Saudi Arabia's new love for soccer could cause ripple effects across the sports world

Soccer superstar Cristiano Ronaldo's move to Saudi nine Al-Nassr, and the kingdom's increasing investments successful the sport, could person ripple effects crossed Europe and the U.S., experts person told CNBC.

Ronaldo's two-and-a-half-year contract, reportedly worthy up to 200 cardinal euros ($212 million) per twelvemonth including commercialized agreements, volition marque the 37-year-old the highest-paid footballer successful history, and the highest-paid jock successful the world. 

For context, Ronaldo's idiosyncratic yearly net volition transcend the full unit wage measure for astir fractional of the clubs successful the English Premier League. The erstwhile Real Madrid, Manchester United and Juventus prima earlier this week contended that the "unique contract" was befitting of his presumption arsenic a "unique player."

Ronaldo had his contract with Manchester United terminated successful November aft helium gave an explosive interrogation criticizing the nine and its manager, Erik 10 Hag.

The Portuguese forward's determination comes arsenic Saudi Arabia reportedly readies a imaginable associated bid to signifier the 2030 World Cup, and follows the Saudi Public Investment Fund's buyout of historical Premier League nine Newcastle United successful precocious 2021. 

The Financial Times reported successful October that the Saudi PIF had committed much than $2 cardinal to sponsorship deals implicit the archetypal 8 months of 2022, astir of which was directed toward home shot competitions.

Author and shot concern adept Kieran Maguire told CNBC connected Thursday that alternatively than an effort to rival the large European leagues, Al-Nassr's signing of Ronaldo was a "marketing exercise" that enables the kingdom to diversify its commercialized entreaty beyond earthy resources, fixed the size of the player's idiosyncratic profile.

"If you instrumentality a look astatine the societal media pursuing that idiosyncratic of Cristiano Ronaldo's presumption brings, it's acold greater than that of an idiosyncratic shot club," Maguire said. 

"Saudi Arabia has a young population, truthful helium volition pull that generation. There's economical benefits, there's governmental and societal benefits, and the fiscal outgo is simply a implicit irrelevance."

Manchester United and Liverpool successful Saudi crosshairs?

The Saudi PIF's takeover of Newcastle United was met with disapproval crossed the shot satellite — deemed an effort to launder the country's estimation against the backdrop of a mediocre quality rights record. 

A radical called NUFC Fans Against Sportswashing sprung up successful protestation astatine the takeover, but having watched their nine endure a prolonged spell of mediocrity, galore Newcastle fans cheered the concern successful the anticipation of becoming a competitory unit successful England and beyond.

Just 15 months connected from the completion of the deal, the nine sits 3rd successful the Premier League table, sandwiched betwixt perennial giants Manchester City and Manchester United.

Saudi officials person consistently denied allegations of sportswashing successful their assorted sporting pursuits, and the Newcastle takeover consortium led by British businesswoman Amanda Staveley insists the PIF is autarkic from the Saudi government.

However, PIF forms the bedrock of the Saudi economical task and its Vision 2030 program. Statements lauding the PIF's advancement from King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman appear successful its yearly fiscal statements.

The PIF owns 80% of the club, with the remaining 20% divided betwixt Staveley's PCP Capital Partners and RB Sports & Media. The PIF has been contacted for comment.

Ownership controversies person besides surrounded Premier League champions Manchester City, (owned by the Abu Dhabi United Group) and French champions Paris Saint-Germain (owned by Qatar Sports Investments). 

Having observed different state-sponsored takeovers implicit the past decade, on with the occurrence of the contentious FIFA World Cup successful Qatar successful December, Maguire suggested that Saudi Arabia could look to grow its shot portfolio successful 1 of 2 ways.

"PIF could spell down a akin way to the UAE successful having the City Football Group and going for a multi-club ownership model, wherever efficaciously you person a mothership and you person a batch of satellites," helium suggested. 

Aside from its flagship nine Manchester City, the ADUG's City Football Group present owns 9 different clubs crossed 4 continents with accordant branding and availability of resources.

"From a fiscal constituent of view, that's really turning retired to beryllium rather palmy due to the fact that you tin person continuity successful presumption of civilization and doctrine astatine clubs, you tin transportation players astir to assistance their development, and past you tin commencement to merchantability them astatine higher prices, truthful it's really proven to be, these days, a beauteous astute model," Maguire added.

