The Daily - How Saudi Arabia Took on Pro Golf — and Won

Episode Date: June 15, 2023

Last week, golf’s premier circuit, the PGA Tour, announced it was partnering with its rival circuit LIV Golf, an upstart league backed by Saudi Arabia, giving the country a powerful new seat at the table of international sports.Alan Blinder, who covers golf for The New York Times, explains what was behind the deal and what it means for the business of sports.Guest: Alan Blinder, a reporter who covers golf and health for The New York Times.Background reading: The deal to merge LIV Golf with the PGA Tour is a big win for oil-rich Saudi Arabia, headlining a banner week that also includes a visit from the American secretary of state.The U.S. Senate opened an inquiry into the PGA Tour’s deal with LIV Golf.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From The New York Times, I'm Sabrina Tavernisi, and this is The Daily. This morning, fierce reaction after the PGA Tour's announcement that it's merging with its Saudi-funded rival, Live Golf. The news of this partnership, a shock premier circuit, the PGA Tour, announced it was partnering with its upstart rival, a controversial league backed by Saudi Arabia. A country that has never won an Olympic gold medal, Saudi Arabia has suddenly emerged as a major player in global sport. Whether it's gobbling up golf rights or signing yet another global soccer star, many roads now seem to lead to Riyadh. They've invested very heavily in golf, Formula One, WWE, they've had boxing there. Now, Saudi Arabia, along with its long record of human rights abuses, has a powerful new seat at the table of international sports, a major success in a years-long effort to win influence.

Today, my colleague Alan Blinder explains what was behind this surprising turn, what it means for Saudi Arabia, and for the business of sports. It's Thursday, June 15th. So, Alan, I have to tell you that a group of producers at The Daily were very interested and became, in fact, quite obsessed with the question of Saudi-backed golf, this Live Golf League. And I told them, no, thank you. I do not want to do a podcast about that. And they persisted. And then last week, this Saudi-backed league burst into the news. And the team got very excited. And here we are sitting with you doing a podcast about the Saudi-backed league, this live league.

So for those of us who don't know anything about golf, like me, explain why this was such a big deal. me. Explain why this was such a big deal. So until last year, there was an absolutely unquestionably preeminent group in golf. It's called the PGA Tour. It was where the biggest stars played. They had played there for eons. If you wanted to make it big in pro golf, make money, be a star, you went to the PGA Tour, play a lot of tournaments in the U.S. Be a star. You went to the PGA Tour, play a lot of tournaments in the U.S. And then there's this new league that shows up, the Live Golf Operation. It's funded by Saudi Arabia's sovereign wealth fund.

It showers players with money. And suddenly the PGA Tour, for the first time in a long time, maybe even ever, has a real challenger. The PGA Tour has essentially been a monopoly for a long time, and they weren't going to give it up easily. And then it shocked us last week when they popped up on Tuesday morning and essentially said they were merging. And why does it matter, Alan? Like, why does it matter that these two merged? It matters a great deal because Saudi Arabia has spent years trying to establish prestige on the global stage, to be a big player around the world, not just in sports, but culturally, economically, and the like.

And look, Saudi Arabia is a country that is oil-rich. Its economy is built around oil and natural resources. It's got a human rights record that has been slammed all around the world for almost time immemorial. With good reason. They were responsible for the killing of Jamal Khashoggi, the Washington Post columnist. Yeah, I mean, there's a long history of human rights abuses that have colored a lot of perceptions of Saudi Arabia. But this merger, I mean, this was essentially unimaginable a year ago. And here we are now with the Saudis poised to have enormous sway over one of the world's biggest sports for years and years to come.

Okay, so Saudi Arabia getting a seat at the table in a big way. How did this deal come together? Where did it all start? Well, a few years ago, the Saudis have the Sovereign Wealth Fund. It's one of the world's largest. They wanted to diversify their economy. They wanted to be about more than oil. So they decide to get into sports as one of their investments, and golf is one of them.

Initially, they reach out to the PGA Tour. They see, is there some kind of alliance to be made, a partnership to be made? And the tour essentially ignores them. Ignores them? Yeah, that did not sit well in Riyadh, it turns out. And why? Why did the PGA Tour close the door in their face? Well, they didn't need them. They thought, we control the game's highest, most elite levels.

