Race in Gulf to spend petrodollars on sport
Saudi Arabia is following the likes of Qatar in splashing out on hosting international competitions, deploying its financial muscle to position the kingdom
Eddie Hearn was feeling emotional. Flanked by boxers Anthony Joshua, a former heavyweight champion, and Andy Ruiz Jnr, a Mexican-US fighter who shocked the sport by winning their bout in June, the UK sports promoter was in Diriyah, a historical site in Saudi Arabia’s conservative heartland, talking up the next championship bout.
In comparison to the usual prefight media conference, it was a polite affair. The fighters avoided trading insults and praised their hosts. Interviews were conducted after prayers.
“Sometimes our sport is very narrow-minded,” said Hearn, the mud-brick remains of the ruling al-Saud family’s ancestral home providing the backdrop to the setting. “There’s Las Vegas, there’s New York, there’s London. [But] there’s a whole world out there and now there’s Saudi Arabia for boxing.”
He conceded some people think Saudi Arabia is a “strange destination” for a global sports event. But he boldly predicted the December 7 title rematch, dubbed the “Clash on the Dunes”, will go down in history with Muhammad Ali’s “Rumble in the Jungle” against George Foreman in Zaire and “Thrilla in Manila” against Joe Frazier.
Saudi officials will hope he is right. Riyadh has spent about $50m to secure the rights to host the fight as sport becomes the latest platform from which Crown Prince Mohammed bin Salman looks to deploy the kingdom’s financial muscle to project the country on to the global stage, reshape perceptions and shake up its conservative society — all part of his Vision 2030 programme of economic reform.
In doing so, Riyadh is following in the footsteps of neighbouring Qatar and the United Arab Emirates (UAE), which have invested billions of dollars to make their mark in the international sports arena.
The trend is rippling through the sporting world as the region’s absolute monarchies splash their petrodollars to lure superstars and top events.
Its effect has been most notable in football, from the decision to award Qatar the 2022 World Cup to the hundreds of millions of dollars Abu Dhabi and Doha have spent transforming Manchester City and Paris Saint-Germain football clubs, inflating wages and transfer fees in the English and French leagues, respectively. But it is also having repercussions across motor racing, athletics, tennis, golf and, now, boxing.
Some grumble that the Gulf states’ financial clout is distorting markets, while campaigners accuse autocratic regimes of using sports brands to deflect attention from poor human rights records. The Joshua-Ruiz bout comes as Saudi Arabia is desperate to repair its tarnished image a year on from the brutal murder of journalist Jamal Khashoggi.
Simon Chadwick, a professor of enterprise at the UK’s Salford Business School, says the phenomenon is changing the global sports industry “tangibly and intangibly”.
“It has changed the face of world sport,” he says. “There’s an expectation that the region is going to be a source of revenue
… [and] it increases expectations about what it takes to bid for and organise an event.”
SAUDI ARABIA IS BECOMING SERIOUS
The entry of Saudi Arabia, which has the Middle East’s biggest economy and the Arab Gulf’s largest population, into the sports bidding market could have the greatest effect yet.
“The sky is the limit for us because it is the mandate within the 2030 Vision to host the best competitions, to promote Saudi in terms of tourism and to use sports, culture and entertainment as a tool,” says Prince Abdulaziz bin Turki alFaisal, chair of the kingdom’s General Sports Authority. “Literally, [Prince Mohammed] says: ‘Abdulaziz, you are doing this for your country. If it’s in the benefit of Saudi Arabia, go out and do it and we don’t have any limits.’”
Days after Joshua and Ruiz exchange blows in a 20,000capacity open-air stadium, with front-row seats selling for $13,000, Diriyah will host a $3m tennis tournament that promises to feature “eight of the finest men’s players on the planet”. In January, Saudi Arabia will stage the Paris-Dakar rally, an annual motor racing event, for the first time.
