0:04

Hey there,

0:06

it's Stephen Dubner. Back in

0:08

2022, we published an episode called

0:10

What is Sports Washing and Does

0:12

it Work? The episode was primarily

0:15

about a controversial new golf league

0:17

called Live Golf, L-I-V, that

0:19

was financed by the Sovereign Wealth Fund

0:21

of Saudi Arabia. When

0:23

we put out the episode, Live was just about

0:26

to hold its first event. Since

0:28

then, there has been a lot of

0:30

news, lawsuits, Senate hearing,

0:32

copious name calling. So

0:35

we have decided to update that episode for you.

0:37

We have also added a new interview with

0:39

a sports lawyer who puts

0:41

the controversy in context and tells

0:44

us whether foreign investors may soon

0:46

be flooding the NFL and NBA.

0:49

That's the final part of the episode. I'd

0:52

love to hear what you think. Our email

0:54

is radio at freakonomics.com. As

0:56

always, thanks for listening. Hi,

1:03

this is Victor Matheson. I'm a professor

1:05

of economics at the College of the

1:07

Holy Cross. When I say the word

1:09

sports washing, you say what? So that's

1:12

a pretty new term. Basically,

1:14

it means using some sort of

1:16

sporting event to try to cover

1:18

over any problems a country has

1:20

had in the past. And

1:23

how is that different from any sort

1:25

of reputation laundering? Let's say I'm Andrew

1:27

Carnegie, and I know a lot of

1:29

people think I've been a brutal capitalist.

1:31

So I decided to open libraries in

1:34

many, many, many places around the country. Leland

1:37

Stanford, the robber baron, decided to open

1:39

what would become one of the most

1:41

esteemed universities in the world. Is this

1:43

any different? Really, it's

1:45

not much different. The idea

1:47

of using politics to curry

1:49

favor is centuries old. I

1:51

actually think all the way back to ancient

1:53

Rome. And I think

1:55

to this famous poet, Juvenal, and he

1:57

coins the term bread and

2:00

stuff. circuses. And the term

2:02

bread and circuses refers to this. If

2:04

a government can at least provide

2:06

enough food to make their citizens

2:09

survive, that's the bread part, and

2:11

enough circuses, things like gladiatorial

2:14

contests and chariot racing, if they can

2:16

provide those, they can distract the populace

2:19

from any other failings of the government.

2:21

Okay, getting back to

2:23

today, what are some good, pure

2:25

examples of sports washing? We've

2:28

had countries like Russia very

2:30

active in mega events like the World Cup

2:32

and the Olympics. Same thing with

2:34

China hosting now two Olympics in

2:37

the last couple decades or the

2:39

Middle East getting into big sporting

2:41

events recently. Now, Victor, your listing

2:43

of the nations that have engaged

2:45

in what we're calling sports washing,

2:47

Russia, China, the Gulf states, there's

2:50

an assumption in labeling this as sports

2:52

washing that these countries are bad countries

2:54

and that they are dirty and have

2:57

a reputation to wash. But

2:59

they probably think the same thing about us. So how

3:01

is that fair? Mind you, I'm coming

3:03

from an American standpoint, but the fact that

3:05

these are countries without functioning democracies,

3:07

where you have no freedom of the press,

3:09

or at least limited freedom of the press,

3:11

by any sort of democracy or openness index,

3:14

all of these countries are very, very low

3:16

to the bottom. And so they're trying to

3:18

rehabilitate some sort of worldwide image, just because

3:20

Putin is going to be president for life.

3:23

We're not so bad. Look how much fun

3:25

you had during the Winter Olympics in Sochi.

3:27

Now, if I think about sports washing, it

3:29

falls into the category of what I think

3:32

a lot of political scientists called soft power,

3:34

right? You're not rolling tanks up to someone's

3:36

border, you're sending sprinters or

3:38

pole vaulters or football players.

3:41

Why does sport have so

3:43

much impact? So

3:45

this is an unanswered question. And

3:48

one of the things sports economists

3:50

just find so fascinating is how

3:54

interested people are in sports, despite

3:56

the fact that it's actually not a very

3:59

big business. All of spectator

4:01

sports globally, all put together, is

4:04

roughly the same size as Johnson &

4:06

Johnson Corporation. The biggest sports

4:08

league in the world, the NFL,

4:10

has annual revenues less than Sherwin-Williams

4:12

paint stores. But there's not an

4:15

entire section of the newspaper dedicated

4:17

to paint stores or pharmaceutical products.

4:22

My personal favorite example of soft

4:24

power is actually Thailand. Thailand,

4:27

by some measures of

4:29

U.S. opinion, is

4:31

the third most favorably looked-on country in

4:34

all of Asia. Behind

4:36

Japan and South Korea, which of

4:38

course are these big, long-standing democracies,

4:41

Thailand's none of that. They are a

4:43

fairly oppressive society. They do not have

4:45

any sort of free and fair elections.

4:47

They have military coups on a regular

4:49

basis. So why in the

4:52

world is this country so popular in

4:54

the United States? I don't

4:56

know. Do they have a really good

4:58

soccer team or pop stars or movies

5:00

or something? No, they have an extremely

5:02

successful soft power run by the government

5:05

of putting Thai restaurants on every corner of

5:07

every city in the country. No.

5:09

You're kidding me. I am

5:12

not making that up. This is an

5:14

actual national goal to send

5:16

out Thai cooks all over

5:19

the globe. And they've taken over

5:21

the United States from a place where 30 years

5:23

ago there were almost no Thai restaurants.

5:25

To this point, we have 5,000 Thai

5:27

restaurants. And why do we love

5:29

Thailand? It's not because of their somewhat

5:32

oppressive government. It's because of Pad Thai. This

5:37

Thai initiative that Victor Matheson is telling

5:40

us about falls under what's been called

5:42

gastro diplomacy. That may be

5:44

an effective type of soft power, but

5:46

let's be honest. It's hard to compete

5:49

with the thrill of sport. And

6:01

a better start the whole station couldn't have

6:03

wished for. And

6:06

the summer war is supposed to stop at

6:08

the wall now. It's a great victory, and

6:11

a shadow in your dorm, pray. Berlin's

6:14

great day dawns with the arrival of the

6:16

Olympic flame. Clegg, Ted, Caring, St. Greek Chancellor

6:18

Hitler on his way to perform the opening

6:20

ceremony. Today

6:27

on Freakadomics Radio, why are sports

6:30

so useful in trying to burnish

6:32

a reputation? They need

6:34

to believe that sports are pure meritocracy because,

6:36

honestly, they don't believe there's a meritocracy anywhere

6:38

else. We focus

6:40

on the latest case of sports

6:42

washing in the usually boring precinct

6:44

of professional golf. Even though

6:47

they're in the middle of a desert and there's

6:49

almost no golf courses in the country, they want

6:51

to get into the business of professional golf. Although

6:53

it does go beyond golf. Do

6:55

we need to hold our politicians as

6:58

accountable? Do our politicians have blood

7:00

on their hands? And we

7:02

try to figure out if sports washing actually works.

7:06

All that coming up right after this. This

7:20

is Freakadomics Radio, a podcast

7:22

that explores the hidden side

7:24

of everything. With your

7:27

heart, Steven Kepner. According

7:37

to Friendship Bureau, editor of the

7:39

New Yale Book of Quotations, the

7:41

term white washing, a deliberate attempt

7:43

to cover up some dark matter,

7:46

this dates back to at least 1703. Green

7:50

washing, that's when you try to appear more

7:52

environmentally friendly than you are, this goes back

7:54

to at least 1989. And

7:57

Shapiro says the first use of

7:59

sports washing... was likely in 2015.

8:02

It described Azerbaijan's hosting of

8:04

the European Games despite a

8:07

troublesome human rights record. Sports

8:10

and politics are in a relationship. They're

8:12

having an affair so to speak and

8:14

their illegitimate child is

8:16

sports-washing. That's Brando Shambly.

8:19

I'm an analyst for Golf

8:21

Channel, an NBC. Before

8:24

that Shambly was the professional golfer.

8:27

Look I was by no means a superstar.