We've got a gazillion dollars already, it seemed. We don't need your help. We've got everything as fine as it is. And that's just kind of the arrogance you sometimes see in professional sports. So the PGA Tour essentially rebuffs the Saudis, but they don't give up on this idea that they could play a big role in golf. And it turns out there is a hugely receptive audience to this kind of idea among some of the world's top players. And it turns out there is a hugely receptive audience to this kind of idea among some of the world's top players. And why are the players so receptive? For decades and decades, there have been arguments in golf about the economic structure, how people get paid, how they make money, how the wealth is spread around. And the PGA Tour had been pretty content

not to really mess with what was working for them, but that didn't mean the players were happy with it. And there was a lot of discontent bubbling up among the players. There was a lot of nerves, a lot of anger, a lot of frustration. And what was that anger and frustration about? So the traditional way of winning money through professional golf, you play these golf tournaments. And really, you only make money if you do well.

You don't get a baseline salary just for being a member of the PGA Tour historically. And you don't even just get a salary for showing up or a payment for showing up. You have to perform well enough to play the full tournament. Wow, so it's not like baseball or football where you have a contract and you get money just by being part of a team. to play the full tournament. Wow. So it's not like baseball or football, where you have a contract and you get money just by being part of a team. Yeah. It is essentially pay for performance in professional golf.

Now, there are guys who would, you know, they make money through some sponsorship deals, equipment deals, that kind of thing. But the PGA Tour money, the money that comes from actually playing the sport, was contingent on how well you played. So that meant only a handful of players were making the truly big bucks. There are people who are early career golfers, people who are never going to rise to Tiger Woods-level stardom, who they don't make much money. Some of them even lose money on playing golf. Okay, so into this steps the Saudis. And what do they do with this discontent? How do they use it? Well, they decide to start their own league, which becomes Live Golf, as we know it

now. And they know that in order to take on the establishment, to take on the PGA Tour, this entrenched monopoly, they've got to get players. There is no way around that. So they think big because they're the Saudis and they have the money to do this. They think big about people like Tiger Woods and Phil Mickelson and Rory McIlroy and Brooks Koepka. They want the biggest names to play the game. Okay, so do they get any of these guys? Well, the rumors start coming fast and furious all over professional golf. Who might be willing to join, live? Who might be willing to leave the PGA Tour?

And then in February of 2022, it really burst out into the open when Phil Mickelson, who is by all accounts one of the finest golfers ever to play the game, won the Masters Tournament, won the PGA Championship, won the British Open. He's quoted in a new book that was coming out of the time, essentially saying that it didn't matter what the Saudis' baggage was, he was interested. Let me just quote for you directly what Mickelson said to this book author. Their scary mother, then he added a swear word, to get involved with it. We know they killed Khashoggi and have a horrible record on human rights. They execute people over there for being gay.

Knowing all of this, why would I even consider this? Because this is a once-in-a-lifetime opportunity to reshape how the PGA Tour operates. So he's kind of saying, this is a very bad regime, but I hate the PGA more. Yeah, that's right. And in fact, he really goes on this extended rant about the PGA Tour. He's got essentially a greatest hits list of grievances that he's been nursing for a long time. And he talks about how they're manipulative, they're coercive, they strong arm people. He says Jay Monahan,

the commissioner, you know, is a decent guy, but he won't do what's right for the players in the end. And then he talks about how the Saudi money has given the players the leverage they have always wanted. So, Saudi dictators helping golfers get leverage over PGA dictators. That's effectively what he's saying. Yeah, that pretty much sums it up. So how does the golf world react? Well, it was about as ferocious of a reaction as you can imagine. Saudi Golf League, Bill Mickelson, holy cow.

