Sport privatisation next goal for Saudi Arabia

June 7, 2023

Crowd cheer for Saudi sports team Al Nassr, home to Ronaldo — Crowds at matches for teams such as Al-Nassr, home to Ronaldo, have grown by 150 percent in the last year

Saudi Arabia aims to privatise all sports clubs starting in Q4
Team owners will include energy giant Aramco and PIF
Critics accuse country of ‘sportswashing’

Saudi Arabia has revived a blueprint for the future of sport in the kingdom as it looks to increase revenue significantly and attract more of the world’s biggest football names to its fledgling league.

Crown Prince Mohammed bin Salman revealed plans this week to transform the Saudi Pro League into a SAR8 billion ($2.1 billion) force by the end of the decade.

The project – part of the Vision 2030 strategy to diversify the country away from an oil-based economy – also aims to privatise all sporting clubs, starting from the final quarter of this year.

The plans were announced just one day before reigning Saudi champions Al-Ittihad confirmed the signing of French star Karim Benzema from Real Madrid.

According to the Sports Ministry, Saudi Arabia’s sovereign wealth fund will take control of four clubs including Al-Ittihad and Al-Nassr, which Cristiano Ronaldo plays for.

The Public Investment Fund will also own 75 percent of Al-Ahli and Al-Hilal, while other deals announced include oil company Aramco owning Al-Qadsiah and Diriyah Gate Development Authority (DGDA) taking on Al-Diraiyah FC.

Jerry Inzerillo, group CEO of DGDA, said he wants to enhance infrastructure at Al-Diraiyah FC to “world class” standards.

Under the plan the Saudi Pro League aims to boost revenues to SAR1.8 billion annually from the current SAR450 million.

But Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Paris, said that the proposals were not new and first put forward in 2015.

“My first reaction to this was it’s a timely announcement but we have heard it all before,” Chadwick said.

“It’s been a fairly laborious process up until now interspersed with the state bailing out football clubs as recently as last year. This is why I take the latest news with a pinch of salt, but we’ll see what happens.”

He added that Argentina’s World Cup winner Lionel Messi is an “intrinsic part of what is now happening in terms of privatisation” amid ongoing rumours that he could sign for Al Hilal after becoming a tourism ambassador for the kingdom last year. However, media reports on Wednesday suggested he is poised to reject Al Hilal for a move to Inter Miami in the US.

Overseas interest

Chadwick said that although such big ticket signings create commercial opportunities in terms of merchandise, TV rights and sponsorship, they also bring “significant cost pressures” and he questioned whether Saudi clubs are ready.

“I know Al-Nassr struggled to source enough shirts when Ronaldo signed and having been in the Al Hilal store recently I’m not sure if the club is equipped to cope with the global demand around any potential Messi signing,” he said.

Ben Gordon, a sports diplomacy expert at Dentons Global Advisors, said it’s “very likely” more big names will follow Ronaldo and Benzema to Saudi Arabia because of the money on offer.

People, Person, Adult — Argentinian football icon Lionel Messi and his family visited Saudi Arabia as part of a tourism push

“The privatisation plan will ideally lead to a more professional, structured and competitive league, which will help attract quality players, even if they aren’t of the status of Ronaldo,” Gordon added.

Three objectives underpin the Saudi sports privatisation announcement: fostering investment opportunities; boosting professionalism, governance and financial sustainability in sports clubs; and enhancing competitiveness and infrastructure.

Chadwick acknowledged that there will be considerable “speculative interest” from overseas investors who, he said, were warming to Saudi Arabia.

He described a “mood change” since the pandemic with “much more interest” from commercial organisations outside the country, which could lead to some of them appearing as shirt sponsors for Saudi clubs.

“There are definitely promising signs but it’s not a done deal by any means and there is still some caution,” he added.

Gordon noted that with a population of 33 million people, Saudi Arabia has “huge potential” as an entertainment market, including in sports.

“One challenge the league will face with foreign investors – at least from Western countries – is the potential reputational risk they may be exposed to due to allegations of sportswashing,” he added.

Saudi Arabia and other Gulf nations have spent billions worldwide on sporting ventures. Critics call it “sportswashing”, claiming such investment is being used to improve a country’s reputation and deflect international censure.

Attendance across the Saudi Pro League has increased by nearly 150 percent in the last year to a total of 1.2 million across 134 matches, averaging just under 9,000 a game, but there are ambitions to make it one of the top 10 leagues in the world.

Chadwick sees a “healthy appetite” for football in the kingdom, especially since the success of the national team at Qatar 2022.

According to the government, 80 percent are now either playing, attending or following football.