Context Behind Saudi Arabia’s ‘Sports-Washing’: the LIV Golf–PGA Tour Partnership in Juxtaposition with Antitrust Law
By Kyleigh Krames
Whatever it is, the way you tell your story online can make all the difference.
Sportswashing is a term used to describe organizations that seek to elevate their image via association with an elite sport. It is a new term for many and has sparked controversy across global media in recent years, specifically involving the purchase of football and golf clubs by Saudi Arabia. The Crown Prince of the Kingdom, Mohammed Bin Salman, seeks to diversify the nation’s economy to be less reliant on oil. As a result, money is being funneled from his government into various sectors: a financial program, sustainability efforts, the health sector, national industrial development, and sport as part of Saudi’s Vision 2030 plan. As outlined on Saudi Arabia’s government website, Vision 2030 aims to cultivate a “vibrant society,” a “thriving economy,” and “an ambitious nation,” all in “the spirit of modern Islam” by dedicating its sovereign wealth fund to prepare the nation’s citizens and GDP for the future.
Bin Salman declared in an interview with Fox News that he expects at least “one percent growth of GDP” from his cumulative investments in sports. He isn’t worried about the way it's been received internationally, stating: “If sportswashing [is] going to increase my GDP [gross domestic product] by way of 1%, then I will continue doing sportswashing… I don’t care". His efforts in this sector have been underway for years; between 2016 and 2019 alone, before the country’s more high-profile investments, “‘sports’ contribution to Saudi Arabia’s gross domestic product almost tripled”. In U.S. dollars, this rise in GDP over those three years is worth $4.5 billion.
The investment in such a popular commodity started initially in 2018, with the Kingdom’s sports ministry signing a ten-year deal worth $100 million annually to host two World Wrestling Entertainment (WWE) events. Since then, the Kingdom has hosted boxing matches, tennis tournaments, the highest-paying horse race of all time, and Formula 1 races. Most recently, Saudi Arabia obtained a new partnership between American golf’s PGA Tour and their own LIV Golf Tour.
Saudi Arabia manages its investments through its Public Investment Fund (PIF), which is the “world’s fifth-largest sovereign wealth fund”, having reached $700 billion in assets as of July 2022. Due to this fund, they were able to purchase Newcastle United, one of England’s top-level professional teams, four teams in the Saudi soccer league (including recruits with famously lucrative contracts), and more recently LIV Golf, an international rival-turned-partner to the U.S.-based PGA Tour. The two golf bodies announced their intentions to partner in June of this year, after the PIF reportedly agreed to contribute more than one billion U.S. dollars to the merger. This almost immediately sparked the opening of a Department of Justice investigation, which is still ongoing. The basic concerns regarding this partnership stem from a debate about the level at which a foreign entity can purchase influence into a domestic institution. Especially a foreign entity that, given its history with human rights issues and repressiveness, can be construed as “cleans[ing] its public image” with this ‘buying-into’ a “cherished American institution”. Democratic Senator Elizabeth Warren of Massachusetts accused the PGA of “selling out to the Saudi regime trying to draw attention away from its atrocious human rights record with a new golf monopoly”.
What the Department of Justice is investigating specifically, however, is whether the merger violates federal antitrust law. Antitrust law is a collection of federal laws and statutes that were created to protect businesses and promote competition while preventing unjustified monopolies. Even though the PGA Tour held a monopoly position over American professional golf for decades, this deal would take away the Tour’s only (albeit recent) competitor, and establish a dominant association with absolute control over the industry. Two major opponents joining forces to avoid competing against one another is the main scheme “antitrust law was designed to prevent”. The 1914 Clayton Act is one of said main antitrust statutes, focused on the prohibition of mergers or acquisitions designed to weaken competition. However, the deal has not yet been finalized, and no paperwork has been submitted to the Antitrust Division or Federal Trade Commission—which a merger of this size is lawfully required to do. The Justice Department won’t comment on the deal until after it’s been filed with the appropriate government divisions, however, “some of the nation’s foremost antitrust experts say it appears to stand on shaky regulatory ground”. Tim Wu, a Columbia University law professor and late member of President Joe Biden’s National Economic Council, broke down the basics for TIME; “you have one sort of monopolist or quasi-monopolist in golf…” this being the United States PGA Tour to begin with. “...They have a challenger”; newly formed Saudi-owned upstart LIV Golf. “The idea that the existing dominant monopolist can buy out its challenger because it’s causing problems is just sort of a facial violation of antitrust laws.”
PGA Tour commissioner Jay Monahan has demonstrated that he understands the context behind intending to eliminate a competitor. Monahan was quoted talking to reporters in June, displaying his understanding that in taking a “competitor off of the board,” the PGA will “be able to control the direction [of the sport] going forward” once again. He added in an additional interview that the investment received from the PIF in sponsorship of the merger, “can grow the game to new heights under consolidated leadership.”
