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Why this won't be a typical World Cup...

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EDITOR'S NOTE

 

Good morning. With the World Cup starting today in Qatar, we've got a special Brew for you previewing the tournament from all angles. There's a lot to talk about, only a portion of which is the actual soccer.

Have a great day. Go USA.

Neal Freyman, managing editor

 
Origin Investments
 

SPORTS

 

This isn't your typical World Cup

Choreography of SC Freiburg fans before the game with the inscription "Boycott Qatar" as a protest action against the World Cup in Qatar.Tom Weller/picture alliance via Getty Images

Every four years, the World Cup brings minute-long "GOOAAALLLL" announcer celebrations, remarkable athletic achievements (with no hands!), and lots of consternation as to why the US team disappointed yet again.

But this year's edition feels a lot different. The sketchy circumstances through which the host country was selected and the controversies stemming from the Qatari government threaten to overshadow the action on the pitch.

Here are some of the reasons why this isn't your typical World Cup.

First of all, it's not in the summer. The World Cup typically takes place in the summer months, which has made it pretty easy to watch games at work while your boss is away on vacation. But Qatar's weather is unbearably hot in the summer (regularly exceeding 100°F), so the organizers moved it to the fall. That's proving exceptionally disruptive for domestic soccer leagues across the world, which have had to take long breaks in the middle of their seasons so that players can compete in the World Cup.

So how was Qatar selected to host? Good question, because it is unprecedented. Qatar's soccer team had never qualified for the tournament when it was selected in 2010, and it's not exactly equipped to host one either: It had just one operational soccer stadium in the entire country. The answer could be corruption. In 2020, after a yearslong investigation, the US Department of Justice alleged that reps working for Qatar and Russia (which hosted the 2018 World Cup) bribed FIFA officials to win hosting rights.

And then there are the alleged human rights abuses. As a small nation of less than 3 million, Qatar has relied on migrant workers to build the infrastructure needed to host the tournament. But Amnesty International has said that the conditions those workers endure border on "modern slavery." More than 6,500 migrant workers from South Asia have died since Qatar was awarded this World Cup in 2010, according to The Guardian (which also says it's an extreme undercount). The Qatari government introduced reforms in 2020, including the creation of a support fund that paid harmed workers reparations, but human rights watchdogs say they haven't gone far enough to remedy the wrongdoing. And in addition to Qatar's alleged migrant worker abuses, critics have called out the government's restrictions on homosexuality (which is a crime there) and women's curtailed rights (they can't drive without a male guardian's approval).

In a bizarre, hourlong speech on Saturday, FIFA President Gianni Infantino sought to deflect all this criticism from the host country toward himself. "Don't criticize Qatar. Don't criticize the players. Don't criticize anyone. Criticize FIFA. Criticize me, if you want. Because I'm responsible for everything," he said.

Big picture: Similar to what the Beijing 2022 Olympics experienced earlier this year, global backlash against FIFA World Cup Qatar 2022 seems likely to dim enthusiasm for this installment of the tournament. Denmark's jerseys have a "toned down" design to protest Qatar's human rights track record. And cities across Europe, including Paris and London, are pausing the tradition of showing World Cup games in public spaces for the same reason.—NF

     
 

FOOD & BEV

 

There's also going to be a lot less beer

Budweiser tents on November 17, the day the announcement was made to ban alcohol sales near the stadiums. Budweiser tents on November 17, the day the announcement was made to ban alcohol sales near the stadiums. Miguel Medina/Getty Images

Two days before the 2022 World Cup's first match, Qatari officials laid down the alcohol gauntlet: no beer at the games. While it's a 180 from the country's initial promise to serve beer outside the stadiums before and after games, the writing was on the wall just six days ago, when the country's royal family handed down orders to move beer tents to less prominent areas around the stadiums.

Booze will still be served in designated fan zones and high-priced stadium suites for tournament officials and rich folks. But considering Budweiser has been the event's official beer sponsor since 1986 and shells out roughly $75 million every four years to hold that yeasty title, the company can't be too happy right now.

And neither can FIFA, which has been trying to compromise with the conservative Muslim country on its stringent alcohol rules. Qatar initially wanted a fully dry 2022 World Cup.

