Suddenly, Saudi (Money Is Drying Up)

For a while there, it seemed like the only constants in life were death, taxes, and Saudi Arabia’s Public Investment Fund buying up yet another beloved Western sports or entertainment property. Golf, soccer, boxing, pro wrestling, and of course, video games—both in the esports and large-scale development senses—have all found themselves entangled in Saudi Arabia’s gleaming golden net. But in recent months, the moneybags have begun to look decidedly flaccid, and with this week came the biggest casualty yet: LIV Golf, which has been propped up by the crown since its inception five years ago. The games industry might be next. On the latest Aftermath Hours, we talk about that.

This time around, we discuss cheery news from yet another normal week. For example: A video game CEO casually said the quiet part out loud by opining during a routine interview that “We've been a little bit too romantic about the idea that we should have employees and give people long-term job security,” suggesting that it’s time to instead rely heavily on a merry-go-round of beleaguered contractors. And this CEO is also the head of the head of the UK trade body for the games industry. Great!

We also discuss Saudi Arabia’s divestment from LIV Golf, the first of many dominoes possibly to fall as its soft-power-hungry Public Investment Fund runs low on money. Are Saudi Arabia’s games industry investments in similar trouble? According to early reports, it sounds very possible! Lastly, we talk about something that’s actually cool—the new Steam controller, which Chris is loving—before envisioning the darkest possible special interest a person could have: Mario Party historian.

You can find this week's episode below and on Spotify, Apple, or wherever else you prefer to listen to podcasts. If you like what you hear, make sure to leave a review so that we can eventually hire our own historian to suffer through years—perhaps even decades, by the time it’s all said and done—of my jokes.

Or, for a limited time, you can support us by subscribing to Aftermath AND three other great independent sites—Rascal, Rogue, and Never Post—at a 50% discount. Check it out!

Here’s an excerpt from our conversation (edited for length and clarity):

Luke: [Saudi Arabia] has actually been stepping away from some of these investments for a while. They made a huge splash in European football—not just with their own professional league, but in purchasing one of England’s biggest clubs, Newcastle. They pumped a lot of money into that. They had aspirations of making Newcastle one of the best teams in England. Newcastle have improved, but they haven’t become sort of an elite club like the owners would’ve hoped, and in the last 6-12 months, there’s been a very public backing away of their support for that club. It’s not that they’re looking to sell it, but they’ve basically lost interest in turning that into a super club because it hasn’t worked. And it felt like the investment was a poor one that they didn’t fully understand.

You saw that happening in a few places even before the war in Iran. The Saudis have essentially gambled their country’s future on this idea of two aims: One is very understandable, in that they know the oil is going to run out or we are going to stop using oil one day. So they can’t base their national economy on oil forever. So they had this idea that they were going to take the oil money they have now and invest that globally in countless industries and companies and corporations and basically diversify their income.

The other part is a soft power grab, because obviously the Saudi regime does not have a great reputation globally in terms of human rights and authoritarianism and stuff. If they can invest in all these things we love and watch and follow and are passionate about, it would soften our approach to the Saudis because they’re so involved in the things we love—like football, wrestling, television, and video games.

None of those things have worked. The investments have been shocking across the board. You look at the lion city, Neom: disaster! Who the fuck thought that was going to work? They blew so much money just on the plans and digging a few trenches for that. Everything they’ve invested in has been an entertainment property that the reason they’re investing in it is because it was failing or losing money. So they’re not making money on that. They sunk money into an English football club, which you do not make money on. Those things are passion projects. They’re a money sink, and they found that out very quickly.

Nathan: They also sunk a ton of money into esports, which has always been notoriously unprofitable. That’s why all the mainstream entities, investors, and sports organizations in North America pulled out or gave up on it [after the esports boom].

Luke: The other way it’s failing is that soft power needs to be soft. You can’t overtly attempt to purchase soft power. That stuff happens organically. The Saudis’ attempt to garner goodwill has actually backfired because they’ve been seen to have been coming in and buying things that were or are important to people in specific markets. They haven’t been seen as saviors.

Nathan: Or originators or propagators. [They’ve been seen as] interlopers. And of course EA is the big video game company now that they’re going for, but in all these cases, what stands out is not “Oh man, it’s so cool that Saudi Arabia has a hand in this.” Instead it feels like they are very deliberately trying to improve their image with these vehicles. People can sense that lack of authenticity, and they’re like “OK then, you’re just interfering with a thing that I already liked where you’re taking it over.”

Or in the case of EA, everyone’s worried that [Saudi Arabian ownership] is gonna make games more expensive or add more microtransactions. It’s also nakedly motivated by money or power, and these things generally do not result in good outcomes for the things that are being purchased.

Luke: The fear is that if the Saudis have basically come in and propped up a number of these organizations and sports and pastimes with their money, and now that money is in danger of disappearing, it’s basically cutting the legs off the table. There’s no one else left to support those organizations if Saudi money’s gone, because we’ve already tried Chinese money. We’ve tried our own money; that stuff’s either pulled back or withdrawn or doesn’t work anymore. The Saudi money was literally the last thing propping up a lot of these things.

And if that disappears, a lot of these things are in serious trouble, because who else can afford to buy them or operate them at the scale and cost that they were running at if they weren’t tapping into billions of dollars of Saudi money? That’s where the real concern comes from across the board. It’s in football, but also football will live just fine without the Saudi money. But if they’ve got major stakes in video game publishers, we’re already having enough trouble in video games as it is.

Nathan: In games, some dominoes have apparently already fallen. A couple days ago on Bluesky, Cat Manning, who is narrative director at Firaxis, said, “Watching a certain Saudi game investment company cancel all their meetings 48 hours before GDC was an incredibly telling indicator that US markets have not caught up to [Saudi Arabia losing so much money].”

Now people are speculating that the EA deal could be in trouble—which has not been confirmed in any capacity; my guess would be that they still try to close the deal and then pump EA for money—but the most concrete thing I’ve heard so far is Mikhail Klimentov, who I used to work with at The Washington Post, replied to Cat’s tweet and said, “There will be extremely funny news about this [fingers crossed] soon.”

I asked him what about, and he said that it will somehow be funnier than if the EA deal fell apart. I can’t imagine anything funnier than that, but OK!