Sport Investment in Saudi Arabia

Sport Investment in the Kingdom of Saudi Arabia is an economic activity aimed at developing the sport industry in Saudi Arabia. It seeks to transform sport practices into economically viable paths that contribute to adding value to the gross domestic product (GDP).

To achieve sustainability and returns from sport activities, Saudi Arabia has worked on developing laws to advance the sport sector. In 2020, the Regulation of the Ministry of Sport was issued, stipulating in its second article that the ministry is the competent authority and the primary reference in Saudi Arabia for regulating, developing, and enhancing the sport sector. It also aims to expand the base of sport practitioners, achieve excellence for Saudi sport both locally and internationally, and oversee all sport activities.

To bolster sport investment and achieve its sustainability, the Ministry of Sport is dedicated to encouraging, fostering, and developing investment in the sport field and attracting local and international sport investment, as per the established regulatory procedures.

Sport investment in Saudi Arabia aims to elevate the level of economic growth within the sport sector. This is achieved by encouraging and involving the private sector and investors to contribute to the sport economy while marketing the Ministry's tangible and intangible assets across all cities in Saudi Arabia. The focus also includes developing operational and financial models to activate available investment opportunities. These efforts contribute to increasing sport participation rates across various disciplines, stimulating the sport industry, building sport facilities, hosting local and international events, and fully activating the sport ecosystem. This approach helps boost Saudi Arabia's GDP and raises the rate of sport engagement while enabling all sports.

The initiative also seeks to activate and market sport investment zones across diverse fields to address gaps in sport practice needs. It works to activate the sport ecosystem and diversify sport investments beyond football, by fostering investments in sport medicine, organizing events, and integrating sport technology with real-world applications.

The sport sector’s contribution to GDP witnessed significant growth between 2020 and 2021. Its contribution increased from SAR2.4 billion to SAR6.5 billion, reflecting a growth of 170 percent. Additionally, seventeen investment companies were established for sport clubs and federations.

Sport investment in Saudi Arabia contributed to increasing the total value of non-governmental revenues for Saudi Pro League clubs, exceeding SAR1.8 billion over two years. Revenues for 2021 reached over SAR1.1 billion, compared to SAR747 million in 2020. Additionally, the Ministry of Sport issued more than 1,904 licenses for gyms and sport centers, resulting in the creation of more than twenty thousand direct jobs and sixty thousand indirect jobs in the sport sector. The Ministry of Sport aims to increase the sport sector's contribution to the non-oil GDP to more than 0.8 percent by 2030.

In January 2022, the Council of Ministers issued a resolution requiring the Ministry of Sport to apply the provisions of the Law of Disposition of Municipal Real Estate (issued under a Supreme Order) to lands designated for the ministry’s benefit, its sport facilities, and contracts for investing in naming rights and sponsorships of sport facilities under the ministry for specified periods. This decision represents a significant shift in the sport economy, aimed at enabling and attracting private sector participation while increasing investment opportunities in sport cities. It also permits the rental of ministry facilities for temporary events, optimizing the use of underutilized facilities. Sport are an integral part of people’s lives and health, as well as a contributor to the economy. The private sector plays a pivotal role in this industry through the establishment of private clubs, sponsorship contracts, various partnerships, and more.

The Nafes Platform has revolutionized investment in the sport sector by providing investors the opportunity to establish private clubs and academies. In 2023, the platform issued approximately 2,270 licenses for gyms and sport centers, 555 licenses for academies, 242 licenses for sport clubs, and 2,270 licenses for diving clubs.

Saudi Vision 2030 has set several targets aimed at creating a vibrant and healthy society, expanding the base of sport practitioners, and enhancing the sport sector. Among its key initiatives is the Club Support Strategy, launched in 2019, which has achieved significant milestones. These include a 32 percent improvement in the average governance score for clubs from the 2020/2021 season to the 2022/2023 season, a remarkable 1,289 percent increase in various sport within clubs participating in the diverse sport initiative, the creation of approximately 5,700 jobs, and an increase in the number of sport federations from thirty-two in 2016 to sixty-four.

