Saudi Arabia’s Latest Move in the Virtual World
The public investment fund of Saudi Arabia (PIF) is taking another significant step in acquiring a major stake in the sports industry, this time in the virtual world. The PIF, along with Jared Kushner, the son-in-law of US President Donald Trump, and US investment company Silver Lake, is set to buy Electronic Arts (EA) for $55 billion. This deal will be the largest private equity buyout in history, with a substantial portion of the purchase price consisting of borrowed money.
A Strategic Investment
The PIF had previously owned around 10% of EA, which produces successful games such as EA FC (previously FIFA) and Madden NFL. These sporting titles are crucial to the company’s commercial success. The size of this deal surpasses other PIF investments in sports, including LIV Golf and the purchase of the Premier League team Newcastle United. Economic diversification is a key goal for Saudi Arabia, particularly as part of its Vision 2030 project, led by Prime Minister Mohammed Bin Salman.
Diversification and Global Reputation
Saudi Arabia’s economy is currently heavily reliant on oil and gas, which accounts for around half of the government’s income. As the world slowly moves away from fossil fuels, the motivation to diversify the economy is clear. The country’s investments in sports and entertainment also offer a way to boost its global reputation. By hosting major events, Saudi Arabia can demonstrate its ability to organize successful and popular tournaments, thereby gaining legitimacy in the world.
eSports Strategy and Domestic Concerns
Saudi Arabia has a national eSports strategy, which is unique among countries. The PIF is positioned to build ecosystems and support fans, developers, and IP creators in the global gaming and eSports sectors. However, there are also domestic concerns, with 70% of the population under the age of 35 having grown up playing console games. Providing games, competitions, and sports can help address radicalization and offer employment opportunities, thereby reducing the risk of uprisings.
Legitimacy and Human Rights Concerns
Hosting major events can give Saudi Arabia legitimacy in the world, but concerns about human rights abuses and sports washing persist. The country will host the men’s World Cup in 2034 and has already organized the ESPORTS World Championship. However, critics argue that these events are used to distract attention from the country’s human rights record. Researchers at Human Rights Watch believe that these investments are used to divert attention from human rights crises and that the love of average fans is being exploited to serve the interests of the Saudi government.
Kushner and Trump’s Saudi Links
The presence of Jared Kushner’s affinity partners in the consortium is another aspect of the buyout with significant political undertones. Kushner has developed close relationships with Mohammed bin Salman, and his father-in-law, Donald Trump, has also cultivated ties with the Saudi government. The Trump organization has signed a contract for a $1 billion development in the Saudi city of Jeddah, further solidifying the connections between Saudi Arabia and the US government.