8:29

I wouldn't even say I was a star

8:31

on the PGA Tour. He did

8:33

earn more than four million dollars over a

8:36

15-year career. I won one time

8:38

on the PGA Tour. I lost a few playoffs but

8:40

you know I loved every minute of it. And how's

8:42

your game these days? It's not bad. I mean I'm

8:44

pretty good for a commentator. Let's

8:48

get to the topic that we really want

8:50

to get to here which is a brand

8:52

new golf tour called Live Golf. Why don't

8:54

you just take it from the beginning. They

8:57

market themselves as a rival

9:00

tour to the PGA Tour and

9:03

they are trying to recruit with

9:05

massive sums of money superstar

9:07

players to compete with the PGA

9:09

Tour. For people who don't know

9:12

or care about golf, describe

9:14

the PGA Tour. It is not a

9:16

league like the NFL with teams and

9:18

owners. It's essentially a series of tournaments

9:21

held in a different place every week.

9:23

So who is the PGA

9:25

Tour exactly and what's the relationship

9:27

the average golfer with the tour?

9:29

Well to state the obvious it's

9:32

the major professional

9:34

golf men's tour. It's

9:36

a member-driven, philanthropic,

9:38

nonprofit organization. The

9:41

money that is brought into the PGA Tour

9:43

goes to three different places. It goes to

9:45

the players, the persons and pension funds. It

9:48

goes to charities and it goes

9:51

to run the future tournaments through

9:53

administrative costs. Traditionally

9:56

the PGA Tour has offered no

9:58

salaries and no guaranteed But

10:00

if you play well, you can make a

10:03

lot of money. The top three

10:05

career earners in PGA TOUR history are

10:07

Tiger Woods with $121 million, Phil Mickelson

10:11

with $95 million, and

10:13

Rory McElroy with $80 million. For

10:16

every dollar earned on the course, a top golfer

10:18

might earn 2, 3, even 10 times that amount

10:22

in corporate sponsorships. So, the

10:24

best golfers from around the

10:26

world flock to the US-based

10:28

PGA TOUR to partake in

10:30

its riches. It

10:32

operates pretty much as a monopoly, and there

10:35

have been attempts over the years to break

10:37

this monopoly. The most

10:39

recent one comes from an outfit

10:41

called LIV, or live golf, LIV

10:43

being the Roman numerals for

10:46

54, which is the score a golfer

10:48

would shoot if he or she birdied

10:50

every hole. This has

10:52

never happened in the history of competitive

10:54

golf, so the name is

10:57

plainly aspirational. But

10:59

that's not why Randall Shambly and

11:01

many others in the golf world

11:03

hate the LIV golf tour. They

11:06

hate LIV golf because of who's bankrolling

11:08

it. LIV golf is

11:10

a Saudi-backed attempt to

11:12

get the world to

11:15

not pay attention to their

11:17

atrocious record on human rights.

11:20

The CEO of this new league is

11:22

Greg Norman, the Hall of Fame Australian

11:24

golfer, but the money comes

11:26

from the sovereign wealth fund of

11:28

oil-rich Saudi Arabia. It

11:31

is, at least in my view, an

11:33

attempt to manipulate the market with an

11:35

economy of corruption where they pay

11:37

lavish sums of money to get the world

11:40

to look at what they're doing as reform

11:42

all the while Saudi Arabia

11:44

is experiencing the worst period

11:47

of repression in modern history.

11:50

Saudi Arabia is an authoritarian

11:52

regime where women are treated

11:54

as second-class citizens and dissidents

11:57

are harshly punished. Crown

11:59

Prince Mahal. Mohammed bin Salman, or

12:01

MBS, has made noises about

12:03

reforming. He says he wants to make

12:05

Saudi Arabia, quote, a country of moderate

12:07

Islam that is open to all religions

12:09

and to the world. But

12:12

he has been linked to a long

12:14

string of abuses, most prominently the 2018

12:16

assassination of

12:19

Jamal Khashoggi, a US-based Saudi journalist

12:21

who had been critical of MBS.

12:25

The fact is, the reform that

12:27

he's promising is just a facade. So

12:32

how are you supposed to put a positive spin

12:34

on that? The Saudis have been

12:36

engaged in sports washing for a very long time.

12:39

And that is Alan Shipnuck, a

12:41

longtime golf journalist. Formula

12:43

One, snooker tournaments, pretty much any sport

12:45

they can get their hands on. And

12:48

what's particularly attractive about golf

12:51

is they don't have to woo an entire league.

12:53

It's just one player at a time. The

12:55

Saudi Golf Initiative has been going on

12:58

for some time. Saudi Arabia

13:00

has decided that even though they're in the

13:02

middle of a desert and there's almost no

13:04

golf courses in the country and a tiny,

13:06

tiny percentage of the population's ever touched a

13:08

golf club, they want to get into the

13:11

business of professional golf. So

13:13

as part of dipping its toe

13:15

into the waters of professional golf,

13:18

the Saudi Golf Federation joined forces with the

13:20

European PGA Tour and created this new event

13:22

called the Saudi International. The

13:24

American PGA Tour does not allow

13:26

tournaments to pay appearance fees to

13:29

golfers. Because then it

13:31

would create this arms race where half

13:33

the tournaments couldn't compete. So

13:35

golfers on the PGA Tour can

13:37

only earn tournament money by playing

13:40

well, not by appearance fees. But

13:42

on the European Tour, they're allowed. So Phil

13:45

Mickelson, Dustin Johnson, Bryson DeChambeau, a lot of

13:47

top stars have been getting paid seven figure

13:49

appearance fees to go over and play in

13:51

this new tournament in Saudi Arabia.

14:00

He is king of the coast. There's

14:03

been an outcry about it because we

14:06

all know about the Saudi atrocities and

14:08

the assassination of Jamal Khashoggi. And

14:11

they supplied 15 of the 19 9-11 hijackers. And

14:14

when the players go over there, there's

14:16

a very standard script they stick to, which says,

14:18

I'm not a politician, I'm just a golfer, or

14:21

I'm just here to try and grow the game. But

14:24

that was just one tournament per year

14:26

in Saudi Arabia. Native golf is a

14:28

whole tour. In 2022,

14:30

its first season, it held eight

14:32

tournaments. This year, it

14:34

has 14 tournaments on the schedule all

14:37

over the world, including one at a

14:39

course owned by Donald Trump. I

14:41

mean, Trump is not unlike the Saudis. He's trying to

14:43

buy his way into the golf world. He's

14:45

always been an outcast. The reason he's built

14:47

all of these private clubs is that he couldn't

14:50

get into any of the great East Coast citadels.

14:52

He could get into Pine Valley or Augusta. This

14:55

new Saudi tour promises to,

14:57

quote, supercharge the game of

14:59

golf. And the money

15:02

is much bigger because let's face it,

15:04

nobody can compete with Saudi money. Their

15:06

first event in London, that person $20

15:08

million. And the PGA tour

15:10

event that's happening at the same time is $7 million. It's

15:13

also a much smaller field, right? How many

15:15

players will be playing in a Saudi event?

15:19

Versus like 144, right? Exactly.

15:21

And there's no cut. So when you get on the

15:23

plane, you know, you're going to make at least say

15:25

$250,000 just for showing up.

15:31

From the perspective of a professional

15:33

golfer, these are some huge

15:36

differences between the Saudi tour and the

15:38

PGA tour. Professional golf

15:40

is the ultimate meritocracy. There

15:42

are no guaranteed contracts. The

15:45

players are independent contractors. They pick their

15:47

schedule and they have to

15:49

pay their own way. Their private jet

15:51

and or Southwest Airlines, your

15:53

hotel, all of it. And tournaments

15:55

are four rounds. You play the first two and

15:57

they make a cut for basically the level of golf.

16:00

70 scores. If you miss the cut, you get zero

16:02

dollars and zero cents and you're losing a lot of

16:04

money that week. How much you're

16:06

paid is strictly a reflection of where

16:08

you finished on the leaderboard. You can

16:10

play your way into job security but

16:12

for those on the margins, it's extremely

16:15

stressful. And there are a lot

16:17

more players on the margins or if you

16:19

want a better visual on the bottom of

16:21

the pyramid than there are near the top.