In 2022, the Ministry of Investment took the initiative to sign a joint cooperation agreement with a sport company, in coordination with the Ministry of Sport, aiming to enhance investment in the sport of padel. The agreement seeks to increase the number of sport venues through initiatives and enablers provided by the Ministry of Investment. The agreement contributes to creating an investment-friendly environment and encouraging investors to support the sport sector. It also activates the Ministry of Investment's comprehensive service role to provide services and facilitations for investors.

Several achievements have been made in the field of sport investment, including the launch of a service for issuing new licenses to increase investment opportunities with the private sector. In 2020, a licensing platform was inaugurated, resulting in the issuance of more than eighty licenses by the end of the same year.

Sport clubs have received support to encourage sport investment. With the establishment of the Club Investment Platform, the number of applications submitted through the platform in 2019 reached thirty-nine, benefiting eleven entities. In 2020, the number of applications increased to 104, benefiting twenty entities. By 2023, the number of beneficiaries from the platform reached seventy clubs, with a total of 337 applications submitted.

In 2020, the Ministry of Sport organized the International Conference on Governance and Compliance to Promote Integrity in the Sport community. It shed light on governance, integrity, and their implications on sport investment.

Efforts to regulate the investment process in the sport sector in Saudi Arabia included issuing the Regulation of Land Investment Allocated to Sport Clubs. The regulation aims to generate financial returns for clubs to help them achieve their objectives, organize the investment procedures undertaken by sport clubs, maximize financial efficiency for clubs to secure investment opportunities at fair and competitive prices, and ensure transparency at all stages of the clubs' investment processes.

The development of sport investment extended to sport clubs. While no club had a private company for sport investment in 2015, around three private companies dedicated to sport investment were established by clubs for the first time in 2020, aiming to ensure their financial sustainability.

The process of sport investment in clubs is subject to conditions set by the Ministry of Sport before approving the establishment of investment companies. These conditions include forming an investment committee within the club, clarifying the primary purposes of the company, complying with the ministry's laws and regulations on investments and sponsorships, and providing the ministry with all existing investment contracts of the club.

Sport investments initiated by clubs provide greater opportunities to enhance their capabilities. Investment companies, serving as the investment arms of these clubs, work to meet the standards of the Club Support Strategy and implement governance. They also create a stimulating investment environment that strengthens the club's resources, invest the company’s funds and the surplus funds from the club’s investments, and collect revenues from those investments.

Clubs benefit from these investment companies by participating in investment, endowment, and real estate funds, among other investment vehicles. They establish investment entities to govern the investment process and manage resources, operate all contracts related to investment, sponsorship, advertising, leasing, and renting, and own all investment rights related to the club, its players, programs, and projects. These rights are marketed, operated, and sold by the companies, which also manage all relations with investors. Additionally, the companies can establish wholly-owned or jointly-owned subsidiaries within Saudi Arabia or abroad in partnership with local or international investors.

As part of efforts to promote sport investment and attract investors, the Ministry of Sport approved the establishment of private companies for thirteen clubs in the Saudi Pro League by 2022. This initiative aligns with governance objectives stemming from the Club Support Strategy launched by the ministry.

This initiative strengthens opportunities for sport investment in Saudi Arabia and works towards establishing an attractive investment ecosystem to encourage the private sector to invest in sport clubs. It empowers clubs to leverage their resources, stimulate the growth of the sport economy in Saudi Arabia, and enhance their financial resources.

Supportive initiatives for sport investment in Saudi Arabia included organizing the campaign "We Complement Each Other and Make a Difference" in 2021. The campaign aimed to enhance integration between the small and medium enterprises (SMEs) sector and sport clubs by creating a stimulating investment environment in sport investment and club sponsorships.

The campaign also contributes to increasing investments by small and medium enterprises (SMEs) in the sport sector and the number of sponsors for sport clubs, thereby enhancing their sustainability and financial resources. The number of sponsors for football clubs has reached 126 enterprises. Additionally, the campaign aims to develop innovative investment tools to expand the participation of SMEs in sport investment.

The Ministry of Sport is also working to develop the sport industry and increase club investments, enhancing their ability to address challenges. In this context, the ministry aims to increase the number of clubs, which totaled approximately 170 by 2021, to expand the capacity for nurturing sport talents within Saudi Arabia.

Saudi Arabia boasts a strong sport presence, positioning it well for expansion in sport investment. It is home to ninety-seven sport federations, committees, and amateur leagues. Additionally, the move toward privatization supports sport and economic investment in sport-related activities, events, and products.