Qatar's drinking culture is almost nonexistent

There are only two liquor stores in all of Qatar, drinking and being drunk in public are illegal, and any alcohol found in visitors' luggage is confiscated. Plus, the country slapped a 100% tax on alcohol imports in 2019, so Qatar has the most expensive beer in the world, with an 11 ounce bottle costing $11.26, according to a 2021 report by Expensivity.

Budweiser is walking on eggshells. Despite Bud's powerful influence at your family's Fourth of July bash, its presence in Qatar has been spotty at best since the country won the World Cup bid in 2010.

It's illegal to advertise alcohol in Qatar, so Budweiser tailored its ads there to highlight soccer stars in a classic-inspirational-sports kind of way. It's also using the opportunity to promote its nonalcoholic beer, Budweiser Zero.

Peter Kraemer, chief supply officer at Budweiser's parent company, said their team is expecting more beer to be drunk in the country during the four weeks of the World Cup than in an entire year.

Big picture: Even with the addition of temporary taps at fan zones, the few watering holes that sustained the light-drinking country of 3 million are looking at an influx of an estimated 1.2 million rowdy football fans that now have even fewer places to grab a drink.—MM

     
 

MEDIA

 

More than half of the global population will watch the World Cup

This year's World Cup is expected to be viewed by 5 billion people (remember, the global population just hit 8 billion). So how does that stack up against other major TV events?

Chart showing viewership of World Cup compared to other eventsMorning Brew
 
Yogi Tea
 

CLIMATE

 

Qatar says the World Cup will be carbon neutral

Gif of Marcia Brady saying The Brady Bunch/Paramount Pictures via Giphy

Qatar didn't secure its World Cup hosting duties by having a reputation as the most environmentally conscious of nations. It's a major oil and natural gas exporter and is considered the highest emitter of CO2 per capita globally. As national economies go, this one's basically an energy company that also happens to have some malls and beaches.

Nevertheless, the nation and FIFA declared that Qatar 2022 will be the first-ever carbon neutral World Cup.

Here's what Qatar claims

The nation has highlighted its efforts to make the World Cup sustainable, like making one of the seven stadiums it built for the tournament a temporary structure constructed of 974 shipping containers—the aptly named Stadium 974. It also planted 16,000 trees, started an electric bus network, and brought a new solar energy plant online.

Qatar further asserts that its size (it's smaller than Connecticut) will keep emissions down by minimizing travel between venues.

But the tournament will still have a big carbon footprint: An official estimate puts total emissions associated with the World Cup from the start of preparations in 2011 through 2023 at 3.6 million metric tons of carbon dioxide—that's more than a year's worth from some countries.

To counter these emissions, Qatar will rely on carbon offsets, meaning they'll invest in emissions-reducing activities to "offset" the pollution.

But critics aren't buying it

A report released by Carbon Market Watch said the organizers used very creative math to get their estimate—undercounting by a factor of eight. One big sticking point is how to calculate the emissions from the construction of those six other new stadiums that aren't going to be dismantled like Stadium 974.

But even if Qatar is doing the math correctly, Carbon Market Watch still isn't impressed by the carbon offsets, saying the projects funded so far didn't really need the investment. Carbon offsets generally have a poor reputation among environmentalists, who view them as a way for polluters to drop some cash to keep polluting.

Plus, in order to have enough water for the influx of visitors (since Qatar is a desert peninsula that's usually only home to about 2.9 million people), it will need to send desalination plants into overdrive. Qatar will also be air conditioning open-air stadiums, as it's expected to be ~92 degrees Fahrenheit during the day.

Bottom line: Qatar is spending an eye-popping $220 billion to host the tournament in an effort to burnish its international reputation. But it's faced headlines all over the globe questioning the environmental impact—probably not the kind of publicity it was hoping to buy.—AR

 

GEOGRAPHY

 

If the World Cup were decided by things other than soccer

World Cup trophy Stuart Franklin/Getty Images

We all know the winner of the World Cup will be determined by winning soccer games (and has been nearly impossible to predict ever since the passing of the oracle octopus).