Alternatively, fixed the fig of precocious nett worthy individuals successful Saudi Arabia apt to beryllium funny successful gathering connected the Newcastle United acquisition, helium suggested different high-profile clubs could travel into Riyadh's sights. 

Both Liverpool and Manchester United, arguably the 2 biggest clubs successful England successful presumption of planetary profile, person publicly declared that they are unfastened to investment, and perchance adjacent a afloat sale.

"[The Saudis] person seen the affirmative effect from Newcastle fans — determination are 2 clubs which are publically up for immoderate signifier of concern successful Liverpool and Manchester United and nary disrespect to Newcastle United, they're overmuch bigger fish," helium said.

"Sports concern is attractive. You won't needfully get a important instrumentality connected your concern financially, fixed the precocious prices they are apt to person to spell and wage for a nine of that stature, but the non-financial instrumentality connected concern arsenic we've seen astatine some the Etihad (home of Manchester City) and PSG is simply a affirmative one."

Individual prima signings exemplary could endanger MLS

Credit ratings bureau DBRS Morningstar suggested that Ronaldo's determination to the Saudi Pro League, and the country's evident intentions, could imperil the recognition hazard profiles of European and North American clubs.

"In Europe, arsenic subordinate costs astatine shot clubs are tied to their revenues, expanding idiosyncratic salaries driven by overseas request could alteration squad prime implicit time. This could person a longer-term interaction connected on-pitch results, marque values, and viewership for teams that are incapable to turn gross and reinvest successful their squads," said DBRS Morningstar Senior Vice President for Sports Finance Michael Goldberg. 

Saudi concern has disrupted nonrecreational play successful the signifier of LIV Golf, a breakaway contention from the accepted PGA Tour that utilized Riyadh's heavy pockets to gully immoderate of the game's biggest names.

However, Goldberg suggested that attracting a fistful of superstars successful the twilight of their careers to a squad sports league would not beryllium capable for Saudi Arabia to pull a captious wide of instrumentality interest, since the prime of play would inactive beryllium considerably little than successful apical European leagues.

The Saudi exemplary poses much of a menace to the U.S., helium noted, since Major League Soccer (MLS) has a long-running strategy of attracting aging prima players to physique involvement and viewership. To this end, each nine is permitted to motion 3 players whose compensation bundle is excluded from the team's wage cap.

For example, Italian winger Lorenzo Insigne near Serie A squad Napoli to articulation Toronto FC successful 2022 and became the highest-paid subordinate successful MLS past with a reported yearly wage of $12.4 million. This pales successful examination with the mammoth declaration signed by Ronaldo.

"The SPL tin acold outpay MLS clubs and could endanger a cardinal facet of MLS' concern model. While the wide prime of play successful the MLS has been expanding rapidly done concern successful subordinate development, coaching, and designated players, the prime spread betwixt it and the SPL is overmuch narrower than that of the SPL comparative to the European leagues," Goldberg said.

As such, DBRS Morningstar believes the SPL's fiscal mightiness and willingness to people prima players from European leagues, who whitethorn different see the MLS, could negatively interaction North American clubs' recognition profiles.

Goldberg anticipates that Saudi concern volition airs a greater contiguous hazard to idiosyncratic sports similar golf, tennis, mixed martial arts (MMA), and racing.

European wage inflation

European clubs person continually accrued transportation fees and subordinate salaries successful caller decades successful bid to pull and clasp apical endowment and enactment competitive. 

Goldberg suggested that Saudi concern successful idiosyncratic players could propel subordinate salaries higher, but European shot assemblage UEFA precocious introduced rules stipulating that nary nine tin walk much than 90% of its yearly revenues connected wages, transfers, and cause fees successful 2023. This bounds volition further trim to 70% successful 2025.

"As such, if revenues bash not proceed to grow, European clubs' wage bills volition beryllium capped. Under this scenario, accrued idiosyncratic subordinate salaries could pb to reduced squad prime implicit clip and a competitory disadvantage versus teams extracurricular Europe," Goldberg said.

"Any antagonistic interaction connected on-pitch results, marque values, and viewership would besides impact European shot clubs' recognition profiles, and clubs that could not turn gross and reinvest successful their squads would beryllium astir exposed."