In recent years, Saudi Arabia has made waves in the sporting world, signing numerous football superstars like Ronaldo and Neymar while also hosting golf icons on the LIV golf tour. The substantial salaries offered make these deals hard to resist. But what motivates these significant investments?

Saudi Arabia’s influence on sport has sparked global controversy, with many claiming that all of this will ‘calm down very soon’ and others worrying that ‘this is the end of sports’. This article uncovers the reasoning behind the sudden rise of sporting investments in Saudi Arabia and the positive global impact it has. 

Saudi Arabia has spent at least $6.3bn (£4.9bn) in sports deals since early 2021, significantly overtaking data compiled by Grant Liberty two years ago, estimating that Saudi Arabia had spent $1.5bn in the period between 2014 and early 2021. Many have labelled this an effort to distract from its human rights scandals. Saudi Arabia has used these billions from its Public Investment Fund over the last two years , according to analysis by the Guardian, spending on sports at a scale that has completely changed professional golf and transformed the international transfer market for football. The $6.3bn investment is almost equivalent to the GDP of Montenegro or the island of Barbados. 

A key reason for this sporting campaign is the move for economic diversification. Saudi Arabia has been actively pursuing this goal as part of its Vision 2030 plan. Investing in sports is an effort to reduce the country’s dependence on oil revenues by developing non-oil sectors of the economy. This creates new revenue streams and job opportunities. The Gulf states (the oil-producing countries bordering on or located near the Persian Gulf) need to diversify their economies so they don’t become dependent on a limited resource that fluctuates in price everyday on global markets, so it’s a positive step to see them making efforts towards that goal. However, paying billions of dollars above market prices to become the home of sporting events that are already struggling to make money elsewhere is a questionable strategy. Arguably, the money would be better spent on developing other industries that could replace oil and gas long term, or invested into a sovereign wealth fund that makes low risk investments providing revenues to countries in the future. Despite the sporting investment holding many potential economic benefits, there are also challenges and risks involved in pouring billions into this industry. These include: the sustainability of sports investments, the need for long-term planning, and ensuring that the benefits are equitably distributed across society.

Until five years ago, most forms of mass entertainment were frowned upon in Saudi Arabia. No music blared from public concerts, no cinemas awed viewers with movie magic, and gender segregation was the norm in public places. Fast-forward to present day: Saudi Arabia has gone from having close to zero entertainment venues to being a Middle Eastern hub for cultural events, art exhibitions, and movie screenings. The Saudi entertainment industry has experienced explosive growth. Cinemas are found in almost every city, and men and women can gather and socialise freely. All of this is simply the result of Vision 2030. 

You may be thinking, what exactly is Vision 2030? Well, it is a government program launched by the Kingdom of Saudi Arabia that aims to achieve the goals of increased diversification, economically, socially and culturally, in line with the vision of Saudi Crown Prince and Prime Minister Mohammed bin Salman. It was first announced on 25 April 2016 by the Saudi government. However, in 2021, The Guardian wrote that ‘despite Saudi Arabia’s commitment to diversify its economy, the government was still 74% dependent on oil exports for its budget. So, of course whether this goal is reached by 2030 is still very much up for debate. A lot will need to be done within a small time period. 

Through understanding the goals of Vision 2030, Saudi Arabia investing billions into sports makes a lot of sense. This meets the criteria for all three goals, diversification economically, socially and culturally. 

The sports sector is a significant component of the tourism and entertainment industries in Saudi Arabia. Hosting international sporting events, such as Formula 1 races and golf tournaments, has become a key element of the country’s efforts to attract tourists and boost the entertainment sector’s contribution to the economy. The sports industry, including events management, coaching, and administration, provides employment opportunities for both Saudis and expatriates. Job creation is an essential aspect of the economic strategy, and the sports sector contributes to this by employing a diverse workforce. With Saudi Arabia hosting the 2034 world cup, huge amounts of labour will be required to setup and run the event. Promoting sports and physical activity has many positive social outcomes such as a healthier population and increased community engagement. These improvements can lead to a more productive and vibrant society, which can ultimately lead to great economic benefits including driving growth in new industries. This provides budding entrepreneurs with the tools for success and attracting investments. By investing in sports and hosting major events, Saudi Arabia aims to increase tourism. It is already the fastest-growing tourism destination in the G20, with visitor numbers up by 121% compared to pre-pandemic levels. This has led to the growth of the hospitality and tourism sectors, with the construction of hotels, resorts, and related infrastructure to accommodate visitors attending sporting events. For example, projects including King Salman Airport and The Riyadh Airport are currently under construction following the sudden increase in tourists. 

In recent times, Saudi Arabia has been talk of the town when it comes to football conversation . Pundits all over the world, especially in the UK have been outraged with what Saudi Arabia has been doing to football. Gary Neville has gone to the extent of saying, ‘Any chance the Premier League can look into this Saudi trading like NOW!!!’. When extraordinary wages and transfer fees are being spent on players, of course many do wonder whether all of this should be legal. Some of the highest being the transfer payments and contracts of players like Ronaldo, Neymar and Kante, the lowest paid  of those being Kante who is currently earning £15 million per year. Another player who was very nearly enticed by the large sums of money was Kylian Mbappé. With the transfer fee of $332 million and annual wages upwards of $776 million offered by Al Hilal, which would’ve been the biggest deal in football history, people couldn’t believe what they were seeing. When these types of contracts are being negotiated, people start to think that firstly Saudi Arabia are ruining football, but also, whether this type of money should be used in this way, with the high risk of it not working out and fading away after a few years. The teams making these offers are majority owned by the previously mentioned Public Investment Fund, one of Saudi Arabia’s sovereign wealth funds. This is a Sovereign Wealth fund used mostly by oil rich states to save oil revenues and invest into projects to decrease their economy’s reliance on oil. Therefore, people do understand that these sums of money, which seem astronomical at first, in comparison to the $2.23 trillion that the fund owns aren’t actually that much of a setback to the country. 

In summary, Saudi Arabia’s investments in sports represent a significant part of its broader economic diversification and development efforts. These investments have the potential to stimulate economic growth, create jobs, and enhance the country’s global image, but they also come with challenges and therefore need careful planning and management.