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Saudi Soccer Dominance: Could It Take "Decades" Despite Reported $332 Million Mbappé Bid?

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The Saudi Arabian Soccer Club Al-Hilal Bids a Record 300 Million Euros for Kylian Mbappé

Kylian Mbappé's Potential Move to Al-Hilal

Saudi Arabian soccer club Al-Hilal has made a 300 million euro ($331.9 million) bid for Paris Saint-Germain star Kylian Mbappé. This offer represents Al-Hilal's efforts to disrupt the global order in the sport. Mbappé, the captain of the French national team, has declined a contract extension with PSG, leading to speculation about his future.

Mbappé has long been linked to a move to Real Madrid, but the Spanish club prefers to wait until his contract expires next summer. Al-Hilal, owned by Saudi Arabia's Public Investment Fund, has taken advantage of this situation by offering Mbappé a one-year contract worth up to 700 million euros. This deal includes a 200 million euro annual salary and various commercial and image rights agreements. However, Mbappé would still be free to sign with Real Madrid in 2024.

Saudi Arabia's Focus on Revamping Soccer

Alongside their bid for Mbappé, the Public Investment Fund has acquired a majority stake in English Premier League club Newcastle United and taken control of four top-tier Saudi Arabian clubs: Al-Ittihad, Al-Nassr, Al-Hilal, and Al-Ahli. These clubs have attracted talent from Europe's prestigious leagues this summer by offering lucrative wage packages.

European soccer is facing new regulations from UEFA that will limit clubs' spending on transfer fees and player salaries. Despite the lure of storied European clubs and competitions like the Champions League, Saudi authorities see an opportunity to disrupt the traditional hierarchy with their financial resources.

The Medium-Term Impact of Saudi Investment

While Saudi investment has already impacted sports like golf, disrupting the world of soccer will take much longer, according to Michael Goldberg, a senior vice president of sports finance at DBRS Morningstar. Only a few top players have made the move to Saudi clubs, and it may be decades before these clubs can compete with the glamour and competitive appeal of European teams.

UEFA's focus on the financial stability of European clubs is the right approach, as it ensures the quality of play and viewership. The pressure on European clubs is currently limited, but over time, the balance may shift if Saudi clubs can attract enough superstar players to weaken the European brands.

Building a strong brand takes time and will play a crucial role in attracting broadcasting and sponsorship dollars. If Saudi clubs can gradually catch up and threaten the European giants, the impact will be seen in the shift of revenues from Europe to other leagues.

Ultimately, while Al-Hilal's bid for Mbappé is a major statement of intent, the long-term effects of Saudi investment in soccer are yet to be fully realized.

The Potential Impact on New Business

The bid made by Al-Hilal for Kylian Mbappé and the broader efforts of Saudi Arabia's Public Investment Fund to revamp soccer have the potential to shape the landscape of global football. This raises interesting implications for new businesses entering the sports industry.

Firstly, the entry of Saudi-backed clubs into the market signifies the significant financial power and ambition that can disrupt traditional hierarchies in the sport. This presents opportunities for new businesses to collaborate and form partnerships with these emerging powerhouses, leveraging their financial resources and global reach.

Secondly, the presence of Saudi investment in soccer highlights the growing importance of branding and marketing in the industry. As these clubs strive to build strong brands to attract broadcasting and sponsorship deals, new businesses specializing in sports marketing and communications can find a niche market to support and assist these emerging clubs in establishing their presence on the world stage.

Thirdly, as the landscape of football evolves with the influx of Saudi investment, there may be shifts in revenue streams and fan engagement. This creates openings for new businesses to capitalize on emerging markets, tapping into the fanbases of these newly established clubs and exploring partnerships in broadcasting, merchandise, and fan experiences.

In conclusion, the Al-Hilal bid for Mbappé and the broader Saudi investment in soccer present a unique opportunity for new businesses to align themselves with the changing dynamics of the sport. By capitalizing on these developments, entrepreneurs and startups can position themselves strategically to contribute positively to the industry's growth and success in the future.

Article First Published at: https://www.cnbc.com/2023/07/25/mbapp-bid-the-latest-in-saudi-soccer-spending-spree.html

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