16:24

There's about 200 players who have some

16:26

playing status on the PGA Tour. That's

16:28

the big leagues. Of those 200 players, maybe

16:31

30 to 50 of them have some

16:33

job security and the other 150 are just

16:35

trying to hang on. And that's

16:37

not counting the thousands of professional golfers

16:39

outside the top 200 trying to work

16:42

their way up. Those

16:44

golfers would of course find the

16:46

guaranteed Saudi money very attractive. But

16:49

would the Saudis find them attractive?

16:52

Not likely. They want big names and

16:54

they have pitched all the big names

16:57

with one simple compelling argument

16:59

against the PGA Tour. Too

17:02

much money is getting siphoned off that

17:04

should be going to the players. That's

17:06

a constant critique from the players about

17:08

the tour. What share of revenues from

17:10

the PGA Tour are going

17:13

to the players and how

17:15

does that compare to let's say the NBA

17:17

or the NFL? That's one of Phil Mickelson's

17:19

arguments that he's been making for a very

17:21

long time. The players have always felt like

17:23

they needed a higher percentage. In the NFL

17:25

or any of those leagues all you have

17:28

to do is look at the collective bargaining

17:30

agreement. You can see this share

17:32

of overall dollars will be spent

17:34

on player salaries in the NFL.

17:36

I think it's around 48%. Do

17:39

you have any sense of what that

17:41

percent would be for the PGA Tour

17:43

revenues? I do not and

17:45

I'm not sure anybody does. The tour is

17:47

they don't like to open their books. That's

17:50

another longtime complaint amongst the players is a

17:52

lack of transparency. The PGA

17:54

Tour is theoretically run by

17:56

the players. They have an advisory council. They

17:58

have a board of of directors, but

18:01

there is a commissioner who is

18:03

the ultimate shot caller. So, it

18:05

sounds like what the best professional

18:07

golfers in the world need is

18:09

some rival to come along and

18:12

offer better terms to the players

18:14

that would either exert some leverage

18:17

on the PGA Tour or could

18:19

take over as the dominant tour

18:21

in a way that would benefit the players more.

18:25

Wouldn't it be wonderful theoretically

18:27

if some rival league that

18:29

was based perhaps on

18:31

the other side of the globe could do something like

18:33

that? Yes, indeed.

18:36

And this is an old idea because

18:38

in the 1990s, Greg Norman tried to

18:41

form a world tour that would be

18:43

a rival to the PGA Tour. Even

18:47

though the PGA Tour is not a league

18:49

like the NFL and even

18:51

though the golfers are independent contractors, this

18:54

does not mean the PGA Tour gave

18:57

its golfers their blessing to go play

18:59

in the new Saudi League. In fact,

19:01

they suspended players who chose to participate

19:03

in live events. But

19:05

that did not stop a lot of golfers from

19:08

joining the live tour. Several

19:10

weeks before the first live tournament, I

19:12

asked Brandel Shambly who he thought would

19:14

play. Well, it seems like Lee

19:16

Westwood is going to be there. Sergio

19:18

Garcia, Martin Kimer, Ian

19:20

Poulter. Are you sure

19:23

Phil Mickelson will be there? Other

19:25

than Mickelson, the golfers Shambly

19:27

named are older European players,

19:29

great golfers, major championship winners,

19:31

but also well on the

19:33

downside of their earnings arc.

19:36

But that's about it. Tiger Woods

19:38

has said no. Rory McIlroy

19:40

has said no. Scotty Scheffler, Jordan

19:43

Speith, Justin Thomas, is Andrew

19:45

Shoffley, Colin Morikawa. They have all

19:47

said no. And

19:50

then right before the first live

19:52

event, one very prominent U.S. golfer

19:54

did say yes, Dustin Johnson. Remember

19:56

him? Dustin Johnson has

19:59

one of his best friends. the

20:01

Friday International. Dustin Johnson

20:03

had recently been the number one ranked golfer in

20:05

the world. He won the Masters in 2020, the

20:07

US Open in 2016, and he has many

20:11

more wins on the PGA Tour. So he

20:14

is not remotely a has-been, and

20:16

yet he resigned from the PGA Tour

20:18

and joined the Saudi League. Why?

20:22

Well, it was reported that Dustin Johnson

20:24

received a hundred and fifty million dollars

20:26

for headlining the Liv Golf Series. That's

20:29

double his career earnings to

20:31

date. Phil Mickelson, meanwhile,

20:33

who for years was the second most

20:35

famous golfer in the world after Tiger

20:37

Woods, he reportedly signed a contract with

20:39

the Saudis for 200 million

20:42

dollars. Mickelson, by the

20:44

way, is the reason this whole

20:47

story turned from a golf world

20:49

controversy into a global referendum on

20:52

sports-washing. He was quite candid

20:54

about his feelings towards the Saudis. He called them

20:56

scary motherf****rs. Coming

20:59

up after the break, Phil Mickelson,

21:01

Alan Shipnuk, and the interview that

21:03

went around the world, also

21:05

the super slippery slope of

21:08

moral outrage and whether

21:10

sports-washing can trigger the Streisand effect.

21:12

So I feel a little weird

21:14

as McConnell was talking about Barbara

21:16

Streisand. I'm Stephen Nubner. This is

21:18

Freakonomics Radio. We'll be right back.

21:35

He became the oldest golfer to ever

21:37

win one of the four major championships,

21:40

in this case, the PGA Championship. It

21:43

was his sixth major victory in

21:45

a long and phenomenally successful career.

21:48

Mickelson has always been incredibly popular with

21:50

golf fans, most of them at least,

21:53

but this victory was something

21:55

special. Here it is, biggest

21:57

moment of a legendary career.

22:00

Bill defeats Father Time.

22:09

At the next year's PGA Championship, Mickelson

22:12

was expected to defend his title

22:14

and continue to bask in the

22:16

glory. But he didn't even show

22:18

up. Why not? Had

22:21

the PGA Tour banned or suspended

22:23

him? Not clear. He

22:26

wasn't injured. He didn't have an urgent family

22:28

matter. He had issued a

22:30

statement a couple months earlier saying he needed

22:32

some time away to work on being the

22:34

man I want to be. What

22:37

he really needed apparently was a break

22:39

from public scrutiny. Pretty much

22:41

the entire golfing world had turned

22:43

against him because of something he

22:46

said in an interview with Alan

22:48

Shipnuck who was writing a biography

22:50

on Mickelson. It has since been

22:52

published. It's called Phil, the rip-roaring

22:54

and unauthorized biography of golf's most

22:56

colorful superstar. I approached Phil

22:58

face-to-face three times, asked him to sit for

23:01

interviews, and he ultimately said no,

23:03

which is his prerogative. I didn't really need

23:05

him. Shipnuck had been covering Mickelson closely for

23:07

a couple decades. I thought it would benefit

23:09

him to tell his side of every story and it would have been

23:11

fun, but that wasn't his decision and that was

23:13

fine. So I just kept working on the book. All

23:16

this Saudi stuff was churning in the background. This

23:19

Saudi stuff, meaning the rival golf

23:21

league, now called Live Golf, which

23:23

is backed by Saudi Arabia's massive

23:26

public investment fund. Everyone

23:28

knew Phil was involved. Not

23:30

sure exactly the level. No one knew what his

23:32

ultimate goals were, but he was

23:34

clearly a player in all of this. Mickelson

23:36

being a player in a rival

23:39

league didn't surprise anyone. Even

23:41

though he'd earned $95 million on

23:43

the PGA Tour and much more

23:45

in endorsements, he had openly

23:47

criticized the tour as greedy in

23:49

how it distributes funds. Plus,

23:52

Mickelson had turned 50 years old,

23:54

well past the earning prime of

23:56

any athlete, even a golfer, but

23:59

also... He loves to gamble and

24:02

is apparently not as good at that

24:04

as he is at golf. In

24:07

his Mickelson biography, Alan Shipnuk writes

24:09

about a forensic accounting of Mickelson's

24:12

finances that was related to an

24:14

insider trading case. In

24:16

the four years that was scrutinized, 2010 to 2014, Phil

24:18

claimed $40 million in gambling losses.

