#27. Why Saudi Arabia Invests Billions of Dollars into Sports?

On 7th of October, 2021, Newcastle United Football Club was sold for a reported $408 million, making them the richest club in world football.

Most of the money behind the deal came from Saudi Arabia's Public Investment Fund (PIF), which is valued at over $600 billion.

Newcastle wasn't the only beneficiary; across the sporting world, money from this PIF was being used to invest in major sporting series, host significant events, and even purchase established groups within various sporting sectors.

💡 Before I get into the Why, Here are some sports that the PIF has invested in:

1. Football

   • Bought Newcastle United in 2021 & spent over £400 million on transfers since the takeover

   • Saudi Pro League clubs spent a record US$957 million (£754 million) in the 2023 summer transfer window

2. Golf

   • Invested $2 billion in LIV Golf in October 2021

3. Cricket

   • Aramco became the naming sponsor of the International Cricket Council (ICC) events.

   • Saudi Tourism is a main sponsor of the Indian Premier League (IPL).

4. Boxing

   • Hosting elite boxing events and investing in major boxing matches such as the ‘Day of Reckoning’ and the ‘Clash of the Dunes’

5. Formula 1

   • Hosted a Formula 1 race for the first time in 2021 & are also licensed to host an F1 race each year for 10 years.

   • Bought a £400 million stake in the McLaren F1 team in 2021 (sold in 2023)

6. MMA

   • Bought a minority stake in the Professional Fighters League worth $100 million

7. Tennis

   • The Women’s Tennis Association is preparing to announce that its season-ending WTA Tour finals will take place in Riyadh, backed by investment from the PIF.

   • The country has also hosted exhibition matches, such as a clash between Novak Djokovic and Carlos Alcaraz, to promote the sport.

8. eSports

   • Launched an eSports World Cup to be held annually starting in summer 2024.

However, these investments have not been without controversy, as various human rights groups have objected to all the investment, accusing the Gulf State of “Sport-Washing” — using sport to wash over allegations of human rights abuses.

Anyway, let’s get into the strategic details on why Saudi Arabia is investing so much into world of sport?

1/ Economic Diversification

Saudi Arabia's economy has been heavily reliant on oil demand. Their economy boomed in the 70s because of the oil crisis. In fact, their economy grew from $15 billion in 1973 to $184 billion by 1981, creating a bigger dependency on oil.

With fluctuating oil prices and diminishing reserves, there's a pressing need to diversify the economic base. The government is constantly seeking opportunities to diversify the economy.

Vision 2030 aims to reduce dependence on oil, diversify the economy, increase non-oil trade and investment, and develop public service sectors to promote a more secular image of the nation.

The strategy is built around three main pillars: a vibrant society, a thriving economy, and an ambitious nation.

This development is largely funded by the Public Investment Fund (PIF), the state's sovereign wealth fund, which holds estimated assets of $620 billion. Investing in sport, both nationally and globally, is a key part of this plan.

2/ Boosting Global Image and Soft Power

By hosting major sporting events and owning high-profile sports teams, Saudi Arabia is working to improve its image and gain influence on the global stage. This strategy, sometimes called "sports washing," helps to shift the focus from the country's human rights issues to its positive contributions in sports. Successful sports projects can also help Saudi Arabia build better diplomatic and economic relationships around the world.

3/ Youth Engagement and National Unity

Saudi Arabia has a young and expanding population, so engaging the youth is essential for the country's social stability and future growth. By investing in sports, Saudi Arabia can offer young people opportunities to get involved, stay healthy, and feel proud of their nation. These efforts also aim to inspire the next generation of athletes and create a lively, connected society, aligning with the goals of Vision 2030.

4/ Tourism and International Visibility

Major sporting events attract tourists from around the world, giving a significant boost to the local economy. By hosting events such as Formula One races, boxing matches, and esports tournaments, Saudi Arabia not only showcases its ability to host world-class events but also garners global media attention, increasing its visibility and appeal as a tourist destination.

These initiatives are part of a larger plan to grow the tourism sector and position Saudi Arabia as a global hub for sports and entertainment.

5/ Strategic Investments and Long-Term Growth

The Public Investment Fund (PIF) is carefully putting money into sports to make sure there's growth and profit over the long haul. Big investments, like buying Newcastle United FC and starting the LIV Golf series, are meant to bring in a lot of money and help Saudi Arabia make a name for itself in important global markets. These aren't just quick money grabs; they're part of a bigger, long-term plan to strengthen the kingdom's economy and meet the ambitious goals of Vision 2030.

So, know you why!

By pouring billions into sports, Saudi Arabia is aiming to achieve several big goals that touch on economics, society, and global politics. These investments are planned to help the country become more diverse and sustainable in the long run .

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