Sports following the money will change the game in years ahead

The global sports industry faces a diverse set of challenges over the remainder of this decade. Football follows the money, and as the game finds new deep pockets among the Middle Eastern Gulf states and United States, the structure of the game will continue to evolve. These new power bases in investment, sponsorship and audience growth has started to tilt the regional epicentre of the beautiful game away from Europe. Over the remainder of this decade, Europe’s pre-eminence as home to the top leagues, top players, and largest sources of investment and audiences may finally be challenged.

In the US, the popularity of football continues to rise, ignited by the success of Major League Soccer (MLS) in attracting world-class stars (e.g. David Beckham’s move to LA Galaxy in 2007 and Thierry Henry’s transfer to New York Red Bulls in 2010) to play out their late professional years. The bigger source of US influence in elite football is the nation’s affluent audience base and vast corporate sponsorship potential, which acts as a magnet for the game’s decision-makers. Indeed, UEFA president Aleksander Čeferin has indicated that the US could host the Champions League final in the future to capitalise on the sport’s rising popularity in the country. “Football is extremely popular in the United States these days... Americans are ready to pay for best and nothing for the [sic] less” ,Čeferin told the Men in Blazers podcast, reported by Reuters. The US also won the rights to joint-host the 2026 FIFA World Cup, alongside Canada and Mexico. The US’s victory was attributed to a tacit awareness of the “potentially staggering financial revenues that would come with hosting”, reported ESPN. The US also has a vibrant women’s league which opens the door to new audiences to monetise. The US could emerge as a major epicentre for world-class women’s football, supported by the nation’s investment, sponsorship and promotional flare.

In the Middle East, the Saudi’s football ambitions are arguably even more ambitious, both at home and abroad. The Saudi Pro League (SPL) has brought a far deeper pool of stars to play, including older world-class superstars (e.g. Cristiano Ronaldo to Al-Nassr FC) as well as players still in their prime (e.g. Neymar moved to Al-Hilal SFC and Rúben Neves to Al-Ittihad). The Saudi’s aspirations are drawing attention and concern among Europe’s elite clubs which are keen to preserve their wealth base, as evidenced by the ill-fated 2021 attempt by around a dozen of Europe’s wealthiest football clubs to form a breakaway ‘Super League’ competition to supersede the Champions League. Clubs including England’s Manchester United, Manchester City, Liverpool, Arsenal, Chelsea and Tottenham Hotspur; Spain’s Real Madrid, Barcelona and Atlético Madrid; and Italy’s Juventus, AC Milan and Inter Milan were all on board. However, plans were thwarted by a fierce backlash from the sport’s governing bodies, fans and politicians. But over time, as more money into European football is sourced externally, and as rival leagues such as the SPL in Saudi Arabia continue to draw the world’s biggest stars, these new footballing power bases will continue to exert influence on the structure of the game, league and tournaments. Any future re-emergence of an elite club football breakaway league or tournament will likely include considerable Saudi influence. The Saudi’s influence has paved the way for an apparent uncontested bid to host the 2034 FIFA World Cup, accommodated by last-minute rule changes to the bidding process which prompted Australia to withdraw its planned bid. Two young footballing nations in Qatar and Saudi Arabia look to have landed two World Cups despite minuscule track records and infrastructure. Football follows the money, indeed.

Middle Eastern investment in European football has quickly made huge strides. Since the Abu Dhabi royal family’s majority purchase of Manchester City in 2008, the club has won both the Premier League and FA Cup six times each. Paris Saint-Germain, purchased in 2011 by Qatar Sports Investments (QSI), the Qatari government-backed fund, has won eleven Ligue 1 titles. Newcastle United fans are still waiting for their taste of football glory under Saudi Public Investment Fund’s (PIF) majority ownership. Saudi wealth and its own domestic league aspirations has also served to further accelerate footballers’ wage inflation, as new leagues compete for each generation’s elite players.

With the influence of Middle Eastern money in football, club ownership has evolved from wealth individual owners, billionaires and oligarchs, to private equity investors and sovereign states. Many consider the strategy part of Gulf states’ plan to diversify their countries to be the epicentre of world-class international sport before its sovereign oil wealth runs out. The trail is long and growing. In 2022, Saudi Arabia’s Aramco signed a long-term sponsorship deal with Formula One and PIF launched the LIV Golf Invitational Series, a breakaway golf tournament to rival PGA Tour. Elsewhere, Qatar Sports Investments owns the Doha Tennis Championships and the rights to the European Cricket League. In December, Saudi Arabia also showcased its ambition to host world-class boxing with a two-day event of six heavyweight fights including Anthony Joshua and Deontay Wilder in separate bouts.

At the other end of the spectrum, sports clubs without the glamor of elite football are struggling. Operating costs for lower league football clubs, as well as rugby, cricket and basketball, are all on the increase, and, in some cases, lower audience numbers are significantly reducing gate receipts.

BTG Advisory offers sports clubs an independent options review for those facing a financial event. BTG Advisory is a leading adviser to football clubs facing administration, having represented most of the major cases in recent years. Our works involve defining the financial impacts of various potential adverse scenarios, including heavy financial penalties for regulatory non-compliance (e.g. English Football League’s (EFL) Profitability and Sustainability Rules), and points deductions, as well as league relegation. Our team can help prepare clubs to manage their financial obligations, including navigating player contracts, parachute payments, and broader operational costs to help bridge the income gap in the event of relegation.