But imagine a world in which the World Cup trophy was handed out not for soccer, but for other notable achievements and unique characteristics. We did. Here's how each country competing in the tournament could clinch the big prize.

Staying loyal to the flag: Denmark

The simple yet tasteful design of the Danish flag has not changed since it was adopted in 1625, making it the oldest continuously used national flag in the world.

Having the most expensive cheese in the world: Serbia

Produced exclusively in Serbia, Pule cheese is made from the milk of endangered Balkan donkeys and will cost you a pretty penny at $600 per pound.

Having the oldest newborns: South Korea

Koreans consider a person to be a year old at birth and they add a year to their age on every New Year's Day. A child born on New Year's Eve can be considered to be two years old despite literally being born yesterday.

Proximity to the center of the world (literally): Ghana

Ghana is the closest country to the intersection of the equator and the prime meridian, aka a random spot in the international waters of the Atlantic Ocean referred to as Null Island.

Being the champions of hospitality: Senegal

The people of Senegal take so much pride in their reputation for exceptional hospitality that the name of their national team roughly translates to "the lions of hospitality."

Sardine consumption: Portugal

Being a sardine in Portuguese coastal waters is dangerous business: The country collectively eats 13 sardines per second in June when people celebrate festivals in honor of popular saints.

Yeah…there's no way we could fit all 32 countries competing in the tournament in a single newsletter. Click here to read the rest.—SK

 

EXPLAINER

 

What to expect when you're expecting to watch the World Cup

World Cup groups FIFA

FIFA expects the 2022 World Cup total viewership to hit 5 billion—so for the same reason you Google "how to talk about Ted Lasso without having to actually watch Ted Lasso," you may want to know generally what's going on before all of your coworkers start blabbing about it for the next month. Also, it's been four years since the last World Cup, which means you may need to brush up on the format.

How does the tournament work? The World Cup consists of two stages of play: the group stage and the knockout stage. In the group stage, the 32 qualifying countries are placed into eight groups, each consisting of four teams, which play against all of the other teams in their respective group one time (i.e., in a "round robin" format). The outcomes of those matches determine which teams move on to the 16-team knockout stage.

  • The group stage: In this stage, teams earn three points for a win, one point for a draw, and zero points for a loss. After all group matches have been played, the top two teams from each group move on to the knockout stage.
  • The knockout stage: As the name implies, once the knockout stage begins, draws are no longer possible. If teams are still tied up at the end of regulation and two 15-minute periods of extra time, the match will be settled by penalty kicks (exciting).

How is the US expected to do? Anything could happen, but the US' group (Group B) is likely the toughest of all eight. Ranked 16th in the world, the USMNT will face England (world rank: 5th), Wales (19th), and Iran (20th).

Because the US didn't qualify for the last World Cup in 2018 and is trotting out a bunch of Gen Zers (with an average age of <26, the US team has the second-youngest roster in the field), the team isn't expected to contend for the trophy. But, if the US doesn't make it to the knockout stage it'll be a disappointment…to everyone except Chipotle, which is giving out free entrées for every US goal.

The game to watch: USA vs. England, a rematch of both the Revolutionary War and the less formal TikTok war between Gen Z Brits and Americans, will take place on Black Friday.—MK

     
 

BREW'S BEST

 

Track team ratings and their probability of advancing to the next round in real-time with FiveThirtyEight's rankings. Brazil currently has the best odds to win, with a 22% chance of nabbing the World Cup trophy. [FiveThirtyEight]

Migrant workers are the World Cup's forgotten team. [New York Times]

The new documentary FIFA Uncovered offers a good introduction to the powerful organization's controversial history. [Netflix]

Everything you need to know about the US Men's National Team ahead of the World Cup. [Yahoo Sports]

A broad preview of all the teams, stars, and betting opportunities. [ESPN]

Your best sleep: This clinically tested CBD hot chocolate—packed with ingredients like melatonin and magnesium to help you get quality shut-eye—is now available in white chocolate peppermint . Get up to 50% off sitewide.*

*This is sponsored advertising content.

