Saudi Arabia to launch a billionaire sports group – 7/6/2023 – Sports

Saudi Arabia plans to launch a billion-dollar investment company to expand its sporting interests after its foray into golf and its success in English football, according to two people familiar with the matter.

The sports group, which will form part of the kingdom’s sovereign wealth fund, will have funding to finance its expansion, according to one of the people, in a sign that Riyadh is committed to making more acquisitions, investments and partnerships in football, tennis and other sports.

The $650 billion Public Investment Fund (PIF) has made a series of sports investments in recent years, demonstrating its financial power in a sector hit hard by the coronavirus pandemic.

The initiative has drawn criticism over Saudi Arabia’s history of human rights abuses and accusations that the kingdom is “sportswashing” (using sport to clean up its international reputation). Government officials say the initiative is part of an ambitious reform of the economy, in which they seek to diversify beyond the oil sector, attracting tourism and investment.

“After the World Cup, there was definitely a sense of optimism to invest in global sports,” said a person familiar with the strategy. “This was driven by the fact that Qatar did so well and Saudi Arabia’s performance at the Cup. There has been a noticeable shift in how they view global sports.”

Simon Chadwick, professor of sports economics and geopolitics at the Skema Business School in Paris, said Saudi Arabia’s foray into sport was in some ways “not new”, drawing comparisons with past investments by Qatar and Abu Dhabi.

However, he added that the “scale and speed” of Riyadh’s spending was unprecedented and had the potential to leave a lasting impact across the sector.

“Saudi Arabia is now shaping the sport’s commercial, industrial and geopolitical networks,” he said. “It’s starting to test the limits of rules and governance.”

Fund officials were unavailable for comment.

The fund created a divide in the golf world when it launched the LIV circuit last year, spending billions to attract top players from the US PGA Tour and establish a new team-based tournament. But last month, the two circuits agreed to a truce, ending a long-running court battle and agreeing to merge their business interests.

The sovereign wealth fund is chaired by Crown Prince Mohammed bin Salman, the day-to-day ruler of the kingdom, who has tasked the PIF with driving the country’s economic reform plan, increasingly centralizing specific sectors, including sports, under the fund. ruler of wealth.

PIF manager Yasir al-Rumayyan is poised to chair the partnership between LIV and the PGA, which still faces significant opposition among US lawmakers.

He also chairs Newcastle United, the English football club the sovereign wealth fund bought in 2021. The team, which was suffering from poor results at the time of the takeover, finished fourth in the Premier League last season, securing qualification for the Premier League. Champions League, the top European competition.

Neither LIV Golf nor Newcastle United will be under the control of the new company, according to a person familiar with the matter, who said it will be focused on new opportunities.

The company’s launch will coincide with a time when the PIF will take on a greater role in the kingdom’s football ambitions, which include strengthening its clubs at home. This year, the country lured late-career soccer stars like Cristiano Ronaldo and Karim Benzema into its league with lucrative contracts, while also signing younger players. The PIF also recently announced that it will take control of four of the biggest football clubs in the country.

The Financial Times reported last month that the sovereign wealth fund had also held talks with the ATP men’s tennis circuit about potential events and investments.

The PIF has sought to centralize sectors by creating national champions to oversee strategies and investments.

The new sports company could take the same approach that PIF has taken towards the gaming industry with its investment firm Savvy.

Chaired by Prince Mohammed and with a budget of US$38 billion (R$186 billion), the company has spent nearly US$8 billion (R$39 billion) on acquisitions over the past 18 months, in an approach described by one analyst as “an approach by tractor”, acquiring, among others, the US-based game developer Scopely for 5 billion dollars (R$ 24 billion).