Saudi football spending tipped to tumble as economy falters

July 14, 2024, 8:23 AM

A young Al Hilal fan (with Neymar phone case) watches his side play Al Ittihad at the Kingdom Arena in Riyadh. Fewer superstar signings are expected this summer

Transfer window opens next week
Pro League clubs spent $1bn last year
Giga-projects soak up funds

Saudi Arabia’s domestic football ambitions may have to take a back seat this year as the kingdom focuses on funding its $1.25 trillion giga-projects programme, according to analysts.

Last summer Saudi Pro League clubs spent close to $1 billion signing the likes of Neymar, Ruben Neves and N’Golo Kante.

This year’s transfer window is expected to be much quieter, although some Premier League and Euro 2024 stars have been linked to Saudi sides.

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“Spending on sport appears to have temporarily slowed, which is consistent with the fiscal restraint we have seen in Saudi Arabia this year,” says Simon Chadwick, an AGBI columnist and professor of sport and geopolitical economy at Skema Business School in Paris.

Investment in football is part of Saudi Arabia’s Vision 2030 strategy to diversify its economy and overhaul the country’s image.

Funding for the sport has largely come from the kingdom’s sovereign wealth fund. The Public Investment Fund has assets of $925 billion, but the PIF is also carrying the burden of the giga-projects.

Analysts have previously speculated that some developments could be pared back in response to budget deficits, higher interest rates and a dearth of foreign investment. Saudi officials have already announced that some projects will stretch out beyond 2030.

Saudi Arabia’s economy contracted by 1.7 percent year on year in the first quarter of 2024 as oil production cuts continued.

The International Monetary Fund downgraded its estimate for Saudi economic growth this year in its latest World Economic Outlook, but has raised its expectation for 2025.

“The giga-projects are more important to Vision 2030 than the attraction of foreign football stars, so I wouldn’t expect football spending to escape cost cuts,” says Ben Gordon, associate partner at management consultancy Albright Stonebridge.

Last year the Saudi government transferred to the PIF 75 percent ownership of four Pro League clubs: Al Ittihad, Al Ahli, Neymar’s Al Hilal and Cristiano Ronaldo’s Al Nassr.

State oil company Aramco was given ownership of another top-flight team, Al Qadsiah, while the PIF-owned giga-project Diriyah Gate was given Al Diriyah, which plays in a lower division.

Another 14 Saudi football clubs are being put up for sale, including four from the Pro League, as the country tries to monetise the sport.

The aim is to “encourage the business sector to take part in the establishment and growth of the sports industry”, says the sports ministry in Riyadh.

Saudi Arabia fans at the 2022 World Cup in Qatar. The kingdom is the only bidder to host the 2034 tournament

John Viola, a football agent who has helped to broker deals across the Middle East for more than a decade, says: “It’s not all about the government funding. They’re looking at people coming in to get involved in clubs, they’re looking at sponsorships for the first time. My feeling is this is big for the long term.”

Pro League executives have had meetings with all 18 clubs to discuss their plans for this summer’s transfer window. And while the league has committed to supporting a centralised approach to transfers, deals will be made at fair valuations, according to reports.

The window will open on July 17 and close on October 6.

Instead of providing a final pay-day for ageing players – Ronaldo is 40 on his next birthday – SPL officials are looking for clubs to nurture their own talent and attract younger international superstars to the league, according to a report from Reuters.

“By focusing on attracting younger international talent, we aim to provide our youth with the opportunity to learn from the best globally,” an SPL spokesperson said.

Rules to promote youth development, which will include two additional international team spots for under-21 players, will be implemented in the forthcoming season.

Although the ultimate aim may be to create leagues where clubs are self-sustaining, Gordon admits there is “little evidence so far that this ambition is within reach any time soon”.

The Saudi Pro League is not alone in this, however. English Premier League clubs reported an aggregate pre-tax loss of £685 million ($876 million) in 2022-23, according to figures from Deloitte. This was 14 percent up on the previous season.

Domestic football in Saudi Arabia may also be overshadowed by Fifa’s formal announcement that the country will host the 2034 World Cup. The kingdom is the only bidder for the tournament and the governing body of world football is expected to rubber-stamp its hosting in the next few months.

“One senses that Saudi Arabia’s attention this summer will be devoted to loftier ambitions than signing one or two high-profile players from overseas,” says Chadwick.

“The country’s football authorities won’t want its big headlines to be dwarfed by more important news.”