How the deal with Lionel Messi hinders Saudi Arabia’s ambitions

How David Beckham beat the Saudis

Just a day after Saudi Arabia secured a major win in the sport – a deal to merge the PGA Tour with its own upstart golf circuit, LIV – the kingdom suffered an embarrassing defeat: it fell short in its quest to replace Lionel Messi, a of the football players. greats of all time.

Instead, Mr. Messi appears to be heading to Inter Miami, the MLS team co-founded by David Beckham. It is a sign that not everything can be bought with almost limitless oil money, but the complicated arrangements to bring Messi to Florida also indicate what it will take to trump Saudi wealth.

What to expect from Mr. Messi: Contract details have not been released, but what is known about Inter Miami’s offer to the Argentine star includes a squad spot clear of MLS salary rules and, most unusually, an ownership stake in Inter Miami once his playing career ends.

But the commercial partnerships Inter Miami has established may have given the team an edge over the Saudis, in the form of revenue-sharing agreements with Adidas and Apple, major MLS commercial partners.

While it is not unheard of for sportswear companies help pay for transfers among the great footballers, the contribution of the iPhone maker is more unusual. Mr Messi’s arrival in the MLS could well be possible turbocharger subscriptions to streaming service Apple TV+, which recently paid $2.5 billion for the rights to stream the league’s games over 10 years. (Apple also announced Wednesday that it would be producing a multi-part documentary series about the soccer star.)

Inter Miami had to get extremely creative to beat Saudi Arabia, who reportedly offered Mr Messi a whopping $500 million to play in his own football league and sees sports as part of his campaign to become a greater geopolitical force.

The kingdom has already lured other top players in hopes of quickly turning it into a world-class league. For example, Portuguese star Cristiano Ronaldo plays on Saudi fields for $100 million a year, while France’s Karim Benzema has also just signed. And it handed over owned by four of the best clubs in the country to its powerful sovereign wealth fund to boost their financial firepower as the kingdom bids to host the 2030 men’s World Cup.

Mr Messi also had links to Saudi Arabia, in the form of a multimillion-dollar spokesman role for the country’s tourism board.

Beating money from the Middle East is not impossible, but it is difficult. One impetus behind the proposed merger of the PGA Tour and LIV was the prospect of an extensive legal battle between the golf circuits – one that Saudi Arabia has more than enough money to continue to fight.

Saudi Arabia and other Gulf countries, including Abu Dhabi and Qatar, have bought and transformed major European football franchises by simply being willing to spend more money than anyone else.

That said, the PGA-LIV deal is a long way off. While analysts and high-profile golf fans like the financier Henry Kravis praised the proposed transaction, Senate Democrats called for an investigation. And the Justice Department was still investigating the PGA Tour for possible violations of antitrust laws. And other golf enthusiasts – as well as some players, including Rory McIlroy, who reluctantly accepted the deal – remain highly skeptical, if not outright against, LIV.

HERE’S WHAT HAPPENING

Hardline Republicans paralyze the House. Members of the House Freedom Caucus retained control of the floor of the chamber, forcing Speaker Kevin McCarthy to scrap the vote for the rest of the week. The feud between the parties has raised concerns over whether Mr McCarthy, who enraged Conservatives by agreeing to the debt ceiling compromise, can continue to govern.

The eurozone is entering a recession. The block economy contracted by 0.4 percent in the three months to March, the second consecutive quarterly decline, according to the EU statistics office, as rising inflation after the war in Ukraine weighed on household spending.

Senators accuse TikTok of misleading Congress. Connecticut Democrat Richard Blumenthal and Tennessee Republican Marsha Blackburn question sworn statements by top executives about how the Chinese app processes and stores US user data. Separately, a former executive of TikTok’s parent company ByteDance accused ByteDance of helping Beijing authorities spy on protesters in Hong Kong.

CNN’s future comes under scrutiny after its chief is fired. Chris Licht was fired as CEO of the news outlet, after a rough 13-month period that saw him lose the support of top talent and eventually his patron, the Warner Bros. Discovery chief David Zaslav. Shares in Warner Bros. Discovery rose 8 percent on Wednesday, but it’s unclear who will hire Mr. Zaslav to reverse the network’s declining fortunes.

GameStop ousts its CEO and elevates its top shareholder. The video game seller fired Matt Furlongwhile giving Ryan Cohen, the activist investor turned chairman, a promotion to executive chairman. Shares in GameStop fell 19 percent on Wednesday; the company has struggled to return to profitability amid a consumer shift to downloading game titles.