 

TRIVIA

 

World Cup trivia

This puzzle should fire up your neurons. We'll give you the last names of five players on a World Cup team, and you have to name the country they play for.

It's definitely not easy, so if you get 4/10, that's a really good score.

  1. Christensen, Nørgaard, Højbjerg, Eriksen, Lindstrøm
  2. Di Maria, Paredes, Romero, Molina, Pezzella
  3. Pedro, Richarlison, Casemiro, Silva, Marquinhos
  4. Kostić, Đuričić, Lukić, Rajković, Eraković
  5. Tielemans, Batshuayi, Vertonghen, Alderweireld, Meunier
  6. Dieng, Koulibaly, Ballo-Touré, Mendy, Gomis
  7. Al-Yami, Al-Burayk, Al-Hassan, Al-Malki, Al-Muwallad
  8. Fraser, Johnston, St. Clair, Wotherspoon, Davies
  9. Varane, Pavard, Lloris, Rabiot, Dembélé
  10. Khalilzadeh, Rezaeian, Gholizadeh, Ansarifard, Hosseini
 

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ANSWER

 

  1. Denmark
  2. Argentina
  3. Brazil
  4. Serbia
  5. Belgium
  6. Senegal
  7. Saudi Arabia
  8. Canada
  9. France
  10. Iran
         

Written by Matty Merritt, Neal Freyman, Abigail Rubenstein, Max Knoblauch, and Sam Klebanov

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PE's rose-tinted glasses

Plus: Theranos sentencing considers valuation, Slush 2022 impressions, cultivated chicken gets FDA approval & more
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The Weekend Pitch
November 20, 2022
Presented by Masterworks
(Chloe Ladwig/PitchBook News)
Private equity has a reputation for surviving, and even thriving, in most economic crises, thanks in part to its illiquid nature and focus on long-term horizons. However, while this quality can insulate investors from economic volatility, at times it can also insulate them from reality.

It has been a bad year for public markets. At the time of writing, the S&P 500 is down by just over 18% year-to-date, while Europe Stoxx 600 is down by just over 12%. Yet it is harder to say how PE has fared. Fundraising and dealmaking have cooled off, but in both cases, this still only really reflects a return to activity pre-2021: US PE deal value hit $1.2 trillion that year—64% higher than the previous record—while fundraising topped $301 billion, just shy of 2019's record.

News of portfolio markdowns has been sporadic thus far. For example, Blackstone saw its corporate PE portfolio fall 6.7% in Q2. More recently, there were also reports that in Q3, Massachusetts Pension Reserves Investment Management noted a 5.7% drop in the value of its PE portfolio.

Even so, the fear rippling through the public markets has not carried over to PE investors. Instead, the industry is cautiously optimistic—even confident—about its ability to ride out the economic and financial storm, with investors' portfolios sufficiently diversified to absorb any unfolding economic shock.

A part of this optimism could be chalked up to genuine resilience, but there is also something to be said about the way fund managers report their portfolio performance and how this could contribute to a relatively rose-tinted view.

As the macroeconomic picture gets bleaker, more markdowns could materialize, and some investors may find that the glass is not half full.

I'm Andrew Woodman, and welcome to The Weekend Pitch. You can reach me at andrew.woodman@pitchbook.com or on Twitter @adwoodman.
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A message from Masterworks  
Microsoft co-founder's $1.5B+ sale highlights "safe haven" asset
Earlier this month, Paul Allen's historic art collection shattered the record for largest sale in auction history. The fact that the blue-chip art market is still setting records amid major drawdowns in financial markets, and macroeconomic turmoil, highlights why it can be such a strong alternative diversifier. The high-end art market also remained resilient through downturns like the dot-com bubble and GFC.

But this time around, it's not just the ultra-wealthy benefitting.

Thanks to Masterworks. This unicorn investment platform allows everyday people to invest in shares of multimillion-dollar art by names like Banksy and Picasso. So far, seven of Masterworks' last eight exits have realized a net return of +17.8%.