The same month, Spain’s top four football teams, including Barcelona and Real Madrid, will compete in the Spanish Super Cup in Jeddah. The new version of the tournament will earn the Spanish football federation between €35m-€40m a year over three years, according to a
Spanish newspaper report, and is going ahead despite criticism from within Spain. Rumours have also persisted that Prince Mohammed wants to buy Manchester United.
The kingdom is also hosting Formula E motor racing, the Italian football Super Cup and a round of the European golf tour, all for the second year, as well as its first cycling tour event. In February, the inaugural Saudi Cup will be run, which, with prize money of $20m, will be the world’s richest horse race.
“The idea is to host all kinds of sports … to have the kingdom as the hub of sports within the region,” says Prince Abdulaziz.
Officials in the deeppocketed Gulf states say the investment is part of the broader effort to diversify oil-dependent economies and help boost tourism, brand awareness and standards in their hospitality industries.
Qatar is spending more than $200bn on infrastructure associated with the World Cup; Abu Dhabi’s Formula 1 track is the centrepiece of the $40bn development of Yas Island. As
Saudi Arabia plays catch-up, it plans to pour billions of dollars into its Qiddiya sports and entertainment project, which will have a motorsports complex and an “Olympic-style” city near Riyadh.
The development of sports industries is also viewed as important in the creation of more entertainment options for youthful populations, and boosting participation in sport partly to tackle some of the world’s highest obesity levels. More than two-thirds of the population in Saudi Arabia is aged under 24.
But experts say there are other motives at play, from the projection of soft power to what campaigners have described as attempts to “sportswash” the country’s poor human rights record. Similar complaints have been made against the UAE and Bahrain, which both host Formula 1 Grand Prix races.
Despite the social reforms, Saudi activists say the kingdom has become increasingly autocratic under Prince Mohammed’s watch, pointing to Khashoggi’s killing and crackdowns that have targeted academics, bloggers, businessmen, clerics and female activists.
ALQST, a UK-based group that monitors abuses in the kingdom, says: “They are trying to cover up their abuses by holding high-profile sporting events and spectacles supported by businesspeople, politicians and sporting figures around the world, who are not taking account of the deteriorating state of human rights in Saudi Arabia.”
Chadwick says after the Khashoggi murder some people in the sports industry stepped “back from association with Saudi Arabia”. But the lure of money is again trumping reputational concerns, he adds. “What I sense is people are starting to step back into the Saudi Arabian arena.”
UNDER SCRUTINY
For some Gulf states, becoming involved in sport has brought more scrutiny than they might have liked. Qatar has been dogged by allegations, which it denies, that it corruptly secured the rights to host the World Cup. It has also drawn criticism for its treatment of foreign labourers and its stance on LGBTI rights. And the sight of rows of empty seats when Doha recently hosted the World Athletics Championship also pointed to the challenges of putting on successful events in Qatar. A person close to its World Cup organising committee said the images — broadcast worldwide — were a “disaster”. Manchester City and PSG have brought success in terms of trophies. But both are under investigation by Uefa, European football’s governing body, for alleged breaches of financial fair-play rules designed to prevent unsustainable spending on players.
Abu Dhabi officials have always insisted the 2008 acquisition of Manchester City by Sheikh Mansour bin Zayed Al-Nahyan, a senior royal and the UAE’s deputy prime minister, was a private investment. However, perceptions of the club have become inextricably linked to the UAE capital. Khaldoon alMubarak, one of Abu Dhabi’s most powerful officials, is City’s chair and the airline Etihad its leading sponsor.
The project has expanded globally, with City Football Group (CFG), which was established in 2013, acquiring sister clubs in New York and Melbourne, and minority stakes in Japanese, Spanish, Uruguayan and Chinese clubs. On Wednesday, Silicon Valley investor Silver Lake Partners is set to announce a $500m deal to acquire a 10% stake in CFG, valuing the business at $4.8bn — more than any other football organisation in the world.
