Saudi Arabia's PGA merger is likely just the beginning for the kingdom when it comes to pro sports investments

The controversial mega merger between the PGA Tour and Saudi Arabia's LIV Golf is just one step in the kingdom's ambitious tourism and investment strategy — and its pursuit of big-name sports is just getting started.

"We're sort of a proponent to find 'all of the above' strategy in sport," Saudi Investment Minister Khalid Al-Falih told CNBC's Dan Murphy in Riyadh.

"Any sport that has consumers globally and domestically is a sport we're interested in as an investment opportunity, to not only create commercial returns for the investors, whether it's the PIF or private investors, but also as an upgrade to the quality of life of Saudi Arabia, it's part of our tourism agenda."

The PIF is Saudi Arabia's Public Investment Fund, a $600 billion sovereign wealth fund controlled by Saudi Crown Prince Mohammed bin Salman. It's being wielded as an economic tool for Vision 2030, a years-long project aiming at modernizing and diversifying the kingdom's economy away from oil.

News that the PGA Tour and Saudi Arabia's LIV Golf were joining forces last week brought an end to a two-year battle between the archrivals.

The agreement, which includes the DP World Tour — also known as the PGA European Tour — will combine the commercial businesses and rights of the PGA Tour and LIV Golf into a new, yet-to-be-named for-profit company. 

Founded in 2021 with the goal of becoming the world's premier professional golf tour, LIV Golf was backed by the PIF and had lured some of the biggest golf stars away from the PGA Tour with huge paychecks. That spurred lawsuits between the two entities until the decision to merge, which ended all pending litigation.

"The region is more than capable of being part of this global phenomenon, recent phenomenon of the rise in sports as part of the global economy," Al-Falih said of the Middle East. "And golf is part of it, is a significant part of it, and it addresses an important segment of the population who also play and follow golf."

As part of the PGA-LIV merger, the Saudi PIF is now the exclusive investor in the new golf entity, and it has the right of first refusal on any new investment.

The PIF is rapidly expanding into sports, hosting a Formula One Grand Prix and major boxing matches, and buying British Premier League soccer team Newcastle United.

Saudi Arabia also lured soccer legends Cristiano Ronaldo and Karim Benzema with contracts worth hundreds of millions of dollars to play in local Saudi leagues, and it's expected to bid to host the 2030 World Cup.

In the past few years, the mammoth PIF fund has also bought up stakes in major blue chip companies including Amazon, Uber, Alphabet, Microsoft, Boeing, Bank of America, Disney and Meta.

Al-Falih noted the power of sports to attract tourism, but also to offer something attractive to Saudis already in the country.

"Sport is a significant component of global economy, consumption, media, digital content, which is now in our hands and laptops and something that as individuals, as households, as corporates, it's part of," he said. "And of course, as a minister of investment, I welcome it as an opportunity for us to create more -- Formula E, Formula One, boxing matches, football matches."

"It's part of retaining our Saudi citizens, global residents who choose Saudi Arabia as their home, to stay in Saudi Arabia and to consume this product that is of high demand," the minister added, "and also to bring global followers of sport to the kingdom for the various activities and sports that will be taking place here."

Numerous human rights groups and lawmakers in other parts of the world criticize Saudi Arabia's financial involvement in the sports world as "sportswashing," or an effort to cleanse its image of human rights abuses.

Saudi Arabia has long been criticized for its human rights record, which includes the imprisonment and execution of political dissidents, harsh penalties including death for members of the LGBT community, and the high-profile killing of U.S.-based journalist Jamal Khashoggi in 2018 by Saudi agents.

CNBC has contacted the Saudi Foreign Ministry for comment.

The kingdom's aggressive campaign to promote its image as a reformed, socially liberalizing country is a key part of the crown prince's Vision 2030. It includes expanded freedoms for women — though many female activists still remain behind bars — and allowing previously banned things like movie theaters and concerts.

Seventy percent of the Saudi population is under the age of 35, and the kingdom's youth are highly digitally active and connected, creating an enormous market for televised sports and sporting events.

"We have one of the highest consumptions per capita of many sporting activities and ... electronic sports and digital games," the Al-Falih said. "Having these activities being created in Saudi Arabia, with ownership from Saudi entities like the PIF is going to direct that demand in positive ways and it's going to create commercial returns. I think it's going to increase the flow of investment by Saudi investors and, like I said, that will improve the quality of life and make Saudi Arabia a more attractive place for international visitors to visit and come and live in our country."