Saudi Arabia’s soccer spending spree reshapes Middle East sports sector

August 2023 Al-Monitor PRO Trend Report 

3,917 words

Introduction

A year ago, the soccer world’s center of gravity revolved around Qatar’s $300 billion FIFA World Cup, which culminated in Argentina’s thrilling victory over France — after which top stars were supposed to return to business as usual in Europe. Instead many went to Saudi Arabia.

Cristiano Ronaldo, Karim Benzema and Neymar are all now members of the Saudi Pro League, or SPL, which kicked off its 2023-2024 season on Aug. 11. The new campaign is laden with expectation for a league that was largely unknown outside the Middle East until Saudi Arabia’s $700 billion sovereign wealth fund started bankrolling a spending spree on global superstars. 

Saudi clubs have shelled out nearly $900 million during the 2023 summer transfer window poaching world-class talent from Europe, fueling a larger plan to make the SPL one of the world’s most commercially lucrative leagues. That total could’ve been considerably higher, as Riyadh side Al Hilal made a world record-breaking $332 million bid in July for French forward Kylian Mbappe, which was ultimately turned down. 

Gulf countries are known for global sports investments, but until recently Saudi Arabia largely sat on the sidelines as Qatar and the UAE bought soccer clubs and hosted competitions. “Clearly, what's happening here is Saudi Arabia is playing catch up,” Simon Chadwick, a professor of sport and geopolitical economy at Skema Business School in Paris, told Al-Monitor.

The kingdom is now gunning to become a professional sports powerhouse, headlined by the SPL’s bold spending (not to mention a $2 billion investment into LIV Golf). It also underlines a broader shift: no longer content with simply owning foreign teams and splashy sponsorships, more Gulf sports investments are coming home. 

That trend has produced regional mega events, F1 races, cycling teams and more, but the SPL’s rise as a globally relevant soccer league is an unprecedented development and has significant implications for neighboring countries. After years of lavish sports investments, Qatar and the UAE must contend with a regional giant overtaking them, while the SPL’s ambitious plans remain in their early stages and so far have focused on aging stars nearing retirement — plenty could go wrong, with Saudi Arabia's Public Investment Fund (PIF) footing the bill if boom times go bust.

1. State of Play

As the soccer world descended on Doha in November 2022 for Qatar’s historic — and historically expensive — World Cup, something quickly became clear for those in attendance. “You noticed from the very first game that Saudi was the home team,” said Uri Levy, an expert on Middle East soccer and founder of soccer website BabaGol. That was underlined by the Saudi squad quickly delivering an iconic moment by beating eventual champions Argentina 2-1 in the group stage, setting off regional celebrations. 

For many viewers globally the shock upset may have marked an introduction to Saudi soccer; today, none is required after the SPL has spent 2023 raiding household names from storied European clubs. As of Aug. 25, the SPL spent $866 million in transfer fees during the 2023 summer transfer window, ranking second globally behind only the mighty Premier League’s $2.5 billion, according to Transfermarkt. It’s a development few could have conceived 12 months ago — save perhaps Saudi Crown Prince Mohammed Bin Salman. 

The SPL’s ascent is ushering in a new era for domestic sports in the Middle East. That centers on soccer, the region’s most popular sport, but more specifically it is reshaping the competitive landscape in the Gulf, where governments have jockeyed to become top global destinations for events and entertainment. Bahrain, Qatar, the UAE and Saudi Arabia all host F1 races, while the region has welcomed everything from WWE to global track and field competitions. Crucially, these moves — alongside global sports investments — mostly serve as expensive marketing ploys to enhance the brands of Doha, Riyadh and Abu Dhabi. The target audience has been global, not local, drawing plenty of “sportswashing” criticisms.

Equally important: Saudi Arabia only recently began pursuing big sports investments. Gulf rivals got a significant head start, headlined by Qatar’s World Cup. “They won the bid while Saudi Arabia was still sleeping,” notes Chadwick. Abu Dhabi acquired Manchester City 13 years before Saudi Arabia’s PIF bought Newcastle United in 2021. Qatari and Emirati soccer clubs also enjoyed successes. For instance, the UAE Pro League’s Al Ain FC reached the Asian Football Confederation (AFC) Champions League Final as recently as 2016.

