The rentier states ruling football

November 25, 2019 17:14
Manchester United manager Ole Gunnar Solskjaer (L). Rumours have been circulating that Saudi Arabia will acquire the English Premier League football club. Photo: Reuters

For more than a year, rumors have been circulating that the Kingdom of Saudi Arabia will acquire English Premier League football club Manchester United. If this rumor ultimately proves to be true, then Saudi Arabia will join its near regional neighbors Abu Dhabi and Qatar in owning leading European football clubs (England’s Manchester City and France’s Paris Saint Germain respectively).

Such an acquisition would raise expectations among fans of United; prompt worries about the impact of the club’s spending on the player transfer market; provoke concerns about Saudi Arabia’s human rights record, and create cynicism about the ostentatious spending of yet another Asian nation investing into European football.

Already, some observers on social media have suggested that a United/Saudi alliance will become a lightning rod for public scrutiny and general criticism. Others will inevitably label such an investment as being sport-washing, a means through which government in Riyadh will seek to sanitize its tarnished reputation.

While some or all of these things may be true, they are nevertheless the consequence of the fundamental basis upon which states like Saudi Arabia and Qatar are governed. Buying overseas football clubs is not just a whim, it is a common characteristic of rentier states. Rent in this sense is not based upon an English definition; instead, it is derived from the French ‘rente’ – meaning private income.

States like Abu Dhabi draw private incomes from overseas investments, with oil and gas revenues typically funding them. Rentier states have tribal origins, with ruling families governing on an autocratic basis.

A ruling elite gathers incomes and decides how it will be spending, something intended to reinforce their societal positions especially as it eliminates the need for domestic taxation thereby placating a country’s population. Rentier states thus operate as a form of patronage, which guarantees the legitimacy and stability of the countries' rulers.

In a sometimes unpredictable region like the Middle East, investment in overseas football club assets also serves as a risk mitigation strategy practiced by the rentiers. For instance, as the first Gulf war at the start of the 1990s illustrated, seemingly stable nations can be geopolitically vulnerable and subject to invasion, either by rival states or by terrorist groupings.

By moving some of their assets offshore, rulers of the likes of Abu Dhabi, Qatar and Saudi Arabia can protect some of their personal wealth (perhaps even the wealth of their countries as well).

As Manchester United fans look forward to what many are likely to see as the enticing prospect of a petrodollar fuelled spending spree, it is worth remembering that an acquisition will be dictated more by the stability, safety, security and lifestyle both of Saudi Arabia’s ruling family and the country’s population in general, than the hopes amongst United fans of returning to former glories.

A similar reality faces Paris Saint Germain (PSG) fans. The club’s owners – a Qatari state entity – represent a country that is geopolitically vulnerable. A country populated by fewer than three million people, Qatar is surrounded by the sea (in which there have been several recent provocative acts, including tanker attacks) and has only one land border which it shares with a regional superpower, Saudi Arabia. To the East is another regional superpower, Iran.

By embedding itself in the global football landscape, Qatar has made itself visible, relevant and, as such, has garnered a degree of security which it hasn’t previously enjoyed. At the same time, the country’s ownership of PSG has served the classic purpose of a rentier state’s overseas investments.

In recent weeks, PSG has announced record revenues of €637.8 million (an 18 percent rise on the previous season) confirming it as one of world football’s top-10 richest clubs. PSG fans will no doubt revel in their club’s strengthening commercial status, although Qatar’s ruling elite will presumably be even happier.

Alongside the ‘Saudi to buy Manchester United’ stories have been a media staple over the last six months, Qatar’s name has also appeared in connection with an interest in acquiring another English club, Leeds United. It remains unclear whether these rumors have any substance to them, although the Leeds club already has some well-established connections to government entities in Doha.

Yet there is some speculation that any Qatari move for United will serve as a counter strategy to what the country’s bitter adversary – Abu Dhabi – has achieved at Manchester City. However, rather than being a bitter political rival that Qatar wants to defeat, one senses that what Abu Dhabi has been doing at City could provide a template for the country’s investment in Leeds.

Over the last five years, the Abu Dhabi state is thought to have spent upwards of £1 billion in the construction of rented accommodation in Manchester (via its relationship with City and the network with which it has been able to engage as a result of owning the club).

At the same time, property and rental values in Manchester have boomed guaranteeing that for years, if not decades, to come the rulers of Abu Dhabi can rest assured knowing that their overseas investments are paying dividends.

Little more than forty miles away, Leeds is going through a process of urban renewal which will see a British national broadcaster relocate there from London. Real-estate experts are already predicting a property price boom, especially given local government’s desire to promote the city as a digital business hub.

Reports that a Qatari/Leeds United tie-up is imminent may be wide of the mark. After all, there is surely little value to the small Gulf nation in buying a Championship football club! However, if the club was to be acquired in conjunction with long-term investments in real-estate or even in the creation of a digital cluster, then for a rentier state like Qatar a deal for United would become much more attractive.

Fans of numerous clubs across Europe live in hope that a wealthy Middle Eastern investor will one day lavish riches upon their team. But the investors are not local people and in some cases not even football fans. Rather, they are invariably the ruling elites from countries grown wealthy on oil and gas money. They may not be United fans (of any persuasion); rather, they are rent seekers hunting down opportunities to secure their personal and their countries' futures.

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Qatar Sports Investments (QSI), a Qatar state investment company, has turned Paris Saint Germain (PSG) into one of Europe's top teams. Photo: Reuters

Simon Chadwick is Director of Eurasian Sport, Professor of the Eurasian Sport Industry Director, Centre for the Eurasian Sport Industry.