With global oil consumption expected to peak by 2040, Saudi’s investment spree in soccer, as well as in leisure and entertainment, is gaining traction, not just mere attention, as an economic diversification strategy. For Saudi, sports, entertainment, and tourism could deliver potentially huge revenues.
This summer alone, the Saudi Pro League (SPL) has already seen transfer fees reach a cumulative worth of $830 mn. This amount does not take into account salaries yet. It is also on top of Cristiano Ronaldo’s contract, which according to new media estimates, will net him around $430 mn in two and a half years.
The transfer of Ronaldo from Manchester United to Al Nassr in December 2022 marked the beginning of more prominent footballers joining the SPL. The latest in the list is Brazilian superstar Neymar, who joined Al Hilal.
Read: Saudi soccer eyeing participation in Europe’s Champions League
Different story
While Saudi Arabia has a history of attracting soccer legends with irresistible offers, its current investment spree is a different story.
In the 1970s, “there was a push to bring big names” to Saudi, as revealed by Saleh al-Khalif, Al-Riyadiah newspaper’s deputy editor-in-chief, to AFP.
Brazil’s Rivellino, a notable name to arrive in the local soccer scene, inked a deal with Al Hilal. He reportedly received a $10,000 monthly living allowance at the time, according to The Washington Post. This is in addition to getting a new Mercedes Benz and residing in one of Prince Khaled Al Saud’s spare palaces.
Al-Khalif shared that the decision to get players back then, particularly those who played well in World Cup 1978, “depended on the honor of the clubs, not a government plan or spending.”
But this latest investment binge goes beyond that. It appears to be a more calculated move as part of a broader economic strategy.
Economic diversification
Today, Saudi Arabia’s ambitious soccer plans align with Crown Prince Mohammed bin Salman’s Vision 2030. It is a comprehensive strategy that aims to diversify the nation’s economy and veer away from its longstanding reliance on oil.
With soccer matches featuring star players, the government hopes to encourage people, especially the younger ones, to spend. Saudi is a desert country with a population of 32 mn. Of which, two-thirds are below age 30.
Carlo Nohra, the recently appointed chief operating officer of the SPL, explained that “the project is part of a transformation journey that the country is pursuing.” This encompasses investments spanning from NEOM, an innovative city on the Red Sea, to entertainment offerings that appeal to the masses.
Simon Chadwick, a sports and geopolitical economy professor at Paris’ Skema Business School, noted the urgency of Saudi’s economic diversification. “Saudi Arabia is up against the clock. [It] has 20 years to diversify. In the meantime, they’re being exposed to oil price fluctuations. They’ve got to move fast, they’ve got to move strategically, they’ve got to move effectively,” he told AFP.
For 2023, oil revenues could reach $189 bn. This figure is lower than what the kingdom earned from oil last year, which was around $228.5 bn. In contrast, non-oil revenues are expected to top $112.2 bn, an increase from the $109.5 bn it earned in 2022.
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