Government Soccer
On September 28th, a highly awaited soccer match occurred between Paris-Saint-Germain and Manchester City. The end result was a 2-0 victory for PSG, with Lionel Messi scoring his first goal for the club, but there was much more meaning behind the match. Pundits and fans dubbed the match “Oil Clasico”, a spinoff of “El Clasico” which is a rivalry match between Spanish clubs Barcelona and Real Madrid. The reasoning behind this is simple; in the last few years of the football world, elite clubs have been purchased by Middle Eastern oil giants, granting them massive budgets to spend on all the top talent in the world. PSG and Manchester City were the two best examples of this, but they have been trumped by something much larger.
You might be wondering why we’re talking about soccer so much, but this move has major economic and geopolitical implications. On Thursday, it was announced that the Saudi Arabia sovereign wealth fund would take over Newcastle United for 408 million dollars, an English club that competes in the top division. A sovereign wealth fund is a government-owned investment fund that is made up of surplus money, and they use it to invest into financial devices like stocks and bonds, although it looks like we can add soccer club to the list now. This is the first time a government has bought a major soccer team like this, and it instantly places them as one of the most valuable franchises in the world. In a sense, Crown Prince MBS is the owner of Newcastle United, although not technically as the Premier League opposed that. Naturally, Qatar relations have been messy with this, and it makes sense as one of their oil tycoon businessmen is the owner of PSG. Saudi Arabia is trying to resolve this diplomatically, and it looks like a football club acquisition is helping that. Human rights groups lashed out at Newcastle and the English Premier League due to Saudi Arabia’s notorious violations of human rights, specifically targeting the Khashoggi killing. For now, it looks like the only people happy are Newcastle fans, who haven’t felt this much excitement since Alan Shearer signed with their club in the 1990s. What do you think about Saudi Arabia’s acquisition?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