He's facing some backlash, losing a big sponsor over his comments he made supporting a Saudi-backed golf tour. Sponsors are furious. People are condemning Mickelson left and right. Several PGA stars, including Rory McIlroy, blasted Mickelson's comments. I thought they were naive, selfish, egotistical, ignorant. You know, watching Pat Perez there react and Justin Thomas, it's almost like they're sort of laughing at Phil,

as if he sort of lost his mind. You know, he eventually apologizes, issues a statement, says, I'm going to take some time away, work on myself. He is in essentially full retreat at that moment. So he is like being shamed in the doghouse. It is golf's version of being canceled. Huh. And a lot of people around golf watch this. They see this guy who's been a reliable, bankable superstar

for years and years and years. And they say, if Phil Mickelson can't withstand this, if he's getting hit this hard, what happens if I sign up for this new Saudi league? And that leads to the question, can live work? Can they survive? Can they get the players they need? We'll be right back. So, Alan, you just told us that everybody's watching this upstart golf league that's going up against the mighty PGA. I mean, this is kind of an audacious challenge,

right? So what actually happens? Well, Liv decides to host its first big tournament, and of course, just outside of London. And from really the very earliest stages, it's very clear just how different Liv is going to be from the PGA Tour and the establishment tours. Five, four, three, two, one. One, two. So in traditional golf, you play 72-hole tournaments over four days. Okay. Live was using a format that had 54 holes. That's where the Liv name comes from.

The Roman numeral for 54 is L-I-V. Oh, huh. And it's shorter. It's shorter. I mean, it's a day less of golf. Right. What a relief. Okay, what else?

Golf is such a grind that you feel like you're all out there by yourself. And sometimes when you're not playing well, it can really weigh on you. Usually the focus at a golf tournament is solely on the individual competition. In terms of live golf, you have 12 different teams. Live in its format included the team competition as well. I mean, you guys both played incredible. Your team is awesome.

You're the youngest team. What do you have to say to the other team they're way too old this is our tour now even just the vibe of the place is different beyond the game itself there it is we promised you an ace oxwell and chase katka has You know, at a traditional golf tournament, you've got players looking really serious. They're in slacks, polo shirts. Oh, and short shorts. At a live event, you can see players in shorts.

As of tomorrow, live tour players will be able to wear shorts. The first league and tour to make it official. Trust me, the idea of pro golfers wearing shorts counts as a radical thing. Okay, so when you think of a golf tournament, you likely think of silence when the players are hitting their shots. Noise is not welcome in professional golf. You know, sometimes they actually hold the signs up to remind people to hush, except to live.

Sometimes they actually hold the signs up to remind people to hush, except at Live. Our approach is to treat it like an NBA game or an NHL game or an NFL game, where the entire course is integrated like an arena. One of the slogans was actually, Live, it's golf, but louder. Golf, but louder. I mean, you had to differentiate yourself if you were going to go up against the PGA Tour. You could not just do the same old, same old.

Okay, so really different from the buttoned-up masters and their khakis. Who's playing? Like, who came to play at the tournament? Well, Phil Mickelson resurfaced. I love this game of golf. I've seen the good that it's done. And I see the opportunity for Live Golf to do a lot of good for the game throughout the world.

And I'm excited to be a part of this opportunity. Oh, wow. So he signed. Yeah, Phil Mickelson signs. I understand that many people have very strong opinions and may disagree with my decision. And it's a big deal because this is the guy who took all the heat and he decided I'm going to play and go forward anyways. At this time, this is an opportunity that gives me a chance to have the most balance in my life going forward.

And I think this is going to do a lot of good for the game. So he's in the field. Some other major tournament winners. For something that was in its infancy, they drew a pretty good crop of players out there. Okay, so they've pulled off their first event. They've established themselves. What happens next? The thing that they desperately needed was a lot

of attention. I mean, they were getting attention for their funding sources. They were getting attention for the politics surrounding it, but they were not really getting a lot of attention for golf. You know, they didn't have a TV deal at the time. If you wanted to watch this thing, you had to watch it on YouTube. Oh, wow. So they also need places to play. And a lot of the really great courses in the U.S. were very close to the PGA Tour. They wanted nothing to do with live golf. So you start looking at the list of courses in the country that can suit championship level golfers, and there aren't many. But you know who had a lot of them with Donald Trump and the Trump Organization? There aren't many, but you know who had a lot of them with Donald Trump and the Trump organization?