Regardless of the reasoning, whether Wu’s theory about LIV Golf “causing problems” is what led to the merger, or if it was pushed by Saudi’s government wanting to “cleanse its public image,” as Senator Richard Blumenthal suggested, it seems unlikely that the Department of Justice investigation won’t scrap the agreement. As it is right now, the acquisition violates competition and monopoly federal laws. Hopes from the governor of PIF and the PGA Tour commissioner in expanding golf’s future won’t be enough to keep the partnership alive against federal antitrust investigators.
As outlined previously, investment in sport is just one of many ventures that the Saudi regime is pursuing to diversify its economy. They understand that an oil-dependent economy isn’t sustainable for the future, and Vision 2030 is their plan to create other opportunities for GDP growth. The Saudi Arabian government, as their Crown Prince has declared, doesn’t care about the sports-washing claims from critics who believe their investments are to take media coverage away from their human rights issues—even if it is a beneficial consequence. The Saudi regime will continue investing in sports despite the outcome of the Department of Justice investigation and the LIV Golf–PGA Tour partnership, and it's likely we will be seeing more jaw-dropping contracts for athletes like Cristiano Ronaldo and Karim Benzema in news headlines in the future.
Works Cited
Sutton, Bill. “Sportswashing: The Term Might Be New but Not the Activity.” Sports Business Journal, July 10, 2023. https://www.sportsbusinessjournal.com/Journal/Issues/2023/07/10/Opinion/sutton.aspx#:~:text=Sportswashing%20has%20always%20existed%20—%20it%27s,we%20need%20a%20new%20adage.
Ibid
Sullivan, Arthur. “What’s the Strategy behind Saudi Arabia’s Sports Splurge? | Business Beyond.” YouTube, September 15, 2023. https://www.youtube.com/watch?v=HnqRpt359vo&ab_channel=DWNews.
Kingdom of Saudi Arabia, Council of Economic and Development Affairs, Saudi Vision 2030, Copyright 2023, https://www.vision2030.gov.sa/en/.
Ibid
Bonagura, Kyle. “Mohammed Bin Salman Unfazed by Sportswashing Claims.” ESPN, September 21, 2023. https://www.espn.com/golf/story/_/id/38457576/mohammed-bin-salman-says-saudis-continue-sportwashing.
Ibid
Berman, Noah. “Saudi Arabia’s Investments Raise Questions of ‘Sportswashing.’” Council on Foreign Relations, July 13, 2023. https://www.cfr.org/in-brief/saudi-arabias-investments-raise-questions-sportswashing.
Reda, Ahmed, and Laurent Viviez. “How Sports Events Can Transform the Saudi Arabian Economy.” EY US - Home, September 15, 2021. https://www.ey.com/en_ly/consulting/how-sports-events-can-transform-the-saudi-arabian-economy.
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.
Ibid
Ibid
Kingdom of Saudi Arabia, Council of Economic and Development Affairs, Saudi Vision 2030
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.
Ibid
Ibid
Cortellessa, Eric. “How Antitrust Laws Could Kill the PGA - LIV Golf Merger.” Time, June 8, 2023. https://time.com/6285954/pga-liv-merger-antitrust-law/.
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.
Antitrust Division, U.S. Department of Justice, The Antitrust Laws, last modified August 31, 2023, https://www.justice.gov/atr/antitrust-laws-and-you
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.
"Clayton Act". (Oct. 15, 1914, ch. 323, §1, 38 Stat. https://www.ftc.gov/legal-library/browse/statutes/clayton-act
Antitrust Division, U.S. Department of Justice, The Antitrust Laws. https://www.justice.gov/atr/antitrust-laws-and-you
Ibid
Cortellessa, How Antitrust Laws Could Kill the PGA - LIV Golf Merger, Time, June 2023.
Ibid
Ibid
Straka, Dean. “Jay Monahan Defends PGA Tour, Liv Golf Merger as Commish Touts Effort to ‘Grow and Expand This Great Game.’” CBS Sports - Golf, June 7, 2023. https://www.cbssports.com/golf/news/jay-monahan-defends-pga-tour-liv-golf-merger-as-commish-touts-effort-to-grow-and-expand-this-great-game/amp/.
Ibid
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.
Straka, Jay Monahan Defends PGA Tour, Liv Golf Merger as Commish Touts Effort to ‘Grow and Expand This Great Game, CBS Sports, June 2023.
Bonagura, Mohammed Bin Salman Unfazed by Sportswashing Claims, ESPN, September 2023.
Berman, Saudi Arabia’s Investments Raise Questions of ‘Sportswashing’, Council on Foreign Relations, July 2023.