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LIV Golf was just the start. With the bottomless coffers of its Public Investment Fund at the ready, Saudi Arabia is taking steps that could upend the sports world.
On a dreary afternoon in northern England last April, the supporters known as Toon Army eagerly led the charge to St. James’ Park to cheer on Newcastle United in a Premier League match against Crystal Palace, and also to revel in what they hope is the continued rebirth of the 130-year-old club. Seated among the casual crowd was a well-dressed man in a suit and tie, his stylish dark hair offset by the rapidly graying beard that marked a clear sign of his 52 years. At one point, the man began waving a black-and-white flag, among the symbols of the club, glancing toward the sky with a broad smile on his face. Photographs were snapped, and the club shared the image on Twitter with the excited message, “Our chairman, Yasir Al-Rumayyan is in attendance at St. James’ Park this evening!”
At that moment, no one in the crowd of 51,938 seemed to be thinking — or caring — about where the money came from to buy the team, or about the legal battles or public relations controversies that ensued. Those had been the dominant themes of the months-long effort by Saudi Arabia’s Public Investment Fund, of which Al-Rumayyan is the governor, to buy an 80% stake in the club, a deal that closed one year ago this month. Any talk of a club being owned by the wealth fund of a country known for repeated human rights violations had drifted away in the celebration of a 1-0 victory and the possibility of more to come thanks to the nearly unlimited wealth of the new owners, led by Al-Rumayyan, a Saudi native who studied at Harvard Business School. Long after the match, Rumayyan and his fellow new owners took to the pitch themselves to happily kick around a soccer ball.
It is a scenario that may soon be playing out across the globe, as the sports ambitions of one of the richest nations on earth comes into clearer focus. The chorus of criticism heard in the U.K. that accompanied PIF’s purchase of Newcastle United reached a crescendo in the U.S. this spring when that same fund was used to bankroll a full-frontal assault on the PGA Tour by spending billions of dollars to launch LIV Golf and raid star players with astronomical sums of money. Major winners like Dustin Johnson, Brooks Koepka and Cameron Smith, among many others, have joined Phil Mickelson on the renegade tour, which wrapped last weekend with an event in Miami featuring a $50 million prize purse and has signaled the Saudis’ most ambitious step yet onto sports’ world stage.
Saudi riches have already been used to secure sponsorships with Formula One, a partnership with the WWE and major stakes in esports. Earlier this year, PIF made an unsuccessful attempt to elbow into CVC Capital Partners’ planned acquisition of 20% of the WTA’s commercial business for $150 million, according to two sources familiar with the effort. And the Arab nation has already won the right to host the 2034 Asian Games, the second-largest multisports event on the planet, and has joined a bid with Egypt and Greece to host the 2030 FIFA Men’s World Cup.
This all comes at a time of increased strain in the relationship between the governments of Saudi Arabia and the United States, divisions that are reflected in the sports world. Athletes and executives have found themselves in the middle of a tense geopolitical debate, forced to take sides or justify their positions with their careers and reputations on the line. Some worry about the repercussions of joining sides with a country that has such a negative image and know that if they cross over, there may be no going back.
Saudi investment is such a hot-button issue in the industry that few sports business executives contacted for this story would agree to speak on the record, if at all. Interview requests to firms that have worked with Saudi sports properties — CSM Sport & Entertainment, which worked with the planned city of Neom and Saudi airline Saudia on sponsorships in Formula E; executive search firm Odgers Berndtson, which a source said had been retained to support PIF’s recruiting — declined to or were instructed not to speak with Sports Business Journal. A representative for PIF declined to comment for this story.
When asked about the sovereign wealth fund’s hiring plans, one headhunter without an apparent connection to PIF even held up his hands and walked out of a building lobby without saying a word.
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Those plans, according to multiple sources with knowledge of the situation, have PIF now actively recruiting American sports business executives with an eye toward developing a sports-specific company to spearhead its global efforts. According to a source with knowledge of what PIF has in mind, the entertainment, sports and leisure initiative has the stated goal of growing Saudi sports tourism. Key objectives include stadium development and commercialization, the creation of new sports content and IP, the acquisition of sports content rights, investment in global sports leagues and the acquisition of fan engagement technology companies.
