Opinion article: Arab investments in sports

The Saudi Public Investment Fund announced this week that it will spend 8.75 billion Saudi riyals (2.3 billion US dollars) during the first eight months of 2022 in exchange for sponsorship deals for local and foreign football clubs, to as another link in the chain of investments of Arab sovereign funds in sports in general and football in particular in recent years.

Saudi Public Investment Fund

The fund, which is headed by Crown Prince Mohammed bin Salman Al Saud, acquired 80% of the shares of the English club Newcastle United in October 2021 in a transaction estimated at around 300 million pounds sterling. In the first year since the deal closed, the fund has spent more than £200m buying new players, appointing a new coach and chief executive.

And after the acquisition of Newcastle United, Yasser Al-Rumayyan, governor of the Public Investment Fund, and chairman of the board of directors of a number of large Saudi companies (such as Aramco Oil, for example) was appointed to lead Newcastle.

In addition, the Fund, through the companies it owns, has made many sports investments inside and outside the Kingdom, including the sponsorship of the Saudi Premier League through the “Roshen” property development company owned by the Fund, and the establishment of the Jeddah Corniche Circuit to host the international motor race “Formula One”, as well as the launch of LIV Golf Series for $2 billion.

Abu Dhabi United

In 2008, the Abu Dhabi United Development and Investment Group, owned by Sheikh Mansour bin Zayed Al Nahyan, brother of UAE President Sheikh Mohammed bin Zayed, acquired English club Manchester City for an amount estimated at around $350 million is. Later, in 2013, the group founded the “City Football Group”, which is led by the Emirati government official Khaldoon Al Mubarak, CEO of the government investment authority “Mubadala”. The “City Football Group” owns a number of other (less powerful and influential) football clubs besides Manchester City, which include the American New York City, the Australian Melbourne City, the Japanese Yokohama Marinos, the Uruguayan Montevideo City, the Spanish Girona, the Chinese Sichuan Jinyu, the Indian Mumbai City, Lommel, Belgian, French Troyes and finally the Italian Palermo.

According to the German magazine “Der Spiegel”, and since acquiring ownership of Manchester City, the Abu Dhabi United group has spent more than $2 billion on deals to include players and attract coaches to the club, the most prominent of which was the current Spanish coach, Pep Guardiola.

On the other hand, during this period, Manchester City transformed from a middle-ranked team and sometimes even below relegation to the strongest team in England. Since 2008, City have won six Premier League titles (they only won it twice, the last of which was the 1967-68 season), two FA Cups, six League Cups, in addition to reaching the Champions League final for the first time fetching. in its history in 2021.

Qatar Sports Investment

For 100 million euros, the “Qatar Sports Investment” group, owned by the Emir of the State of Qatar, Sheikh Tamim bin Hamad Al Thani and led by the Qatari businessman Nasser Al-Khulaifi, acquired 70% of the French club Paris Saint- Germain bought. in June 2011. Nine months later, the group acquired 100% of the club’s shares to own it outright.

The group has since spent an estimated €1.4 billion on the French capital side, and has already succeeded in turning PSG into France’s biggest power and one of the richest clubs in the world. Since then, Paris Saint-Germain has won 20 major championships in France, with 8 league titles (it had won the title only twice before), six French Cups and the same amount for the League Cup. The team has also won the French Super Cup nine times and in 2020 reached the Champions League final for the first time in its history.

A few days ago, specifically on October 10, the group announced the purchase of 21.7% of the shares of the Portuguese club Sporting Braga for 80 million euros, becoming the second European club sponsored by the Qatari group become

other clubs

Away from the sovereign funds, it should be noted that there are other European clubs owned by some Arab businessmen, such as the English club Sheffield United, which is acquired by the Saudi businessman Prince Abdullah bin Musaed Al Saud, and the English club Aston Villa, which is jointly owned and chaired by Egyptian businessman Nassef Sawiris.

Sponsorship contracts

In addition to the ownership of these clubs by sovereign funds, a group of companies affiliated with Arab countries have signed huge sponsorship contracts with many clubs and international bodies. The most prominent of these contracts belong to companies such as Qatar Airways, which – together with Paris Saint-Germain – has sponsorship contracts with the International Federation of Football Associations (FIFA), Barcelona clubs, Germany’s Bayern Munich, Italy’s Roma and Argentina’s Boca Juniors, in addition to the sponsor of various competitions in Asia. , North, Central and South America.

In turn, Emirates Airlines sponsors the FA Cup, and a group of clubs such as Arsenal (whose stadium bears the Emirates name under the sponsorship contract), Spain’s Real Madrid, France’s Lyon, Italy’s Milan and Portugal’s Benfica. In addition, Emirates Airlines sponsors various competitions in rugby, cricket and motorsport, in addition to sponsoring the Australian and French Open tennis tournaments.

The UAE’s Etihad Airways in turn sponsors the clubs owned by the City Football Group, led of course by Manchester City (whose stadium is called the Etihad Stadium), in addition to other clubs such as Al-Nasr Saudi Arabia, and the Washington Wizards American basketball team.

Other benefits

In addition to the huge publicity provided by the large sponsorship contracts provided by the Arab sovereign funds, other advantages in the promotion of tourism to these countries can be listed, as Manchester City annually holds a camp in Abu Dhabi, compared to similar camps for Paris Saint-Germain and Bayern Munich in Doha, for example.

The Dubai Sports Council organizes an annual global celebration called “Dubai Globe Soccer”, to which the top stars of the game in the world are invited. It is possible to imagine the value of a star like the Portuguese Cristiano Ronaldo who publishes a photo of him with a tourist attraction like Burj Khalifa, especially since Cristiano Ronaldo is the most followed on the social networking site ” Instagram”, which has 487 million followers. (October 2022).

Social gains cannot be overlooked either, which include the exploitation of soft power to improve the public image and spread the culture of a country. For example, after the Saudi investment fund owned Newcastle, the team changed its reserve shirt this season to be white and green, which completely matches the Saudi national team shirt.

criticism

However, the case was also not without some criticism, especially from Western media, such as that these transactions can be exploited for political and social purposes. Many club owners and coaches also felt that what was happening represented a clear case of unequal opportunity, as the clubs owned by these Arab funds were spending hundreds of millions on deals at a time when other clubs were struggling the specter of bankruptcy and the inability to meet the least of their demands.

What’s next

It does not look like the Arab sovereign investments, and specifically those of the Gulf, in world sports will end anytime soon.

In recent months, after Russian billionaire Roman Abramovich was forced to sell shares in English club Chelsea due to the fallout from Russia’s war on Ukraine, more than one Saudi investor has expressed his desire to buy the club, but the case did not happen for various reasons, so that the ownership of Chelsea eventually passed to the American businessman Todd Boelhy.

But it will not be the final word.

(Prepared by: Adel Kreim, sports economics analyst at Zawya Arabi and former media coordinator of the Confederation of African Football)

(Contact zawya.arabic@lseg.com)

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