Saudi Arabia's sports binge seeks economic dividend

The outsized role Saudi Arabia now has in global sport was on display last week in a major row involving Lionel Messi, the world's most distinguished footballer.

Messi was suspended by his club, Qatari-owned French side Paris Saint-Germain (PSG), for making an unauthorized trip to Saudi Arabia as part of his ambassadorial role for the Saudi Tourism Authority. The Argentinian is now expected to leave PSG, with the Saudi league as a possible destination.

Messi earns tens of millions of euros for that Saudi role, part of a huge outlay the Kingdom is currently making on professional sports.

A 2021 report by London-based human rights group Grant Liberty found that Saudi Arabia had spent $1.5 billion (€1.37 billion) on professional sports in the previous few years. That figure has increased dramatically in the last two years, with increased investment in football, golf, motor racing and cricket.

The country's sovereign wealth fund — the Public Investment Fund (PIF) — spent close to $800 million on its LIV golf tour in 2022 alone, according to the tour's former COO Atul Khosla. Meanwhile, the PIF bought English football club Newcastle United for around €400 million ($438 million) in 2021 and has spent more than €300 million on new players since. Within domestic Saudi football, a fortune was spent to bring Cristiano Ronaldo to the league.

The Kingdom also recently announced plans to dramatically increase spending on cricket. It wants to become a "global cricketing destination" by creating one of the world's most lucrative tournaments.

Earlier this year it was reported that Saudi Arabia even came close to buying the whole of Formula 1 motor racing in a deal that would have been worth more than $20 billion.

Lots of sport, lots of sportswashing

A multitude of critics accuses Saudi Arabia of engaging in "sportswashing" on a huge scale. The campaigning organization Greenpeace defines sportswashing as "the act of sponsoring a sports team or event in order to distract from bad practices elsewhere. This tactic is often used by companies and governments with poor environmental or human rights records, exploiting people's love of sports to 'wash' their image clean."

Saudi Arabia certainly has an image problem. Amnesty International says the country is guilty of multiple cases of human rights abuse, from a lack of freedom of expression to the continued use of the death penalty, a lack of migrants' rights and the severe, institutionalized oppression of women and girls.

Another major issue in recent years was the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in 2018. It led to global outrage and severe criticism of the Saudi government ever since.

Jon B. Alterman, director of the Middle East Program at the Center for Strategic and International Studies, says the aim of Saudi Arabia's massive spending on sports is to build a more positive image of the country overall.

"The country's leadership would like the international public to have positive associations with the Kingdom," he told DW. "When Western audiences think about Saudi Arabia, many people think first about things like unearned oil wealth, terrorism, and gender segregation."

He says that Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, and the leadership team around him see sports as a vital part of their overall strategy to change the country's international political and economic standing.

"The Saudi leadership sees its country as dynamic and modern, and it hopes that sports will highlight the ways in which Saudi Arabia is like the rest of the world, not the ways it is unlike the rest," Alterman said.

Pivot to tourism

Creating more positive associations can ultimately have a direct impact on the country's economy. It's no coincidence that Messi is spearheading the tourism drive as the country's leadership sees that as a vital sector in its bid to diversify the country's economy away from its current oil dependence.

Around 40% of Saudi GDP is based on oil while close to 80% of the country's export income is tied to its oil production.

Tourism revenues rose sharply in the country in 2022 and the government has hugely ambitious plans, aiming to attract around 100 million visitors annually by the end of the decade as part of bin Salman's Saudi Vision 2030 strategic framework.

The much-hyped Neom project — a so-called smart city that Saudi Arabia plans to build in the northwest of the country — has been described by the government as "the world's most ambitious tourism project."

Yet attracting such a huge number of foreign visitors will be a major challenge. Last year, around 16.5 million overseas visitors came to the country.

Making friends and influencing governments

The International Monetary Fund projects that the Saudi economic growth will more than halve to 3.1% this year mainly on account of a slowdown in the oil sector.

However, the bumper year enjoyed by state oil company Saudi Aramco in 2022, when it made record profits of $161 billion, means the Saudi government has been able to pump money into the PIF, which it is using to power its strategic investments in sports and elsewhere.

Meanwhile, economic activity outside the oil business increased by 5.8% year-on-year, according to this week's figures. "The Saudi economy is robust, and there is increasing interest in the global business community in expanding ties with Saudi Arabia," said Alterman.

One of those partners is China. Now Saudi Arabia's top trade partner, business between them has expanded in the last few years far beyond oil. Saudi Arabia now imports a large amount of Chinese technology, much of it for weapons as it expands its military.

The criticism of Saudi Arabia's sports investments will continue, but the long-term success of the strategy seems inevitable, suggested Alterman.

"Emirates Airlines' sponsorship of several European football clubs over more than a decade demonstrates how sports sponsorship can boost branding and awareness," he said, highlighting the success of one of Saudi's regional rivals Dubai.

"Saudi Arabia wants people to have curiosity about the Kingdom."

With its fingerprints now all over some of the most popular and lucrative sports on the planet, that is clearly already the case.

Edited by: Uwe Hessler