Some of those strategies will be far less disruptive than LIV. A source said one planned PIF tactic is to take minority stakes in leagues in order to open channels of communication with potential business partners. Another source said such an effort failed with the WTA because it came late in the deal timeline and because of concerns about the optics of Saudi Arabia investing in a prominent women’s sports league. It has been reported that the nation has also made entreaties to host a WTA event while meeting similar resistance. In a statement to SBJ, the organization said, “We have not entered into any formal negotiations on bringing a WTA event within the Saudi region.” Its negotiations with CVC are ongoing.
However, the kingdom has already played host to major events in boxing, golf, horse racing, motorsports, soccer and tennis, leading to a slew of possibilities for where it might next set its sights (see sidebars). This has been a rapid evolution for a country that had shown little outward interest in global sports until 2016, years after Arab neighbors like Qatar and the United Arab Emirates had begun pursuing team ownership and event hosting rights. That year, Saudi Crown Prince Mohammed bin Salman, or MBS, revealed Saudi Vision 2030, a new roadmap for the nation to improve the quality of life of its citizens, diversify an oil-reliant economy and ultimately “become a global investment powerhouse.”
PIF is the world’s sixth-largest sovereign wealth fund with some $620 billion in total assets under management. In 2019, the kingdom announced it would provide $650 million to support local Saudi sports teams, and it nearly made a $400 million investment in pre-IPO Endeavor. (The agency pulled the plug and returned the money following the 2018 murder of Washington Post columnist Jamal Khashoggi, which a U.S. government intelligence report later indicated that MBS had directly approved). In 2020, PIF allocated another $1.8 billion to make sports investments across the following five years, and this past May, LIV CEO and Commissioner Greg Norman revealed that Saudi Arabia had committed an additional $2 billion to fund the breakaway golf league through 2025. Taken together with expensive Saudi sponsorship and event-hosting initiatives from the nation’s other commercial vehicles, it may represent the single largest sports investment strategy the world has ever seen.
Critics have labeled the kingdom’s efforts as mere “sportswashing” — nations leveraging sports for political effect, typically as a means of distracting attention from autocratic or repressive policies. The modern version of the concept was seen most notably with the 1936 Berlin Olympics in Nazi Germany. A more recent legacy features Olympic games hosted in Russia and China, as well as the upcoming World Cup in Qatar.
Experts, however, say that there’s more here than just improving a poor global reputation. Instead that is just a small piece of a far broader strategy to transform the nation into a more globalized, cosmopolitan and welcoming home of foreign tourism and investment.
“In the case of Saudi Arabia with its vast sovereign wealth, the potential risks of negative publicity are outweighed by the sort of leverage and financial influence that can come — and therefore the political and cultural influence that can come — through putting money into sport,” said Alan McDougall, a professor at the University of Guelph who specializes in the history of sports and their relationship to geopolitical issues.
It’s clear how the concept applies to Saudi Arabia, an authoritarian monarchy that’s long maintained repressive policies against women, LGBTQ individuals, migrants, religious minorities, political dissidents and many democratic freedoms. (Ironically, the public attention on LIV has brought more, not less, focus on the kingdom’s dismal human rights record, with LIV golfers still being asked to address the tour’s tactics at every stop).
What’s less clear is whether it will work.
“People search for simple answers to very complicated questions. Sportwashing is a term that kind of describes maybe some of what’s going on, but it misses the mark,” said T Burns Sports Group Chairman and CEO Terrence Burns, a longtime global sports consultant. “What they really want is intellectual and capital investment in their countries. And yeah, to say ‘We’ve hosted an Olympic Games’ is a proof point of something, but I’m not sure that saying you’ve hosted an Olympic Games will have every major corporation rush to your country and invest trillions of dollars.”
The sentiment is echoed by former IOC marketing boss Michael Payne. “When a country hosts a Formula One event, it won’t cover up whatever the issues of the day might be. On the other hand, it will put the country on the map and give an opportunity to showcase tourism, innovation, maybe an internal dynamic to be able to show the local population that you are stepping out onto the world stage,” said Payne. “There’s a whole series of strategic imperatives or merits as to why you would embark on that. The fact that there may be some media criticism, they’re probably used to it.”
According to Dubai-based Ernst & Young partner Laurent Viviez, Saudi Arabia’s approach is largely geared toward generating financial returns. Viviez last year co-authored a report on sports event opportunities in Saudi Arabia that identified key opportunities in rights ownership, sports events and infrastructure and services, among other areas.
Much of the strategy is domestic — building stadiums and arenas and supporting the growth of local leagues. Among the top priorities for Saudi Arabia is domestic investment into sports facilities. The nation has recently undertaken renovations of King Fahd International Stadium, Mrsool Park and Prince Abdullah Al-Faisal Stadium, among others. New, state-of-the-art stadia projects are also flagship elements of Neom, Saudi Arabia’s planned $500 billion city of the future, and Qiddiya, an under-construction tourism hub outside Riyadh.
