The kingdom of Saudi Arabia has been investing in soccer and could have an effect on Europe and the U.S. according to experts.
A two-and-a-half-year contract worth up to 200 million euros would make the 37 year old the highest-paid footballer in history and the highest-paid athlete in the world, according to reports.
The total staff wage bill for roughly half of the clubs in the English premier league will be more than the earnings of one player. The former Real Madrid, Manchester United and Juventus star claimed that he was a unique player.
After giving an interview in which he criticized the club and its manager, he lost his contract with Manchester United.
As Saudi Arabia reportedly readies a potential joint bid to stage the World Cup, the Portuguese forward has moved.
The Financial Times reported in October that the Saudi PIF had committed more than $2 billion to sponsorship deals over the first eight months of the next decade.
An author and soccer finance expert told CNBC on Thursday that the signing ofRonaldo by Al-Nassr was more of a marketing exercise than an attempt to compete with the major European leagues.
If you take a look at the social media following of someone who is famous, it is much more than that of a football club.
Saudi Arabia has a young population that will be attracted by him. There are economic benefits, political benefits, and societal benefits.
The Saudi PIF's takeover ofNewcastle United was met with criticism because of the country's poor human rights record.
A group called NUFC Fans Against Sportswashing sprang up in protest at the takeover, but having watched their club endure a long spell of mediocrity, many fans cheered the investment in the hope of becoming a competitive force in England and beyond.
The club sits third in the league table, sandwiched between City and United, just 15 months after the deal was completed.
The PIF is independent from the Saudi government and the Saudi officials have consistently denied allegations of sportswashing.
The Saudi economic project is underpinned by PIF. The annual financial statements show statements about the progress of the PIF.
80% of the club is owned by the PIF, with the other 20% split between the two partners. The PIF has been contacted about something.
The Abu Dhabi United Group's ownership of Manchester City and Paris Saint-Germain has caused controversy.
Saudi Arabia could look to expand its soccer portfolio in one of two ways, having seen other state-sponsored takeovers over the past decade.
The City Football Group and a multi- club ownership model could be a way for PIF to follow in the footsteps of the United Arab Emirates.
The ADUG's City Football Group now owns nine other clubs across four continents with consistent branding and availability of resources.
It is quite successful because you can have continuity in terms of culture and philosophy at clubs, you can transfer players around to help their development, and then you can sell them at higher prices.
Alternatively, given the number of high net worth individuals in Saudi Arabia likely to be interested, he suggested other high-profile clubs could come into Riyadh's sights.
Both Manchester United andLiverpool, arguably the two biggest clubs in England in terms of global profile, have publicly declared that they are open to investment.
He said that the Saudis saw the positive response from the fans of Newcastle and that there were two clubs that were publicly up for investment.
It is attractive to invest in sports. You won't necessarily get a substantial return on your investment financially, given the high prices they are likely to have to go and pay for a club of that stature, but the non-financial return on investment as we've seen at both the Etihad and Paris Saint-Germain
The credit risk profiles of European and North American clubs could be at risk if the Saudi Pro League moves forward with its plans.
Increasing individual salaries driven by foreign demand could decrease squad quality over time. Michael Goldberg, Senior Vice President for Sports Finance, said that this could have a long-term impact on on-pitch results, brand values, and viewers for teams that are unable to grow revenue and invest in their squad.
Saudi investment has disrupted professional golf in the form of LIV Golf, a competition that used Riyadh's deep pockets to draw some of the game's biggest names.
Goldberg suggested that the quality of play in Saudi Arabia's team sports league wouldn't be good enough to attract a large amount of fans.
The Saudi model poses more of a threat to the U.S. since Major League Soccer has a long-running strategy of attracting older star players. Three players whose compensation package is not included in the team's salary cap are allowed to be signed by each club.
Lorenzo Insigne became the highest paid player in MLS history when he joined Toronto FC from Napoli in 2022. This is not as big of a deal as the one signed byRonaldo.
The MLS business model is threatened by the fact that the SPL can outpay it. While the overall quality of play in the MLS has been increasing rapidly through investment in player development, coaching, and designated players, the quality gap between it and the SPL is less than that of the European leagues.
The financial might and willingness to target star players from European leagues could negatively impact the credit profiles of North American clubs.
Saudi investment will pose a greater immediate risk to individual sports such as golf, tennis, and MMA.
In recent decades, European clubs have increased transfer fees and player salaries in order to remain competitive.
Goldberg suggested that Saudi investment in individual players could propel player salaries higher, but European soccer body UEFA recently introduced rules stipulating that no club can spend more than 10% of its yearly revenues on wages, transfers, and agent fees in the next five years. The limit will be reduced to 70% in 25 years' time.
European clubs' wage bills will be capped if revenues don't grow. Goldberg said that increased individual player salaries could lead to reduced squad quality and a competitive disadvantage.
Negative impact on on- pitch results, brand values, and viewership would affect European football clubs credit profiles, and clubs that could not grow revenue and invest in their squad would be most exposed.
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