Following the LIV-PGA Tour merger, could F1 be next for the Saudi Arabian-led PIF?

Photo by Heuler Andrey/Eurasia Sport Images/Getty Images

Could F1 be the next acquisition for the Saudi Arabian-backed PIF following the LIV-PGA merger?

The sports world was stunned on Tuesday when, after months of feuding and litigation, it was announced that the PGA Tour was merging with the upstart LIV Tour.

Tuesday’s announcement sent shockwaves throughout the sporting world, as it came after months of a protracted feud between players and the two different tours. After months of preaching “loyalty” to players on the PGA Tour, the group turned around and merged with LIV, even giving the Saudi Arabian Public Investment Fund (PIF) the “right of first refusal” regarding future investments into the newly-created Tour.

And yes, the deal is being portrayed as a merger, but it has more of a “hostile takeover” feel given some of the language, such as the “right of first refusal” outlined above.

The move comes as the PIF has made a number of investments in teams and leagues across the globe. The PIF purchased Premier League club Newcastle United, and the club enjoyed its most successful run of play in decades this year, qualifying for the Champions League for the first time since 2002.

PIF also announced that it would be taking a majority ownership stake in four of the nation’s top soccer clubs including Al Nassr, where Cristiano Ronaldo currently plays. Karim Benzema, the French national and Real Madrid star, was reportedly offered a massive new deal to play in Saudi Arabia as well.

There were also rumors of a potential merger between the PIF and WWE earlier this year.

With Saudi Arabia, through the PIF, expanding their influence in the sports world on a massive scale the question becomes: What could be next?

And could that be Formula 1?

The idea is certainly not new. Back in January a report from Bloomberg indicated that the PIF approached Liberty Media — the company that currently owns F1 — last year, placing a valuation on F1 of $20 billion. The report from Bloomberg further noted that while Liberty Media rejected the offer, PIF remains “interested in the asset.”

Liberty Media acquired F1 during 2016, with the sale being finalized at the start of 2017. At the time, F1 was valued at $8 billion, and the purchase price was $4.4 billion.

According to Bloomberg, the offer from PIF came in at $20 billion.

These reports touched off a flurry of controversy, starting with Mohammed Ben Sulayem, the president of the FIA. FIA’s president took to social media to push back on the idea of a sale. In the process, he had some thoughts on the potential purchase price, referring to it as “inflated:”

He continued to say that “[a]ny potential buyer is advised to apply common sense, consider the greater good of the sport and come with a clear, sustainable plan – not just a lot of money.”

Those posts, while coming from a place of good intentions, had some ramifications.

After all, when an authority figure calls into question the value of an asset that you own — using the word “inflated” along the way — it might not leave you with the warm and fuzzies.

As a result President Ben Sulayem’s posts drew a harsh rebuke from both Liberty Media, and F1 itself.

In a letter sent to the FIA from F1’s chief legal officer Sacha Woodward Hill, and Liberty’s chief legal officer Renee Wilm, the comments from president Ben Sulayem were described as “unacceptable,” and in their words, “overstep the bounds of both the FIA’s remit and its contractual rights.”

Copies of the letter were provided to both BBC News and Sky Sports.

The letter also referenced an agreement between F1 and FIA, wherein F1 “…has the exclusive right to exploit the commercial rights in the FIA Formula One World Championship”

According to the letter, the comments from president Ben Sulayem encroached on those commercial rights: “Further, the FIA has given unequivocal undertakings that it will not do anything to prejudice the ownership, management and/or exploitation of those rights. We consider that those comments, made from the FIA president’s official social media account, interfere with those rights in an unacceptable manner.”

The letter concluded with the warning that FIA would be liable if the comments “damage the value of Liberty Media Corporation.”

Talk of a potential sale waned in recent months, and in recent weeks both the head of F1 as well as the CEO of Liberty Media have dismissed the idea of F1 being for sale. Speaking in February, F1’s CEO Stefano Domenicali told Sky Sports F1 that recent investments made by F1 were a sign that no sale was in the works.

“That’s a question you’ll have to ask my shareholders but I don’t think so, because we are investing in Formula 1.

“You see what we put in terms of real money, for example in Las Vegas we bought a piece of land for $200million. We are building new facilities there. We’re going to invest more than half a billion, so we are very, very happy.

“I’m connected with my shareholders every week. It’s really the jewel of their portfolio and they really feel very comfortable with what we’re doing.

“Of course, if you look at the value, the value has been phenomenal because I think that we are delivering a good job altogether. So I don’t think that [selling] is on the table for my shareholders.”

Then last month the CEO of Liberty Media was even more direct.

Speaking during the MoffettNathanson Inaugural Technology, Media and Telecom conference, Liberty Media CEO Greg Maffei shot down the rumors that Liberty Media would be selling F1, and stressed the group’s excitement over the growth of the sport in recent years.

“Is there any chance we’re going to sell this thing and incur corporate tax? That should stop any discussion that anyone says that our friends, the Saudis, are going to buy it next week or something like that? If anybody knows us, they should know that’s just not in our cards,” said Maffei at the conference.

However, would the cards change if a shock offer comes in from PIF?

After all, for months it seemed as if the PGA Tour was going to hold firm in their stance, as the battle between the PGA Tour and the upstart LIV Tour waged on in both the courtroom, and the court of public opinion. Consider this from PGA Tour commissioner Jay Monahan at the Canadian Open almost exactly a year ago:

This passionate defense of the PGA Tour raised the question: Did PGA members ever need to apologize for being a member of the tour?

Monahan raised those concerns with good reason. Saudi Arabia’s continued expansion into the sports world through PIF is part of a bigger plan, the “Saudi Vision 2030” framework. This is a move by Saudi Arabia away from reliance on oil exports, and to diversify their financial holdings and positioning for a changing world.

There is also another side to that, termed “sportswashing,” where through the mechanism of sports the image of Saudi Arabia is softened all over the globe, as fans turn their eyes away from human rights abuses, the murder of journalist Jamal Khashoggi, and more.

Monahan’s spirited defense of the PGA Tour included Saudi Arabia’s ties to 9/11. In those comments above he referenced 9/11, he talked about two families close to who lost loved ones, and all of that built to his question over whether PGA Tour players ever needed to apologize for being a member of the tour.

Now things have changed. In announcing the deal on Tuesday Monahan referred to it as a “world-class investing experience.”

The harsh and bitter truth of it is this: Money changes everything, especially massive, massive amounts of money. Earlier this year when the reports surfaced of PIF looking to buy F1, the $20 billion price tag was floated, a number well above what Liberty Media paid a few years ago. Perhaps that is indeed the end of it.

Perhaps not.