24:23

When you add all this up, you

24:25

can see why Phil Mickelson might have

24:28

been interested in a start-up golf tour

24:30

funded by an uber-wealthy petro state. So

24:33

now, out of the blue, Phil texts me and asks if

24:35

we can speak. And of course, I'm thrilled because I'm putting

24:37

the fishing touches on my book. I've been trying to get

24:39

this guy for a year. He calls

24:41

me up and he just opens

24:43

a vein about his grievances with

24:45

the PGA Tour, all the battles

24:48

he's fighting, trying to win

24:50

concessions for himself and the other players. We

24:52

segue into the Saudis. This

24:55

is where it got interesting because he was

24:57

incredibly blunt. He basically said,

24:59

I'm not even sure I want this

25:01

league to succeed, but it's a once-in-a-lifetime

25:04

opportunity to reshape the business of professional

25:06

golf and I have to take it.

25:09

And he was quite candid about his

25:11

feelings towards the Saudis. He called them scary motherf****rs.

25:14

And he admitted that it's just

25:16

sports washing and that we know they killed

25:19

Jamal Khashoggi and we know they execute

25:21

people for being gay over there. But nevertheless,

25:23

it's just too good an opportunity to pass

25:25

up. And was it on tape? Our

25:27

conversation, no, I was just taking notes on my

25:30

computer as we spoke. What were you feeling as

25:32

he's talking? On one hand, I

25:34

was deeply impressed by his candor and it

25:36

was so refreshing because he was

25:38

straying from the script about we're going over

25:40

there to grow the game, which we all

25:42

know is total BS. Again, athletes have been

25:45

in bed with the Saudis for a long

25:47

time. That wasn't news, but there was a

25:49

couple of things I think that made

25:51

this so explosive. One was how callous

25:54

Phil was in just disregarding the

25:56

Saudi atrocities. There was

25:59

also the sneakiness. He was actually helping

26:01

this rival league get started in a

26:04

way that could harm his home circuit

26:07

and all the players who rely on

26:09

that. When you say sneakiness, I just

26:11

want to clarify, did he and other

26:13

golfers that he enlisted actually hire the

26:16

lawyers to write up the documents that

26:18

became the lead charter? Yeah, that's

26:20

what Phil told me. So there was that. And

26:23

really, he said the quiet parts out

26:25

loud. That's what was so stunning,

26:27

because as discussed, there's certain

26:29

code words that these players use when they

26:31

go over to Saudi Arabia, but no one

26:34

actually just tells it like it is. You

26:38

might think Phil Mickelson would have gotten

26:40

a little bit of credit for being

26:42

so candid, for saying the quiet parts

26:44

out loud as Shipnak got it. But

26:47

he didn't. The moment Shipnak

26:49

published these comments, Mickelson was vilified

26:51

by most of the golf world.

26:55

That concludes Golf Channel analyst,

26:57

Randall Shambly. He spoke

26:59

with seeming amusement about the atrocities

27:01

and acted as if he was

27:03

only interested in the atrocities to

27:05

the extent that they provided him

27:07

with leverage so that he could

27:09

get everything he needed with the

27:11

PGA Tour. When you take

27:13

all that in its totality, it

27:16

was reprehensible. The way Shambly

27:18

sees it, no amount of money can

27:20

paper over the decision that Mickelson, Dustin

27:22

Johnson, and the other golfers have made.

27:25

The minute they take that money from

27:27

Liv Golf, they are

27:29

now dependent upon and subservient

27:31

to MBS and his thugs.

27:35

They lose their image,

27:37

their legacy, because

27:39

their talents and fame are now

27:42

being exploited by

27:44

a government seeking to

27:46

hide their atrocities. And to whatever

27:49

extent this country, Saudi Arabia, can

27:51

hide and euphemize its

27:53

atrocities, you are in

27:55

some way ensuring that those atrocities

27:57

will continue its blood money all the

27:59

way. When golfers say that

28:01

this is not political, they

28:03

couldn't be more wrong.

28:06

So you're saying Phil Mickelson, Greg

28:09

Norman, Lee Westwood, whoever

28:11

plays in these events, they're on the wrong side

28:13

of history. They're on the wrong side of history.

28:15

The money's coming from the wrong place. Are

28:20

they on the wrong side of history? Is

28:23

it truly blood money? Before

28:25

you give an answer, here's something to consider.

28:28

The Saudi Investment Fund, backing this

28:30

new golf tour, is the very

28:32

same fund that invested billions of

28:35

dollars in Uber before it went

28:37

fiddlic. It's the

28:39

same fund that has since bought

28:41

huge batches of stock in Boeing,

28:44

Facebook, Disney, Starbucks, and more. Do

28:47

you and I have blood on our hands when

28:49

we take an Uber or buy a coffee? It's

28:52

worth a really deep conversation,

28:56

but people aren't trying to find

28:58

the nuances. That is Karen

29:00

Krause, who covered golf for years at the

29:02

New York Times. I'm not

29:05

condoning the Saudi regime. There's

29:07

no defending it. But

29:09

any rogue tour poses an

29:11

existential threat to the PGA

29:13

Tour, which has basically a

29:16

monopoly. The cynic in

29:18

me thinks that the PGA Tour

29:20

is making a big deal about

29:23

where this money is coming from

29:25

to deflect attention

29:27

from the fact that this is a

29:30

really interesting idea that if it was

29:32

being funded in any other way, people

29:35

would be quite excited. It's

29:37

smaller fields, no cuts, so

29:39

you can go to a tournament and don't have to

29:42

worry about your favorite player not being

29:44

around on the final day. This

29:46

kind of creativity poses

29:48

an existential threat to

29:51

this very staid tour,

29:53

which still debates uncollored

29:56

polo shirts as being

29:58

sort renegade.

30:01

Were you surprised at how thoroughly

30:04

Mickelson was vilified? Yes,

30:06

and the fact that none of

30:08

us have an understanding

30:11

of why Phil has not

30:13

played since those comments were

30:15

made public. The fact that

30:17

we don't know was he suspended

30:19

by the PJ Tour? Is

30:22

this his decision? Tells you

30:24

everything you need to know

30:26

about how the PJ Tour

30:28

operates. It is

30:31

notoriously private. It's a

30:33

not-for-profit organization where the

30:36

CEO makes more than four million dollars a

30:38

year. It really

30:40

hangs its hat on its charity.

30:43

But people in the world

30:45

of charity say the percentage

30:47

of money that the PJ

30:49

Tour directly gives to charity

30:52

is low. 16% where

30:55

I think 65% is the

30:57

benchmark. But what's making people

30:59

speak out in this case is the

31:01

source of the money for this rival

31:04

league, the Saudi Public Investment Fund, even

31:06

though that fund is invested in a

31:08

lot of American assets. So

31:10

why do you think this is the

31:12

case that's caught fire? Because

31:15

it poses a threat to

31:17

the status quo, the PJ

31:19

Tour is the gold standard.

31:21

I might also add the

31:23

Ladies European Tour has five

31:26

Saudi sponsored events. It's

31:29

a struggling tour. The PJ Tour

31:31

is not struggling. So is that

31:33

our moral calculus? If you're a

31:36

sports league but you're struggling, it's

31:38

okay to take the money. Again,

31:41

it's a complicated issue. Does

31:43

that mean we can't fly a Boeing

31:45

airplane or get an Uber car at

31:48

the airport?

31:50

Or do we need to

31:52

hold our politicians as accountable?

31:54

Do our politicians have blood

31:56

on their hands? Krause's

32:02

point is well taken. The

32:04

US government has a long and

32:07

complicated relationship with Saudi Arabia, built

32:09

primarily around our reliance on their

32:11

oil. When Joe Biden

32:13

was running for president in 2020,

32:15

he promised to make Saudi Arabia

32:18

a pariah for its assassination of

32:20

Jamal Khashoggi. But as

32:22

president, Biden visited Saudi Arabia

32:24

to talk oil and politics.