Yet, Saudi Arabia always had potential to outshine its smaller Gulf rivals when it came to soccer. The SPL lacked global exposure and superstars, but featured a large domestic fanbase and several of Asia’s top clubs — Al Hilal owns the most AFC Champions League titles. It was already essentially the Middle Eastern Premier League, notes Levy. “All the most talented players from Syria, Iraq, Jordan, Oman...Their destination was Saudi Arabia,” said Levy. That was reflected in attendance: SPL’s top clubs were capable of attracting up to 60,000 fans, while the UAE and Qatari leagues rarely drew strong crowds.

Now, Saudi Arabia is no longer on the sidelines. Sports have become key to its sprawling Vision 2030 agenda and entered a new phase in December 2022, when Ronaldo, then 37, agreed to join Al-Nassr on a 2.5-year contract reportedly worth about $200 million annually. Although Lionel Messi ultimately spurned the SPL for US soccer, Ronaldo’s move paved way for more famous names to follow, from Karim Benzema and N'Golo Kante to Jordan Henderson.

Many moves have centered on wooing out-of-contract veterans making high salaries, but some younger players have joined too, such as 26-year-old Ruben Neves, who left Wolverhampton for Al Hilal for a fee reportedly worth $60 million. Notably, newcomers are taking SPL spots traditionally occupied by regional talent, with Saudi teams currently allowed eight foreign players per squad. That’s already pushing out well-known players. 

This spending is part of a long-term strategy, the SPL’s chief operating officer Carlo Nohra told Reuters in August. "We're taking it one window at a time,” said Nohra. “In order to improve quality, we have to pay for it.” Notably, the SPL doesn’t have spending constraints, unlike European leagues, which have obviously taken a keen interest in this new competition for talent (although Saudi clubs are also taking some unwanted contracts). The SPL’s splurge has drawn comparisons to the Chinese Super League, which burst onto the scene several years ago with big spending, only to fizzle. Yet, unlike that cautionary tale, the SPL has total government support and the PIF’s immense financial firepower at its back. 

Ultimately, Saudi Arabia wants the SPL to become one of the world’s top 10 leagues as part of a strategic plan intended to commercialize clubs, with a goal to quadruple its annual revenue to $480 million annually by 2030. This plan took shape in June 2023, when the kingdom launched the Sports Clubs Investment and Privatization Project, which transformed Saudi’s top four clubs — Al Ittihad, Al Ahli, Al-Nassr and Al Hilal — into corporations, each 75% owned by the PIF and 25% owned by respective nonprofit foundations. The plan also calls for club privatizations starting in Q4 2023.

Other state entities are also involved, with Saudi Aramco and Neom also taking control of clubs. Bloomberg has reported that new owners are expected to build up brands and revenues before selling stakes to investors, while noting that the SPL is discussing new broadcast deals and partnerships with global private equity companies. In August, the league inked a two-year agreement with sports video service DAZN to stream matches in the UK, Ireland, Germany, Austria, Belgium and Canada.

Ultimately, this onslaught has stunned Gulf neighbors, with Riyadh seizing the global spotlight that Doha spent a decade and many billions to capture. There's almost a sense of disbelief and an absence of direction in the UAE and Qatar, notes Chadwick. “Whatever competitive advantages the UAE and Qatar have established over the last 10-15 years, Saudi Arabia is eroding that,” said Chadwick.

Currently, there are few signs Qatar or the UAE will accelerate domestic soccer spending in response, just relatively minor moves. For instance, Barcelona legend Andres Iniesta, now 39, joined Emirates Club on a one-year contract in early August. Yet, sports remain key to their plans. Among other future events, Qatar is hosting the 2023 AFC Asian Cup and this year won hosting rights for the 2027 Basketball World Cup. In February 2023, Dubai announced a 10-year strategy to develop its sports sector and raise its contribution to the emirate’s GDP from 2% to 4% annually, alongside organizing 3,000 local, regional and international events and 1,000 international training camps.

Currently, there are few signs Qatar or the UAE will radically accelerate domestic soccer spending in response. Qatar Stars League expenditure during the 2023 summer transfer window reached $114 million, ranking 13th globally, while the UAE Pro League's $27 million was 25th. The only notable headline came when Barcelona legend Andres Iniesta, now 39, joined Emirates Club in early August. 

2. Beyond Soccer

Soccer is the Middle East’s most popular sport, but not for a key demographic in the Gulf. That would be cricket, the second-most watched sport globally and the game of choice for millions of South Asian expats living in GCC countries. 

