Saudi Arabia to launch multi-billion dollar sports investment group

Two people with knowledge of the matter say that Saudi Arabia is planning to create a multi-billion dollar investment company in order to expand its sporting interests after its success in English Football and its power grab in English golf.

According to one person, the sports group will be part the sovereign wealth fund of the Kingdom. It will have a war-chest to fund its expansion. This is a sign of Riyadh’s commitment to further investments, joint ventures and acquisitions in sports such as football, tennis, and others.

In recent years, the $650bn Public Investment Fund made a series of investments in sports. It was flexing its financial muscle in a sector that has been disrupted due to the coronavirus epidemic.

Saudi Arabia has been criticized for its human rights record, and it is accused of “sportswashing”. Officials say the drive is part of a massive overhaul of the Saudi economy to diversify it beyond oil and attract tourism.

A person familiar with PIF’s investment strategy said, “After the World Cup, there was definitely a bullishness in investing in global sports.” It was a result of the success that Qatar had in the World Cup and Saudi Arabia. It’s obvious that there has been a sea change in the way they view global sports.

Simon Chadwick of Skema Business school in Paris said that Saudi Arabia’s investment in sport is in many ways “nothing” new, drawing comparisons to previous investments made by Qatar and Abu Dhabi.

He added, however, that Riyadh’s “scale and pace” was unprecedented and could have a lasting effect on the entire sector.

He said that Saudi Arabia was now shaping the commercial and industrial networks, as well as the geopolitical ones of sport. It’s starting to test the limits for rules and governance.

PIF officials did not respond to requests for immediate comment.

Last year, the PIF caused a rift within the golf world when it introduced the LIV circuit. It spent billions of dollars to lure players away from US PGA Tour in order to create a new tournament based on teamwork. Last month, the two tours reached a truce after a long-running court battle. They also agreed to merge their commercial interests.

The sovereign wealth fund is headed by Crown Prince Mohammed bin Salman. He is the day-today ruler of the Kingdom and has given the PIF the task to steer the economic reform plan for his country, centralising more sectors, including sports, under the sovereign wealth funds.

PIF Governor Yasir Al-Rumayyan will chair the partnership between LIV PGA. This still faces considerable opposition from US legislators.

Newcastle United is the English football team that the sovereign wealth fund purchased in 2021. The team, struggling at the time, finished fourth last season in the Premier League and qualified for the Uefa Champion League, Europe’s top competition.

According to a person who is familiar with the situation, the new company will not include LIV Golf or Newcastle United. Instead, it will focus on finding new business opportunities.

The launch of the company will coincide with PIF’s assertion that it has a greater role in the football ambitions of the kingdom, including strengthening its domestic clubs. This year, the country lured football stars in their late careers such as Karim Benzema and Cristiano Ronaldo to its league by offering lucrative contracts. It also recruited younger players. PIF announced recently that it would be taking over four of the biggest domestic football clubs.

Last month, it was reported that the sovereign fund also had talks with the men’s ATP Tennis Tour about potential events and investment.

The PIF has attempted to centralise the sectors by creating champions at national level to oversee strategy and investment.

The PIF could take the same approach towards the gaming industry as it has done with Savvy, its investment company.

Analysts have described the company’s acquisitions as a ‘bulldozer strategy.’ It has acquired, among other things, the US-based game developer Scopely, for $5bn.