32:27

To Karen Krause, the Saudi Golf

32:29

League is by comparison a very

32:31

minor matter. It's interesting

32:34

that we are dissecting this

32:36

in a way that we

32:38

don't dissect matters far more

32:40

important, like what is happening in

32:42

Yemen right now. So can

32:45

we please give the same oxygen

32:47

that we're giving this topic to

32:49

some other areas in which there

32:52

is Saudi money

32:54

floating around? It's

32:56

so easy to make this a

32:58

black and white issue as people

33:00

have. The Crown Prince and the

33:02

Saudis are bad. Golf is good.

33:05

But the world is so much more

33:07

complicated than that. Newcastle United,

33:09

a Premier League team, 80% of

33:13

it is controlled by the

33:15

exact same group that

33:17

is behind this new league. Newcastle

33:20

is far from the only

33:22

prominent soccer club to have

33:24

politically complicated ownership. The

33:26

big ones that have been of interest here recently,

33:29

of course, is Chelsea. That again

33:31

is the sports economist Victor Matheson.

33:34

Chelsea is owned by Romana Abramovich, or at

33:36

least was a prominent

33:38

Russian oligarch close ties to

33:41

Putin. Abramovich was forced

33:43

to divest the Chelsea Football Club

33:45

in the wake of Russia's invasion

33:47

of Ukraine. We also have

33:50

Man City that's owned by one of

33:52

the Emirates. Man City

33:54

as in Manchester City, like Chelsea,

33:56

another very successful team in England's

33:59

Premier League. Hey, I'm Peter

34:01

St. Germain, the biggest team in France owned

34:03

by Qatar, their big sovereign wealth fund. Qatar

34:06

also hosted the World Cup in

34:08

2022. Ever wonder how that happened?

34:11

So there's a million reasons, and of

34:13

course the million reasons are the millions

34:15

of dollars of bribe money that ended

34:17

up in the FIFA pocket. FIFA

34:19

being the perennially corrupt ruling

34:21

body of international soccer. We

34:24

know that there was bribery involved because many of

34:26

the people involved with the bribery ended

34:28

up indicted and in jail. Let's

34:31

say that there are some legitimate

34:34

state building reasons for a place like Qatar

34:36

to hold an event like the World Cup.

34:38

Let's just assume that there's no sports watching

34:40

at all going on. How

34:42

do we feel about the World Cup being

34:45

held in Qatar with

34:47

the underlying fact that

34:49

the event was actually obtained through

34:52

corruption? Qatar is a country that

34:54

is the size of Connecticut, but

34:56

with about a tenth the amount

34:58

of infrastructure. And yet you're going

35:00

to, I mean, think how crazy that would be. It's like,

35:03

oh yeah, we're going to host the World Cup in the

35:05

United States, but it's going to all be in Connecticut. When

35:08

the United States hosted games back in

35:10

1994, they were

35:12

spread out from LA over to New

35:14

York, down to Orlando, so all over

35:16

the country. But there's really no place

35:18

to spread out games in Qatar. So

35:20

the World Cup is always played in

35:22

the summer. In Qatar, the summer is

35:24

too hot to play outdoor football or

35:26

soccer. And therefore, the Qatar World Cup

35:28

had to be moved to December, correct?

35:30

Right. Let me also point out that

35:32

the reason that they have the World

35:34

Cup in the summer is not the

35:36

nice weather. It's not because people want to

35:39

travel. It's because all of

35:41

these players have real jobs during the

35:43

rest of the year playing for their

35:45

clubs. The English Premier League, the Bundesliga

35:48

in Germany, all the top players are

35:50

playing for these leagues. And

35:53

they're actually playing games during November,

35:56

December. So all these leagues have now

35:58

been asked, or I guess... required

36:00

really to adjust their schedules to

36:02

accommodate a winter World Cup

36:04

in Qatar. Is that the case? That's

36:06

exactly right. It'd be like having a

36:09

World Cup of American football that's going

36:11

to be held in Paraguay and telling

36:13

the NFL, oh, cancel all of your

36:15

games in December and November so that

36:17

we can have this event down there.

36:19

So if I'm on the FIFA selection

36:21

committee and I'm listening to Victor Matheson,

36:23

I'm saying, okay, Qatar is not the

36:26

best candidate plainly. It's not that

36:28

Qatar is not the best candidate. Qatar is not

36:30

even a practical candidate in any way. I

36:33

mean, Qatar is not even the 420th best candidate out

36:35

there. So

36:38

the message I'm hearing from you is

36:40

that sports washing may not necessarily be

36:42

very effective, sometimes a

36:44

little bit, sometimes not. But

36:47

bribery is fantastic. That's

36:50

my takeaway. Again,

36:52

I've been telling you that sports washing

36:54

has been going on for centuries. Guess

36:56

what bribery has as well? But

37:00

here's the thing about sports. It's supposed

37:02

to be fun. It's entertainment.

37:05

This produces a strange pattern. When

37:08

there is a World Cup or an

37:10

Olympics held in a place like Russia

37:12

or China, most of the U.S. media

37:15

coverage ahead of the event is somber

37:17

with a lot of hand-wringing. The

37:20

Olympic Winter Games are being held again

37:22

in an authoritarian state, raising questions for

37:25

human rights groups. But

37:27

once the games begin... Once

37:41

they start going, television executives made

37:43

the conclusion that the audience doesn't want

37:46

to hear about that other stuff. That is

37:48

Bomani Jones, a sports writer and host

37:50

of the podcast The Right Time with

37:52

Bomani Jones. It's real

37:54

easy for them to forget about any of the larger stuff

37:56

because now they have games to talk about. So what do

37:58

you say to the sports fans? fan who's like,

38:01

you know, I just want to watch the game.

38:03

I don't want to make sports political. It's like

38:05

sports is the one place I have that's

38:07

not political. Well, I mean, for

38:10

one, that fan is usually a white

38:12

male because sports can be a political

38:14

to you as a member of the

38:16

majority group. We start with that part.

38:18

The issue for me is there are all these

38:21

other hours of the day when that game isn't

38:23

on and those people still don't want to talk

38:25

about the stuff that matters. And sports

38:29

gives the impression that it is always on

38:31

the right side of the moral imperative. And

38:33

so it allows viewers

38:36

also to ascribe

38:38

their perceived goodness of sports onto themselves. And

38:40

then when you say that the sports themselves

38:42

are a little bit rotten, I think it

38:44

can get to people's self concept and then

38:47

they don't really want to get to it.

38:49

They need to believe that all these things

38:51

in sports are pure meritocracy because honestly, they

38:53

don't believe there's a meritocracy that exists anywhere

38:56

else. The LA Times recently published an op-ed

38:58

saying that this might be the year that

39:00

sports washing backfires the idea is that between

39:02

the World Cup and Qatar and the recent

39:04

Olympics in Beijing, that

39:07

the downside just becomes too obvious to

39:09

too many people. Do you think that's

39:12

actually going to be the case? No,

39:14

because especially with those major events, there's so

39:16

much corruption and getting those events in the

39:18

first place. Who's going to be the people

39:20

most likely to engage in that level of

39:22

corruption? The answer is people with stuff to

39:24

cover up. Now, will it

39:26

be effective? I don't know. But a lot of people

39:28

are still going to get paid off of building those

39:30

stadiums that will never get used. So the

39:33

incentive is still going to be there for them to do

39:35

it. But again, I don't think there's

39:37

a single person in the United States who

39:39

between the 2008 Olympics and the 2022 Olympics

39:42

has changed their opinion of China based

39:44

on what they've seen on television. As

39:50

we've been talking about sports washing today,

39:52

we have focused on how outsiders look

39:54

at the place that's holding the sporting

39:56

events. We are assuming that the

39:58

main goal is extra propaganda.

