Gulf Monarchies Look To Score In Soft Power Premier League

Oil-rich Gulf monarchies have been investing in high profile sports tournaments for more than 20 years. These have been calculated investments aimed not so much at a direct economic return, but at transforming their international image.

The UAE arguably was the first to seize the opportunity, with the inaugural Dubai World Cup horse race in 1996. The Emirates now host major events from golf, to tennis, to Formula One. But neighboring rival Qatar upstaged the UAE in 2009 when it won the rights to host the 2022 Fifa World Cup, an investment that is slated to cost it a whopping $220bn.

Qatar’s key motivation was to score a soft power victory. It will be hoping that a successful tournament will ultimately overshadow scandals over corruption associated with the tournament’s award as well as the deaths of foreign laborers.

WAR MINUS THE SHOOTING

Whilst the 2022 World Cup represents the biggest single Gulf sporting outlay, Qatar and Abu Dhabi have each invested over $1bn to date in a bid to win football’s biggest club prize, Europe’s Champion’s League. Adding spice to the contest is that Abu Dhabi alongside Saudi Arabia has been the key instigator of an embargo on Qatar since 2017. At least, to paraphrase George Orwell, football is a war minus the shooting.

The Abu Dhabi United Group, a vehicle for senior Abu Dhabi royal and Deputy PM Sheikh Mansour bin Zayed al Nahyen, in 2008 paid $310mn to take a 100% stake in Manchester City, a team that at the time was not even the biggest club in Manchester. Sheikh Mansour has since invested $1.6bn. This has resulted in four Premier League titles, most recently this month. But Champions League success has so far proved elusive – ‘Man City’ were knocked out in the quarter finals this year by English rivals Tottenham Hotspur and by Liverpool at the same stage a year earlier.

Man City’s best Champions League performance under Abu Dhabi ownership is the semis in 2015-16. At least this is one stage better than the Qatar Investment Authority (QIA) has managed to achieve since paying $100mn in 2011 for French Ligue-1 club Paris St Germain (PSG). QIA subsidiary Qatar Sports Investments (QSI) has since invested a further $1bn, winning the Ligue-1 five times.

But the generally mediocre quality of the French league has left PSG poorly prepared for performing on Europe’s top stage, despite the club repeatedly shelling out record sums to attract top talent – including a world record €222mn for the August 2017 signing of Brazilian forward Neymar from Barcelona.

Manchester City and PSG have only met once in recent history, during a Champions League quarter final tie in 2016, with Manchester City prevailing. One-nil to Abu Dhabi.

Qatar on the other hand netted big time when the UAE hosted football’s Asian Cup earlier this year. The hosts were shocked when the event turned into a victory parade for Qatar. Chalk that up as a soft power own goal.

FAIR PLAY: OFFSIDE!

It’s not inaccurate to say the whole point of the Man City and PSG takeovers was to ‘buy’ success (indeed supporters of a club being targeted by a billionaire would expect nothing less!).

But increasingly strict financial fair play (FFP) regulations from European football governing body Uefa threaten this model.

At first such rules – which seek to keep a club’s spending more or less in line with earnings – proved easy to circumvent. Man City’s Emirati backers in 2011 raised eyebrows with (but got away with) paying an inflated $400mn for “naming rights” to the club’s stadium, henceforth known as the ‘Etihad’ after Abu Dhabi’s national airline.

But fair play rules were tightened in 2015. And both PSG and Manchester City were investigated for breaches last year. Manchester City could still face expulsion from next year’s Champions League with a current Uefa investigation underway.

Whilst PSG were cleared this year, Fair Play rules leave the French team at a disadvantage given that the French league is substantially less well supported than that in England (or Germany, Spain or Italy for that matter) meaning that both ‘matchday’ revenues and those from TV rights are substantially less.

The English Premiership is by far the more lucrative of the two leagues. While PSG’s €58mn ($57mn) in prize money last season for winning Ligue-1 outstripped Manchester City’s £38mn ($48mn), the latter raked in an additional £109.5mn in television revenue.

FOLLOWING THE LEEDS, HAWAY ZAYED

QSI is disappointed at PSG’s inability to meaningfully challenge for club football’s biggest prize, the Champions League, despite shelling out over $1bn since taking over PSG in 2011. And this disillusionment may lead the group to shift its focus to England, with QSI currently looking to buy a major stake in English second tier club Leeds United.

