Privatization Will Bring Paradigm Shift in Sports Business

by shariff mohammed | May 02, 2017

Hamood Fahad Al-Bakawi, CEO of Gulf Horizon Group and Former Chairman, Sports Committee of Asharqia Chamber speaks to Mohammed Shariff of Saudi Commerce and Economic Review about news trends in the sports sector and how Vison 2030 is going to bring vital changes in the Kingdom's sports sector.  

How do you see investment prospects in the Kingdom’s sports sector?

Since 2008 I was a Board Member of Qadisya club of Eastern Province. We were pretty young to the business world. While doing graduation in United States, I had a dream to get into the sports sector and develop the sector as one of the good business model. I have seen how sports sector was being marketed in US and other European countries. When I started my career in Al-Khobar, It was early realization that there are ample opportunities for sports club to flourish as good business model in the Kingdom. Though my primary business was contacting and advertising,  however, sports remained my passion. I used advertisement industry to get string entry into the  sports sector. I still believe advertisement and sports are complimentary in nature. Till the announcement of privatization of spots club under Vision 2030, there was big gap between businessmen and sports activities in the Kingdom. Clubs were not thought of commercializing because of regulations and lack of communication with the businessmen.

Professional football is gaining an increasing social and economic importance. Nowadays, the sports world and especially football clubs need experts capable of handling all the issues connected to the management of this particular business. Currently the Kingdom is aiming to create a unique structure at all levels  with a view to develop this as perfect business model. This will definitely bring more investment into this sector, especially in the Kingdom where we have popular football clubs. It will also help to produce a new professional model and a new generation of managers in tune with the steadily changing world of modern sport

How do you explain ROI (Return on Investment) in the sports sector?

The value of the Saudi Arabian sports products retail market is approaching SR30 billion with an annual growth of eight per cent, according to many reports. Though we do not have exact figure of growth. Recent reports, especially, after the announcement of  Vision 2030, which has asked all the clubs to submit the plan for privatization in next six months. It provides investment implications that can be described as pivotal that the concerned authorities in the kingdom support sports and health initiatives with about SR29 billion dedicated to social projects including the construction of new sports centers throughout Saudi Arabia.

For more attraction of market attention, the Kingdom is currently running a key project for the development of sports in Saudi Arabia with a budget exceeding SR18 billion and is scheduled for completion next year.

With the growth of sports and entertainment infrastructure along with the boom in the hospitality industry in Saudi Arabia, public and private investments in sports industry recorded an annual increase of 40 per cent and it will grow further once privatization process completes . These investments included privatization of sports clubs as an economic strategy. Moreover, the emergence of women’s sport activities required establishing dedicated sports facilities exclusively for women.

How Vision 2030 is going to boost the sports sector?

It will strengthen our idea that we carved in Asharqia Chamber, in fact I was the first chairman of the Sports committee. We tried our best to educate the business community that it is business of sports and we need to tap into it. The Vison 2030 has endorsed our idea of privatizing the events and bringing business model to the sports sector.

The Council of Economic and Development Affairs (CEDA) has already directed the General Authority of Sports to create a Sports Development Fund to support sports clubs as well as to further boost sports activities in Saudi Arabia. Deputy Crown Prince Mohammed Bin Salman, second deputy premier and minister of defense has taken special interest in this sector.  The objectives of the Fund include provision of loans and facilities for sports clubs, promotion of various sports events, contribute to privatize sports clubs, and set up and finance multi-purpose sports incubators under an institutional umbrella to create as many as 40,000 jobs for Saudis.

CEDA meeting also is all set to get details of clubs on the issue of privatization of sports clubs that are participating in professional league tournaments. It approved formation of a committee to supervise execution and completion of the procedures with regard to the privatization. The committee will be headed by the chairman of the General Authority of Sports, and its members include deputy minister of economy and planning, undersecretary for regulations at the ministry of commerce and investment, representatives of the ministry of finance, Saudi Arabian Football Federation and the Saudi Professional League. 




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