More haze will haunt the east coast

Don’t put away your masks just yet: Health alerts were extended Thursday for large parts of the United States, from the Northeast to the Midwest and the South, as noxious smoke from wildfires continues to drift down from Canada.

The FAA, which had slowed air traffic to and from New York on Wednesday, warned Thursday morning that incoming flights to La Guardia Airport would be grounded due to poor visibility. That order could also be extended to Newark and JFK International airports, the agency said.

Businesses and schools in numerous U.S. cities have suffered from the haze of tiny particles, similar to the fumes from cars or coal plants, illustrating how unprepared much of the country is for climate crises.

New York City had the worst air quality of any city in the world on Wednesday, according to reportsdelay flights and cancel outdoor And indoor events, including Broadway shows, “Hamlet” in Central Park, and a New York Yankees game. Al fresco dining was also a no go.

Many companies, including Google (which recently urged its employees to return to the office), suggested that employees work from home if possible.

The city may see some improvement on Thursday. But air quality in Philadelphia is reaching dangerous levels and haze can be seen as far south as Alabama. Meanwhile, the White House said the United States planned to send 600 firefighters and other specialists to Canada to help fight the fires, which totaled nearly 250 blazes.

Disruptions from wildfires are becoming increasingly costly. The toll of smoke on the US economy is now about $125 billion a yearaccording to the National Bureau of Economic Research.

Expect more emergencies like this. While no research has yet linked this week’s events to climate change, rising global temperatures — largely caused by human activity — are making parts of the Earth more susceptible to wildfires and other catastrophes.

And the expected arrival of the weather event known as El Niño later this year could make things worse, sparking even more wildfires.

“I think they’re actually doing everyone a huge disservice with the level of hype they’re creating.”

— Ken Griffin, on cheerleaders from new artificial intelligence services. New Citadel interns interviewedhis financial giant, he warned that while new developments would bring many benefits, they will take years to materialize.

A reality check for the markets

It is now an open question whether the Fed will leave interest rates unchanged next week, a decision investors have dubbed a “Fed pause,” or raise them.

Thursday morning market futures had priced in a 35 percent chance of a rate hike at the June 13-14 meeting. That’s far from a certainty, but the odds have become more likely in recent days – and by a percentage cut later this year seems to be off the table.

Investors believe that taming inflation will take longer than expected. The central banks of Canada and Australia surprised economists this week by raising interest rates, signaling that more aggressive monetary policy will be needed to curb consumer spending and lower prices.

The result: government bond yields around the world have risen, driving up loan prices for consumers and businesses.

A boom in Treasury borrowing is also weighing on markets. With the debt ceiling agreement now in effect, the federal government will replenish its treasury by auctioning about $1 trillion in Treasury bills this summer.

That coming tsunami of debt could drive up borrowing costs even further and create a kind of liquidity crisis for lenders, Wall Street analysts warn.

This makes investors wary of price-sensitive sectors. Technology stocks slumped on Wednesday and were under pressure again this morning in premarket trading. The tech-heavy Nasdaq has been one of the biggest gains this year as investors bet that the Fed is nearing the end of its rate hike cycle and imposing a cap on borrowing costs.

Still, tech stocks have risen on investor enthusiasm for artificial intelligence, and that rally may not be over yet. Analysts at Goldman Sachs calculate that widespread adoption of AI could boost GDP over the next decade, boost corporate profits and drive a potentially substantial rise in the S&P 500 over that period.

The upswing of the market due to AI comes from only a few companies – but that was enough to push the entire benchmark index to its highest level since August.

READING THE SPEED

Offers

• Toshiba’s board of directors advised shareholders of the Japanese electronics giant accept a $14 billion takeover offer by an investor consortium. (Reuters)

• Kim Kardashian became the biggest draw at the Super Return conference in Berlin with her new hat as a private equity mogul. (Bloomberg)

• The British Daily Telegraph and Sunday Telegraph will be put up for sale amid a dispute between the papers’ current owners and their backer. (Guardian)

Artificial intelligence

The best of the rest

• China and Cuba have reportedly reached an undisclosed deal that would allow China to set up an electronic eavesdropping facility on the island. (WSJ)

• Binance lawyers said that’s what Gary Gensler offered advise the crypto exchange in 2019, years before he became SEC chairman and led a lawsuit against the company. (CNBC)

• Lawyers for Fox News Tucker accused Carlson of breach of contract, after he began airing his new show on Twitter. (Axis)

• Having thirteen wives accused Crispin Odey, the British hedge fund magnate, of sexual assault and harassment. (FT)

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