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See important Regulation A disclosures.
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Valuation in Holmes' sentencing

Former Theranos CEO Elizabeth Holmes, center, arrives Friday at federal court with her partner Billy Evans, right, and mother Noel Holmes in San Jose. Holmes was sentenced after being convicted of four counts of fraud.
(Justin Sullivan/Getty Images)
In handing down a punishment for Theranos founder Elizabeth Holmes' crime, the federal judge in her case partly used a calculation about the company's valuation and the venture capital she fraudulently raised for the blood-testing startup.

Theranos in total raised more than $810 million from investors up through 2014, according to PitchBook data. In preparation for the sentencing, prosecutors had pegged the loss at $804 million among 29 investors, but Holmes's defense lawyers put that figure at no more than $48 million and a smaller number of investors.

Ultimately US District Judge Edward Davila came down much closer to the defense's view of restitution, and he factored in a valuation analysis based on sentencing guidelines.

Speaking at Friday's sentencing hearing in his courtroom in San Jose, Davila said he concluded that Theranos had defrauded at least 10 different investors of a total of more than $121 million. He agreed with Holmes' lawyers that he shouldn't count in that group the investors who participated in late-stage funding rounds in 2013 and 2014, when the company hauled in the biggest portion of its capital, vaulting its valuation to over $10 billion at its peak.

But Davila also said that Theranos still had value even though Holmes had lied to investors about the company. The judge will make a final determination on restitution at a later hearing.

—Alexander Davis
 

Reporter's notebook: Slush

(Courtesy of Petri Anttila)
The mood among investors attending Slush 2022 startup conference in Helsinki this week seemed to match the weather as confidence in VC's outlook cools.

Most are expecting a prolonged period of challenges for startups looking to raise capital after global dealmaking slowed this year.
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Trivia

(Felix Mizioznikov/Shutterstock)
The collapse of cryptocurrency exchange FTX is shaking the crypto sector and causing investors of all kinds to reevaluate their exposure to the asset class. What percentage of government pension plan sponsors is currently invested in crypto currencies?

 A) 94%
 B) 73%
 C) 69%
 D) 62%

Find your answer at the bottom of The Weekend Pitch!
 

Cultivated meat's big week


You now have the US government's permission to eat lab-grown meat. The Food and Drug Administration has cleared Upside Foods to start making and selling cultivated chicken—the first approval of its kind in the US.

Hungry for more? PitchBook analyst Alex Frederick recently detailed the top takeaways from the Cultured Meat Symposium.
 

Private equity takes
your temperature


The healthcare services industry is witnessing fierce competition between hospital systems, PE-backed platforms and vertically integrated payer-providers.

Increasingly, PE firms are becoming more sophisticated investors. In the past, they've focused on consolidating medical specialties like dentists and dermatologists. Now, they're entering new provider categories and looking to scale offerings in value-based care.

PitchBook senior analyst Rebecca Springer has more on these and other trends in our just-launched coverage of Healthcare Services.
 

Dethroning datacenters
in the AI chip sector


As the AI and machine learning semiconductor sector rides the economic downturn, emerging use cases have been scooping up a larger share of the diminishing VC funding flow. The datacenter chip market, historically the dominant segment, seems to be nearing saturation.

The markets for PC and automotive AI chips have taken the lead in growth this year, at a pace of more than 30%. They will likely surpass datacenters in market size in 2025, giving space for innovation in these areas of the AI and machine learning chip market.

PitchBook senior analyst Brendan Burke shares projections on the future of this sector in a recent analyst note.
 

Stay tuned

Keep an eye out for these insights and research reports coming out this week.
  • Q3 2022 European VC Valuations Report

  • Q4 2022 Quantitative Perspectives

  • Analyst Note: Recapping the 2022 HLTH Innovation Conference
 

Trivia

Answer: A) 94%

According to the 2022 Investor Trust Survey conducted by the CFA Institute, 94% of state and government pension plans are invested in cryptocurrencies. Among insurance companies, the figure is 73%. For sovereign wealth funds it's 69%, and among corporate-defined benefit plan sponsors it's 62%

This edition of The Weekend Pitch was written by Andrew Woodman, Leah Hodgson, Alexander Davis, Chris Noble, James Thorne and Clarinda Simpson. It was edited by Chris Noble and Clarinda Simpson.

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