Saudi Arabia Investing Billions of Dollars in Sports
By Claire Brown
Saudi Arabia, with its borders recently opened to tourism, has implemented the Saudi Vision 2030, an economic and social reform blueprint that is opening up the country to the world. The sports industry is one of the vital aspects of Saudi Vision 2030. The country’s idea to pursue sports did not come overnight; it materialized alongside growing sports popularity and their desire to compete at an international level.
While Saudi Arabia lacks history in the industry, the country is quickly making its mark. In November, Saudi Arabia was the only team to beat World Cup Champion Argentina in Qatar. This win proved that Saudi Arabia’s investment in soccer is paying off. In addition to soccer, Saudi Arabia is pouring millions into Winter Sports, Golf, F1 Racing, and more. It seems that the only sports the country is staying away from are America's Big 4: Basketball, Baseball, American Football, and Hockey.
One of Saudi Arabia's primary investments is in soccer. Saudi Arabian club Al-Nassr recently signed a two-and-a-half-year contract with Cristiano Ronaldo, making the 37-year-old athlete the highest-paid soccer player in history, and the highest-paid athlete in the world. Ronaldo is expected to make $212 million per year. For context, Liverpool, which has a home roster of 77 players, pays their entire team a combined $244 million per year. A contract this high is almost unheard of for a player nearing retirement, especially since Ronaldo is no longer in his prime. His 2022 performance was subpar, as he was benched in the later parts of the World Cup and with his club team Manchester United.
So the question remains: why would Al-Nassr offer a nearly retired athlete so much money? The ROI resides in the idolized figure Ronaldo represents, not necessarily in his current level of play. Ronaldo’s presence means a steep increase in tourism as soccer fans around the world come to see him play before his career ends. Part of Ronaldo’s contract also includes commercial agreements, which enable the country to expand its marketing beyond natural resources, breaking the public’s strong perception of Saudi Arabia as a country solely associated with oil. Saudi Arabia also has a young population, so Ronaldo will serve as a role model who draws the younger generation to the sport and enhances youth development in the country. The financial cost of Ronaldo seems irrelevant compared to the societal, economic, and political gains he brings to Saudi Arabia.
In addition to Ronaldo, Saudi Arabia hopes to acquire even more soccer players and clubs. Lionel Messi's two-year contract with Paris Saint-Germain F.C. expires this summer, and the Saudi Arabian club, Al Hilal, reportedly offered him $300 million per year. About 15 months ago, the Public Investment Fund (PIF) took ownership of the Premier League club, Newcastle United. The change left fans in England divided. Some found the political implications upsetting, while others saw this as a good opportunity for club growth. While Newcastle United typically finishes in the lower half of the Premier League table, they are currently ranked 3rd this season, sitting above usually dominant clubs Liverpool and Chelsea. The purchase of Newcastle United made sense for the PIF considering the Premier League possesses a massive fan base and is the most-watched league in Saudi Arabia. There are also rumors that the PIF may purchase Premier League giants, Liverpool and Manchester United, whose current owners are open to selling.
Saudi Arabia is now two races into a fifteen-year F1 Racing deal and expects to host four Grand Prix this year alone. Each Grand Prix reportedly costs $65 million in hosting fees, and over the next fifteen years, Saudi Arabia will likely spend over $900 million in hosting fees alone. With this investment, Saudi Arabia hopes to bring a Formula 1 racing team to their country. Their sights are currently set on McLaren and Aston Martin after relocating the companies’ headquarters to their country. Investing in motorsports is a no-brainer for Saudi Arabia– oil is what the country is most known for. The largest and most valuable oil company in the world, Aramco, produces one-third of the world’s oil and is based in Saudi Arabia. The country wants to use this F1 partnership to grow, build racing academies, and develop a Saudi Arabian team with drivers from their country.
In 2021, the PIF backed LIV Golf, a new golf league founded by Greg Norman. This revolutionary league aims to eclipse the sport of golf’s premier tournament organization, the PGA tour. With the league's large bank account, they are well on their way. In its first two years alone, the league has already spent over $2 billion. LIV used the money to entice veterans and rising talent into joining the league with signing bonuses and large sums of prize money. LIV reportedly offered Tiger Woods $700 million, the most lucrative deal known to date, to play in the league. Each regular season event consists of $25 million in prize money, with $20 million distributed among victors for the individual event and $5 million split in the team competition.
Saudi Arabia’s own government acknowledges that LIV is an expensive endeavor, however, the country isn’t necessarily looking for an ROI. They are more focused on the potential influence gained from backing the league.
Saudi Arabia recently won the bid to host the 2029 Asian Winter Games. The country plans on building a $500 billion megacity to host this event. Given their desert climate, this will be a challenging investment. Saudi Arabia’s winter temperatures range from 45° F to 68° F, which isn’t exactly ideal for a sport that requires mass amounts of snow. Despite the climate, Saudi Arabia is set on building a carbon-neutral winter wonderland in preparation for the Asian Winter Games. The year 2029 is a ways away, but it will be interesting to see how Saudi Arabia can create snow parks that meet the standards for a professional competition.
As Saudi Arabia invests billions of dollars into the sports industry, it’s apparent the country wants a piece of the sports world’s growing power and influence. Due to their investments, Saudi Arabia is already seeing a positive change in their country. Jobs at sports clubs increased in the past three years by 129%; administrative jobs rose by 156%, and career opportunities in sports jumped by more than 114%. Sports growth in Saudi Arabia also gave women unprecedented rights as the country opened sports participation to all genders. Saudi Arabia also implemented reforms to encourage female participation in sports, which helped increase female participation by 150% in the past 5 years.
Saudi Arabia was a closed country for many years and did not encourage much tourism or international visitors, which resulted in misconceptions about their culture. Now armed with the power of sports, Saudi Arabia is giving the world a chance to experience its culture firsthand.