Make golf great again. Why former U.S. president and potential presidential hopeful Donald Trump backs the Saudi-funded Live Golf series. Two Live events will be hosted at Trump golf courses, starting with one next weekend at his Bedminster, New Jersey course. So in July, Hi, everybody. Hi, everybody. Jersey course. So in July, the Live Roadshow rolls into Trump's place in New Jersey. And that, you know, if you don't have a TV deal, then you've at least got a former president wandering around your events. Can you help me appreciate your decision to host this event? events. Can you help me appreciate your decision to host this event? Well, I've known these people for a long time in Saudi Arabia, and what they're doing for golf is so great. What they're doing for the players is so great. The salaries are going to go way up. And you know what? The cameras came,

the reporters came. It's not too often you see former presidents basically endorsing sports leagues. And you have really the best players in the world, many of the best players in the world, and soon you'll probably have all of them. Okay, so throughout all of this, what's PGA doing? Oh, they're absolutely seething. They are furious at the thought that players would ever consider going to this new upstart league. But they also know there's not all that much they can really do about it.

Really, all the PGA realizes it can do is threaten players. They can say, if you cross the Rubicon, if you go play for Liv, you can't play PGA Tour events going forward. You'll be suspended. But can they even do that? Well, this was always going to end up in a courtroom, and that is exactly where it went. A handful of live players sued the PGA Tour. They said that the tour was trampling on their rights,

all sorts of questions about whether the PGA Tour was abusing monopoly power, and more court filings than I would care to mention. Okay, so the players sue, which on some level makes sense, right? abusing monopoly power, and more court filings than I would care to mention. Okay, so the players sue, which on some level makes sense, right? It's like, why do you, PGA, get to be the final word on golf? You've controlled the game, but the truth is you're this stodgy, old, unchanging thing that isn't really paying us very much. And so we're going to check out this upstart. Yeah. And they look, golfers had the idea that they should be free to pick where they play, when they play there. And they thought they should

be able to move back and forth between these tours pretty much at will. The PGA Tour wanted absolutely none of that. Right. So the PGA Tour, they're desperate to keep players because let's face it it having good players is what gets people to come to tournaments it's what gets people to watch on tv it is what makes this whole operation work so the pga says okay we're going to increase our prize money we're going to start in some instances promising that in your first season you can make a certain amount of money like they start trying to throw some bones to people to say, if you're loyal to us, we will make this work for you.

The problem is the PGA Tour is not made of money. They don't have the bottomless pockets, so to speak, of the Saudi wealth fund. And look, the PGA Tour knew this from the start. They have said they could never compete dollar for dollar with audi wealth fund right and look the pga tour knew this from the start they have said they could never compete dollar for dollar with a sovereign wealth fund i mean take dustin johnson who is this incredible golfer he had played on the pga tour for 15 seasons in that whole 15-season run, he had had $75 million in earnings. He makes the jump over to Liv. By the end of the first season of Liv, he had made more than $35 million in prize money. Holy moly, that is money.

Yeah, I mean, look, the arms race of money has come to professional golf, it came with very very little warning in the grand scheme of things so the reality is the pga tour it starts to uh feel the financial sting of this like they are suddenly shelling out many many many millions of dollars more than they had anticipated doing okay so pga can't keep up with the saudis in the money department you know so that's not on their side but do they have anything going for them at all? Well, they got a few things. They've got the argument of history. We're the PGA Tour. We've been around. You know us. You like us. We should tolerate us. They got that. And then there's also this element the PGA Tour keeps using of, look where the money is coming from for Live Golf. And they

really wrap themselves in this cloak of morality and say, you know, our money is pure. It comes from TV deals. It comes from traditional sponsorships. It's American money for the most part. The PGA Tour commissioner at one point says, have you ever had to apologize for being a member of the PGA Tour? Huh. Meaning our red-blooded American money has none of that Saudi stain. That's exactly the implication. There are family members of 9-11 victims coming out and questioning how could any golfer sleep at night if he takes money from Saudi Arabia. There are some protests. This whole thing, it goes from just being an economic spat in golf

to having these really freighted emotional implications and storylines associated with it. So the PGA Tour is howling with moral outrage. But eventually, we learn that the two actually started meeting and talking about, could there be a way to work together? So publicly, moral outrage, privately, something entirely different. That's what it came to. It all started when a member of the PGA Tours board messaged the governor of the Saudi Sovereign Wealth Fund and said, I'd like to set up a call and hopefully a meeting with you. And then they were off to the races. I'm not sure I can convey just how secretive this deal was until it was announced. You know, there were members of the PGA Tour board who did not know