Leeds this year narrowly missed out on promotion to the money-spinning Premier League after finishing third in England’s second tier. Leeds were relegated from the Premier League in 2004, and fell to England’s third tier in 2007, following years of financial mismanagement. That said, Leeds, with a 38,000-capacity stadium, are considered a ‘sleeping giant’ having been English champions twice in the 1970s, then again in 1992.

Promotion to the Premier League this season unlocked a minimum of £170mn over three years in guaranteed broadcast rights for Norwich City, Sheffield United and Aston Villa. The financial benefits of entering the Premier League are clear, but are arguably outstripped by the soft power benefits.

It’s not just the Qataris who are looking to rouse a supposed sleeping giant. Abu Dhabi’s Bin Zayed Group, owned by Sheikh Khaled bin Zayed al Nahyen, the cousin of Sheikh Mansour, this week agreed terms to acquire Premier League strugglers Newcastle United for £350mn ($442mn), just a year after his proposed £2bn takeover of Champions League finalists Liverpool failed. Newcastle, known as the Magpies for their barcode-like black and white striped kit, haven’t won anything in 50 years but remain one of English football’s best supported sides.

"We have agreed terms and are working hard to complete the transaction at the earliest opportunity," Midhat Kidwai, Bin Zayed Group MD said in a 27 May statement. Such is the passion for football in England’s northeast that not only are Newcastle one of the top ten best supported teams in the UK, but neighbors Sunderland, who just failed to secure promotion from England’s third tier, are ranked in the top fifteen of the UK’s biggest clubs. In fact, an April 2019 CIS Football Observatory report showed Sunderland recorded higher attendances over the last five seasons than Italian Champions Juventus; ripe for the picking one would think.

Newcastle owner, controversial UK businessman Mike Ashley, bought the club for £135mn in 2007. He has been actively looking to sell since October 2017. The club has endured a tumultuous period since Mr Ashley’s takeover, and were relegated from the Premier League in 2009, returning the following year. The club was relegated again in 2015, to return again in 2016. The firm’s Spanish manager Rafa Benitez, a Champions League winner with Liverpool in 2005, is well regarded. The first job of the firm’s new owners will likely be to convince Mr Benitez that they are more willing than the spendthrift Mr Ashley to finance player acquisition.

The 610-page Premier League Handbook does not specify whether members of the same family can own ‘rival’ clubs. But it could easily be argued that allowing family members to own clubs in the same division could lead to special relationships that are highly unethical – especially seeing that for both Qatar and Abu Dhabi the lines are clearly blurred between national assets and those of the ruling family. If Man City had to beat Newcastle on the last day of the season to win the title it is hard not to imagine pressure being exerted via back door channels.

SHIRTS FIRST, THE WORLD LATER

Of course, there are less expensive ways to score soccer soft power than hosting tournaments or buying clubs outright.

Qatar’s first foray onto football’s top stage was with a $200mn four-year shirt sponsorship deal with five-time European champions Barcelona signed in 2010.

And whilst Dubai’s ruling family has failed to follow Abu Dhabi in buying a club, national airline Emirates in 2004 paid $440mn to have the new stadium of London club Arsenal named after it for 25 years, as well as a shirt sponsorship deal which will expire in 2024.

Emirates also has shirt sponsorship deals with European heavyweights Real Madrid from Spain and Italy’s AC Milan, as well as Portuguese giants Benfica.

CHAMPIONS LEAGUE: GOOD ENOUGH FOR ME

It is not just Qatar and the UAE who have realized the far-reaching influence of football. Even Saudi’s Crown Prince Muhammad bin Salman was rumored to be interested in buying Manchester United for $4bn in February this year, though Saudi officials denied the rumors.

Ironically, amid billion-dollar investments possibly the biggest soft power ‘win’ has come for free.

The Arab world’s most populous country, Egypt, possesses possibly the largest footballing influence and icon from the region, and they didn’t even have to pay one penny to promote him. Liverpool forward Mohamed Salah has risen to prominence since his 2017 transfer to the club, prompting Mecca’s council to announce in April last year that it would award him with land or a mosque in Islam’s holiest city, for being an ambassador for Islam.

More than one million Egyptians voted for the Liverpool forward during last year’s presidential elections in Egypt according to local reports, making him the unofficial runner-up to incumbent President Abdel Fattah al-Sisi, despite not being on the ballot.

Expect things to kick off on the streets of Cairo if Salah nets the winner in the 1 June Champions League final.