The company behind Saudi Arabia's vast Qiddiya sports and entertainment complex near Riyadh will take over entertainment business SEVEN, in a bid to expedite the multi-billion dollar project, sources told Reuters on Tuesday.
The acquisition aims to "capitalise on business synergies between the two companies," according to a statement on Saudi state news agency.
But a source, who declined to be identified due to the sensitivity of the issue, said the move was designed to ensure that Qiddiya's top projects, including a massive sports stadium that should be ready for the World Cup 2034, are finished on time.
Saudi Arabia's highly ambitious efforts to develop its entertainment and tourism industry have faced significant delays, leaving Qiddiya years behind schedule.
Crown Prince Mohammed bin Salman, chairman of Saudi Arabia's $700 billion sovereign wealth fund, is banking on entertainment projects such as Qiddiya to transform the kingdom and diversify its economy away from oil under his Vision 2030 program.
With deadlines looming for large-scale Saudi-hosted events such as the 2029 Asian Winter Olympics, the 2030 World Expo and the 2034 FIFA World Cup, pressure is building to transform glitzy marketing campaigns into finished projects.
"The announcement of the FIFA World Cup was a factor in this," the source said, adding that the PIF was keen to save face with the tie-up, "They don’t want to showcase it (Qiddiya) as a failure.
SEVEN opened Saudi Arabia's first cinema after more than 35 years in partnership with U.S. based AMC Group, an early sign that Saudi Arabia aimed to move in a new direction.
Qiddiya was among the first of the so-called giga-projects announced in 2018 and was scheduled to open in 2022 and attract 1.5 million visitors. The first theme parks, Six Flags and Aqua Arabia, are now expected to open in 2025.
The deal follows decisions by the Saudi government to prioritise some developments over others, as the economy grapples with a looming 79 billion riyal ($21.06 billion) deficit.
"There are challenges... we will change course, we will adjust, we will extend some of the projects, we will downscale some of the projects, we will accelerate some of the projects," Saudi Arabia' Finance Minister Mohammed Al Jadaan told the World Economic Forum meeting in Riyadh in April.
The company did not respond to Reuters' questions on whether the acquisition was related to project delays.
The Public Investment Fund (PIF) owns Qiddiya Investment Company and was the owner of Saudi Entertainment Ventures, or SEVEN, before Tuesday's move. SEVEN will remain under the umbrella of PIF, which has funded many of the futuristic projects, the statement said.
The sovereign wealth fund has made a landmark deal to reshape the world of golf, bought a $3.6 billion aircraft leasing business from Standard Chartered, built up a 10% stake in Spain's Telefonica and launched an ambitious 300 million euro ($323.58 million) bid for the services of French soccer superstar Kylian Mbappé, to name a few.
The Crown Prince's plan to wean the $1.11 trillion Saudi economy off oil is now hitting stumbling blocks.
The flagship Line, "city of the future" held between two mirrored walls in the new economic zone of NEOM, has faced setbacks, while Qiddiya has suffered delays and frequent changes in management.
Branded the 'city of play', Qiddiya will feature a Six Flags theme park, a Dragon Ball-Z Park, an E-Sports arena, several new hotels, resorts and a new Formula One track snaking through the complex.
"It's too late, it was supposed to start yesterday", said a source with knowledge of the project, explaining that the acquisition is designed to bring Qiddiya back on track.