Although it hasn’t received the same attention as soccer, there are signs the Gulf could become a new hub for world-class cricket action. So far, activity centers on the UAE, which hosts the International Cricket Council — the sport’s global governing body — and recently welcomed a new professional cricket tournament, dubbed the International League T20 (ILT20). T20 is a shorter, TV-friendly version of cricket popularized by the Indian Premier League, or IPL, which has become one of the most viewed sporting events globally since launching in 2008 and has expanded via franchises globally. 

The ILT20’s inaugural edition launched in January 2023, featuring six franchise teams competing across a month-long tournament. Notably, it arrived with big names and big earnings, creating potential to disrupt an increasingly crowded field of T20 leagues globally. The ILT20 is reportedly the second most lucrative T20 league in the world after the IPL, as it is offering top players up to $450,000 per season, which saw it attract stars such as Andre Russell, Sunil Narine, Kieron Pollard and Alex Hales. It has also attracted controversy by allowing teams to have nine overseas players. That’s upping the competition for talent, as T20 leagues typically only have four.

IPL franchise owners and major sports investors have gotten involved. Billionaire Mukesh Ambani’s Reliance Industries owns one UAE franchise, while Manchester United co-owner Avram Glazer’s Lancer Capital bought another and Bollywood superstar Shah Rukh Khan also has a franchise. ILT20 also struck a ten-year deal with Indian broadcaster Zee to air matches globally, while Dubai logistics giant DP World signed a five-year sponsorship deal.

That said, previous attempts to launch UAE T20 tournaments never took off and there are questions about whether it can attract fans and viewers in key markets. Crucially, the ILT20 lacks stars from cricket’s top market, as the IPL currently bans Indian players from competing in T20 tournaments abroad. Yet, another Gulf player could make the IPL rethink that approach — Saudi Arabia. 

News surfaced in April 2023 that the kingdom wants to launch the world’s most lucrative T20 tournament and bring in Indian players, a move directly threatening the IPL. The proposed Saudi T20 could feature year-round contracts worth around $6 million. That’s setting up another LIV Golf scenario. However, Saudi government representatives have also held talks with IPL owners about collaboration. 

Planning is reportedly still in early stages, but cricket’s appeal in Saudi Arabia is obvious, with roughly 13 million expats, many of them from South Asia. ICC chair Greg Barclay has already acknowledged this potential. “Given their advance into sport more generally, cricket would work quite well for Saudi Arabia,” he has said. 

Other sports are also making inroads in the Gulf, like basketball. The NBA debuted in the Middle East in 2022, with the Milwaukee Bucks and Atlanta Hawks playing preseason games in Abu Dhabi, with more games scheduled for this season too. In July 2023, Qatar invested in an NBA franchise and the league wants to grow basketball internationally, including in the Middle East. The NBA recently inked a multiyear collaboration agreement with Abu Dhabi wealth fund ADQ to engage local fans and youth players. 

Baseball is also targeting the region. In November 2023, Dubai is set to host a showcase for Baseball United, a new professional league focused on the Middle East and South Asia. The event will feature Baseball United’s first four franchises, two representing the UAE alongside counterparts from India and Pakistan. Notably, Baseball United’s ownership group includes MLB legends Barry Larkin, Mariano Rivera, Adrian Beltre and Felix Hernandez.

3. Outlook

• After a busy summer, the SPL’s next steps loom large. “When the winter transfer window opens, one would imagine that we will see further Saudi investment in players and in clubs,” said Chadwick. “What I'm looking out for is evidence of a long-term strategy, rather than just a short-term caffeine hit.” 

• There likely will be more caffeine hits. After missing out on Messi and Mbappe, SPL clubs will hunt for more stars — like a regional homecoming for Mo Salah — but transcending the retirement league tag could prove challenging. After all, 24 year-old Mbappe snubbed a contract that could’ve reached $776 million — if that wasn’t tantalizing enough to leave Europe, what is?  

• Buying fading superstars can only get you so far. Alongside securing rising talent, the SPL needs to develop homegrown stars and leverage this moment to help benefit a new generation of Saudi players. That said, watch out for turmoil amongst new arrivals: former Celtic winger Jota, at 24 one of the younger transplants, has already reportedly left Al Ittihad amid reports the club wanted to free up space as it pursues Mo Salah.

• Regardless, luring soccer legends has fueled global exposure and interest. The SPL’s 2023-2024 season should see huge ticket sales and packed stadiums. Improvements in the on field product will be noticeable, with newcomers largely playing midfield, wing and striker. “These are the people that make the game move faster,” said Levy. 

• A bigger story line will be getting eyes on the screen. “They need a big international broadcast deal,” Dan Plumley, senior lecturer in sports finance at Sheffield Hallam University, told Al-Monitor. “Having star talent is great, but only if people are watching, at home and overseas.” The DAZN deal is a start.