“If you take all the real estate mega-projects, all of them have a sports component to it,” said Viviez, who estimates that the Saudi sports event industry will rise from $2.1 billion in 2018 to $3.3 billion in 2024. “They will be building infrastructure for the local population and mass participation, but also for elite sports events.”
Saudi Arabia’s first step toward hosting the sports world’s biggest international events came when it won the right for the capital city of Riyadh to host the 2034 Asian Games, a quadrennial competition. It is also bidding to host the 2027 AFC Asian Cup, a soccer tournament, and has joined Egypt and Greece in a bid for the 2030 FIFA Men’s World Cup.
Event hosting has been a critical avenue through which Saudi money has infiltrated the global sports ecosystem. In 2018, Saudi Arabia landed a 10-year, $500 million partnership with WWE, which is about to host its eighth pay-per-view event in the nation. The kingdom has a 15-year race-hosting contract with Formula One that began last year, served as the location for a title bout featuring two-time heavyweight champion Anthony Joshua and hosted Serie A’s Supercoppa Italiana.
The ultimate coup would be for the country to host an Olympic Games. While such a move seems implausible today, the years-long selection process means the Games could eventually be awarded to a Saudi nation that by then is perceived very differently. “This is not an issue you have to focus on or discuss for at least a decade from now, meaning hosting in two decades from now,” said Payne. “I don’t want to be provocative here, but Los Angeles hosted the Games in 1984. What was the state of segregation in the U.S. in 1964? Two, three decades, things evolve and change. And they evolve and change for the positive.”
Saudi investment vehicles have also leveraged sports sponsorships to align and closely interact with major power players throughout the sports business world, something it has managed to accomplish despite public outcries. The state-controlled petroleum company Saudi Aramco has a 10-year global sponsorship with F1 reportedly worth over $450 million, and earlier this month it announced a sponsorship of the International Cricket Council that covers all of the governing body’s major events — including the Men’s Cricket World Cup — through the end of next year. The aforementioned planned city of Neom is a sponsor of the Asian Football Confederation through 2024 and has deals with electric race teams from Mercedes and McLaren. Last year, Saudi tourism mega-project Qiddiya was rumored to be close to finalizing a 10-year, $180 million sponsorship with Real Madrid.
But most disruptive of all, PIF has been deploying its tremendous resources to take stakes in — if not outright control and operate — properties outside the kingdom’s borders. A source familiar with PIF’s inner workings said the investment fund has thus far deployed capital “on a commercial basis rather than on a strategic basis,” though sports and sports-adjacent properties have been a clear target.
The nation has a $1.1 billion stake in Live Nation, and it has acquired significant equity in publicly traded video game manufacturers, including a $3 billion investment in Activision Blizzard, $1.8 billion in Electronic Arts and $1.14 billion in Take-Two Interactive. Those investments are accompanied by growing investment in esports, and this summer the Saudi Esports Federation debuted a two-month esports festival with a $15 million prize pool.
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As for what’s next, most major American pro leagues don’t have to worry about LIV-like disruption. Their superstar athletes are under contract already, and the significant complexity of building or operating a league in a team sport versus one with independent contractor athletes makes it logistically improbable for a worthy competitor to be launched. Team investments from PIF are similarly unlikely due to league ownership rules, though not impossible in Major League Soccer, where the United Arab Emirates owns a majority of New York City FC through its City Football Group.
Instead, motorsports has been a clear focus of sponsorship and investment. In fact, Saudi Aramco’s naming-rights sponsorship of the Aston Martin F1 team grants a pathway to 10% ownership, according to a British financial filing made by the team’s parent company. Combat sports may offer another avenue forward, especially if the nation has a desire to go head to head with the UFC after its Endeavor investment plans were rejected. And perhaps no sport seems more ripe for disruption than tennis, which is likely a prime target following Saudi Arabia’s failed WTA bid. However, the PIF insider said the investment fund’s own leadership is not yet clear on where, exactly, they’ll strike next
When they do inevitably strike it could spark another civil war, much as has happened in golf following Saudi Arabia’s backing of LIV Golf.
This past year has demonstrated what can happen when PIF and Saudi Arabia train their empire of endless riches on the sports world. Soccer and golf have already felt the impact. They won’t be the last.
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