Why the Middle East is spending billions on sport

You might have noticed that in the last 15 years Middle Eastern nations have spent billions of dollars on sporting ventures, attractions, and events.

From football to golf, to boxing and WWE, nations in the Gulf – more specifically Saudi Arabia, the United Arab Emirates, Qatar and Bahrain – have poured unimaginable sums into bringing the world's sporting elite into their backyard. Among them are stars such as Cristiano Ronaldo, Lionel Messi, Tyson Fury and Anthony Joshua.

The crown jewel in all of this, however, was the 2022 FIFA World Cup in Qatar, where a global audience tuned in to watch the first major footballing tournament in the Middle East ever.

But behind the scenes, many more deals have taken place that have put these nations front of mind in the sporting world, and also helped secure the economic future of the world's most oil-rich states.

UQ's Dr David Smerdon, from the School of Economics, explains why there has been such a perceived sudden shift in priorities in the Gulf. 

Why has the Middle East turned to sport?

Dr Smerdon has called this recent shift 'fascinating', and believes the change has been driven by 2 primary factors.

“As they look towards the future, investing in sports – a sector with an enormous global audience and an equally significant revenue generation potential – is economically sound.”

In recent years, much of the focus has centred around football – the most watched sport on the planet. 

Saudi Arabia's Public Investment Fund purchased English club Newcastle United in 2021, while a Qatari fund has also made an offer worth almost £6 billion for Manchester United, following the success of the World Cup in Qatar in 2022.

During the recent football off-season between June and August 2023, Saudi also invested billions of dollars to bring some of the top current footballers to the Saudi Pro League.

Cristiano Ronaldo was the first – and most famous – athlete to make the switch from Europe to the Saudi Pro League in December 2022, in a deal worth A$315 million per season.

But he has since been followed by the likes of Real Madrid legend Karim Benzema, former Liverpool forward Sadio Mane, and French World Cup winner N'Golo Kante; all on deals worth hundreds of millions of dollars per season.

Even players in their prime, like Portugal star Ruben Neves, have joined, demonstrating the allure of playing and living in the Middle East.

“These moves help create additional revenue streams and buffer their economies from any shocks in the oil market,” Dr Smerdon explained.

Could this be considered 'sportwashing'?

Sportswashing is the term used to describe a nation's purchase of a beloved sporting entity to detract from national shame and controversies, like human rights violations.

Qatar faced heavy scrutiny, and allegations of corruption, during its hosting of the 2022 World Cup. Dozens of migrant workers were left to die during construction of its new stadiums, while it was also alleged the Qatar government paid off FIFA officials to win the rights to the tournament.

Saudi Arabia similarly has been condemned for its purchase of Newcastle United due to the kingdom's strong opposition to same-sex relationships. Members of the LGBTQIA+ community in Saudi face the death penalty, life in prison, deportation, or public floggings.

Dr Smerdon said it was impossible to ignore the political economics at play.

“By associating themselves with globally loved sports entities, these nations can soften their international image and improve their standing on the global stage.

“But of course, there's pushback, as critics argue that this might serve to distract from pressing issues in these nations, such as human rights concerns. 

“So, in essence, these investments are not just purely economic, but also strategic manoeuvres in the field of international politics and public relations.”

Are these nations competing with each other to buy the best entity?

First, it was the United Arab Emirates, which purchased English football giant Manchester City in 2008, turning it into one of the most successful clubs in history.

Then, it was Qatar's turn, successfully gaining the rights to the FIFA World Cup in 2010.

Since then, Saudi Arabia has hosted major boxing, mixed martial arts and wrestling events, featuring the world's most famous athletes and identities.

UFC 242 was hosted in Jeddah in 2019, while Anthony Joshua's highly anticipated rematch with rival Oleksandr Usyk was also held in the city in 2022.

In 2018, Saudi announced a '10-year strategic partnership' with WWE to host 2 premium live events in the nation every year.

There are now also 4 annual Formula 1 races in the Middle East – in Bahrain and Saudi Arabia – with more soon to be added in Qatar.

In 2023, the PGA Tour was forced to join forces with Saudi's new LIV Golf tournament, after it lured some of the game's biggest names away from the United States. This merger was driven by Saudi's Public Investment Fund, which purchased Newcastle United.

Dr Smerdon said he wouldn't necessarily categorise these purchases as competition between the nations, however, despite the incredible sums being forked out.

“This is more about capitalising on opportunities and harnessing the power of global platforms like football to achieve national objectives, rather than trying to outdo each other,” he said.

“Although the tactics may differ, they share a common goal of diversification and improved global perception. 

What does the future hold?

Dr Smerdon believes these significant investments are a way for Middle Eastern nations to communicate their desire to engage more with the world beyond their traditional oil-centric role.

But such a level of spending likely won't continue forever.

“By investing in sports, they are demonstrating their commitment to becoming global players in a range of sectors,” he said.

“It's reasonable to forecast that Gulf nations' sports investment is likely to continue at least for the next decade, due to their substantial wealth derived primarily from oil production.”

Part of the process will likely include investing in infrastructure and developing its own athletes for future generations.

Saudi's Crown Prince, Mohammed Bin Salman, initiated Vision 2030, a 'unique transformative economic and social reform blueprint that is opening Saudi Arabia up to the world'.  

It has been reported that the nation has plans to host 25 world championship events in different sports by 2030, as well as a likely bid for either the 2030 or 2034 Men's FIFA World Cup. 

Part of Vision 2030 is the very ambitious goal for the Saudi Pro League to be in the world’s top 10 football leagues by 2030. 

However, Dr Smerdon believes it will be a challenge to compete in terms of quality and popularity with the likes of the English Premier League, which has existed in various forms for more than 100 years. 

“It isn't just about bringing in high-profile players,” he said.

“It involves nurturing home-grown talent, constructing world-class facilities, and fostering an environment that young international talents, not just ageing superstars, see as attractive for football development.”

Whether Middle East nations can achieve this – and how quickly – remains to be seen.

Dr David Smerdon is a Lecturer in the School of Economics. He primarily works in behavioral and development economics. His research involves theory and modelling, experiments in the lab and field, and microeconometric analysis in order to investigate topics at the intersection of these fields.
Contact: d.smerdon@uq.edu.au

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