Efforts to develop sport investment in Saudi Arabia also included the launch of the Nafes Platform in 2021, specializing in licensing private clubs, academies, and sport centers for the first time in Saudi Arabia. The platform aims to enable the private sector to invest in Saudi Arabia's sport sector and provides opportunities for local and international investors to establish and develop private clubs, academies, and sport centers by applying for the necessary licenses through the platform. This initiative aligns with the objectives of Saudi Vision 2030 and aims to diversify economic resources.

The Nafes Platform aims to deliver several benefits that enhance sport investment in Saudi Arabia, including increasing the number of private clubs, academies, and sport centers. This effort seeks to elevate the level of sport performance, improve competition quality, develop athletes’ skills, and support the growth of both sport and the economy. The platform is expected to serve as a turning point in Saudi Arabia’s sport industry, as it provides the private sector with opportunities to invest in sport and contribute to its growth and prosperity by obtaining the necessary licenses to establish clubs, academies, and sport centers for various disciplines.

The Nafes Platform operates in phases to eventually encompass a broader range of sport within an integrated investment ecosystem. It includes activities licensed by the Ministry of Sport for gyms and sport centers, such as: archery, car and motorcycle tracks, car and motorcycle clubs, judo, athletics, cycling, skating, diving, air hockey, archery clubs, foosball, basketball, billiards, bodybuilding, weightlifting, bowling, boxing, chess, cricket, electronic sports, fencing, fitness, football, gymnastics, handball, karate, kids' clubs, paintball, equestrian sports, rugby, squash, swimming, table tennis, taekwondo, tennis, volleyball, water sports and diving, wrestling, padel, and yoga.

Activities licensed by the Ministry of Sport for sport academies include: football, basketball, swimming, gymnastics, squash, fencing, equestrian sport, rowing, indoor rowing, electronic sports, remote-controlled and wireless sport, cycling, chess, tennis, badminton, shooting, taekwondo, indoor volleyball, and beach volleyball.

Activities licensed by the Ministry of Sport for sport clubs include: football, basketball, swimming, equestrian sport, gymnastics, fencing, sailing, rowing, indoor rowing, electronic sport, remote-controlled and wireless sport, cycling, judo, jiu-jitsu, karate, taekwondo, boxing, wrestling, mixed martial arts, muay thai, kickboxing, chess, tennis, kiteboarding, shooting, badminton, beach volleyball, padel, equestrian tourism, and indoor volleyball.

To establish an effective sport sector, stimulate private sector involvement, and enable its contribution to the development of the sport industry, Crown Prince and Prime Minister, His Royal Highness Prince Mohammed Bin Salman Bin Abdulaziz Al Saud, launched the Sports Clubs Investment and Privatization Project on June 5, 2023. The project aims to create unique opportunities and an attractive investment environment in the sport sector to achieve a sustainable sport economy. It also seeks to enhance professionalism and administrative and financial governance in sport clubs, elevate club standards, and develop infrastructure to provide better services to sport fans.

The project includes two main tracks: the first involves approving investments by major companies and development entities in several sport clubs in exchange for transferring club ownership to them, and the second involves offering a number of sport clubs for privatization. The first phase began with the transformation of four clubs into companies and transferring their ownership to developmental entities. These include: al-Qadisiyah Club, which was transferred to Saudi Aramco; al-Diriyah Club, to the Diriyah Gate Development Authority; AlUla Club, to the Royal Commission for AlUla; and al-Suqoor Club, to NEOM Company. Additionally, the Public Investment Fund (PIF) invested in four Saudi clubs by converting them into companies owned by the fund along with a non-profit foundation for each club. These clubs are al-Ittihad, al-Ahli, al-Nassr, and al-Hilal.

The second phase of the project's second track began on July 2, 2024, with the approval of the document for privatizing fourteen sport clubs. The supervisory committee for privatization was granted the authority to approve the privatization of sport clubs across various divisions, including the Professional, First, Second, Third, and Fourth divisions. The fourteen clubs included in the privatization project are al-Zulfi, al-Nahda, al-Okhdood, al-Ansar, al-Orobah, al-Kholood, al-Shoala, Hajer, al-Najma, al-Riyadh, al-Rawdah, Jeddah, al-Taraji, and al-Sahel.