Saudi football kicks off bid for world-class growth

The Kingdom's project currently runs on two main tracks: first, the approval of investment by major companies and development entities in sports clubs in exchange for the transfer of club ownership to the investors, and second, offering a number of sports clubs for privatization starting from the fourth quarter of 2023.

It is based on three strategic objectives: one, to create quality opportunities and an attractive environment for investment in the sports sector to achieve a sustainable sports economy; two, to raise the level of professionalism and administrative and financial governance in sports clubs; and three, to develop clubs and their infrastructure to provide the best services to sports fans and boost the audience's experience.

Overall, the move of clubs into the private sector is designed to create a generation distinguished in sport at the regional and global levels.

Top 10 ambitions

Specific ambitions for the scheme are high. In football, the aim is to take the Saudi Pro football league onto the list of the top 10 competitions of its kind in the world.

Its revenues are expected to rise to over $480 million annually from $120 million, or from 450 million riyals to 1.8 billion riyals.  Its wider market value is targeted to reach $2.1 billion from $800 million.

Those are big ambitions and are designed to catch the eye and spur the appetite of investors to bring in a new phase of unprecedented growth in a popular field.

It all amounts to a transformative vision for the Saudi sports sector and it would be a major contribution to wider economic diversification, helping boost competitiveness both on and off the pitch.

Prince Abdulaziz bin Turki bin Faisal, the minister of sports, pointed to the top-level backing for the Sports Clubs Investment and Privatisation Project, saying it "is a new confirmation of the great support offered by the Custodian of the Two Holy Mosques and His Highness the Crown Prince and Prime Minister, and the attention and interest they attach to the sports sector."

He added: "This gives the sectors more excellence and success, reflected in many international events. Added to this is the significant rise in the level of Saudi sports competitions, which have become the focus of the world's attention."

"The launch of this huge sports project by His Highness the Crown Prince is a continuation of the accelerated steps we're taking in our country to achieve the goals of the blessed vision."

"This project represents a qualitative and historical transformation of the sports sector in the Kingdom; it promises to contribute to achieving economic diversification, raising the level of sports professionalism and governance, and enhancing competitiveness. This will reflect on the present and future of Saudi sports."

First privitisation steps

The first steps of the sports privatisation project will be taken by four top-flight Saudi clubs. Al-Ittihad, Al-Hilal, Al-Nasr and Al-Ahli will be transformed into companies 75% owned by PIF. The remaining 25% will be owned by the non-profit sports association of the respective club.

The transition of the four clubs will provide various opportunities for the business sector to establish partnerships, agreements, and sponsorships.

Four other clubs are also involved from outside the top-flight league. They are: Al-Qadisiyah Club of Saudi Aramco, Al-Ula Club of the Royal Commission of Al-Ula Governorate, Al-Diriyah Club of the Diriyah Gate Development Authority, and the Falcons Club of Neom.  

Phenomenal turnaround for Newcastle

Even the most optimistic fan of the big-name English club bought by PIF did not expect Newcastle United to make it into the Champions League as a result of the 2022-2023 season.

The team secure fourth place in the English Premier League, the world's biggest national club competition, in the first full season after the deal. Newcastle stopped the likes of Liverpool, Tottenham, and Chelsea from securing a place in the sport's most prestigious international club competition. The achievement was all the more remarkable after Newcastle's lack of success beforehand.

PIF's lead role in a consortium bidding for the club, based in England's northeast and long-seen as one of the sport's sleeping giants, represented a turning point for Newcastle's fortunes. The £305 million ($378 million) deal was struck in October 2021.

The world's biggest sporting leagues have all benefitted from major inward investment in recent years, and the experience of PIF in transforming Newcastle United shows what the objectives of Saudi's wider policy can achieve.

High market value

The transformation the Kingdom is aiming for at its home football league has already had some emblematic successes.

Portugal's international star Cristiano Ronaldo, long seen as one of the best players in the world, has been playing in the Saudi Pro League for months – paving the way for more big-name stars to follow.

The private sector's involvement should help as top-flight football in the Kingdom sets course to become one of the top 10 leagues in the world and lifts its market value to $2.1 billion, which would be a growth of around 167%.

Modernisation and global interest

Ishaq Sarraj, chairman of the International Sports Marketing and Investment Association, predicted that the privatisation project will modernise and internationalise Saudi sports, establishing an industry that will be better placed to compete for international investment.

He said potential returns on offer were huge and that the boom that the sports industry could spark would match the scale of Vision 2030's ambition, while discovering fresh stars and new talent.

Vision 2030 aims to strengthen and diversify the pillars of the economy and introduce new sectors that contribute to the economy. The aim is to reduce dependence on oil as the main source of income for the country. Figures show this has begun to be achieved – this reliance eased to 64% in the first quarter of this year.

Saudi's sports sector looks well placed to play its role in doing more.

The Kingdom has suitable demographics: its society is mostly young and its sports clubs have a very broad fan base at the local and regional levels, in addition to the fact that the Saudi Professional League is one of the strongest leagues in Asia and Africa – it even surpasses some European leagues in terms of passion and competition.

Saudi's unique geographical location connecting three continents – Asia, Africa and Europe – enhances the opportunities to attract fans.

The fresh policies will lead to stronger infrastructure and deeper supply chains, key factors in the wider programme for economic diversification.