More than money: Geopolitics drives Saudi sports spending

There’s a saying in sports journalism: “The answer to all your questions is money.” But in the case of Saudi Arabia’s massive sports investment programs during the reign of Crown Prince Mohammed Bin Salman, money isn’t everything.

In simple terms, there is a clear profit motive. With assets worth $925 billion in 2023, Saudi Arabia’s sovereign wealth fund exists to convert oil revenues into even greater national income.

Last year, the country’s public investment fund reported a profit of $36.8 billion. Since 2016, $51 billion has been spent on sports real estate.

This is not about making bin Salman the biggest sports impresario in the world. Rather, he is concerned with improving Saudi Arabia’s economic and geopolitical situation through sports investments while at the same time ensuring the long-term survival of the Saudi regime.

Beyond Newcastle United, LIV Golf

Investing in sport is a common way for developing countries to announce their presence on the world stage. Instead of one-off mega-events, Saudi Arabia is taking a more dispersed and diverse approach.

The Public Investment Fund’s most high-profile investments are well-known, notably the 2021 purchase of Newcastle United of the English Premier League and the acquisition of the LIV Golf Tour, which challenged the PGA’s decades-long dominance of the sport.

In addition to golf and soccer, Saudi Arabia has also spent staggering sums on lesser-known investments in esports, wrestling and motorsports. In other games, such as chess and snooker, the winning motive is less clear.

The logical conclusion is that Saudi Arabia views its sports investments as a loss leader – an unprofitable activity designed to encourage more profitable activities elsewhere. In the words of the Public Investment Fund’s 2022 annual report, international investment pools “enable Saudi Arabia to expand its global reach and influence.”

But what does that really mean?

“Sports washing”

The common term for Saudi Arabia’s strategy is sportswashing, the practice of reputation washing in the hope that a cleaner national image will translate into soft power on the world stage.

But this explanation does not go far enough. For bin Salman, the series of sports investments and real estate is just a small part of a larger strategy to prepare Saudi Arabia for a 21st century in which global oil demand is expected to decline by mid-century and geopolitics become more complicated.

This is no secret: Saudi Arabia’s official grand strategy – Vision 2030 – envisages the complete modernization of the country’s economy and foreign policy. Saudi Arabia’s sports diplomacy is therefore part of a broader geopolitical strategy to prepare Saudi Arabia for an era of multipolarity, in which power is distributed among several states.

Sports diplomacy also normalizes the West’s financial and political commitment to the Saudi regime. Internationally, bin Salman wants to maintain economic and security ties with organizations whose interests align with those of the Saudi royal family and state, thereby ensuring the long-term health of both.

Regular interactions between Saudi Arabia and the West create an understanding that Riyadh is a “normal” place to do business – and if it is good business, there is no reason to end the relationship with too much resentment because of its authoritarianism and to jeopardize its abysmal human rights record. In short, sports investments are a Saudi hedge against turning away from the West.

The allure of the big payday

From a Western perspective, the most troubling consequence of Saudi sports investment is the normalization of authoritarian capitalism – economic freedom without political freedom – as a feature of the emerging international order.

Saudi Arabia, alongside China, Russia, Singapore and others, represents an alternative to Western democratic capitalism as a path to development.

This would be surprising to an earlier generation of scholars and policymakers who once thought free markets and free societies were a self-reinforcing phenomenon.

But given the staying power of authoritarian capitalism, doing business with dictators and strongmen has become inevitable and, in some cases, even desirable. In the world of sports, few have resisted the charm of a huge payday.

Democratic backsliding is closely linked to authoritarian capitalism. All over the world, the quality of democracy and freedom is declining, and the slow normalization of economic dealings with authoritarian capitalists is part of this erosion.

What’s next?

So can something be done? Western states have options, but they are limited.

Finally, Saudi Arabia’s investments are legal and highly sought after in both the private and public sectors.

Western officials can resist the awarding of major events to authoritarian states. But complaining about problematic hosts means little unless liberal democracies are willing to cover the hosting costs themselves, which they are increasingly unwilling to do.

Meanwhile, authoritarian regimes are eager to host mega-events and secure the prestige that comes with them. For example, Saudi Arabia is currently the only candidate for the 2034 FIFA World Cup.

Countries may seek to intervene regulatoryly to curb the extent of Saudi influence. National security is often used as an excuse to block foreign investment in strategic sectors such as ports and 5G mobile networks.

The Saudi plan is working

However, since golf and video gaming do not pose a national security risk, American regulators are unlikely to intervene. Political intervention by the US Congress or the White House is even less likely. Saudi Arabia is an important part of America’s Middle East strategy to confront Iran, and arguing too much about human rights or sports investments is not worth the strategic cost.

The genius of Saudi Arabia’s business is its projection of power through consent. Investors and fans want what bin Salman is selling, governments have limited options and critics have to rely on outdated standard arguments.

For Saudi Arabia, however, its sports charm offensive is about more than money. It is about an investment in the future prosperity and security of the kingdom and the longevity of the Saudi dynasty. So far the plan is working.

Aaron Ettinger is an associate professor of international relations at Carleton University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.