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What began in late 2022 and early 2023 as a niche curiosity has transformed into 10,577% Google search increase in Mexico, France 8,508%, Brazil 6,147%, and India 5,304% compared to the previous season. It’s the new look of the Saudi Pro League (SPL). It’s thanks to the strategy of signing top football talent from the European top 5 football leagues: English Premier League, Spanish La Liga, Italian Serie A, German Bundesliga, and French Ligue. The five Leagues represent the core of the global football system. In analysing the financial and business model of the SPL, we believe that this strategy is indeed driven by leveraging the ‘superstar effect’, which is scientifically proven to boost ticket sales, broadcasting interest, and general fan engagement from different parts around the world, unlike what western media tended to stereotypically portray as a solely Saudi PR attempt. 
This investment was significantly ramped up with the Public Investment Fund (PIF) taking over the star-studded four major clubs: Al-Ahli, Al-Hilal, Al-Ittihad, and Al-Nassr in June 2023. Our analysis is based on an economic theory called World Systems Theory (WST), which conceptualizes the global economy as a structured system with a central core, surrounded by semi-periphery and periphery layers. When we apply this framework to world football to understand how economic and financial power is distributed within the sport, we find the European Top 5 football leagues represent the core of the global football system. Other leagues, especially in South America, Aisa and Africa, serve as a periphery or semi-periphery, often acting as "launching pads" for players who move to the core leagues. We believe that the SPL strategy is mainly aimed at placing itself at the global football core not to remain at the periphery layers. This’s evidenced by spending a record of $957 million during the 2023 summer transfer window, which came in only second to Premier League’s net transfer spend of $1.39 billion, according to Deloitte’s Sports Business Group. Almost half of the transfer fees received by Premier League clubs from overseas (worth $698 million) came from Saudi Pro League clubs that season. Two Premier League clubs, Fulham and Liverpool, saw %100 of their transfer receipts come from Saudi Pro League clubs. The 2024 summer transfer window saw 101 foreign players join the Saudi Pro League, alongside 115 domestic player registrations. The following chart based on data from Transfer Market shows the net amount spent on Saudi Pro League Club transfer market window in from 2023 to 2024. The Future of Football Finance? The main angle of our analysis is then putting forward the new financial concept in sports business, which’s represented in using the players’ transfer fees as collateral, especially if a club wants to secure a large amount of transfer fee or if it is operating on a loss. We believe that this strategy will help the SPL convert its substantial initial investments, primarily in high-profile player acquisitions, into a financially sustainable and profitable long-term business model. (click here to read our previous edition in which we outlined in numbers some of the high-profile acquisitions in the past two years). Sustaining such expenditure at the SPL without a corresponding increase in consistent revenue streams places considerable financial strain on the league's economics. The League’s revenue in the 2024/2025 season from broadcasting was estimated at $80.1 million, while sponsorship revenue reached an estimated $54.53 million. This’s against a total of approximately $952 million spent on talent acquisition. This disparity highlights a substantial financial gap: the cost of acquiring top players is over seven times greater than the combined income from the two primary commercial revenue sources. In comparison, the Premier League clubs' commercial revenue in the 2024/2025 season was estimated at £2.3 billion, while the Premier League clubs spent approximately £2.26 billion on player acquisitions. Leveraging players’ future transfer fees as collateral is a financial strategy where a football club or league borrows money based on the expected future income from selling players.  To explain this with a real life example, Al Ittihad completed the transfer of French forward Moussa Diaby from Aston Villa last summer. Diaby has signed a five-year contract with Ittihad for what’s reported in the British press £51.9 million. When a lender provides this kind of loan, they want some form of collateral, which’s a valuable asset they can claim if the club fails to repay the loan. In this case, the “collateral” could include the player’s contract itself, expected future earnings from the player (like merchandise sales, ticket sales boosted by his arrival), or other club assets. Essentially, the lender’s security lies in the tangible and intangible value that Diaby’s presence and performance bring to the club. So, what does the lender get in return for providing liquidity (money) to Al Ittihad? Besides repayment with interest, they gain security through collateral, meaning if Al Ittihad can’t repay, the lender has a claim on this value. This arrangement reduces risks for the lender and makes large transfer fees like Diaby’s manageable for clubs by turning the player’s potential value into financial leverage. But of course, such debt would come at a cost that depends on the financial profile of the borrower. Pricing of interest rate can vary widely, but it’s determined based on two financial metrics in the market: a) basis points b) the benchmark rate (which’s the low-risk interest rate). The "basis points" are just ways to express how much extra interest the club pays over a standard, low-risk interest rate. If the typical loan charges 500 basis points more than the benchmark rate, that means 5% extra interest. So, if the benchmark rate is 3%, the club pays 3% + 5% = 8% interest per year on the loan. The following chart shows the market value of clubs in the Saudi Pro League in the 2024-25 season.  As we focus in this analysis on the fact that core aspect of the SPL’s business model relies on acquiring internationally recognized players, which necessitates enormous financial investments. But it’s crucial for the SPL to develop a robust young talent pipeline if it wants the Chinese super football league. (In the June edition, we discussed why it was important for the Saudi Pro League to replicate the successful model of the Football Academy of SL Benfica (known as the Benfica Campus) in identifying and developing top talents from the young age of 12.) There’s an insightful academic paper analysing the rise and decline of the Chines super football league. It was published in February 2025 under the title: Shining stars, unpredictable outcomes: the impact of outcome uncertainty and star power on the online attention of the Chinese Football Association Super League. The Chinese Super League (CSL) actually experienced a significant decline after an initial period of heavy investment aimed at boosting football quality and the national team's success. In recent years, the Chinese government shifted its strategy away from simply buying expensive foreign stars to focusing more on developing Chinese players domestically. Fees for players are becoming some of the main items on the balance sheets of football clubs. Striking the right balance between continued financial commitment in Saudi Arabia to superstar acquisitions, along with the gradual development of a domestic football ecosystem, will be critical to establishing a competitive and commercially sustainable league that competes as a business mode with top leagues at the core of the global football system. |
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