For Saudi Arabia, sport is the new oil

Turning the country into a global sporting hub, Mohammed bin Salman aims to diversify its economy and divert attention from its human rights record.

Mohammed bin Salman speaks at the Future Investment Initiative Forum in Riyadh on October 24, 2018. Saudi Arabia is possibly the biggest investor in global football today. | Photo Credit: VIA REUTERS

Saudi Arabia, the world’s second largest oil producer, has gone into overdrive in recent years in its efforts to become a global player in international sports. It has spent billions of dollars on high-profile deals for an image makeover that involves reducing the country’s overdependence on oil. But detractors say the kingdom is using sport in a desperate attempt to divert international focus from its poor human rights record.

Until recently, the country was known for its oil and as the custodian of the two holy mosques, in Makkah and Medina that draw millions of Muslims to the country each year for Hajj and Umrah. The Saudi leadership’s championing of Wahhabism, however, has been criticised as many feel it is responsible for the spread of Islamic fundamentalism in the world. Its dubious track record on human rights and women’s freedoms has often led to stringent attacks by international rights groups, but Saudi Arabia is now making efforts to project itself as a moderate Islamic power and global sports hub.

Saudi Arabia has, in recent months, gone on a buying spree. In its effort to rejuvenate domestic football, it has picked up the most sought-after football stars for its local clubs. Some of the biggest names in world football—Neymar, Cristiano Ronaldo, Karim Benzema, N’Golo Kanté, Sadio Mané, and several others—have been lured with million-dollar salaries and opulent mansions into signing up for major Saudi clubs.

MBS plays the great game

The new initiative is the brainchild of the 37-year-old Saudi Crown Prince Mohammed bin Salman, popularly known as MBS. Most people regard him as the de facto ruler of the country. The Crown Prince used his 2030 Vision document to make a case for transforming Saudi Arabia into a modern economy and regional power. He believes investment in sport will not only help diversify the economy but also attract tourists, generating employment and investment. He also believes it will keep younger generations of Saudis healthy and fit.

Fans celebrate during a Saudi Pro League football match between the teams Al-Nassr and Al-Fateh in al-Hasa on August 25. The youth happen to be the Crown Prince’s main support base.   | Photo Credit: ALI AL-HAJI/AFP

Other Gulf countries, too, have shown considerable interest in football and have spent generously on the sport in recent years. Love for the sport grew significantly after Qatar successfully hosted the 2022 FIFA World Cup. Qatar, UAE, and Saudi Arabia have invested heavily and bought major stakes in leading English and European clubs. The Saudi Crown Prince now wants the star performers of world football to play before a domestic audience.

Currently, Saudi Arabia is considered the biggest investor in global football. However, its first major investment in a foreign sports enterprise came in 2018 when the Saudi Sports Ministry signed a 10-year contract (worth $100 million a year) to host World Wrestling Entertainment (WWE) events. In subsequent years, the kingdom spent lavishly on other sports, too, hosting international boxing, tennis, horse racing, and Formula 1 events. Since 2020, it has also hosted the famous Dakar Rally, an off-road endurance race. Furthermore, Saudi Arabia has financed international golf competitions. It even bought a stake in a Formula 1 franchise and purchased the English football team Newcastle United F.C. in 2021.

Most of these investments have been made through Saudi Arabia’s $776 billion Public Investment Fund, considered to be one of the largest sovereign wealth funds in the world. However, its purchase of LIV Golf, an international rival of the US-based PGA Tour, golf’s foremost competitive body, drew a lot of attention in the US media and concern from its legislators. In June 2023, after the PGA Tour and LIV Golf decided to become partners, two US Senators and the Department of Justice, respectively, opened investigations into the agreement.

According to the Council for Foreign Relations report, Richard Blumenthal, a Democrat Senator from Connecticut, who was leading the probe, said the hearing was “about how a brutal, repressive regime can buy influence—indeed even take over—a cherished American institution simply to cleanse its public image”. The report added that a bipartisan group of lawmakers had expressed concern over the agreement, although some said it should be scrutinised by federal regulators before lawmakers investigate.

Saudi Arabia is not the only country that faces charges of “sportswashing” from the West. In recent years, China, Russia, and more recently Qatar have also faced such charges. Qatar, for instance, attracted criticism from the time it won the rights to host the FIFA World Cup. For months during the run-up to the tournament, campaigns were organised, asking countries not to participate, and to persuade celebrities and sports personalities to stay away from Qatar. Ironically, Qatar managed to impress visitors with its sprawling new stadiums and infrastructure and its efficient handling of the matches.

Saudi team Al-Hilal introduces its new signing, Brazilian star Neymar, to fans at the King Fahd International Stadium in Riyadh, on August 19.   | Photo Credit: Ahmed Yosri/REUTERS

What has sustained debate and discussion in sports and diplomatic circles is the amount of money (though there are no official figures) that Saudi Arabia has invested in the sports industry in recent years. According to estimates by sports websites, the country is showing interest in almost every sporting activity. Khel Now, a New Delhi-based sports company, writes that “when it comes to sports, Saudi Arabia is leaving nothing out of its investment bracket”. The company says even the world of esports falls in its purview. In recent years, the kingdom is estimated to have invested $38 billion in the $184 billion global gaming market through its subsidiary, Savvy Games Group: “What began as an esports venture has evolved into a desire to develop, publish, and acquire major video games.”

This attempt to turn the country into a global hub for sport is not driven by philanthropy. There are big bucks to be made in sports. Though ESPN continues to be the biggest sports channel globally, a number of other networks like Alkass, Abu Dhabi Sports, KSA Sports TV, and Saudi Sports Company have emerged as major broadcasters in the Gulf. The plan is to earn sizeable revenue through the international broadcast of major sporting events.