40:00

But let's not forget the world

40:04

cup. It's

40:09

just like advertising, right? You can target different

40:12

groups. And in the case of Rome, the

40:14

emperors there were trying to target their own

40:16

citizens so that their citizens don't rise up

40:18

against them. I think that's actually a little

40:20

bit more what's happening in Russia than trying

40:22

to influence the rest of the world. I

40:25

think with the Middle East, though, they're definitely trying

40:27

to tell the world, hey, we're open for business

40:29

and we're not such a bad place. Remember how

40:31

much fun we had at the World Cup? Here's

40:33

a piece that recently appeared in the Wall Street

40:36

Journal. Quote, when the invasion of Ukraine began, the

40:38

era of Russian sports washing abruptly

40:40

ended, at least for the foreseeable

40:42

future. You agree with that? I

40:45

quite honestly don't believe that because

40:47

I think it ended a month

40:49

after they hosted the Winter Olympics

40:51

in Sochi. This was an

40:53

extremely expensive event that they put on,

40:56

$51 billion, the most expensive Olympics

40:58

ever done. And

41:00

rather than basking in the glow of soft

41:03

power of showing, hey, what a great place

41:05

Russia is after the closing

41:07

ceremonies, they invaded Ukraine for the first time.

41:09

But I think sports washing at best works

41:11

at the margins. It's not going

41:13

to erase tanks' role in Cross the Border. Talk

41:16

to me for a moment about the 1936 Olympics,

41:20

which Hitler meant to be a

41:22

showcase for Aryan dominance and for

41:24

his ideology. So what happened there?

41:27

It's not that Germany was trying to

41:30

say, hey, this Nazism, it's not that

41:32

bad. What they're trying to do there

41:34

is they're saying the new German way

41:37

is most powerful, and we're going

41:39

to project power to the rest

41:41

of the world through this great

41:43

event. So how much did Jesse

41:45

Owens ruin Hitler's Olympic Party? Certainly

41:47

some. If this is a big show

41:50

of Aryan dominance, it didn't go so

41:52

well when the great Jesse Owens, the

41:54

African-American track star, wins four gold medals,

41:57

putting a bit of a nail into

41:59

that coffin. But do

42:01

you think that throwing that

42:03

kind of party in Berlin in

42:06

1936 did anything

42:08

to allow Hitler to

42:10

continue to strengthen what would turn out

42:12

to be this Europe-wide and then global

42:14

aggression? Do you think it did anything

42:17

to build the movement that turned into

42:19

the war? I think it certainly sent

42:21

the message that Germany was a force

42:23

to be reckoned with. And to the

42:26

extent that a big spectacle was popular

42:28

among his own people, it gives him

42:30

some ability to solidify his standing with

42:32

his own people. Because if

42:34

you're going to engage in a

42:36

half-decade-long world war, you at least

42:38

have to have your own people behind you, which of course he did

42:41

for a while there. Are you familiar with

42:43

an idea known as the Streisand Effect? Yes.

42:46

So I feel a little weird as the economy

42:48

was talking about Barbara Streisand, but the Streisand Effect

42:50

basically comes from the idea that if you advertise

42:52

that he's going to be a good person, if

42:54

you advertise things, people actually come and say, oh,

42:57

we're going to look more deeply into this. So

42:59

if you have things to hide, maybe

43:01

you don't want to draw attention to yourself.

43:03

Yeah, I think what happened is that a

43:06

photograph of her house on the cliffs

43:08

above the beach in Malibu was made public,

43:10

and she felt her privacy was invaded. And

43:13

she sued, which ended up calling

43:15

even more attention to the situation.

43:17

And now everybody knew where Barbara

43:19

Streisand's house was. Along

43:21

those lines, do you think that

43:24

when a country like Russia or

43:26

China or Saudi Arabia or Qatar

43:29

engages in what we consider

43:31

sportswashing, do you think it backfires that

43:33

they're pulling a Streisand and focusing attention

43:35

where they'd rather it not go? I

43:38

think we can look at two potential things

43:40

where this is the case. If

43:42

we go back to the Winter Olympics

43:45

in Sochi, a huge amount

43:47

of attention was placed upon the fact

43:49

that this was by far the most

43:51

expensive games that have ever taken place,

43:54

which got a lot of people thinking, well,

43:56

why in the world would someone spend $51

43:58

billion? on this event. And

44:01

how in the world can this event be $51 billion?

44:04

Is this just all corruption? And

44:06

what do the people think about

44:08

their money in a moderately poor

44:10

place like Russia being spent on

44:13

a three-week party? I think even

44:15

more so when we're looking at

44:17

the World Cup in Qatar. This

44:19

is a place where I think 95%

44:22

of Americans couldn't have identified Qatar on

44:24

a map a decade ago. A lot

44:26

more of them probably can now. But

44:29

it also means that we're learning a

44:31

lot about Qatar. And what have we

44:33

been learning? Well, some things are good,

44:36

right? Al Jazeera, as much as it

44:39

sounds scary and foreign to Americans,

44:41

it's actually a pretty good news organization. And

44:44

that's in Doa in the capital of Qatar. But

44:46

we also know that they've imported a

44:49

huge number of foreign workers and placed

44:51

these workers under terrible, terrible working conditions,

44:54

confiscated their passports, not allowed them to

44:56

leave. By some estimates, I've

44:58

seen that thousands of guest workers

45:01

have died while they have been

45:03

in Qatar, and also treatment of

45:05

their own citizens. Qatar is a

45:07

very conservative country. The ability of

45:09

women to have full participation in

45:11

the workforce and in society. That's

45:14

not to say anything about people like

45:16

LGBTQ community. And even beyond sports, if

45:18

you're a pop singer, Victor, and I

45:20

want to hire you to come perform

45:23

at my daughter's 13th birthday,

45:25

and I happen to be an Emirati prince,

45:27

and I offer you $2 million, I don't

45:30

hear people getting too distressed about

45:32

that. We're doing so you'd certainly

45:34

do see some people turn that

45:36

money down. But again, $2 million

45:39

bucks to play a birthday party doesn't matter if

45:41

you're Britney Spears or not, that's still $2 million.

45:44

And that's hard to turn down. You're saying if

45:46

someone asked you to come sing, you do

45:48

it for $2 million. Yes,

45:50

I certainly would. And I'll send you

45:52

my standard contract after we get off

45:54

this call. Can I hear the demo

45:56

tape first, though? Absolutely. you

46:00

actually do sing? Yes,

46:03

yes I was a singer in college

46:06

at a fairly good choir. I

46:08

did not know that. So what should

46:11

we do? You never close your eyes

46:13

anymore. When I kiss

46:15

your lips. I think that's

46:17

what we'll end with. Okay,

46:21

that is where we ended our original 2022

46:24

episode, but since then Saudi Arabia's

46:26

live golf league has not only

46:28

held many events but they

46:30

peeled off many more golfers from

46:32

the PGA Tour, including one of

46:34

the world's best and most popular

46:36

golfers, the Spaniard John Rahm. But

46:39

that's only the beginning of the new

46:42

story. Coming up after the break, the

46:44

very messy state of professional golf and

46:46

whether that mess comes to the rest

46:48

of American sports. I'm Stephen Dubner,

46:50

this is Freakonomics Radio. We will be right back.

47:08

We first published our episode on

47:10

sports washing one day before live

47:12

golf's first tournament in England. Since

47:15

then a lot has happened. The PGA

47:17

Tour tried to hang on to its

47:19

golfers by reconfiguring its schedule,

47:21

increasing prize money, even guaranteeing some

47:24

payments. But Liv continued to steal

47:26

away some of the best players

47:29

in the world, including John Rahm

47:31

and Bryson D'Chambeau. And both sides

47:33

spent a lot of money on

47:36

lawyers fighting for dominance. The

47:39

result thus far has been two

47:41

separate professional golf circuits. Many people

47:43

familiar with the PGA Tour are

47:45

unhappy with this situation. Live

47:48

golf has been bad for the game

47:50

of golf. It has atomized the

47:52

golf world. We don't see all the great

47:55

golfers competing against each other in

47:57

one tournament anymore. That is

47:59

Jodi Baldwin. She is a law

48:01

professor at Brooklyn Law School with a concentration

48:03

on sports law. For more than

48:05

a decade, she worked for the National Football League.

