Patrick Reed’s LIV exit shows a bigger problem for the league
For all the backroom cooperation that helped LIV come to fruition, the theme of the league’s contract negotiations has always been public knowledge: LIV has the money, and the players take the risk.
Simple financial math explained why PGA Tour members were drawn to the new league: salary + risk = reward. In order to sign a PGA Tour star, LIV had to offer at least one dollar more than what the players estimated they could earn on the PGA Tour, plus that star’s risk fee.
This strategy helped LIV down and put the PGA Tour on its heels, but it wasn’t without its flaws. First, it opened up an opportunity for players to change the way they value risk; and secondly, it was assumed that LIV 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, saying only that they could not reach an agreement.
Perhaps Reed, who plans to rejoin the PGA Tour in late 2026 following an eight-month suspension, was homesick, drawn by LIV’s globetrotting schedule, and only a big offer could convince him to return. Maybe LIV added an offer, but one less than Reed’s initial signing bonus, and turned up his nose. Perhaps LIV saw Reed’s declining value and took the opportunity to ship him. Or maybe Reed and LIV had the same interest but LIV didn’t have the money needed to close the deal.
Whatever motivated Reed’s decision, it likely came down to money or risk, and on the eve of LIV’s 2026 season, there’s reason to believe that both factors could play a role.
Patrick Reed and LIV sponsors
Of all the headlines that LIV generates in the world of golf, the league only represents part of the Saudi balance sheet.
Officially, the Saudi Public Investment Fund (PIF) is worth about $1 trillion. Since LIV’s inception, the league has accumulated a net loss of approximately $5 billion, according to LIV’s regulatory filing. Five billion dollars is nothing – but LIV brings benefits that can be difficult to quantify, such as international cachet and cultural influence and good relations with the US political dynasty. In short, the rise of the Saudis is less financial than impactful.
But then PIF money seemed unlimited, and now that funding seems stable.
The most well-known catalyst for the Saudi “liquidity squeeze” has nothing to do with golf. Instead, it’s a place called Neom, an ominously glamorous “city of the future” being built in the middle of the Saudi desert. For a while, 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 into the present. The city was the site of unprecedented infrastructure and housing investment by the State, who dreamed that the uninhabited desert would one day become a center of economic and technological innovation.
The truth has been a headache. Today, almost ten years into the project and after years of over-budget, over-schedule construction, Neom contains a tiny fraction of the desert. There is no ski resort or high speed rail. PIF has spent more than $50 billion on the project, as well as internal research, according to The Wall Street Journalestimated the cost of completing the city at its original level at $8.8 a trillionmore than 8 times the initial estimates of the State.
At the same time, the old way of doing business in Saudi Arabia has experienced an unexpected decline. Over the past year, global oil supplies have exploded, thanks to increased production in the United States and several other non-traditional oil producing countries. As a result, oil prices have fallen to their lowest levels since 2021, according to reports from the US Energy Information Administration. Under MBS, the Saudis have been willing to diversify their economy beyond oil, but such economic transformation takes time. Much of the Saudi economy is still tied to the country’s oil interests, according to the International Monetary Fund’s year-end report, and those oil interests are currently underperforming.
The result of an oil slump and an ambitious infrastructure policy? Suddenly, the Saudis are cash-strapped and facing a growing deficit, i Financial Times reports.
On Sunday, the same day that Patrick Reed revealed his ongoing discussions with LIV, the FT reported the latest evidence of PIF’s belt tightening: the fund has dramatically lowered its outlook for Neom, considering the latter a “very small” project with a very low price tag.
“The changes come as Riyadh seeks to manage its finances as it faces fiscal tightening after a decade of spending spree and falling oil prices,” wrote Andrew England and Chris Campbell. “And there are still tough deadlines to meet on expensive preparations to host the Expo international trade fair in 2030 and the soccer World Cup in 2034.”
Would all these economic changes have had an impact on Reed’s contract negotiations? We don’t know. We do know Reed said he would be “surprised” if he didn’t play in the LIV season opener as recently as Sunday. Three days later, he left for rivals LIV.
If the Saudis reduce the Neom budget, the country’s economic swing, it is not unreasonable to think that they can take a more restrictive approach to the PIF portfolio, LIV included. Even if they don’t, LIV’s willingness to spend remains an important question going forward.
Over the next two years, the league is faced with critical (and, of course, expensive) decisions to extend the contracts of stars like Bryson DeChambeau and Jon Rahm. Except for deals with the same nine prices (if not more than) the duo’s early signing bonuses, it’s hard to imagine Rahm or DeChambeau sticking around. (DeChambeau has already floated YouTube as a full-time pursuit if negotiations fail to meet his expectations.) And without major players on LIV’s roster, it’s hard to see a way for the league to reach long-term viability.
In a statement announcing his departure from LIV, Reed called himself a “traditionalist at heart” who was “born to play on the PGA Tour.” He added that his decision was “for our family, our children.” Reed wouldn’t be the first player to experience the rigors of a LIV schedule that spans five continents and requires long distances on the road. He wouldn’t be the first player to worry about the long-term prospects of a league struggling to gain TV ratings or significant influence in the golf world. He would be well within his rights to worry about the performance of his future super hero; the league still hasn’t received the necessary World Ranking Points for its players to guarantee eligibility for the major tournament.
For the world’s top players, the risk of joining LIV continues. LIV knows that risk costs money, and even private equity funds don’t have that infinite.