about it until right before it was announced. This was a handful of people who cut a deal and then told the world, this is the new world order in golf. Given the complexity of what we were dealing with, it's not uncommon that the circle of information is very tight. And the PGA Tour commissioner, who was central to all these negotiations, he suddenly finds himself on defense. And I recognize everything that, you know, that I've, that I've said in the past and in my prior position. He goes and holds this press conference and he says, I know you're going to think I'm a hypocrite. And anytime I've said anything, I said it with the information I had at that moment. and I said it based on someone that's trying to compete for the PGA Tour and our players. They said, I know you're going to think that I just did this dirty deed. I accept those criticisms.

But this is what I thought the game needed to survive. I mean, it was very much a business argument. It put us in a position where, again, we're in control, we have an investor, and ultimately, you know, for the game, we're moving forward constructively. And if you look at the values of the game, I think that's what the situation warranted. The PGA Tour, for the longest time, they got to claim this was a battle of morality, this was about the integrity of the game. The Saudi element made them a convenient boogeyman.

But they seeded that argument last week. Alan, now that you've taught me all about golf, I'm kind of curious what it means for the game. Like, is it totally changed? What happens to golf? So the Wealth Fund's governor is about to be the chairman of this new company that's been created. And the Saudis essentially hold the purse strings for men's professional golf. You know, at this point, you can't really say it was a complete conquering of golf by the Saudis because the PGA Tour still has a big and consequential role. because the PGA Tour still has a big and consequential role.

But if I had told you a year ago that we would be at this point now, people would have laughed me out of the room. I mean, the Saudis have long wanted to be seen as not a pariah nation. You know, President Biden had condemned them as a pariah. The PGA Tour deal doesn't instantly lift the whole cloud off Saudi Arabia. No sports deal is ever going to do that but it's a part of a process of being accepted by western society it's a form of soft power that was always the idea behind some of these sports investments we're seeing out of the persian gulf and now the saudis have a pretty good playbook for how to do this in other sports if they want to.

They saw flaws in an economic model that were apparent for all to see, and they capitalized on it, took advantage of them, and that could be a recipe for trouble for other sports around the world. Like, upstart with deep pockets disrupts established monopolistic power that took for granted its position for a very long time. Yeah, I mean, just like you would see a startup in Silicon Valley challenging an entrenched player, we see how it can happen in sports. We see how you can do it with, you know, billions of dollars from a sovereign wealth fund. you know billions of dollars from a sovereign wealth fund right and if you're a sports executive you're thinking how do i make sure that i can't be caught asleep at the wheel because in a lot of ways that's what the pga tour was the pga tour thought it was invincible what we have now learned

is that it only takes a year or so of really public badgering and a whole lot of money, and then the PGA Tour is no longer invincible. Alan, thank you. My pleasure. Today, the PGA Tour will begin their first major tournament since the deal was announced, this year's U.S. Open. It follows a sudden announcement by the PGA Tour that its commissioner, Jay Monahan, was, quote, recuperating from a medical situation and that he would temporarily step aside. It did not give a timeline for his return. We'll be right back.

Here's what else you should know today. On Wednesday, the Federal Reserve left interest rates unchanged, the first pause after raising them 10 times in a row over many months. Fed officials said they were pausing to assess how the economy is reacting to the rapid campaign to slow demand and to control inflation. But Fed officials remain concerned about inflation, indicating on Wednesday that they may make two more rate increases this year. And Southern Baptists, the largest Protestant denomination in the country

that is often seen as a bellwether for American evangelicalism, finalized the expulsion of two churches led by female pastors at its annual convention. The move made explicit a ban on women in leadership and marked a win for the ultra-conservative wing of the denomination, which is fighting against what it sees as liberal drift. Today's episode was produced by Nina Feldman, Alex Stern, and Michael Simon-Johnson, with help from Rob Zipko and Shannon Lin. It was edited by Lisa Chow,

John Ketchum, and Mark George. Contains original music by Alisha Baitu, Marian Lozano, and Dan Powell, and was engineered by Chris Wood. Our theme music is by Jim Brunberg

and Ben Landsberg of Wonderly. Special thanks to Kevin Draper. That's it for The Daily. I'm Sabrina Tavernisi. See you tomorrow.