(Bloomberg) -- Saudi Arabia was confirmed as host of the 2034 World Cup, marking the return of the world’s biggest sporting spectacle to the Gulf region for the second time in barely a decade and in a choice that’s already dogged by controversy.
For Crown Prince Mohammed bin Salman, it may be the biggest victory yet in his push to use sport as a way to lure tourists, build influence and improve the country’s image.
“This is huge for MBS and the Saudi state. Arguably the pinnacle of their sports strategy so far,” said Stanis Elsborg, head of Play the Game, a Denmark-based research body into ethical standards in sport. “But for MBS, it’s not just about hosting a tournament.”
Saudi Arabia is eight years into a multi-trillion dollar transformation agenda aimed at freeing the economy from its reliance on petrodollars. The plan includes creating dozens of new industries, while modernizing society and opening up to visitors.
The kingdom has invested heavily in sports as a means to advancing those initiatives, both abroad and at home, and hopes events like the World Cup will energize its young population.
But the Saudi bid to host the 2034 World Cup has been controversial from the start. Advocacy groups including Amnesty International have raised concerns over the use of exploited labor and a pair of US senators wanted the bid rejected due to Saudi Arabia’s poor human rights record.
US intelligence agencies consider MBS responsible for ordering the 2018 murder of Washington Post columnist Jamal Khashoggi, a royal-court-insider-turned-critic.
The kingdom wants the World Cup to distract from those issues, according to Elsborg.
“Let’s not ignore the darker side: this isn’t about the love of the game,” he said. “It’s about using sports to distract from their appalling human rights record and to secure global legitimacy.”
Saudi Arabia’s government didn’t respond to a request for comment.
Qatar, which held the first World Cup in the Middle East in 2022, faced similar criticisms that it was partaking in so-called sportswashing to direct attention away from its human rights record. However, the event was seen as a sporting success, raising the tiny peninsular country’s profile on the world stage.
Saudi Arabia is hoping for a bigger payback. MBS has built a relationship with FIFA President Gianni Infantino, who has long pitched the country as a potential World Cup venue. Saudi oil giant Aramco has become a key sponsor of FIFA events.
In the end, Saudi Arabia was the only bidder to host in 2034 after Australia dropped out, meaning its selection was all but certain ahead of FIFA’s final decision on Wednesday.
World Cup Stadiums
The timing of World Cup 2034 has yet to be decided, according to Saudi Arabia’s sports minister. Matches are set to be held in 15 different stadiums across five Saudi cities including Riyadh and Jeddah. Eleven of those will be entirely new.
Fresh construction and spending needs risk adding pressure to an economy already facing years of budget deficits, in part due to investments on projects already underway.
Saudi Arabia has projected a fiscal shortfall of about 2.8% of gross domestic product this year, and in every year through 2027. It hasn’t given guidance for a return to positive territory and has said running deficits are the trade-off for investing in growth in the non-oil sector.
“A deficit by design in a stable region between 2% and 3% is good for investing in the right economic sectors,” Faisal Al-Ibrahim, the minister of economy and planning said last month.
The kingdom has been become a frequent issuer of sovereign debt in a bid to plug the gap and plans to continue borrowing in 2025. The increased activity may push Saudi Arabia’s debt-to-GDP ratio to 35% by 2030, according to Moody’s. That’s still considerably lower than many countries.
“They’ve got plenty of capacity to finance it,” said Justin Alexander, director of Khalij Economics and an analyst for consultant GlobalSource Partners. “There may be times where they have to borrow a bit more or tighten belts in other places to continue through but it’s clearly a priority.”
Construction Concerns
World Cup construction is set to add to $1.3 trillion in real estate and infrastructure projects that have already been announced across the country since 2016. Saudi Arabia will also simultaneously be planning for two major sports championships in the next five years and the World Expo in 2030.
Migrants workers, the engine of Saudi Arabia’s construction boom, already face widespread labor abuses, making it a “near certainty” the 2034 event will be rife with rights violations, Human Rights Watch said.
A race to build enough new stadia in Qatar in the run up to 2022 led to safety shortcuts and the deaths of hundreds of migrant laborers, according to media reports and comments from government officials. That and many of the other worries that surrounded the selection of the tiny but natural gas-rich nation will arise for Saudi Arabia. 421763782
The Qatar event sparked anger from some club owners who said moving the games to winter would disrupt domestic leagues. The country’s attitude to homosexuality drew criticism from human-rights and LGBT activists who said the World Cup wouldn’t be open to all sports fans. Beer was banned at stadiums.
Trophy Moment
The tournament itself culminated in Argentina’s penalty-kick win over France that pundits say was one of the best World Cup final matches ever, and sealed Lionel Messi’s reputation as the greatest clutch footballer of his generation.
Images of Messi holding the Jules Rimet trophy aloft, dressed in a traditional black Arab bisht cape, which Qatar’s ruler Sheikh Tamim bin Hamad Al Thani had put on him moments earlier, went viral and provided a boon to the country’s reputation and soft-power.
Qatar’s tourism arrivals rose 58% year on year in 2023 after the World Cup and look set to reach a record in 2024. Saudi Arabia’s Prince Mohammed may be dreaming of the same fate.
The kingdom’s goal for 2030 is to have 150 million tourists a year, with 70 million of those people coming from abroad. The government has said it plans to spend almost $1 trillion on the tourism industry alone in the next decade in its push to become one of the world’s most visited places.
“Winning the bid sends a clear signal: Saudi Arabia is not only ready to be on the world stage but determined to redefine the region’s tourism narrative,” said Anita Mendiratta, special adviser to the secretary general at UN Tourism.
Hosting the World Cup may help Saudi Arabia draw in millions of new visitors and fresh revenue sources, serving the country’s broader diversification agenda.
Sign up for Bloomberg’s Business of Sports newsletter for the context you need on the collision of power, money and sports, from the latest deals to the newest stakeholders. Delivered weekly.
--With assistance from Fahad Abuljadayel.
(Updates with uncertainty on timing in 14th paragraph)
©2024 Bloomberg L.P.