Oil-rich governments of the Arab states of the Gulf are spending billions on professional sports in the hope it will accelerate economic transformation. Professor Simon Chadwick reviews the opportunities to develop their sport sectors and secure the significant revenues that could be generated.
|Al Bayt Stadium, Qatar, during the 2022 FIFA World Cup | Mohammed Sardar/Kushared
IT'S JUST SIX months since the FIFA Qatar World Cup ended, but the next phase of the Gulf nation’s sports development plan is in full swing. The Qatar Grand Prix returns this October, the Asian Cup is being staged during 2024 and the country will host the Asian Games in 2030.
It was notable that during the World Cup few commentators engaged in their usual discussion about the tournament’s economic impact.
Most instead preferred to label Qatar’s hosting of the event as being, at best, an example of nation-building or, at worst, “sportswashing”.
Similar cynicism has been levelled at the Saudi Arabian Pro League after the signing of Cristiano Ronaldo at football club Al Nassr.
The Portuguese international is reportedly being paid a package of $400 million, though most observers believe he is being lined up as ambassador-in-waiting for an anticipated World Cup bid.
Then there is Saudi Arabia’s LIV Golf merger with the PGA Tour, the kingdom’s spending on motorsports sponsorships, and its acquisition of football teams.
Some critics claim all this conspicuous consumption is a tactic to buy geopolitical legitimacy – and that it will not stand the test of time.
However, there is a belief among the Gulf’s investors in sport that there is more to their spending than building soft power. It is for the wider economic transformation of the region, and for the achievement of hard bottom-line objectives.
The contribution of oil and gas accounts for approximately 40% of GDP across the GCC (Gulf Cooperation Council) countries.
Earlier this year, Qatar reported that 80% of its quarterly export earnings were derived from these sources.
In a world that is rapidly turning its back on fossil fuels, this constitutes a big problem for the Gulf.
Gulf countries have historically suffered from a deficit of enterprise, which the likes of Saudi Arabia’s football club privatisation programme are intended to address.
The objective of this programme is for the Saudi Pro League to eventually become one of the world’s top 10 revenue-generating leagues.
The global sport industry is estimated to be worth around $750 billion. It is believed that the USA may account for 40% of this total, while the MENA region currently contributes less than 10%.
There are opportunities for Gulf nations to develop their sport sectors and secure the significant revenues this can generate.
Two examples from the UK help to illustrate what is possible.
The English Premier League, which adds gross annual value to the economy of £7.6 billion, sustains 94,000 jobs, and generates £3.6 billion in direct tax contributions.
The UK’s motorsport sector has an annual turnover exceeding £9 billion. It consists of 4,500 businesses of which 87% export their products, and more than 41,000 jobs.
Unemployment in the Gulf is a significant problem, and job creation through sport could be one way to tackle this.
Such numbers are replicated across sports in various parts of the world. For example, EU sport accounts for 2.5% of all economic activity.
This could imply that Gulf nations are correct in their judgment that sport can play an important role in developing more diverse, resilient economies.
However, some key challenges remain despite the resources that Gulf nations have at their disposal to grow their influence on world sport.
Globally, the sector is a hugely competitive one in which several other countries already have established strategic and competitive advantages.
"It remains to be seen whether governments or free markets are the best way to drive development"
Where, how, and on what basis to compete are crucial decisions for Saudi Arabia, Qatar and the region’s other decision makers. The other question is, will sports programs be privately or publicly run?
One suspects that a hybrid Gulf model of sport industry management will establish itself, but it remains to be seen whether governments or free markets are the best way to drive development.
Plugging gaps between vision, planning, operations and evaluation is another challenge.
Driving economic transformation through sport demands attitudinal and behavioural changes among investors, entrepreneurs and populations in general.
One way to help ensure that what is intended really happens is to boost education and training, and incentivise local businesspeople to engage in sport.
In the short term there will continue to be a perception of hype when people discuss sport in the Gulf.
Over the medium to long term this could change providing that governments commit to sport policies and strategies and deliver on promises made.
It’s feasible that the next decade could see the region asserting itself as a legitimate hub of economic activity in sport.
Simon Chadwick is professor of sport and geopolitical economy at Skema Business School