Video game companies are taking Saudi money because everyone else is too
There’s no putting the genie back in the bottle
One year ago1 I interviewed Craig Levine, who had recently become co-CEO of the ESL FACEIT Group, an esports tournament organizer and gaming platform owner. A month prior2, ESL (then a standalone company, headed by Levine) had been acquired by Savvy Gaming Group, a video game holding company backed by Saudi Arabia’s sovereign wealth fund and chaired by Saudi crown prince Mohammed bin Salman. I had a few questions for Levine about that acquisition.
Below, I’ve transcribed the most important stretch of that interview from a recording of the call. I’ve made a few minor edits for clarity (clearing out filler words, mostly) but otherwise, the following is an exact reproduction of approximately 9 minutes of conversation.
Ok, before we go any further, two notes:
I really appreciate Levine agreeing to speak with me. I think “Washington Post reporter wants to talk about your company being acquired by the Saudis” is not a terribly appealing ask, and the fact that he accepted grants him a little gold star in my book.
A lot of these answers are just… not very good. Mostly, they don’t really respond to the question.
That said, there’s one part that really stands out to me. When I asked Levine about Saudi Arabia’s human rights record and how that factored into the thinking6 around the deal, here’s the first thing he said:
This is where this post’s headline comes from. ESL is the subject of this newsletter because Levine is the person I interviewed, but a lot of video game companies are taking Saudi money. And they’re doing it because everyone else is, too. Uber. DoorDash. Disney. Live Nation. Twitter. Which brings us to: Embracer. EA. Take-Two. Activision. Nintendo!
All to say: There’s no putting the genie back in the bottle. Especially now, as both the video game and esports industries face economic headwinds,7 companies will start seeking easy and plentiful money. Judging by the spate of investments and acquisitions by Savvy in 2022, the money on offer is just that.
Simon Chadwick, professor of sport and geopolitical economy at Skema Business School, told me8 that in sports, particularly in Europe, many clubs, teams and events never recovered from the global economic downturn in 2008. He described many of these entities as constantly flirting with financial disaster. This makes Saudi money particularly desirable.
“If you think about private equity investors or major corporate sponsors coming out of the United States, they very often they have specific expectations,” Chadwick said. “There’s a hard bottom line, effectively. They don't just invest in sport for the hell of investing in sports. … With Saudi Arabia, it is different because there's something less tangible connected to political outcomes, not just economic and commercial outcomes.”
“There are a lot of willing sellers out there in the world,” Chadwick said. “And clearly, in Saudi Arabia there is a willing buyer.”9
Wait, why did this take a literal year to come out?
Honestly, I had a mental block when it came to figuring out how to write this story in the style of a Washington Post Article. By the time I had conducted the interview10 the news was already a month old, which to me, signaled that the piece had to be a bit broader: a trend story. But that would require more reporting: quotes from experts, outreach to other companies, aggregation of other acquisition/investment announcements. And as I reached out to more experts and sources, I heard from Middle East scholars who would bring up events and factoids that I wanted to double check myself. I asked Chadwick, for example, whether investments like the one into ESL were a sign that the Kingdom was actually changing, or if it should be read in a more calculating light. He gave a really interesting answer, which I've excerpted below:
This is a really compelling answer! Also, I don’t know a thing about Qatar [Ed. note: this is still true] and would feel a bit weird printing this in the newspaper without putting in the requisite legwork. (I also can’t moderate my tone to say “Hey this is interesting but I’m just not sure” in the newspaper).
Basically, the story slowly became more of a task than the original interview suggested.
Stories like this usually require a “here’s why this is bad” paragraph. I’m going to cite The New Yorker here because I think they’ve written the pithiest one-paragraph explanation I’ve seen so far, in a story about the Saudi Arabian golf tour, LIV:
The Post, too, has been clear-eyed on this subject.
In an interview in a different publication, golfer Phil Mickelson told sportswriter Alan Shipnuck that “[the Saudis are] scary motherfuckers to get involved with. … We know they killed Khashoggi and have a horrible record on human rights. They execute people over there for being gay.”
Wildest of all, Mickelson said this to Shipnuck as part of his explanation for why he was joining the LIV circuit.
A bright spot, if you’ll allow it.
Late last year, the esports organization Team Liquid posted a statement to Twitter in which they promised to donate cuts of winnings from events in Saudi Arabia and the UAE to Rainbow Railroad, a charity that describes itself as “[helping] LGBTQI+ people escape state-sponsored violence.”
This year, we competed in Saudi Arabia and will also compete in the UAE. We are members of the Louvre Agreement alongside ESL, a company acquired by Saudi Arabia’s Savvy Gaming Group. We would like to clearly convey our stance on this.
— Team Liquid (@TeamLiquid)
Dec 13, 2022
I reached out to Austin Ryan, senior managing editor for Team Liquid, via Twitter DM, to ask about the statement. Ryan outlined three challenges to even getting the announcement out in the first place — including just finding a charity in the first place. Their response was so frank and thoughtful that I’d like to share it here (edited for length and clarity).
One more thing…
I really liked the story linked below by Hunter Cooke on this very subject. I’ll let the excerpt below serve as a hook for the piece:
The next edition of ReaderGrev comes out Monday. Cheers.