Saudi Sports

PezCycling News: Saudi PIF Invests Everywhere

A recent short segment in CNBC’s Last Call financial news program succinctly picked apart Saudi Arabia’s sports investment strategy (full segment here). The nation’s sovereign wealth fund (PIF) has seemingly narrowed its spending into two channels: (1) sports with dysfunctional business models that it can disrupt and rebuild, and (2) sports which it may not be able to outright purchase, but where it can license and host prominent events.

It’s now been a few months since we’ve heard a whisper about the much-hyped rumor that pro cycling was on the verge of being “taken over” by the Saudi investment fund. Given PIF’s continuing and aggressive push into other sports, we have to wonder how accurate those rumors were, and if they were accurate, what exactly went wrong? Pro cycling has both a generally outdated economic model and a race licensing model that could readily be upended by a well-funded party from outside the sport’s traditional circles. In other words, cycling is ripe for an outside party to step in and disrupt/modernize the sport.

There is a lot to write about:

• How hard it is to do cycling events of any scale, yet alone make money on them
• That said, it appears obvious from the outside that “Pro cycling has both a generally outdated economic model and a race licensing model that could readily be upended.” Pro cycling teams exist by selling their name to a brand, and that brand wants to be associated with a compelling story that makes consumers want to in turn be associated with that brand. Winning bike races is only a single aspect of that story. EF Education-EasyPost has probably gained more value from the team allowing Lachlan Morton to do his own thing than any World Tour victory.
• The subplot here is “Saudi Arabia’s sports investment strategy,” which is part of a larger strategy to take the massive amount of capital they control by virtue of oil production and invest it around the world in ways that will continue to allow them to control massive amounts of capital¹, even when oil stops creating said capital.

…but it is all too much for me to expand upon now, so this will, like so many quote-posts before, remain a marker, a note to some future self who has time to think and write.