The Saudi football season has just concluded with Custodian of the Two Holy Mosques King Salman attending the final game of the Custodian of the Two Holy Mosques championship.
It was a long season full of joy. We witnessed a strange mix of emotions. We saw victors celebrating their achievements and losers mourning the missed opportunities. Many careers got a boost and many careers ended. There is one thing that all Saudi sport teams have in common; they all face financial difficulties, which pose a serious challenge threatening the very existence of the Saudi sports as an industry.
At the heart of our sports problem is the absence of any economical structure that can resemble any professional sports industry around the world. The government owns all of the Saudi clubs. In pure economical terms, they are public facilities that are managed and financed by the government. Now in reality, the situation is more complicated than that. Although the government distributes cash annually but that money alone allows these clubs to survive for only two to three months. The rest of the funds channeled to these clubs come from wealthy fans and businessmen; a stream that could stop the moment those fans changed their minds, as we have seen on many occasions with different clubs.
Nevertheless, some steps have been taken to address the issue, for instance, regulating TV licensing, commercializing club logos and teams’ sponsorship. Although a step in the right direction, it suffers from many setbacks. For example, not all clubs can equally benefit from such regulations; most of the clubs are already expressing their dissatisfaction with their shares in the broadcasting revenues or events income, in addition to the delays and irregularity of income from these channels.
In the world of economics, investors love nothing more than stability and predictability of returns. In general, making investments in sports clubs may seem like a good prospect; they have been around for years, they have loyal fans (customers) who are attached to the brand (logo). However, the types of risk associated with such an industry sometimes weigh more than its potentials.
Sports industry is not immune to economical turmoil. In a way it is a field of entertainment that is subjected to the regular laws of economics particularly the demand and supply law. The economic climate in the country always reflects on sports and vice versa. It is an industry with risks; a change in the fans income or a change in the products costs like ticket prices or merchandize will have a direct impact on the final demand of the industry products like ticket, merchandise or TV subscriptions.
The first step we should take is to open it to the laws and regulations of the free market. It should have its own economical structure where opportunities, risks, returns, and losses are all determined by the forces of market. It should be restructured and protected by laws of commerce and antitrust, and made attractive for investors by providing some incentives for example, a telecom company that owns a sports club could be exempted from paying any licensing fees, etc. Maybe then, we would have financially stable clubs rather than ones drowned in debt.
