Saudi Arabia Shakes Up Golf and Football
Sports Offensive
There is a name for that. Sportswashing, or the leveraging of an athletic event to embellish a reputation tainted by scandal or controversy. The term was coined in 2015 to describe attempts by the Azerbaijan government to divert attention from its human rights record with the hosting of the first-ever European Games in 2015.
Sportswashing has since become a favourite of Amnesty International which deployed the term in its condemnation of Russian authoritarianism during the 2018 World Cup. In 2022, the Winter Olympics in Beijing and the World Cup in Qatar also sparked denunciations of sportswashing. Retroactively, the term has been applied to the 1936 Olympic Games in Nazi Germany and the 1978 World Cup in Argentina, at the time ruled by a military junta.
Of late, Saudi Arabia has been on the receiving end of criticism after the kingdom splashed $6 billion or so (£4.8 billion) – of the $650 billion (£525 billion) stashed away in its rainy-day sovereign wealth fund – on sports-related investments. The splurge has snowballed since the Saudi Ministry of Sports in 2018 secured a deal with World Wrestling Events (WWE) worth $100 million (£81 million) annually. WWE now regularly organises major tournaments in the country such as the inaugural Greatest Royal Rumble and the 2023 Night of Champions.
In 2021, the Saudi Public Investment Fund (PIF) reportedly spent more than $2 billion (£1.6 billion) to set up the LIV Golf professional tournament to rival – and absorb – PGA Tour, until recently the world’s pre-eminent professional golf league. PIF managing director Yasir Al-Rumayyan (53) is an avid golfer with a decent 12 handicap.
All that cash could not avoid a flop of sorts. In its first season, LIV Golf failed to secure a television deal and only one player ranked in the global top ten signed on. In another sense, the Saudi assault on the sport was a resounding success.
Bombshell
In June, LIV Golf and PGA Tour shockingly agreed to join forces and combine assets in a possible merger which would also include the Europe-focussed DP World Tour and put an end to acrimonious to and fro litigation and a nasty war of words.
However, the US Congress has voiced opposition to the merger. During a hearing in Washington, PGA Policy Board member Jimmy Dune revealed that the Saudis offered an investment ‘north of $1 billion’. Mr Dune also explained that, had PGA Tour not accepted the proposal in principle, ‘they would have just kept throwing money at our golfers’.
Mr Al-Rumayyan is charged with implementing the ambitious Vision 2030 plan which aims to diversify the kingdom’s economy and lessen its dependence on oil revenues. Sports has been identified as a key driver of this push. The Saudi sports event industry has been growing at a steady clip of about eight percent annually and expects its turnover to reach $3.2 billion next year.
Not all undertakings have met with success. A $20+ billion (£16+ billion) mega bid for the Formula 1 racing franchise was rejected by its owner Liberty Media. PIF also failed in luring the McLaren and Aston Martin racing teams to move to Neom City, currently under construction in the peninsula’s far western corner. In late-June, the fund sold its stake in McLaren Group to Mumtalakat, the Bahrain sovereign wealth fund for an undisclosed sum. Two years ago, PIF and Ares Management, and alternative investment manager, injected $510 million (£412 million) into the group.
Saudi money is also said (whispered) to have been a prime mover of the 2021 push towards the creation of a European Super League which caused concern amongst football fans and clubs not invited to join the tournament for its potential to disrupt the football ecosystem.
The idea, shelved for now but by no means dead, may have inspired PIF to power up the Saudi Pro League (SPL) instead, aiming to propel it from a ‘sandbox’ into a world class competition on par with La Liga (Spain), Serie A (Italy), Bundesliga (Germany), or even the English Premier League.
Dash for Cash
Departing for that sandbox – once a ticket for second-rate players hoping to score first-rate pay – no longer carries a stigma after Cristiano Ronaldo took the plunge (for $200 million / £160 million), followed by Neymar, Karim Benzes, Roberto Firmino, and many others.
French striker Kylian Mbappé was the only top player to decline an invitation. Leonel Messi spurned a record-shattering $400 million (£323 million) offer to play for Al-Hilal, opting instead to head to Inter Miami for $54 million (£44 million). The Argentinian star player did, however, maintain his $25 million (£20m) gig as Saudi tourism ambassador.
PIF now owns a 75 percent stake in four of the top clubs competing in the Saudi Pro League and is on track to disburse more than $2 billion (£1.6 billion) on long-term football sponsorship deals through its portfolio companies.
The fund also owns a controlling stake (80%) in Newcastle United FC which it bought in 2021 for £305 million ($378 million) in deal that sparked great controversy and protest. Since then, PIF has spent an additional £200 million ($248 million) on the club. Ranked 19th in the Premier League table at the time of the takeover and skirting relegation, Newcastle United had suffered 14 years of continuous cost-cutting under its previous owners.
Under new management, the club bounced back with enviable zest and now consistently dwells in the middle of the PL table. However, PIF managing director Yasir Al-Rumayyan, who chairs the club’s board of directors, has repeatedly vowed to take Newcastle United to the very top and increase the team’s value – and his investment’s worth – ten-fold.
In Saudi Arabia, teams are not subject to the financial restrictions imposed by UEFA, the body that represents 55 national football associations in Europe and Asia, and runs six multinational competitions from the novel Conference League to its flagship Champions League. UEFA Financial Fair Play (FFP) regulations are designed to protect clubs against leveraged buyouts and limit contributions to club budgets by wealthy owners.
However, there are ways around the rules. During the summer transfer window, the sale of 26-year-old French winger Allan Saint-Maximim from Newcastle Untied to (also PIF-owned) Al-Ahli for £30 million prompted several Premier League clubs to express concern about artificially inflated transfer fees being used to disguise non-FFP compliant cash injections.
Smart Moves
Whilst the inclusion of star players does not necessarily place a national competition in the global spotlight, or boost the success of individual clubs (Leonel Messi’s Inter Miami being the notable exception), football and sports in general can be a smart investment as long as it includes a universe of spin-offs and the ‘ownership’ of a cohort of promising players who can be loaned to clubs competing in bigger leagues.
Analysts note that football’s landscape is changing with younger fans following players instead of clubs. The nature of transfers is also evolving with PIF now leveraging its ownership of four clubs to offer package deals such as the one available to Chelsea FC where the Saudis have expressed an interest in three players.
Another area where PIF may see a handsome payout before long is its robust media strategy with SPL highlight packages beamed across the world. Ready-to-broadcast and with narration in multiple languages, the approach ensures global exposure and untold marketing opportunities.
Sportswashing may play a role in the background, as it does elsewhere, but the uncomfortable feeling caused by Saudi Arabia’s moneyed foray into football and golf seems largely due to a fear of losing control over sports until recently dominated by the West.
Football in particular has been a roost ruled by South American and European teams with outsiders standing no real chance of breaking their chokehold. At most, African teams have been talent pools that passively provide players who, once in Europe, are developed into stars and traded for millions.
Saudi Arabia is not about to change that, but may well be home to the first competition to latch on to the big leagues – perhaps not so much by home-grown talent but by crafty design and, of course, lots of cash.
© 2024 Photo by RawPixel