• Commercialization is the name of the game, with club privatizations set for Q4 2023. “For now it is likely to be the PIF continuing to pump the money in, at least in the short to medium term,” said Plumley. “They don’t need foreign investors in clubs yet as the financial situation is not a problem.” 

• As Chadwick notes, this isn’t privatization in a free market sense. The plan aims to instill commercial discipline while keeping clubs aligned with the state. “Saudi Arabia wants to ensure that SPL clubs are making a clear, tangible and linked contribution to national strategy,” said Chadwick. 

• These moves are intended to catapult the SPL into Deloitte’s Football Money League, an annual profile of the highest revenue generating clubs. “We're not talking about these clubs becoming the world's most profitable,” said Chadwick. “We're talking about these clubs becoming amongst the world's most commercially lucrative.” 

• Although Al Hilal jerseys once featured Volkswagen’s logo, Chadwick notes that SPL clubs have gravitated towards state-oriented sponsorships. That’s likely to continue, especially with the kingdom recently launching new homegrown brands like Riyadh Air and electric carmaker Ceer. 

• Although there’s future potential for big foreign sponsorships, Chadwick points out that if Riyadh’s broader economic ambitions go according to plan, Saudi Arabian brands would themselves be huge global brands in 5-10 years. 

• Ultimately, Saudi Arabian authorities still want inward investment too, which could see US private equity players target the kingdom’s biggest clubs. Big merchandizing contracts may also materialize if global appeal proves real. 

• However, backlash could also undercut appeal in key markets. “Think about Jordan Henderson moving from Liverpool to Saudi Arabia. That's been hugely controversial,” said Chadwick. It will take time to see how commercially attractive Saudi clubs will become to outside investors. 

• International competitions will be an important barometer. Al Hilal is a AFC Champions League fixture, but the stakes are higher now for all Saudi clubs, adding intrigue for FIFA's upcoming Club World Cups. “To become amongst the most commercially lucrative leagues in the world, you've got to win big,” said Chadwick. “You need to win internationally.” 

• This moment could also see a role reversal, with Gulf neighbors beginning to emulate Saudi Arabia. “What we're now beginning to see is perhaps the UAE and Qatar, arguably for the first time, beginning to copy what Saudi Arabia is doing,” said Chadwick. 

• Still, it appears unlikely other GCC countries will enter a new soccer arms race. “We have seen them do this fleetingly in the past,” notes Plumley. “However, I don’t expect this to be as big a push as the Saudi Pro League.” 

• Regardless, the SPL’s newcomers should still impact other Gulf leagues by squeezing out Arab and African players at key positions. That shift will likely make the UAE Pro League, Qatar Stars League and other counterparts more attractive destinations for regional talent going forward. 

• The SPL’s newfound star power has other regional benefits. Consider the King Salman Club Cup, which saw Saudi Arabia host teams from across the Middle East and North Africa this summer. “They all played against, suddenly, Cristiano Ronaldo,” said Levy. “Just imagine the impact on the players, young players.”

• Meanwhile, Saudi Arabia should soon announce more plans for its T20 league. Many will be watching for its disruptive potential on global cricket. That’s also true for the UAE’s T20, which could see its competitive advantage eroded. The ILT20’s next edition is scheduled for January 2024, with strong talent again lined up. 

• Elsewhere, Gulf states will continue competing to host global sporting events. Numerous regional tournaments are already scheduled, but more intriguing will be mega events yet to be awarded. Qatar and Saudi Arabia are planning Olympic bids, while there has been plenty of speculation around Riyadh’s interest in the 2030 World Cup, which is set to be awarded in 2024. 

4. Case Study: Al-Nassr 

Few outside the Gulf were familiar with Al-Nassr until December 2022. Ronaldo, so often a difference maker across his legendary career, changed all that, catapulting the Riyadh club to international fame after agreeing to become the biggest star to ever play in Saudi Arabia. 

The move upended the sports world and came after weeks of breathless speculation, with the aging (and disgruntled) star becoming a distraction for Portugal’s national team during its disappointing World Cup performance in Doha. Yet, few then truly understood how momentous the five-time Ballon d'Or-winner's decision would ultimately prove to be — not only for the SPL, but the future of professional soccer. 

It also provided the newly globally relevant Al-Nassr with unprecedented scrutiny and expectations. Founded in 1955, the Riyadh club is one of the SPL’s four biggest, but it has largely been overshadowed by crosstown rival Al Hilal. 

