Paving the path to profitable sports club privatization in Saudi Arabia
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Deloitte Middle East is committed to shaping a transformative future, driving groundbreaking innovations that empower business leaders to facilitate meaningful change, inspire progress, and create enduring value that resonates for generations to come. In October 2024, the Deloitte Sports Business Group unveiled a groundbreaking study on the future of sports club privatization in Saudi Arabia. This study represents a significant stride in guiding new investors towards transforming newly privatized sports entities into profitable and sustainable ventures. With a steadfast commitment to strategic planning, governance, and financial stability, Deloitte is driving change and fostering a dynamic sports ecosystem in the Kingdom.
One of the primary objectives of the study is to provide new sports club owners with a clear, actionable roadmap for achieving commercial success. The study introduces a four-phase approach – Control, Build, Operate and Transform - designed to transform clubs from operational entities into thriving enterprises. This journey begins with the crucial "First 100 Days" strategy, which focuses on establishing robust corporate structures, governance, and financial stability. Subsequent phases emphasize operational efficiency, tailored business planning, and profitable growth. Long-term transformation, driven by adaptability and market trends, enables clubs to maintain success and remain competitive.
Saudi Arabia's investment in sports has been substantial, marked by high-profile acquisitions by the Kingdom’s Public Investment Fund (PIF) of football clubs like Al Hilal, Al Nassr, Al Ittihad, and Al Ahli, along with Saudi Aramco’s acquisition of Al Qadisiyah Club and Diriyah Gate Development Authority’s acquisition of Diriyah Club and more recently with the Kingdom hosting the 2034 FIFA World Cup. These investments align with Vision 2030’s broader goal of economic diversification, aiming to increase the sports sector's contribution to the Kingdom's GDP from SAR2.4 billion (US$640 million) in 2016 to an estimated SAR18 billion (US$4.8 billion) by 2030.
"Sports clubs in Saudi Arabia have been on a development journey over the last few years, initially with the implementation of the Club Support Program and now with the privatization of clubs posing an opportunity for investors. Deloitte’s framework sets out a mechanism to deliver social and economic impact through these investments." - Hassan Malik, Deloitte Middle East Sport Sector Leader
The Deloitte study highlights the Middle East’s growth trajectory, with Saudi Arabia driving the regional sports boom. The Kingdom's market is expected to grow by 8.7% by 2026, surpassing the global average of 3.3%. A young, digitally adept Saudi population, with 63% of nationals under the age of 30, is identified as a key demographic for sports engagement, likely to fuel demand for immersive experiences and digital interactions.
The study underscores the economic and social benefits of privatization, including attracting international investors, boosting local economic growth, and fostering a vibrant sports culture. The Saudi government's recent approval for the privatization of 14 additional clubs further demonstrates its commitment to professionalizing the sports sector. Plans for state-of-the-art stadiums and major events like the 2027 AFC Asian Cup and the 2034 FIFA World Cup promise a bright future for Saudi sports.
For sports investors, this historic transformation offers a dual opportunity: potential economic returns and a role in advancing Saudi Arabia’s broader Vision 2030 objectives. Deloitte Middle East’s latest in-depth study serves as a crucial guide for navigating this transformative journey, offering sports clubs a first-mover advantage in a rapidly evolving and high-potential market.
