Saudi Arabia’s Public Investment Fund (PIF) is set to invest a jaw-dropping $1 billion into broadcast powerhouse DAZN.
The country’s investment in the international sports streaming platform owned by billionaire Sir Leonard Blavatnik is a huge gamble, considering DAZN’s well-documented financial struggles.
It will grant the PIF a single-digit minority stake in the company, tightening the country’s grip on global sports media and furthering their ambitious Vision 2030 initiative.
The PIF facilitated the investment through its sports subsidiary – SURJ Sports Investment.
While the deal only grants the PIF a relatively small ownership percentage, experts believe it is more of a move that gives Saudi Arabia a seat amongst the major players in the global sports broadcasting sector.
The investment is also part of a broader joint venture focused on expanding sports streaming across the Middle East – a market that has been dominated by traditional television networks for decades.
The sporting industry has always been a priority in the Kingdom’s diversification strategy, and this deal highlights how far they are willing to go to be taken seriously.
The PIF also have a majority ownership stake in Premier League club Newcastle United and have launched the controversial LIV Golf Series.
These deals are as much about business as they are about gaining a foothold in global sports.
Why This Deal is a Huge Gamble for Saudi Arabia
DAZN is undoubtedly one of the major players in the broadcast business, but it doesn’t reflect on their finances, which is a huge red flag.
The company recorded outstanding revenue growth from $2.2 billion in 2022 to $2.9bn in 2023, but their finances took a dive off the cliff last year, with the broadcast giants reporting an alarming $1.4bn loss.
They put their inability to turn a profit down to escalating content acquisition costs, which has skyrocketed to over $3bn annually.
Blavatnik, who owns Access Industries, has personally invested an eye-watering $6.7bn into DAZN, including an $827 million cash infusion in 2023.
Saudi Arabia’s billion-dollar investment will provide DAZN with the much-needed liquidity to stay afloat and keep their aggressive expansion strategy alive.
The broadcast powerhouse has acquired Australia-based broadband company Foxtel as well as premium sports rights for FIFA’s Club World Cup.
But that has not stopped investors from raising questions about whether or not this approach is sustainable in the long term.
Out of the company’s 300m monthly users, DAZN can only boast of around 20m paying subscribers, so the key issue is how to convert non-paying viewers into a profitable revenue stream.
How Betting Fits into DAZN’s Future
There is one area DAZN could explore if they want to start making profits, but it may not sit well with the Saudi government – sports betting.
Sports betting partnerships have become a lucrative way of generating revenue, and companies such as Sky have succeeded in other markets because they can freely work with the betting industry.
That is something DAZN should consider, but Saudi Arabia’s anti-gambling laws will complicate matters. Saudi Arabia is one of several countries in the Middle East that are vehemently opposed to gambling, so if DAZN goes down that route, it puts the Kingdom in a tricky spot.
Letting the brakes off in the Middle East could help to justify Saudi Arabia’s investment in DAZN.
Aside from the fact that international betting sites for Arabic players already operate within the region, the global sports streaming market is proof that affiliations with betting platforms can be a massive game-changer.
Saudi Arabia could use that narrative to their advantage if they choose to re-evaluate their rigid gambling regulations. If they don’t, it could limit DAZN’s ability to compete with broadcasters backed by the wealth of the gambling sector.
DAZN could take a page from Sky’s books by collaborating with gambling platforms to gain a foothold in key markets and ensure profitability, but Saudi Arabia needs to make concessions for that to happen.
What’s in it For Saudi Arabia?
Saudi Arabia’s mind-boggling investment in the sports broadcast sector aligns with the nation’s Vision 2030 strategy.
The initiative was developed for the sole purpose of reducing the nation’s economic dependence on oil and expanding their footprint across the globe.
But that is not the only reason why they have taken a billion-dollar gamble on a broadcast company that has struggled to turn a profit despite their international status.
Saudi Arabia is obsessed with becoming a sporting hub that is recognised on the same level as some of the major sports powerhouses such as the United Kingdom, and they believe DAZN can get them there.
The broadcast giants boast a reach that spreads across 200 markets around the world, providing Saudi Arabia with an ideal platform to advertise its sporting events and initiatives.
The joint venture will expand sports broadcasting in the Middle East, giving Saudi Arabia control over how regional and international audiences consume sports content.
However, Saudi Arabia are getting plenty of stick for their aggressive expansion strategy, with critics labelling it as ‘sportswashing’ – using high-profile investments to distract from its human rights record.