Is Saudi Arabia increasing its involvement in F1 with the latest developments revealing their true ambitions?
Firstly, back in March we had the long-term global sponsorship deal from the state oil giant Aramco. The justification from Aramco was F1’s global fan base will connect Aramco to an engaged audience of 500 million fans and allow it to better communicate its success stories to the world.
Additionally, both sides claimed it will combine their considerable shared expertise to identify opportunities for the advancement of sustainable fuels, enhanced engine efficiencies, and emerging mobility technology.
Well, although there may be merit in the above it was widely speculated that the Saudis had effectively made a down payment to host a race at the Qiddiyah circuit outside the capital Riyadh, from 2023 onwards.
F1 of course are attracted by the estimated $50m hosting fees the kingdom would pay which would certainly offset the reduced fees recently agreed with some European circuits.
Naturally, the human rights question comes to the fore, and space does not permit a full examination but suffice to say it is claimed that Saudi Arabia is attempting to “sports-wash” its poor human rights record.
Amnesty International says Saudi Arabia has “an appalling record on LGBT rights, women’s rights, extra-judicial killings, beheadings, the murder of journalist Jamal Kashoggi, and their involvement in the ongoing conflict in Yemen”.
F1 holds races in other countries that have been criticized for their human rights records, most notably Russia, China, Azerbaijan, Bahrain, and Abu Dhabi, and has always countered criticism by saying it is a non-political organization.
A spokesman for F1, defended the sport’s record. “For decades Formula 1 has worked hard to bring a positive imprint to everywhere it races including economic, social and cultural benefits,” a statement read. “We take our human rights responsibilities very seriously and make this position clear to every race promoter and host country. We believe that working with countries and giving their citizens the chance to attend global sports and entertainment events is a force for good.”
So, leaving aside, for now, the human rights question Saudi Arabia is committed to holding sporting events as part of its strategy to attract tourists and improve its international image.
Saudi Arabia already hosts Formula E, heavyweight boxing title fights, Spanish football’s super cup, and the world’s richest horse race, the $20m Saudi Cup.
The fund is in “advanced” talks for a £340m takeover of the Premier League football club Newcastle United and is set to assume 80% control of the club.
Unidentified Saudi investors — most likely the state’s sovereign wealth fund — are also rumoured to be in talks with Gene Haas to purchase his F1 team.
As part of the narrative coming out of Riyadh to try and counter the opposition to such investments, Saudi Arabia has announced it is to abolish flogging as a form of punishment and they will no longer impose the death sentence on those who commit crimes as minors.
So, with sponsorship, hosting a race and the possible purchase of a team does their ambition end here?
Well I do not think so, as our old friends Liberty Media may well be in secret negotiations with the Saudis.
Liberty Media holds a 33 percent stake in Live Nation which promotes, operates, and manages ticket sales for live entertainment in the United States and internationally. It also owns and operates entertainment venues and manages the careers of music artists.
The firm has been hit particularly hard by the coronavirus pandemic, with essentially all concerts and sporting events around the world cancelled for the foreseeable future.
Step forward Saudi Arabia’s sovereign wealth fund, who have just acquired a 5.7 percent stake in Live Nation, thus making the Saudis boardroom partners with Liberty.
One of Liberty’s other major investments is the Atlanta Braves baseball team. Covid-19 is taking its financial toll here with profits of $54 million in 2019 crashing to an estimated loss of $60 million in 2020.
With Liberty’s F1, Live Nation, and Atlanta Braves holdings all in a financial straitjacket, will Liberty’s owner John “cable guy” Malone be forced into a deal with Saudi Arabia who then become the de facto owners of F1?
Well maybe not as Saudi Arabia’s central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while the kingdom slipped into a $9 billion budget deficit in the first quarter as oil revenues collapsed.
Faced with oil prices heading south of $20 a barrel the kingdom is losing money at an alarming rate, and with oversupply coupled with falling demand there is no end in sight soon.
How long will it be for voices within Saudi Arabia to call for the ever-decreasing resources to be used for the kingdom’s population instead of Crown Prince Mohammed bin Salman’s F1 ambitions?