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7 February 2020

Despite rumours of its interest in the purchase of a large English football club, Saudi Arabia’s geopolitical security and its preference for domestic investment make a foreign takeover unlikely, Simon Chadwick writes.

For football fans, the start to 2020 has evoked a sense of Groundhog Day. Yet another European football club is rumoured to be on the verge of acquisition by yet another oil and gas-rich Middle Eastern state. This time around, the rumour is that English Premier League club Newcastle United is being pursued by the Saudi Arabian government’s Public Investment Fund – the country’s sovereign wealth fund.

We have seen this all before. For the last three years, rumours have circulated that Saudi investors have been interested in buying Newcastle, though none have ever come to fruition. At the same time, counter rumours persist that the kingdom’s Crown Prince, Mohammed Bin Salman, is actually interested in his government’s purchase of Manchester United. However, this rumour also seems to be strong on titillation but low on substance.

Nevertheless, the palpable sense of anticipation among football fans in Newcastle and Manchester is borne of previous European football acquisitions by other Gulf states, notably Abu Dhabi and Qatar.

More on this: Tackling Saudi Arabia’s economic diplomacy challenges

In 2008, the former bought English Premier League club Manchester City, and later, in 2011, the latter purchased French Ligue 1 club Paris Saint Germain. Since then, both sets of new owners have lavished considerable resources upon their clubs, both in terms of finance and human resources.

The logic amongst interested observers of the latest developments is that the same is about to happen again. The predominant view is that Saudi Arabia will follow a game plan laid down by its fellow Gulf Cooperation Council (GCC) members.

This would initially involve buying a football club, then signing some of the world’s best, and most expensive, players. Then, the expectation is that the kingdom will use the club as a focal point for all things Saudi – ranging from promotion of the country’s national airline through to its positioning as a tourism destination.

As the hyperbole has grown, so the usual suspects have clustered around the Saudi Arabian rumours. Not only have these stories become a daily staple of some journalists, but cause-related organisations and pressure groups have used the excitement to restate their claims that Saudi Arabia is somehow engaged in ‘sportswashing’. All concerned are often considerably off the mark in their assertions.

In simple terms, Saudi Arabia is neither Abu Dhabi nor Qatar. It is true that government in Riyadh is pursuing a national vision and associated sport development policy in the same way as its two neighbours.

It is also true that vast oil and gas revenues similarly underpin such a pursuit, and that potential sport revenues are intended to diversify the economy away from its dependence on revenue for fossil fuels.

Further, as in the Qatar and Abu Dhabi cases, there is a perceived need to address domestic socio-cultural challenges through sport, such as growing health problems.

However, a closer look at these three countries suggests that the language being used to characterise Saudi Arabia is misplaced, inaccurate, and based on generalisations.

More on this: Stalemate in the Arabian Gulf

Unlike Saudi Arabia, Abu Dhabi and Qatar are both small countries. The former is less than 1,000 square kilometres in size, with a population of just under 1.5 million, and the latter is only a little bigger, at around 11,000 square kilometres, and with a population of just over 2.5 million.

In turn, both are strategically vulnerable. Abu Dhabi juts out into The Gulf very close to the politically charged and often insecure Straits of Hormuz, and Qatar is a peninsula that does the same, though it has only one land border, with Saudi Arabia. This is telling, as the two small countries find themselves wedged between two ideologically and viciously opposed countries, Saudi Arabia and Iran.

One motive for Abu Dhabi and Qatar’s investment in sport has therefore been to mitigate risk. They have done this in two ways.

Firstly, by embedding themselves in the global landscape, they have worked to make themselves relevant, important, and valuable members of the world’s sporting community.

Secondly, by investing in football clubs, they have moved assets off-shore, hedging against the possibility of political instability in the Gulf, possibly even invasion or terrorist threat.

Saudi Arabia, however, is a completely different entity. The country is no minnow and is, as highlighted above, one of the region’s political, religious, and ideological powerhouses. It is two million square kilometres in size and has a population of more than 34 million.

Furthermore, it is one of the world’s biggest oil producers, and has the fourth-largest gas reserves of any country globally. If further comparisons are needed, consider that Qatar’s armed forces number 12,000, whilst there are 227,000 military personnel in Saudi Arabia.

Consequently, the government in Riyadh is less concerned about mitigating risk than its smaller GCC neighbours. This means that potential sporting investments overseas would be more for commercial reasons than for political ones.

It also means that Saudi Arabia can be more secure, self-confident and domestically focused than the likes of Abu Dhabi and Qatar. Indeed, this is something that is already reflected in recent sports investments the country has made.

Thus far, the state’s priorities have focused on building domestic infrastructure – Neom, Qiddiya and the Red Sea Project being key examples. Each will lead to the creation of urban developments in which sport, events and tourism will play vital roles. In total, trillions of dollars will be spent on the projects, the intention being to attract inward investment, draw tourists into the country, and position Saudi Arabia as one of the world’s most important event hosting and tourism destinations.

To this end, there have already been major international boxing bouts staged in the country, and it has recently been announced that a Formula 1 Grand Prix will take place at Qiddiya in 2023. This indicates that Saudi government policy and strategy is focused more on domestic growth than it is on fanciful overseas investment opportunities.

Sure, there is often considerable status associated with being the owner of a European football club. However, Saudi Arabia is already home to the winners of last season’s Asian Champions League winners Al Hilal, and the government is already trying to privatise its leading football clubs, of which Al Hilal is one. Clearly, this domestic football focus begs the question of why, then, the government would buy an overseas club.

One should not entirely discount the possibility that a Saudi Arabian state investment vehicle might eventually buy a top football club in Europe. However, for now this seems unlikely. Indeed, such a purchase would mark a significant policy shift by the government in Riyadh. Considering Saudi Arabia’s current position, pundits, optimists, and football fans may have to continue satisfying themselves with enticing rumours for a while longer.

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