Adding Ronaldo elicited a huge range of opinions and soaring anticipation, with Saudis flocking to buy his new number 7 jersey. Globally, some dismissed the move as a just high-profile retirement league payday for another fading star, while others saddled Al-Nassr with outsized expectations befitting its outsized star.

It quickly became clear Ronaldo couldn’t win SPL games single-handed. Although he scored 14 goals, his first season with Al-Nassr largely underwhelmed. The club finished second in the SPL behind Al Ittihad and failed to reach the Saudi King Cup or Super Cup. In April, Al-Nassr sacked head coach Rudi Garcia following a 0-0 draw to Al Feiha, with Ronaldo appearing visibly angry after the match. 

Although the club qualified for the AFC Champions League, it was a "disappointing season,” wrote Moqbel Al-Zabni, editor-in-chief of the Saudi capital's Al Riyadiah newspaper. There were also controversies: Ronaldo grabbed his crotch in a gesture toward rival fans while exiting a stadium in April, with Saudi legal scholar Nouf Bint Ahmed tweeting threatening to report him to prosecutors for public indecency. 

Yet, Ronaldo’s arrival has also paid dividends — Saudi football has never enjoyed such global attention. The SPL’s 2022-2023 season witnessed its highest ever live audiences, with 2.2 million reportedly attending games, while matches were broadcast in 170 countries. Al-Nassr's Twitter followers jumped from around 800,000 to more than four million, while its Instagram following swelled from two million to around 18 million. 

Plus, Al-Nassr's star now has reinforcements. Ronaldo’s move proved the SPL could score global talent if it was willing to pay — and pay it has. Al-Nassr has since spent $149 million in transfer fees bringing in Otávio, Sadio Mane, Seko Fofana and Marcelo Brozovic, while Al Ittihad brought in Benzema and Al Hilal netted Neymar. The list goes on. 

That’s raising the competitive stakes for Ronaldo’s second SPL season even higher. Plus, after initial disappoint, the former Real Madrid superstar finally won his first title in Saudi Arabia in August, when Al-Nassr defeated Al Hilal 2-1 in the final of the Arab Club Champions Cup. Ronaldo scored both goals, earning Al-Nassr its first title in the tournament. 

5. Key Takeaways

➡  Long known for investing in European soccer clubs and sponsorships, Gulf countries have also poured resources into their own domestic sports sectors to help drive economic diversification and boost national images. 

➡  That’s already produced a World Cup, F1 races and beyond, with the Gulf rapidly morphing into a global sports capital featuring fierce competition to become the region’s premier entertainment and events hub. Qatar, the UAE and Bahrain originally championed this strategy, while Saudi Arabia belatedly entered the fray. 

➡  The meteoric rise of a globally relevant soccer league in Saudi Arabia has ushered in a new era for the Middle East’s sports sector. As with professional Golf, that’s seeing Saudi Arabia disrupting the balance of power in soccer globally. Cricket could be next. 

➡  The SPL’s dazzling ascent all started with Ronaldo. But where does it end? If the PIF has its way, the SPL will rank among the world’s top 10 leagues and feature the best players on the planet playing in their prime on Saudi soil. That plan is going swimmingly so far, but these are still early days. Rivalling Europe’s elite leagues will be an immensely challenging undertaking — just buying superstars won’t cut it.

➡  SPL club revenues will rise, but profits aren’t the priority. In terms of image-building, the kingdom is already raking in returns. “This is soft power,” said Chadwick. “It's about projection, projecting power, about projecting ambition, about projecting values.”

➡  Saudi soccer has real tailwinds and comparisons to the Chinese Super League look premature. “In Saudi Arabia you don't need to convince people or players that football is the best sport in the world,” said Levy. “They already know it; they are a football country.”

➡  Alongside adding more talent, broadcast deals and commercialization are the SPL’s next big steps. The kingdom has a sales pitch that can’t be ignored. “Saudi Arabian clubs do have some commercial pull,” said Chadwick. “Saudi Arabia is a lucrative market for football.”

➡  The PIF and Saudi entities will be the driving force. As the league grows, Saudi Arabia might court outside investments, notes Plumley. “There will be a global play on this at some point, but we are not quite there yet.”

➡  Ultimately, the kingdom’s soccer moves have shocked Gulf rivals, who worked for years and spent lavishly on sports only to see Saudi Arabia capture the global spotlight in mere months via its sheer ambition and financial firepower. Expect a response soon.