Author: Pranav Sengottuvel
Graphics: Michelle Yuan
Saudi Arabia’s sudden control over boxing shines a spotlight on Sovereign Wealth Funds and how they can be used to shape global perception.
Boxing has long been tied to the United States and Europe. In fact, the top 20 most watched boxing events of the last century have all been held in the West, and have all been promoted by American and European organizers such as Don King, Matchroom, and TopRank. However, starting in 2019 with the aptly titled Clash on the Dunes fight card, a radical shift has emerged in the world of boxing. The largest, high-profile cards are now no longer being held in their usual homes of England or the US, and even if they are, they’re no longer being held by Western organizers. Instead, the Kingdom of Saudi Arabia has quickly and quietly made itself the definitive force in boxing, with nearly every high profile fight over the last 5 years either being held in Riyadh or being organized under the “Riyadh Season” banner.
How Has Saudi Arabia Done It
At the forefront of this takeover is the Saudi sovereign wealth fund known as the Saudi Public Investment Fund (PIF) which has allowed the Saudis to spend hundreds of millions of dollars on each card. Thus, to understand how a country traditionally on the periphery of the boxing ecosystem has become the dominant superpower in boxing we need to understand sovereign wealth funds, their economic power, and how they are, at times, abused to further political agendas.
What are Sovereign Wealth Funds?
Defined simply as investment funds owned by a nation’s government and consisting of money generated by the government, over 90 countries around the world have sovereign wealth funds, including (add some important countries that have SWFs). They’ve become increasingly financially significant, with the 100 largest funds holding roughly $14 trillion in total assets. For countries like Singapore and China with large foreign exchange reserves, or countries like Saudi Arabia with large natural resource revenues, SWFs are a great way to grow surplus wealth or pursue national goals.
For example, Saudi Arabia’s Vision 2030 sets lofty goals to diversify the nation’s economy from being oil-reliant, and the Saudi PIF, worth roughly $1 trillion is a major tool the country uses to meet these goals. Currently, the fund has over 220 companies in its investment portfolio, and looking specifically at the sport of boxing, they’ve made strategic investments in companies like Sela (events organization), DAZN, Ring Magazine, and more.
Abuse of Sovereign Wealth Funds and the Finances Behind Saudi Boxing
Given their major financial presence and influence, Sovereign Wealth Funds can certainly be used for societal good. Unfortunately, they can certainly be used for nefarious motives, as is the case with Saudi Arabia. The Kingdom has officially claimed that the PIF, its investments, and general entrance into boxing are for “diversifying beyond hydrocarbon wealth [and intending] to boost GDP”, but each event has been wildly unprofitable.
For example, the first Heavyweight Championship bout between Tyson Fury and Oleksander Usyk was held in Riyadh and organized by the Saudis. According to ESPN, the fight netted an impressive 1.5 million PPV buys, leading to over $50 Million in PPV revenue and another $45 million from sponsorships and ticket sales. However, the purse for the two fighters was reportedly around$145 Million, meaning the card yielded a net loss of at least $50 million. With similar purses for the other cards they have held, and 1.5 million being a very good PPV sales target (T-5th most in boxing history), it’s clear that Saudi Arabia is by no means earning a profit on their boxing ventures.
The Real Reason for Saudi Investment in Boxing
Evidently, the fights aren’t for making profit, but rather are a form of sports washing, which is when a country uses sporting events to improve their reputation and distract from negative actions like corruption or human rights violations. Saudi Arabia has long faced scrutiny for their lack of women’s rights, labor rights, and other controversies like the state-sponsored assasination of journalist Jamal Khashoggi.
Now they’re using boxing as a way to distract from the wrongdoings within the country. Ultimately, Saudi Arabia’s takeover of boxing is a reminder of how large sums of money, this time in the form of a sovereign wealth fund, can be used as a tool of international influence, and not always in a good way.
Take-Home Points
- Saudi Arabia has made itself a dominant force in the world of boxing, hosting and organizing the majority of recent high profile fights.
- The Kingdom has made this possible through the use of its sovereign wealth fund, making strategic investments and overpaying fighters to ensure agreements.
- Saudi Arabia claims it’s to make the country’s economy less oil reliant, but each card records major financial losses, revealing the efforts to be a form of sports washing.