Gulf States' Sports Shopping Spree
Goes Into Overdrive
Marie-France Han • July 2023 • Get the data
Deep-pocketed sovereign wealth funds from Persian Gulf states are speeding up their quest for marquee sports investments
Abu Dhabi, Saudi Arabia and Qatar have been familiar presences in European soccer since the purchase, in 2008, of Manchester City FC by the Abu Dhabi United Group. The acquisitions of Paris Saint-Germain by Qatar Sports Investments in 2011, and of Newcastle FC by Saudi Arabia's Public Investment Fund in 2021, have coincided with a decade-long explosion of player salaries and transfer fees.
But since June 2022, Saudi Arabia and Qatar have accelerated the pace of their pursuit of marquee sports properties, driven by a desire to diversify their investment portfolio and boost their international image.
2008 marked the beginning of Gulf presence in the upper echelons of European soccer. Save for Malaga CF in Spain, the acquisitions have been successful, with the value of Paris Saint Germain soaring from €100 million to almost €3 billion.
Top soccer players with global fan bases have seen their salaries skyrocket. Of the world's 10 best-paid soccer players for the 2022-2023 season, six are employed by Gulf-owned clubs.
War and (Maybe) Peace on the Fairway
In June 2022, LIV Golf, financed by Saudi Arabia's sovereign wealth fund, kicked off its inaugural season with a roster of high-profile players recruited away from the PGA Tour.
LIV Golf's Global Footprint
After an escalating war of words, player suspensions and legal skirmishes, the two tours in June 2023 suddenly announced a "long-term strategic partnership" "global golf partnership" that would place the PGA Tour's lucrative TV rights under ownership of a new entity.
The merger, which still has many hurdles to cross, including antitrust regulations, would give Saudi Arabia a much larger sports footprint, especially in the US.
Formula 1: Spurned, But Not Discouraged
Saudi Arabia's Public Investment Fund reportedly considered acquiring the Formula 1 motorsports franchise last year -- but owner Liberty Media Corp wasn't interested in selling. The fund remains interested in the sport, which posted record attendance, revenue and profit for 2022.
A Global Web of Race Courses
Colossal Wealth
These eye-popping bids and acquisitions are made possible by the Gulf states' huge sovereign wealth funds, with assets approaching $1 trillion. Funded over the years by fossil fuel income, these state-owned organizations aim to manage diversified investment portfolios that will minimize the region's reliance on global energy demand. Purchasing sports franchises almost exclusively based in the Global North is part of the strategy.
Alongside their sheer size, these funds are notable for their proximity to unelected ruling families and their lack of transparency. Qatar (110th), the United Arab Emirates (133rd) and Saudi Arabia (150th) occupy some of the lowest rungs of The Economist's Democracy Index, with regimes labeled as "authoritarian".
Bread, Circus... and Human Rights
These ambitious plans remain subject to lengthy regulatory scrutiny and political opposition.
Does investing in high-end, Western-based sports represent a good bet for a country eager to improve its image? While the practice of sportswashing is in no way limited to Gulf nations, the 2022 FIFA World Cup in Qatar brought the phenomenon to the forefront.
And recent opinion polls suggest a rather mediocre return on investment.
In a YouGov poll conducted in January, British soccer fans expressed a slight improvement in their unfavorable opinion of the country, to 72% from 78% before the start of the tournament. But in the general population, the percentage of Britons with a negative view of the country actually rose to 72%, from 67%. 60% of Britons still view the hosting of the World Cup by Qatar as "unacceptable".
In the US, a recent YouGov poll shows that, while 29% of US respondent have a "somewhat unfavorable" or "very unfavorable" opinion of the PGA Tour, that figure rose to 39% for LIV Golf. Moreover, 56% of US respondents "strongly" or "somewhat" approved of the US Department of Justice's antitrust investigation into the merger of the two entities.