Qatar bought PSG in 2011 and has also spent hundreds of millions on the club. Notably, the French side paid a world record €222m for Brazil star Neymar two years ago in a deal that sent shock waves through football. Nasser al-Khelaifi, a former tennis player who is president of PSG and chair of its owner Qatar Sports Investments as well as beIN, Qatar’s satellite sports network, has overseen the club’s development.
In February he was appointed to Uefa’s executive committee. However, three months later Khelaifi was put under formal investigation in France for alleged bribery relating to Doha’s winning bid to host the athletics championship. He denies the allegations.
Despite the controversies, Nicholas McGeehan, a humanrights activist and co-founder of Fair/Square, a research group, says the soft-power strategy has been largely successful.
“For every outraged liberal westerner who disapproves of their involvement, there’s about 1,000 kids running around in either genuine or fake football jerseys with Qatar on the front,” he says.
Hassan al-Thawadi, secretary-general of the Qatar 2022 Supreme Committee, insists that despite the fierce criticism over issues such as labour conditions on World Cup building sites, the tournament has acted as a “catalyst” for urban development, the growth of a hospitality industry and societal change.
“Any nation that hosts major tournaments will go through that — it’s a baptism through fire,” he says. “But what we’ve done in the face of constructive criticism, we’ve engaged … and tried to move forward and improve.”
THE QUESTION OF ULTERIOR MOTIVES
Thawadi also cited “ulterior motives” in the criticism of Qatar, alluding to regional rivalries that have spilt over into the sporting arena.
Some analysts suggest that PSG’s Neymar deal in mid-2017 was in part intended by Doha to send a message that Qatar was undeterred just weeks after Saudi Arabia, the UAE, Egypt and Bahrain imposed an embargo on their neighbour. Qataris privately blame their rivals for constantly stoking the corruption allegations.
A person involved in Qatar’s acquisition of PSG says the deal was partly motivated by Doha’s desire to build international alliances, even protection, should it need it from its larger neighbours. “You have to read Qatar’s ownership of PSG as politics,” says the person involved in the PSG acquisition.
A recent battle over sports broadcasting rights in the Middle East has become particularly vicious. Qatar’s beIN Sports channel, which is estimated to have spent more than $15bn on exclusive broadcasting rights, accuses Saudi Arabia of undercutting its product by setting up a pirate network called beoutQ, which broadcasts the same events.
Riyadh denies any involvement in the pirate network, but beIN accuses Saudi Arabia of “state industrial theft on a wholesale scale”. The kingdom was beIN’s biggest Middle East market. Now Riyadh will be bidding for rights, which is likely to increase the regional competition. “That is something we are working on,” says Prince Abdulaziz.
BeIN has launched an international investment arbitration case against Saudi Arabia seeking more than $1bn in damages. The legal process is ongoing. McGeehan says the beIN dispute has been an example of how a “move to sabotage each other” has been an obstacle to success. “What you are seeing is a proxy [battle], their war playing out in the field of sport,” he says.
Others say the greater the sporting rivalry becomes, the more money is likely to be spent. “There is this very competitive, almost family-like contest between these nations as to who can spend the most, buy the most, do the best,” says Chadwick. “If Qatar invests $1bn, then Saudi Arabia will have to invest $2bn.”
Saudi Arabia is only just getting started. Asked if Riyadh could bid for an Olympics or World Cup in the future, Prince Abdulaziz replies: “Why not?”
“There will always be a perception of Saudi, no matter what you do, that these guys are just sitting on a bundle of cash and they’re just spending it left right and centre,” Prince Abdulaziz says. “But we know what’s best for us and we know what we want, and that’s what we’re going to go out and do.”
THEY ARE TRYING TO COVER UP ABUSES BY HOLDING SPECTACLES SUPPORTED BY BUSINESSPEOPLE, POLITICIANS AND SPORTING FIGURES