- The Gulf Arab states over the last decade have used sport as a tool for economic diversification as well as lucrative external investment.
- Qatar and Saudi Arabia will continue to vigorously promote their countries’ sports sectors; they will use sports to encourage cultural change at home as well as provide entertainment for foreign visitors.
- The governments of Qatar and Saudi Arabia will use the increasing media attention on their growing sports’ scenes to change traditional external perceptions of their countries.
- Riyadh and Doha will also funnel money into sports to increase their investments abroad and attract foreign talent to their respective countries.
- Foreign businesses operating in Saudi Arabia and Qatar, in particular those working with government entities for sports and entertainment events, will continue to face scrutiny from international human rights organisations.
Sports of the past, present & future
One of the ways that Gulf Arab states have worked to boost their image domestically and internationally is through sports – an activity that brings people together. The sector also serves to shift the primary focus of the international community from issues normally associated with these countries such as human rights violations and robust governance. It also provides the governments of the Gulf with a space to pre-empt or implicitly address criticism such as the lack of efficient infrastructure or the absence of a strategy to expand sports in their countries.
The Gulf Arab states have increasingly focused on promoting sports in line with their plans to diversify their economy and generate more revenue by boosting cultural tourism and the entertainment industry. The United Arab Emirates (UAE) has had longer to invest in its entertainment sector compared to other Gulf Arab states. Over more than two decades, Dubai and to a lesser extent Abu Dhabi and Sharjah have slowly promoted themselves as a destination for some sports like rugby (the Dubai Rugby Sevens) and cricket (the T20 World Cup).
Qatar and Saudi Arabia have been the most prominent of the Gulf Arab states in the sporting world over the past decade, with investments in sports to develop entertainment for residents and tourists as a key part of their national economic diversification plans (both named ‘Vision 2030’) – which aim to promote economic diversification, create new sectors, or provide new non-oil revenue streams for the government.
Focusing on the region’s two biggest sports players: Qatar and Saudi Arabia will stay committed to these plans to advance their countries’ economies and their progressive cultural openness in various sectors, particularly entertainment and sport. This will give them the space to implement changes and basic amendments to their laws and regulations to get ahead of future criticism.
For instance, Qatar hosted to notable acclaim the 2022 FIFA World Cup (November – December 2022) despite considerable international scrutiny and criticism of labour rights in the run up to the event. Since it won the right to host the tournament in 2010, Doha embarked large-scale infrastructure works, including developing a metro rail network, investing in the real estate sector, and constructing new stadia. Ahead of the event, press coverage forecast the tournament’s challenges would include congestion and disruption in such a small country. In reality, the government of Qatar in the months leading up to the tournament implemented rules that mitigated the potential for excessive traffic and strain on services by compelling companies to permit employees to work from home. Beside normal congestion on the roads, most infrastructure was sufficient to accommodate the visiting fans.
Similarly, Saudi Arabia has robustly continued to boost its entertainment industry, including sports, in order to encourage spending at home (by Saudis) on events and merchandise, and to give the country’s fledgling non-religious tourism sector a boost. To harness the enthusiasm for boxing and WWE among young Saudis, the kingdom in December 2019 hosted the first heavyweight fighting match in the Middle East and North Africa (MENA) region as part of the Diriyah Season in the town of Diriyah on the edges of the capital city, Riyadh which includes a series of international sports and entertainment events. Famously, Saudi football club al-Nassr in December 2022 signed world-famous footballer Cristiano Ronaldo in a two-and-a-half-year deal worth USD 200m.
This government investment in sports at home led to material progress on its goals: increasing domestic spending on the entertainment sector; creating a space for the population to be more active and motivate the adoption of healthier lifestyles; and facilitating a sense of unity from different classes of society towards shared interests. For example, government revenue from sports and outdoor engagements increased from USD 55.41m in 2018 to USD 128.93m in 2022. According to Statista – a market consumer data platform – this revenue is expected to reach USD 153.3m in 2023, an 18.9% year-on-year revenue change.
Human rights microscope
The governments of Qatar and Saudi Arabia will also be keen to capitalise on the increasing media attention on their growing entertainment and sports scene to change perceptions about their countries.
These governments over the coming years will amend some policies, largely to promote a moderate international political and social image. Doha is likely to make further changes to regulations relating to the safety and security of labourers ahead of for 2024 FIA (Fédération Internationale de l’Automobile) World Endurance Championship, and 2027 International Basketball World Cup for men. Similarly, Saudi Arabia will continue to amend its policies over the coming years as it expands its sports industry and eyes the bid for hosting a FIFA World Cup tournament in the future.
However, even with more legal reforms in areas such as labour and human rights, protections will remain patchy and fall short of international ideals. In one example of this, in preparation for the World Cup, the Qatari government in August 2020 increased the minimum wage for all workers by 25%. Yet, according to international human rights organisations like Amnesty International, companies continue to threaten employees with penalties and salary cuts if they complain about working conditions, violating recent changes to labour legislation.
Sports will continue to be a dominant area of focus for investment for Arab Gulf states, whether at home or abroad, and through government-linked vehicles or private family offices. More teams across more sports will be owned by Arab Gulf states, and others will follow Ronaldo to play for local teams in the desert. These investments serve not only as lucrative assets but boost efforts to develop new domestic sporting traditions and local talent through raising awareness and sparking enthusiasm.
For investors and operators
Foreign businesses operating in Saudi Arabia and Qatar, in particular those working with government entities for sports and entertainment events, will face scrutiny primarily from human rights organisations that use public campaigns to try and incentivise practices that are in line with western perceptions. Foreign businesses will remain exposed to reputational and integrity risks related to primarily labour and human rights issues which although improving, will remain some way off, of their counterparts in western states.
How we can help
Control Risks can offer threat assessments for foreign companies wanting to enter into business with government entities, specifically for sport-affiliated work. Furthermore, we offer daily monitoring focusing on security incidents during international sports events to shed light on the latest developments threatening businesses and mitigation points that foreign organizations can adopt.