Outlined to start in 2025, the season-opening tournament would finish just days before the start of the Australian Open, threatening a number of existing lead-in events such as the United Cup mixed national teams event.
The United Cup will be held next year in Perth and Sydney while players also currently prepare for the year's first grand slam by playing in the Adelaide International or a tournament in Auckland and also in Pune, India.
Ten-time Australian Open champion and current world No.1 Novak Djokovic won in Adelaide this year.
According to The Times newspaper, ATP officials and representatives of Saudi Arabia's Public Investment Fund (PIF) are set to meet during next week's ATP Finals in Turin to discuss the proposal, which is believed to be worth almost half a billion dollars.
It's unclear if a new January tournament would replace one of the 10 existing ATP Tour Masters 1000 tournaments, which sit on a tier below only the four grand slams.
Saudi Arabia has never held an ATP or WTA 1000 (women's tour) event and it's also uncertain if the proposal would be a combined event.
The cashed-up Gulf state has previously stated its interest in buying the Madrid Open and the Miami Open, which are owned by sports agency giant IMG, and feature both men's and women's players.
The kingdom will host the ATP's Next Gen Finals from 2023 to 2027 while it will also stage two exhibition events in late December, including a match between Djokovic and Carlos Alcaraz.
In June, ATP Tour chair Andrea Gaudenzi confirmed "positive" talks had taken place with PIF regarding investment.
Saudi Arabia rocked golf's PGA tour in 2022 by bank-rolling the rival LIV tour while it's also set to host the men's 2034 FIFA World Cup.
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