Saudi Arabia: The making of a sports nation

The kingdom has crafted a genuine vision aimed at building a sports ecosystem

August 7, 2023, 11:52 AM

Al-Nassr star signing Cristiano Ronaldo celebrates Saudi Arabia's Founding Day

Saudi Arabia’s sports shopping spree shows no signs of slowing down.

In the past 12 months alone, football superstar Cristiano Ronaldo joined the kingdom’s Pro League, smart city Neom won its bid to stage the 2029 Asian Winter Games and the Public Investment Fund acquired a stake in VSPO, a Chinese esports business.

Last weekend PIF announced that it was forming another company, SRJ Sports Investments, to focus on the domestic market and the Mena region.

Rumours have also resurfaced that the wealth fund wants to add more international football clubs to its portfolio, after buying English Premier League side Newcastle United in 2021.

Meanwhile, Saudi’s homegrown football clubs are being rejuvenated by a state-led privatisation programme.

Critics outside the kingdom have accused it of “sportswashing”– trying to “buy” its way to legitimacy. Yet the sheer scale of the country’s transformation programme suggests there is more to its ambition than largesse or deception.

Make no mistake: Saudi Arabia has crafted a genuine and grand vision aimed at building a joined-up and diverse sports ecosystem.

Its leaders know a developed sports ecosystem has the potential to make a significant contribution to the country’s economic growth. In this respect, the kingdom’s sports investments are undoubtedly aimed at fuelling its wider national transformation programme.

The launch of the LIV golf series shows that PIF is prepared to innovate — The launch of the LIV golf series and the acquisition of Newcastle United show that PIF is prepared to innovate and to take advantage of market opportunities as they arise

The acquisition of Newcastle United shows that PIF is prepared to take advantage of market opportunities — The launch of the LIV golf series and the acquisition of Newcastle United show that PIF is prepared to innovate and to take advantage of market opportunities as they arise

At the same time, sport is intended to be a driver of innovation and source of employment for Saudi’s young and growing population.

In this context, investing in merely one football club or a single golf event will not do.

This is why the government is intent on building an entire ecosystem that facilitates the development of a sporting community to serve the needs of the population as well as the sports industry.

Such a philosophy is reflected in the activities of Sela – a Saudi sport marketing company that has grown to become an event, hospitality and real estate business.

Sela recently opened Via – a leisure and entertainment venue in Riyadh – and is a shirt sponsor for its PIF stablemate Newcastle United.

PIF is behind much of what Saudi Arabia is doing in sport, from investing in motorsports to ownership of giga-projects such as Neom.

The challenge for the government will be to ensure PIF does not crowd out other coordinating bodies, or stifle enterprise from the private sector.

There is also the issue of how Saudi Arabia should develop its sport ecosystem. Should structure come before strategy, or strategy before structure?

Those in the “structure first” camp believe external conditions should drive decision-making – this means taking advantage of market opportunities.

The Newcastle United purchase was one such opportunity. At the time, there was nothing to suggest the Saudi government was looking to buy European football clubs.

However, an opportunity arose for PIF to acquire United for a modest sum – it was reported as £300 million ($381.9 million). Compare this with the current market value of Manchester United, which is thought to exceed £5 billion.

Newcastle United has now become a global billboard for other organisations in the sports ecosystem – hence the Sela shirt sponsorship deal.

Advocates of the “strategy first” model argue that the ideas and actions of organisations can shape external conditions.

This would explain why Saudi feels the need to pursue new opportunities and innovate – trying to enact change within existing constructs can be problematic.

PIF’s foray into golf, via the controversial LIV series, is a prime example of how Saudi Arabia has sought to innovate its way to a position of power.

By challenging golf’s existing order with a new competition format, PIF was able to induce industrial change that is ultimately intended to benefit Saudi Arabia’s sport ecosystem.

It remains to be seen how long it will take for Saudi Arabia to evolve into a bona fide sports kingdom. The country seems intent on shaping itself into a solid sports nation quickly – a feat that has taken other countries decades, or even centuries.

It is a moot point whether Riyadh’s decision makers will be able to align their vision, strategy and investment resources in a way that enables them to build a significant global competitive advantage.

Irrespective of the outcomes, Saudi Arabia has embarked on an unprecedented and fascinating experiment.

Simon Chadwick is professor of sport and geopolitical economy at Skema Business School, France