48:08

I asked Balsam to bring us up to

48:10

date on the launch of Live Golf and

48:12

the ensuing chaos. So Live

48:14

Golf plays its first event. It

48:17

had induced PGA TOUR

48:19

golfers to participate with

48:22

huge signing bonuses, at

48:25

which point the PGA TOUR

48:27

exercises its rights under a

48:29

bunch of interlocking contracts it

48:31

has with the golfers to

48:33

suspend them from the PGA TOUR. The

48:36

11 Live Golf defectors bring

48:38

an antitrust lawsuit saying that

48:40

the exclusivity provisions the PGA

48:42

TOUR is trying to enforce are

48:45

anti-computative and restrain

48:47

illegally the market for the services

48:50

of professional golfers. They

48:52

seek a preliminary injunction from the

48:54

California court where the suit was

48:56

brought and the

48:59

court declines to award them

49:01

preliminary injunctive relief saying

49:03

that they have not suffered irreparable

49:05

damage, meaning damage that could not

49:08

be satisfied or remedied with a

49:10

monetary award because they were receiving

49:13

tens of millions, hundreds of millions of

49:15

dollars from Live Golf. What's the injury?

49:18

We then have a period of about 10 months

49:22

of scorched earth litigation

49:24

in which there are so

49:27

many interesting little side

49:29

stories like the attempt

49:31

to subpoena Saudi entities

49:34

who refuse to testify claiming

49:36

foreign sovereign immunity. All

49:38

this is bubbling up and then

49:40

in a shocking development in June of

49:42

2023 when we're on the

49:46

brink of hardcore deposition with

49:49

80 witnesses lined up to testify

49:51

the PGA TOUR and Live Golf settled

49:53

litigation. That's right. The

49:55

sworn enemies were suddenly frenemies. Not

49:58

only did they settle their litigation. litigation, but the

50:01

PGA Tour and Live Golf decided

50:03

to create some kind of merger

50:05

with all details TBD. This

50:08

agreement to stop disagreeing was done in

50:10

secret and came as a surprise to

50:12

nearly everyone, even the PGA Tour players

50:14

who were supposed to be masters of

50:17

their domain. But PGA

50:19

Tour leadership agreed to pursue

50:21

a Saudi agreement without players'

50:23

knowledge or approval. The

50:25

proposed merger even caught the attention of members of

50:28

the U.S. Senate who held a hearing a

50:30

few weeks after the announcement. Most

50:32

of the Senate questioning was

50:34

the concern that Saudi investment

50:36

in professional golf was

50:39

being used to sportswash its human

50:41

rights abuses and

50:43

attempt to influence or control an

50:46

American cultural institution. And

50:48

so a solution proposed, implicitly

50:51

at least, during the course of those Senate

50:53

hearings was, PGA Tour, why

50:55

don't you seek U.S.

50:58

investment partners? What's

51:00

happened since the Senate hearings

51:03

is that U.S. investors have

51:05

stepped up. Strategic Sports Group,

51:07

which is a collection of

51:10

owners in baseball, football,

51:13

basketball, have decided to

51:15

invest $3 billion. The

51:18

average person who will say is maybe

51:20

somewhat of a sports fan but not

51:22

a diehard, and if numbers

51:24

are to be believed, almost certainly not

51:26

a golf fan, just because golf is

51:28

not the most popular sport by a

51:30

long shot. How much should

51:32

that person care about this issue

51:35

of the Saudi Public Investment Fund

51:37

first trying to compete with

51:39

and now trying to merge or perhaps even

51:41

take over the PGA Tour? I

51:44

would maybe use a perhaps apt analogy

51:46

for a golf state investor.

51:49

It's a nose under the tent, right? It

51:52

is access to the broader

51:55

sports capital market, and

51:57

the fact that Strategic Sports Group has now

51:59

made this investment arguably makes

52:01

a deal by the

52:03

Saudis that much more appealing to the

52:05

Saudis. Why? Because this

52:08

group of American investors includes

52:10

other sports property owners with

52:12

expertise in promoting and maximizing

52:15

the value of professional sports

52:17

properties, the Saudis are going to want to

52:19

cozy up to them because that's the

52:21

next step. When I said nose under the

52:23

tent, that's what I'm talking about.

52:25

I'm talking about their interest, not just the

52:27

Saudis but other Gulf State

52:30

sovereign wealth funds to invest

52:32

in US sports and it's happening already.

52:35

Most recently, Qatar's sovereign

52:37

wealth fund invested in the

52:39

parent company of the

52:42

NBA's, Washington Wizards, NHL,

52:45

Washington Capitals and WNBA

52:47

Washington Mystics. It is

52:49

the first time that a Gulf State

52:51

sovereign wealth fund has made such

52:53

an investment. What if it

52:55

had been a different sovereign wealth fund?

52:57

Norway has a gigantic sovereign wealth fund

52:59

from all their oil and what if

53:01

Norway had decided that they wanted to

53:03

compete, start a rival league and started

53:05

poaching PGA tour players? What

53:08

would we be talking about today instead?

53:10

Well, it depends on how Norway executed

53:13

that plan. The issue with

53:15

the Saudi public investment fund is

53:18

that they were not acting in

53:20

an economically rational way. They were

53:22

pouring far more money into starting

53:25

up live golf than

53:27

they will ever make back in

53:29

direct revenues. They can't get

53:31

a TV deal, nobody's interested in attending

53:33

or watching these events. If

53:36

that was Norway's plan, but

53:39

Norway wouldn't have that plan because

53:42

they wouldn't need what the Saudis think

53:44

they're getting in return. What they

53:46

think they're getting in return is, it sounds

53:49

like you're saying, two things, cleansing the reputation

53:51

and getting a foot in the door for

53:53

other sports investments. It's a

53:55

foreign influence operation and some would argue

53:57

that progress has been a big part

54:00

been made despite the

54:02

recent abuses to

54:06

World Cup in Qatar despite the

54:10

Saudis' abuse of human

54:12

rights and especially the horrible

54:14

assassination of that journalist. Some

54:17

people are able to point to greater

54:20

freedoms loosening up of some restrictions,

54:23

but frankly, it's hard for me

54:25

to understand how so many

54:28

elite athletes are now signing

54:30

up for domestic leagues

54:32

in these countries. That's sort of the

54:34

flip side of sportswashing. For

54:36

example, Cristiano Ronaldo signed

54:39

up with the Saudi Pro-Sakra League. There's

54:42

now a new baseball league in

54:45

the UAE in Dubai. They

54:47

have drafted notable Major League

54:49

Baseball retired legends. Robinson Canoe is

54:52

going to be playing in the

54:54

UAE. I

54:56

wonder, what their wives and

54:58

daughters say about this? If

55:00

they were to accompany them to Saudi

55:03

Arabia while they're playing in

55:05

these leagues, they can't leave the

55:07

house without a male guardian's permission. They

55:09

can't drive a car without a male

55:11

guardian's permission. I know

55:14

that there are looser rules relating

55:16

to the oppression of women when

55:19

it comes to foreign-born women

55:21

who are accompanying their

55:23

partners on business, but how

55:25

do you justify that to the women in your

55:28

life? Very much taken.

55:30

On the other hand, there are

55:32

many, many, many American and other

55:34

Western business people, venture capitalists and

55:37

private equity investors and investment bankers

55:39

and, I'm sure, lawyers going

55:41

in and out of the UAE

55:44

and Saudi every day doing all

55:46

kinds of other business, including working

55:48

with these countries directly to further

55:52

their economic plans. Why

55:55

is sport different? I

55:57

agree that you could ask those same questions

55:59

to anybody. anybody who does business in those

56:01

countries. But sports is different

56:03

for the reasons that your podcasts

56:05

have pointed out, that they are

56:07

such a central aspect of our

56:09

identity. They are a civic institution.

56:12

They create affinities and

56:14

community. They are more than

56:17

an entertainment product. But

56:19

on the other hand, if one believes

56:22

in free markets and relatively open borders

56:24

and stuff, and I'm Robinson Cano and

56:26

I'm 42 or something, let's say, why

56:29

shouldn't he be able to go take

56:31

anybody's money who's willing to pay an

56:34

older baseball player to go play in

56:36

a place whose regime he may

56:39

not like, may not care much about?

56:41

What's stopping him from doing that? Nothing.

56:43

And nothing should stop him. I'm one of the

56:45

biggest advocates of free markets. But

56:47

we all make choices. We all make

56:49

personal choices. And you wonder what they

56:52

are factoring into those choices. Can

56:57

you just describe from a 30,000 foot view

56:59

the level of foreign investment in American sports?

