The Commercial Boom of the Saudi Pro League and the Dark Memories of the Chinese Super League

Cristiano Ronaldo's decision to continue his football career in Saudi Arabia in January 2023 serves as an early indication of a significant shift in the global sports industry. Slowly but surely, the economic gravity of the football industry is shifting away from Europe towards a region that has long been viewed as a peripheral market.

The Saudi Pro League, the highest level of football competition in Saudi Arabia, has been in operation since 1976. This league has a strong track record at the Asian level. Al Hilal and Al Ittihad, two Saudi clubs, have repeatedly won the AFC Champions League.

However, at least until a decade ago, the global influence of this league was limited. Saudi clubs rarely made it onto the list of the world's richest clubs, and foreign players who came were generally at the end of their careers.

Changes began to be felt after the Government of Saudi Arabia launched "Vision 2030" in 2016. This economic transformation program aims to reduce dependence on oil and develop new sectors, including tourism, entertainment, and sports.

Football, with its global reach, is positioned as a strategic instrument for building image and economic activity across sectors.

The Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund (SWF), plays a key role, with assets under management exceeding US$700 billion. In June 2023, the PIF acquired majority ownership of four Saudi Pro League clubs: Al Hilal, Al Nassr, Al Ittihad, and Al Ahli.

Since that time, the four clubs have no longer been managed solely as sports entities, but rather as part of the national economic planning.

This approach differs from the European club management model that is oriented towards annual financial performance. PIF places football within the framework of long-term investment.

Funds are allocated for infrastructure renewal, recruitment of professional management, development of youth player academies, and expansion into global markets. Saudi football is also beginning to be managed as a modern industry, rather than merely a domestic competition.

The most significant turning point came with Cristiano's arrival. According to a Financial Times report, Al Nassr's social media exposure skyrocketed in a matter of months. The Saudi league, previously rarely covered by international media, suddenly became a global spotlight.

This effect continued into the summer transfer window of 2023, when several star players such as Karim Benzema, Neymar, Riyad Mahrez, Sadio Mane, and N’Golo Kante joined Saudi clubs.

Perceptions of the Saudi Pro League have changed. It has suddenly become a competition with serious economic appeal. The impact is felt commercially. According to a Financial Times report, the league's broadcasting rights are distributed to more than 170 countries. Global sponsors have stepped in with apparel deals worth the same as mid-tier European league clubs.

To what extent does this surge in commercial value rest on a sustainable industrial foundation, and not simply a boost in state capital?

Football is also integrated with the tourism sector. Major matches of the Saudi Pro League have become part of the sports tourism agenda. Within the framework of Vision 2030, the sports sector is projected to contribute approximately 1.5 percent of the gross domestic product (GDP) by 2030, with football as the main driver.

However, behind the explosion of commercial value, questions about sustainability remain prominent. The club's cost structure is heavily reliant on state support. The salaries of star players are far above global market standards. Without subsidies and public funding interventions, this model is difficult to sustain independently.

The euphoria currently accompanying the transformation of the Saudi Pro League raises a classic question in sports economics. To what extent does this surge in commercial value rely on a sustainable industry foundation, rather than merely on state capital injection?

To answer the above question, China's experience in the previous decade offers a relevant mirror.

In the middle of 2016, the Chinese Super League was at a seemingly promising point. Supported by state policies and investments from large conglomerates, Chinese clubs flooded the transfer market with players of world-class status. The ambition to build a globally competitive league progressed rapidly, even too rapidly.

In early 2017, the transfer of Oscar dos Santos from Chelsea to Shanghai SIPG for around 60 million euros became a symbol of that phase. He was not the only one. Carlos Tevez, Hulk, Axel Witsel, and Alex Teixeira also moved to China at productive ages, with salaries that rivaled or even surpassed those in European leagues.

In a short time, the Chinese Super League has emerged as the competition with the biggest player spending in Asia.

However, behind the glitter of transfers, the economic foundation of the league is fragile. Match revenues are relatively small. Domestic broadcasting rights have indeed increased, but they must be shared among many clubs and are not sufficient to support operational costs. International commercial revenue is almost nonexistent. The ratio of player salaries to club income exceeds the usual limits in the football industry.

Chinese Super League clubs do not build sustainable revenue sources. Their operations rely on owner subsidies. In many cases, football becomes a financial drain expected to yield non-financial benefits in return.

Entering 2020, along with the global Covid-19 pandemic, the Chinese government began to change its economic policy approach.

Football authorities have also imposed high taxes on high-value foreign player transfers. Regulations on the number of foreign players have been tightened. Salary restrictions are strictly enforced, both for foreign and domestic players.

In addition, clubs are prohibited from using sponsor names in their team identities, such as Guangzhou Evergrande reverting to Guangzhou FC, Shanghai SIPG becoming Shanghai Port FC, Jiangsu Suning changing to Jiangsu FC, and Dalian Yifang becoming Dalian Pro.

The Chinese Super League did not collapse due to a lack of funds, but rather because of the absence of a sustainable ecosystem and policy changes that occurred without a transition period.

The policy directly impacts clubs that have relied on the image of corporate owners. The commercial identity that has been built over the years is erased in a short period.

There are several factors underlying this policy change. One of them is that the Chinese government is intensively working to curb the outflow of capital and the practice of asset transfer abroad. Football investment is considered to have the potential to become a loophole.

At the same time, alongside the pandemic, several major conglomerates in China are facing a debt crisis, particularly in the property sector. The government is no longer allowing for large amounts of funding to be burned in the sports industry.

The impact of the policy change was felt quickly. In March 2021, Jiangsu FC, which had just won the Chinese Super League, was unexpectedly dissolved. The club did not compete in the season as the defending champion. Its owner, Suning Holdings, stated that it could no longer continue operations due to financial pressures.

According to data from the Chinese Football Association, between 2020 and 2023, more than ten professional clubs lost their licenses or were dissolved. The Chinese Super League continues to operate, but with drastically reduced tension and quality.

For foreign players, this failure means contract termination and unpaid salaries. However, for local players and local fans, the impact is more profound. Academies are closed, careers are halted, and public trust in national football projects has collapsed. The average number of spectators, which once reached tens of thousands per match, has sharply declined.

The Chinese Super League did not collapse due to a lack of funds, but rather because of the absence of a sustainable ecosystem and policy changes that came without a transition period. This story serves as a reminder that significant investments and state support can accelerate growth, but they can also amplify the risks of downfall.

For Saudi Arabia, China's experience presents important lessons. The surge in commercial value of the Saudi Pro League indeed demonstrates the strength of capital and the vision of the country.

However, the long-term success of the league will be determined by its ability to endure when the intensity of state support changes. Additionally, it will depend on the extent to which football is treated as an industry, rather than merely an instrument of national ambition.