For all the backroom dealings that have allowed LIV to flourish, the subtext of the league’s contract negotiations has always been public information: LIV has the money and the players are taking the risk.
A simple financial equation explained why PGA Tour members were attracted to the new competition: salary + risk = payout. To sign a PGA Tour star, LIV had to offer at least one dollar more than what players thought they could earn on the PGA Tour, plus the cost of that star’s risk.
This strategy helped LIV take off and put the PGA Tour on its heels, but it wasn’t without its flaws. First, it left open the possibility that players would change the way they value risk; and second, it assumed that LIV’s funding was unlimited.
When Patrick Reed announced his surprise departure from LIV Golf earlier this week, neither he nor LIV gave a clear reason for his decision, stating only that they could not reach an agreement.
Perhaps Reed, who plans to return to the PGA Tour in late 2026 after an eight-month suspension, was homesick, swept away by LIV’s globetrotting program, and only a huge offer could convince him to return. Maybe LIV made an offer, but less than Reed’s initial signing bonus, and turned his nose up. Perhaps LIV saw Reed’s value declining and took the opportunity to send him. Or perhaps Reed and LIV had a mutual interest, but LIV lacked the necessary funds to close the deal.
Whatever Reed’s decision was, it likely came down to money or risk, and on the eve of LIV’s 2026 season, there’s reason to believe both factors may have played a role.
Patrick Reed and the financiers of LIV
For all the headlines LIV generates in the golf world, the competition represents only a piece of the Saudi balance sheet.
Officially this is the Saudi Public Investment Fund (PIF). worth almost $1 trillion. Since LIV’s founding, the league has suffered a relatively small $5 billion in losses, according to LIV’s regulatory filings. Five billion dollars isn’t nothing – but LIV brings benefits that are harder to quantify, like international cachet and cultural influence and a cozier relationship with America’s political royalty. In short, the Saudis’ advantage is less financial than influential.
But that was when the PIF’s money was seemingly unlimited, and now that funding seems less stable.
The most famous catalyst of the Saudis “liquidity crisis” has nothing to do with golf. Rather, it’s a place called Neom, an insanely opulent “city of the future” under construction in the middle of the Saudi desert. For a time, Neom was the crown jewel of Saudi Crown Prince Mohammed bin Salman’s ‘Vision 2030’ – his dream to modernize his country and diversify its economy for the modern age. The city was the center of an unprecedented series of infrastructure and real estate investments by the kingdom, which harbored dreams that the uninhabited patch of desert would one day become a center of economic and technological innovation.
The reality was a headache. Now, almost ten years after the start of the project and after years of overbudget and overdue construction, Neom consists of a small sub-area in the desert. There is no ski area or high-speed rail line. The PIF has spent more than $50 billion on the project and on an internal audit. according to the Wall Street Journalestimated the cost to complete the city to its original scale at $8.8 trillionmore than eight times the Kingdom’s initial estimates.
At the same time, the old way of doing business in Saudi Arabia has suffered an unexpected decline. Over the past year, global oil supply has exploded, thanks to increased production in the United States and several other non-traditional oil-producing countries. As a result, oil costs have fallen to their lowest level since 2021, according to reports from the US Energy Information Administration. Under MBS, the Saudis were keen to diversify their economy beyond the oil sector, but such large-scale economic transitions take time. Much of the Saudi economy is still tied to the country’s oil interests, a year-end report from the International Monetary Fund shows, and those oil interests are currently underperforming.
The result of an oil crisis and a hugely ambitious infrastructure policy? Suddenly the Saudis are short on cash and facing mounting deficits. the Financial times reports.
On Sunday, the same day Patrick Reed revealed his stalled negotiations with LIV, the… FT reported the latest evidence of PIF’s belt-tightening: the fund had dramatically scaled back its vision for Neom and envisioned a “much smaller” final project with a significantly lower price tag.
“The changes come as Riyadh tries to manage its finances as it struggles with tighter liquidity after a decade of massive spending and subdued oil prices.” Andrew England and Chris Campbell wrote. “The country also still has to meet tough deadlines in the costly preparations for organizing the international trade fair Expo in 2030 and the Football World Cup in 2034.”
Could all this economic maneuvering have affected Reed’s contract negotiations? We don’t know. We Doing Know that Reed said he would be “surprised” if he didn’t play in LIV’s season-opening event on Sunday. Three days later he walked to LIV’s rivals.
If the Saudis cut back on Neom, the country’s most spectacular economic swing, it is not unreasonable to think they could take a more restrictive approach to the rest of the PIF portfolio, including LIV. Even if that isn’t the case, LIV’s willingness to spend money remains a crucial question going forward.
Over the next two years, the league will face crucial (and certainly costly) contract extension decisions with stars like Bryson DeChambeau and Jon Rahm. Without matching nine-figure deals (if not exceed) the duo’s original signing bonuses, it’s hard to imagine Rahm or DeChambeau sticking around. (DeChambeau has already suggested YouTube as a full-time pursuit if negotiations don’t meet his expectations.) And without superstars on LIV rosters, it’s hard to see a path for the league to achieve long-term viability.
In a statement announcing his departure from LIV, Reed called himself “a traditionalist through and through” who was “born to play on the PGA Tour.” He added that he made his decision “for our family, our children.” Reed wouldn’t be the first player to feel the strain of an LIV schedule that travels to five continents and requires long stretches along the way. He wouldn’t be the first player to worry about the long-term prospects of a league struggling to gain TV viewership or significant influence in the golf world. He would be right to worry about the viability of his major championship future; the league still has not achieved the world ranking points its players need to qualify for the major championship.
For the world’s top players, the risk of joining LIV remains. LIV knows that risk costs money, and even sovereign wealth funds don’t have an endless supply of it.
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