Highlights

• Saudi Arabia, the world’s second largest oil producer, has gone into overdrive in recent years in its efforts to become a global player in international sports.
• In its effort to rejuvenate domestic football, Saudi Arabia has picked up the most sought-after football stars—Neymar, Cristiano Ronaldo, Karim Benzema and several others—for its local clubs.
• Mohammed bin Salman’s moves to maximise the use of sports is meant to change the country’s image and attract foreigners, but he is also aware of his domestic audience.
• Saudi Arabia has a young population. More than 63 per cent of a total 18 million Saudis are below the age of 30 and 50 per cent are below 25.

Home and the world

The Royal Kingdom of Saudi Arabia was founded in 1932 with British support. After oil was found in the country in 1938, it turned into a deeper strategic partnership. As British power declined, the US became its main partner and chief provider of security. After 1979, the year the Shah was overthrown by the Islamic Revolution in Iran and Afghanistan was invaded by the Soviets, the partnership between the US and Saudi Arabia strengthened.

Although Saudi-American ties have seen rough patches, especially after the 9/11 terrorist attacks, where the bulk of the attackers turned out to be Saudi nationals, relations with the US began to significantly strain once MBS entered the Saudi political scene. He became his country’s youngest Defence Minister when his father, King Salman, appointed him to the post in 2015. It was the Crown Prince’s ill-considered decision to get involved in the Yemen war that led to large-scale destruction in the neighbouring country, with thousands of Yemeni deaths and near-starvation conditions for millions. None of this, though, translated into any real strategic gain for Riyadh. Early this year, China brokered a deal that brought together Saudi Arabia and Iran, its arch rival in the Islamic world. The deal allowed the two sides to re-establish diplomatic relations and also brightened the chances of a Saudi pull-out from Yemen without further loss of prestige for the kingdom.

After becoming the Crown Prince in 2017, there were allegations that MBS had locked up many senior princes, businessmen, and intellectuals in order to consolidate his position in the kingdom’s political structure. But the biggest controversy erupted when the dissident Saudi journalist and US national Jamal Khashoggi was brutally assassinated inside Saudi Arabia’s embassy in Turkey. Although there was global outrage at Khashoggi’s murder and a rising demand for the Crown Prince’s arrest, Saudi authorities denied MBS had any involvement in the gruesome incident.

Since it happened under his watch, the Crown Prince took moral responsibility for the incident but said the people involved were “rogue elements” in the government and that they had been duly punished. In the US, under pressure from the public, President Joe Biden imposed sanctions on Riyadh and described the country as a “pariah state”. The US demand for the prince’s international isolation, however, was not effective; he began to develop closer ties with China and Russia and also deepened ties with India using oil diplomacy. The disruption in global oil and gas supplies due to the COVID-19 lockdowns and, subsequently, the Ukraine war finally forced Biden to reach out to MBS.

American golfer Brendan Steele plays a shot during a LIV Golf tournament in West Virginia, on August 4. Saudi Arabia’s purchase of LIV Golf drew flak from the US media and Congress about the takeover of a cherished American institution.   | Photo Credit: Eakin Howard/Getty Images

Playing to the youth

The Crown Prince’s moves to maximise the use of sports is meant to change the country’s image and attract foreigners. He is simultaneously projecting Saudi Arabia as a venue for regional and global events. In early August, he offered the Saudi city of Jeddah as a venue for an international meeting on peace in Ukraine. Significantly, it was a US-led initiative where both India and China were invited, but not Russia. Saudi Arabia, though, maintains close links with Russia, and the two countries have worked together in recent months to prop up oil prices. The Crown Prince intervened to ensure the release of a number of prisoners of war from the Ukraine battlefield, including many UK and US veterans. In December, Saudi Arabia hosted Chinese President Xi Jinping during a state visit. It chaired the Gulf Coordination Council and Arab League summits, where the Chinese leader also participated.

While many of these initiatives are meant to impress the outside world, the Saudi leadership is also aware of its domestic audience and changes that are taking place in their world. Saudi Arabia has a young population (more than 63 per cent of a total 18 million Saudis are below the age of 30 and 50 per cent are below 25), but the country is trying to deal with rising unemployment, which is currently at 8 per cent.

The youth also happen to be the Crown Prince’s main support base. To woo them, MBS is not only stressing on sports but has also undertaken a series of social reforms: allowing women to drive, encouraging free mixing between boys and girls, and doing away with the headscarf and veil that were mandatory for Saudi women. While this has helped him build his reformer image, the Crown Prince is aware that he should not push social reforms too fast and too far. He is presently not pushing for reforms in areas like marriage, education, employment, and foreign travel for girls that are still subject to parental consent.

A bigger challenge for MBS is likely to be the diversification of Saudi Arabia’s economy. Last year, it grew at 8.7 per cent, making it the fastest-growing G20 economy in 2022. Part of this growth was due to strong oil production because of the Ukraine war, but 4.8 per cent of this growth came from non-oil GDP, driven by robust private consumption and non-oil private investment in infrastructure and industry.

MBS has undertaken mega projects like the Neom Sez, Qiddiya entertainment city, and the Red Sea tourism project. He wants to build smart and green cities that will turn the country into a major business and investment destination, but the success of that future economy will depend on the private sector and efficiency without government interference. Traditionally, Saudi nationals have been nourished by generous funds from the government, but in an economy that is dominated by the private sector, the employability of young Saudi nationals could pose a serious challenge to MBS and his future vision.

Pranay Sharma is a commentator on political and foreign affairs-related developments. He has worked in senior editorial positions in leading media organisations.