57:05

It's far less than Europe, although it's heading

57:08

in that direction. One of

57:10

the reasons that the American

57:12

leagues are increasingly open

57:14

to that kind of

57:16

investment is because franchise

57:19

values have just exploded over

57:21

the last 10, 15

57:23

years. The average NFL team,

57:25

for example, is now valued

57:28

by one reliable source, Forbes,

57:31

as $6 billion. If

57:34

your values are that great and you're an

57:36

owner of one of these US

57:38

major sports teams, and maybe

57:41

you're aging and you need an exit

57:43

strategy and you want to protect the

57:45

asset from estate taxes, you

57:47

have to think about league-wide what

57:50

you want your ownership policy to

57:52

look like. And in fact, at

57:54

this moment, the NFL has convened

57:56

a committee to revisit its ownership

57:58

policies. and they're holding

58:00

a league meeting in a couple of weeks

58:03

that will feature a presentation on

58:05

whether the league should relax some

58:07

of its more restrictive policies. So

58:09

for example, the NFL alone among

58:12

our major leagues in the US

58:15

prohibits investment by

58:17

publicly traded corporate entities and private

58:20

equity funds. So

58:22

they would not have allowed the Qatar

58:24

investment because it was done through the

58:26

vehicle of a private equity fund, the

58:28

NFL simply doesn't allow that vehicle of

58:31

investment. The NFL simply

58:33

prohibits foreign investment, they're revisiting

58:35

that as well. One

58:37

policy that is particularly restrictive,

58:41

you must be able to

58:43

present a single individual capable

58:45

of coming forward with 30% of the value of the

58:47

purchase price. $2

58:51

billion. So as many billionaires as

58:53

we have in this country, we don't have quite enough to

58:55

own all the sports teams that are getting so much more

58:57

valuable. Do you like

58:59

the notion of

59:02

a league like the NFL or

59:04

any American sports league having

59:06

these restrictive clauses? Do you think there's something

59:09

inherently valuable or prosocial for

59:11

the country to have local

59:14

ownership? Yeah, I mean,

59:16

sports teams in the US and frankly, in

59:18

many parts of the world are

59:21

civic institutions where

59:24

we as fans and consumers

59:26

of these entertainment products develop

59:28

strong affinity for them and they're

59:30

part of our identities. And

59:33

to the extent that sports

59:35

teams partner in significant ways

59:38

with their local communities through

59:40

municipal investment in infrastructure and

59:42

stadiums, philanthropic activity, I

59:45

think it is helpful. It's important

59:47

that there be a truly local

59:49

face of the team but I'm

59:51

not convinced it requires banning

59:54

altogether foreign investment. I

59:56

think the issue here is not should

59:59

we ban all foreign investment. But if

1:00:01

you are going to partner

1:00:03

closely with investment

1:00:05

from countries where there

1:00:07

are significant human rights

1:00:09

issues, then you have

1:00:12

to figure out best practices

1:00:14

for that partnership. And other

1:00:16

industries have done so. Well,

1:00:18

let's talk about other industries. Why

1:00:21

is investment in the PGA tour,

1:00:23

or why would the ownership of

1:00:25

an NFL or NBA team by,

1:00:28

let's say, a sovereign wealth fund

1:00:30

from Saudi Arabia or Qatar, why

1:00:33

would that be different than those

1:00:35

exact same funds investing heavily in

1:00:37

U.S. firms like Uber and Meta

1:00:40

and many, many more? They are

1:00:42

civic institutions in the way that,

1:00:44

you know, Uber or Boeing may

1:00:47

not be considered to be. One avenue

1:00:50

for restricting or

1:00:53

monitoring foreign investment is when

1:00:55

that investment might present a

1:00:57

national security concern. I'm

1:01:00

not saying that investment in sports

1:01:02

teams rises to that level, but

1:01:05

sports teams need to tread carefully

1:01:07

not to betray their fans in

1:01:09

whoever they partner with. One

1:01:12

thing that I have been thinking

1:01:15

about is how the current Middle

1:01:17

East crisis might affect sovereign

1:01:20

wealth sports deals. And

1:01:22

there is evidence that it

1:01:24

has slowed some of them down.

1:01:27

So, for example, there was

1:01:29

an offer by Kader

1:01:31

Sheikh Hamad al-Fani.

1:01:34

He had a multi-billion dollar offer to

1:01:36

buy an interest in Manchester United on

1:01:39

the table, and he

1:01:41

withdrew it right after the Hamas attack.

1:01:44

In the wake of that attack, every

1:01:47

major U.S. sports league

1:01:49

and many of its teams made

1:01:52

public statements on all their social media feeds.

1:01:54

They stand with the people of Israel.

1:01:57

At the same time, the Qatari government

1:02:00

holding Israel responsible. This

1:02:02

to me is an example of a direct

1:02:06

conflict of values and

1:02:09

visions that highlight

1:02:11

the issue of sports

1:02:14

washing. Here you have your

1:02:16

business partner, the Petari government,

1:02:19

making the exact opposite statement that

1:02:21

you have made about an important

1:02:24

geopolitical issue. How

1:02:26

do you reconcile that? Considering what

1:02:28

you just told us and considering

1:02:30

the statements made by the NFL

1:02:32

and NFL teams, where

1:02:35

do you think the upcoming NFL meetings will

1:02:37

land in terms of loosening ownership

1:02:39

rules? I think it will be part

1:02:41

of the conversation. I think there's no avoiding

1:02:43

that, addressing that

1:02:46

very problem that these

1:02:48

are unreliable and unpredictable partners.

1:02:51

If we decide to accept foreign

1:02:53

investment, especially from Gulf State sovereign

1:02:56

wealth funds, we have to have

1:02:58

a plan. How are we going to deal

1:03:00

with the next crisis? Because there's always going to be one.

1:03:03

Let me ask you one last question.

1:03:05

As hard as it may have been

1:03:07

to conceive that the NFL would allow

1:03:10

foreign investment, maybe even yesterday, but especially

1:03:12

10 or 20 years ago, I

1:03:14

also think how the NFL used

1:03:17

to be so anti-gambling

1:03:21

that they wouldn't even say the word

1:03:23

Vegas. And now... We've just

1:03:25

had a Super Bowl. Right.

1:03:27

We've had a team in Vegas, the Super

1:03:29

Bowl was in Vegas, and the

1:03:31

NFL is very much in

1:03:33

partnership with sports betting firms. So

1:03:35

what do you think that change

1:03:38

says about the direction of pro

1:03:40

sports generally? In sports,

1:03:42

it's always about balancing the

1:03:44

integrity and authenticity of the

1:03:46

product, the unique connection they

1:03:48

have with their consumers against

1:03:51

the financial constraints and incentives.

1:03:54

It's never going to be static. There's never going

1:03:56

to be a point in time where they say,

1:03:58

okay, we've hit equilibrium. got the balance

1:04:00

right, they're always going to be adjusting.

1:04:03

And this is just a new phase

1:04:05

of adjusting to market realities. The

1:04:12

market realities of professional sport

1:04:14

can seem unreal sometimes. That

1:04:17

is a topic we will keep exploring on this show.

1:04:19

I would love to know what you think about

1:04:22

sports washing, about live golf,

1:04:24

about the future of professional

1:04:26

sports. Our email is radio

1:04:28

at freakonomics.com. We will be

1:04:30

back soon with a regular episode of Freakonomics Radio.

1:04:33

Until then, take care of yourself. And if

1:04:35

you can, someone else too. Freakonomics

1:04:38

Radio is produced by Stitcher and

1:04:40

Renbud Radio. This episode was produced

1:04:43

by Ryan Kelly. Our staff also

1:04:45

includes Alina Cullman, Eleanor Osborne, Elsa

1:04:47

Hernandez, Gabriel Roth, Greg Rippon, Jasmine

1:04:49

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1:04:51

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1:05:02

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1:05:09

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1:05:11

As always, thanks for listening. All

1:05:21

the top players said, I have no interest in going to

1:05:23

Saudi Arabia 10 times a year. There's no

1:05:25

alcohol. There's no women. It doesn't sound like much fun.

1:05:27

Forget it.