Saudi Arabia Using Sport to Challenge the Status Quo
The Kingdom of Saudi Arabia is once again creating geopolitical waves through its use of sport. On 6 June 2023, it was announced that the Saudi Arabian-backed LIV Golf Series would be merging with the PGA and DP World Tours. The news was a sporting and political bombshell which drew praise from former US President Donald Trump and criticism from various groups including the 9/11 Families United, who said they were “shocked and offended” by the merger. On the same day, news broke that the reigning Ballon D’Or winner, Karim Benzema, would be swapping Real Madrid for Riyadh-based club Al Ittihad. His deal - for two seasons, with a third-year option - is worth 100 million euros per season, and includes a bonus of 20 million euros for his work as an ambassador for the 2030 Saudi Arabia World Cup bid.
These announcements - whatever their sporting repercussions - highlight a concerted effort from Saudi Arabia to seek legitimacy, economic diversification and security through sport. Investment in sport has been a key pillar for the Kingdom since it published its Vision 2030 plan in 2016. According to Professor Simon Chadwick - an expert in sport and geopolitical economy at the SKEMA Business School - this display of bullish behaviour is proof the Kingdom’s sport investment plan is finally crystallising. Spurred on by a drop off in oil demand and a weakened global economy, Saudi Arabia has found the right moment and markets in which to throw around its financial muscle.
Saudi Arabia’s newest tactic in football investment is an attempt to lure star players to the Gulf. Benzema will join former teammate Cristiano Ronaldo in Saudi Arabia, and negotiations are ongoing between Saudi clubs and global superstars Luka Modric, and N’Golo Kanté. Moreover, the Saudi Public Investment Fund (PIF) has taken 75 % stakes in the domestic league’s top four teams. This influx of cash will allow these clubs to sign better players, improve facilities and attract more viewers to the league.
Geopolitically, increased Saudi investment in football helps placate the internal demands from the country’s majority Gen Z demographic for a more progressive and modern nation. Chadwick refers to this as “Saudi Arabia’s new social contract.” The government provides investment in education, entertainment and sport, thereby opening up Saudi society, but in return Saudi citizens must not criticise or question government authority. The trade-off is favourable for the regime, as it secures its future in a politically tumultuous region of the world. At the same time, the beautiful game provides another revenue stream for the Kingdom’s oil-centric economy, while providing a new lens through which onlookers can see the Gulf nation. Investment in the world’s most popular sport is a calculated approach to enhance the state’s image, reputation and overall legitimacy on a global scale.
The LIV Golf - PGA Tour merger which shocked the world last week also had strategic objectives behind it. First, the deal puts to bed the lawsuits the two organisations filed against each other. The PGA - as part of its antitrust lawsuit against LIV Golf - was seeking to depose the PIF and LIV Golf governor Yasir Al-Rumayyan. Quashing the lawsuit via the merger allows Al-Rumayyan to escape the stand, and limits the exposure of the Saudi PIF to the US Justice system and media. Furthermore, the deal enhances Saudi legitimacy abroad, bringing a Saudi backed league to the television sets of affluent Americans and Europeans. The deal is a mechanism to change the way people think and talk about the Gulf state; replacing the narrative of 9/11 and the murder of Jamal Khashoggi with 18 holes at a picture-perfect golf course.
These deals are only the beginning. Professor Simon Chadwick expects the Saudi PIF to take an increasingly aggressive approach in the sports market. The golf merger, in combination with past PIF investments in the US market, have opened the door for further encroachment into the US sports environment. The North American sports market is still the largest and most lucrative, so it would only make sense that the PIF begins looking at sponsorship deals in one of the major US leagues, or buying an NBA, NFL or NHL franchise outright. At this point, Saudi investment in sport should not be underestimated.
Saudi investment in sport is also part of a larger pivot from Global North to Global South. For decades, the sports sector has largely been a symbol of the post World War II rules-based order established by the Western powers. As Gulf and Chinese investment in sport increases, the established order is being challenged in a way consistent with geopolitical trends. Long-existing rules and Western values are coming under scrutiny as Gulf money flows into football clubs, Formula 1 and pro golf.
While the United Kingdom was actively courting Saudi investment into Premier League club Newcastle United, the United States response has been more antagonistic. On June 12th, Senator Richard Blumenthal (CT), the Chair of the Permanent Subcommittee on Investigations opened a probe into the PGA Tour and LIV Golf merger. In his press release, Blumenthal highlighted concerns “about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.” He also expressed scepticism in direct letters to PGA Tour CEO Jay Monahan and LIV Golf CEO Greg Norman about the Saudi Arabian PIF’s intent “to use investments in sports to further the Saudi government’s strategic objectives.” At the time of writing, another US Senate investigation has been opened by the Committee on Finance to assess the financial aspects of the deal, as well as potential national security concerns.
Despite backlash, lawsuits, Senate investigations and claims of sportwashing, Saudi Arabia continues to invest heavily in sport as part of its Vision 2030 plan. Organisations like Newcastle United, the PGA Tour and Formula 1 accepting Saudi funds signal that traditional bastions of Western values and rules-based order are open to a new form of business, tilting to the geopolitical scale towards new competitors in the Global South. Expect this to encourage further Gulf investment in sport. The question now is, how will this change the sporting and geopolitical environment, and how will Western states respond to this challenge?