The Saudi Pullback From Sports Investing Shows Even The Ultra-wealthy Are Trying To Cut Costs

• The Saudi Public Investment Fund has been scaling back expensive global sports investments in recent days.
• The moves come alongside a five-year plan pledging a more domestic investing focus.
• For the first time in years, the nation seems to be prioritizing finances over image.

No matter where you look, cost-cutting is reshaping the economy.

From a consumer perspective, Walmart is dominating peers like Target because shoppers are trading down to lower-cost options. From an employment POV, cost-cutting has resulted in widespread layoffs, particularly in the tech industry. All the while, the rise of AI is built on the idea that tasks will be completed more efficiently, and at lower cost.

Well, it turns out that even the wealthiest people on the planet aren't immune to a tightening of the purse strings. In recent days, the Saudi Public Investment Fund (PIF) — run by Crown Prince Mohammed bin Salman (MBS) — has started to scale back its international-facing sports portfolio:

• LIV Golf: The renegade league was originally designed to challenge the PGA Tour by luring away top players with huge paydays. $5 billion later, the PIF is reportedly considering pulling funding for the money-losing endeavor, although the league's CEO said the current season will continue as planned.
• Al-Hilal: The Saudi Pro League club tried to break through to mainstream soccer fans by signing star players from European leagues for eye-watering sums. Now PIF is offloading 70% of it to a different Saudi entity.

Add to that a separate report of financing doubts around a flag-football event starring Tom Brady, the trend is clear: a broad pullback from expensive global-facing efforts to increase Saudi cultural influence. For the first time in years, the nation seems to be prioritizing finances over image.

A five-year strategic plan for the nation, which was approved by MBS this week, confirmed the more insular shift. One top priority is to "maximize returns and redeploy capital within the domestic economy," a release said.

The Saudis may be looking to instead allocate money towards the World Cup it was selected to host in 2034. It's also possible that the Iran war's impact on oil production — the Saudis' crown jewel — has MBS & Co. looking to be more discretionary with funds.

Could this newfound frugality show up in other parts of the Saudi investment portfolio? After all, the PIF has interests that go far beyond LIV and Al-Hilal, such as:

• Major shareholder stakes in Uber, video game-maker Electronic Arts, and EV-producer Lucid
• A longstanding infrastructure partnership with Blackstone, including a recent collaboration to build data centers in Saudi Arabia
• Ownership of English Premier League soccer club Newcastle United

It's unclear what future moves the PIF could make. But MBS does, at the very least, seem to be losing patience with money-losing efforts. How that manifests itself could reshape entire industries reliant on Saudi investments.

Based on how things have been going, if I'm Newcastle, I'm looking at my position in the Premier League and getting pretty nervous. Because one thing is certain: when the Saudis splash money, they're in it to win it. And 14th place isn't cutting it.