Fears are growing that the Hamas attacks on Israel will freeze dealmaking in the Middle East — and the PGA Tour’s merger with Saudia Arabia-backed LIV could be among the casualties, insiders told On The Money.
Earlier this year, On The Money reported that former President Donald Trump’s ties to the controversial deal could hurt its chances of winning approval from US regulators.
But now, insiders said it could be the Saudi connection that derails the tie-up. Saudi Arabia’s Public Investment Fund (PIF) has spent $2 billion in the past two years to launch LIV, luring away top players like Phil Mickelson with eye-popping financial packages.
Saudi Arabia’s crown prince Mohammad bin Salman probably didn’t help things, sources said, when he admitted in an interview last month with Fox News that the merger would result in a monopoly.
Meanwhile, some on Wall Street say the chill already has already taken a toll on another big sports deal, pointing to fizzled talks to sell a stake in Manchester United.
Before the Oct. 7 attack, a Qatari investment group was reportedly confident it would win the UK soccer team and willing to raise its offer to $6.5 billion from $6 billion.
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This week, the group withdrew its offer.
Manchester is owned by the Glazer family who have donated millions to various Jewish causes.
The Glazers are only selling part of the team and didn’t want to be closely partnering with the Qataris, sources said.
Billionaire Sir Jim Ratcliffe reportedly bought a 25% stake as of this week, although the deal has not officially closed.
“People who went to Formula 1 in Qatar before the attacks have been getting shamed,” one source who’s raised money in the region said. “The Qataris buying a British soccer team is a bridge too far.”
While the Qatari government was not directly involved in the Manchester bid, Hamas’ leader-in-exile Ismail Haniyeh resides in Qatar along with a number of other top terrorists.
“When it comes to brand adjacency, people don’t distinguish,” a source said of raising money from various funds in The Middle East. “The optics are too risky.”
Elsewhere, the geopolitical tension is hurting venture capitalists. Funds like Tiger Global, Andreessen Horowitz, and IVP have relied on Middle Eastern money in the past, and it’s unclear if they can make up the difference now.
Last week, On The Money reported OpenAI is close to selling shares at a valuation nearing $90 billion — and the compelling offer could depend on deep-pocketed investors from the Middle East.
“This couldn’t come at a worse time,” one venture source said. “No one is able to do anything… and all the LPs in Silicon Valley have put down their pencils.”
At the same time, insiders say question marks are popping up around the seventh annual Future Investment Initiative in Riyadh, Saudi Arabia, which will be hosted by PIF Oct. 24–Oct. 26.
Attendance slumped following the murder of Jamal Khashoggi in 2018, but has flourished since.
Last year, one panel included JPMorgan Chase CEO Jamie Dimon, Goldman CEO David Solomon, Blackstone CEO Stephen Schwarzman and Bridgewater Associates founder Ray Dalio.
Some investors are cautiously optimistic that President Biden’s trip to the Middle East could resolve tensions and restore working relationships with US allies like Saudi Arabia.
Others remain on edge.
“We’re in a third world war, we just don’t know it yet,” one source warned.
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