The Geopolitical Rationale of State Ownership in Football

State ownership of football clubs - why does it matter?

Over the past century and a half, association football has become a major form of leisure, permitting individuals to disconnect from the realities of the economy, politics, and social division. As the popularity of the sport has grown, so has the financial system surrounding it: for instance, the 2022 FIFA World Cup generated over $7.5 billion, a record for the month-long event, and almost 200 nations attempted to qualify. Simultaneously, the past two decades have seen an increasing involvement of state-sponsored corporations in the acquisition of clubs, the organization of events, and the shaping of local narratives on an international scale. Against this backdrop, the following question comes to mind: why does state ownership matter?

Looking to the past – panem et circenses

State involvement in sporting events is certainly not a novelty, especially when considering sports more broadly. After all, the ancient Olympic Games and gladiatorial games, organized in Ancient Greece and Rome, respectively, date back several millennia. While the Olympic Games were primarily a celebration of athleticism, gladiatorial games soon devolved into a vessel for emperors to achieve political goals, both distracting the populace while aggrandizing their own image. Moving back to football, the use of bread and games as a way to promote a form of government has taken place since the sport’s infancy, with fascist Italy hosting the 1934 FIFA World Cup and Argentina hosting in 1978 under Videla, to name two examples. Thus, while the organization of these global events has been taking place for decades, the trend of state-led involvement in the day-to-day running of football clubs is relatively recent.

The Beautiful Game - from chariots to chairmen

The moment when state involvement moved to state ownership can be reflected in Roman Abramovich’s 2003 acquisition of Chelsea Football Club. The Russian oligarch, with close ties to the Kremlin under both Yeltsin and Putin, started an era of open spending and high achieving, revolutionising the amounts of capital flowing into the sport. Since then, British clubs Manchester City and Newcastle United have been taken over by sovereign wealth funds from the UAE and Saudi Arabia, respectively. Similarly, French club Paris Saint Germain has been owned by the Qatari royal family since 2011. In Italy, Milan-based giants Inter and Milan were both owned by Chinese investors during the 2010s, as part of a larger effort of the East Asian state to develop its Football Excellence Program. Starting in the early 2010s, previously uncompetitive football leagues with either state ownership or heavy state subsidies have also managed to attract key talent from Europe, with the most pertinent examples being in China and Saudi Arabia.

Why does it matter?

On the face of it, the relevance of this phenomenon may seem to be limited to sports fans around the globe. However, with an estimated 3.5 billion worldwide football fans, the sport provides a unique showcase for states looking to promote their interests to a wide audience, including by advertising future events and expanding their geopolitical interests.

1.         Promotion of future events

When the free spending Qatari Investment Authority took charge of PSG in 2011 and revolutionised French football, it had its sights firmly set on a date eleven years into the future: the 2022 FIFA World Cup. An oil-rich nation that gained its independence from the UK in 1971, it began forging diplomatic alliances with Western countries in the 1990s, mainly due to natural gas supply agreements. However, it was little-known on the international stage, and a tournament that draws in the eyes of around half of the world’s population provided the ideal springboard for the country to present itself on its own terms. In preparation for the event, Qatar developed new technology such as a public transportation system, new smart stadiums and even a new airport terminal to show its preparedness to host a large number of tourists during and after the tournament. The strategy to increase its standing in the region was partially successful, with Qatar playing a prominent role in the negotiation of a ceasefire in both the Russian invasion of Ukraine and the Gaza War. Additionally, the number of tourists has in the country has doubled from around 2.5 million in 2022 to over 5 in 2024, while the event provided momentum for the state to grow its non-hydrocarbon sectors. Nevertheless, the Qatari government also drew significant criticism from human rights advocacy groups for the poor conditions it subjected its workers to while building the necessary infrastructure, resulting in thousands of casualties.

Far from standing and watching Qatar’s success, its geopolitical rivals of the Gulf have similarly used their successful football clubs to promote events that transcend sport. For the UAE, this was done by organizing Expo 2020, which they promoted through their highly successful club Manchester City. The year-long event drew over 24 million visitors, representing around 2.5 times the population of the country and showing the UAE’s innovative prowess to a global audience. An immediate benefit of the event has been its impact on the UAE’s standing as a reliable business partner, which has led to an estimated $30 billion in foreign direct investment, mostly in the technology sector.  The most powerful Gulf country, Saudi Arabia, will host the 2034 World Cup. While the planned event is still far into the future, the state’s club Newcastle United will likely play a key role in promoting the event. Furthermore, the heavy state-led investment into the Saudi Pro League, including through direct ownership of several of its clubs, is an attempt to bolster the league’s legitimacy in the run-up to the big tournament. This process is exemplified by the signing of Cristiano Ronaldo, a global superstar, who has been an ambassador for Saudi Arabia’s Vision 2030.

2.         Infrastructure projects

Another incentive for state ownership is to build the political support for large-scale infrastructure projects. The aforementioned Vision 2030, for example, is centred around diversification of the country’s oil-dependent economy by, inter alia, increasing tourism and further urbanizing. This includes NEOM, a planned megacity built with cutting-edge technology estimated to cost around $8.8 trillion. Within it, one of the main projects in the works is the infamous ‘The Line’ smart city, which is intended to have no streets, cars or carbon emissions. Assuming everything goes to plan, the city will host several matches of the 2034 World Cup in a stadium owned and operated by NEOM SC, a state-owned first division football club. With the project having drawn criticism for being overly ambitious, impractical to live in, and likely to require migrant labour working in extremely harsh conditions in the desert, the success of the football league and the work of its ambassadors is key in garnering popular support for the initiative. By attracting top talent, the Saudi government could showcase its competence, which could bolster the legitimacy of the megaproject. However, the success of the project will also hinge on the state’s relationship with Israel, given that it has the right to freely navigate the Strait of Tiran, where the NEOM project is supposed to be built. Thus, any political capital that Saudi is able to build through its sporting endeavours may make these concessions easier in the near future.

3.         Integration into the Western economy

Looking at football clubs as assets in their country of origin allows us to further understand the incentives of state actors to invest. As part of their diversification strategy, the Saudi Public Investment Fund (PIF) has acquired a significant stake in multinationals such as Disney, Boeing and the Citigroup. More recently, they have invested heavily into sport by acquiring Newcastle United. The rationale behind this investment stems from wanting to further integrate into the economy of a key ally, the United Kingdom. Their partnership, based primarily on security and defence, would be enhanced by injecting capital into an area of the UK that has historically not been very wealthy. Over time, the PIF’s presence could lead to the creation of employment opportunities, both directly related to the running of the club and in the area and to the creation of new local infrastructure projects, such as the Strawberry Place Development, which benefit the local population. Thus, the benefit is twofold: the PIF benefits by investing in an area with untapped potential, while the local population benefits from the infrastructure and the visibility gained by being a successful football club. Similarly, the Qatari government has invested into key sectors of the French economy including AI and energy, including a $10 billion investment between 2024 and 2030. The Emirati government, owner of Manchester City, has invested in housing developments in the Manchester area and provided funding to British universities. These examples show how the financial outlays in the football club have a strategic value, serving to bolster the country’s reputation in the eyes of local residents and increasing economic partnerships within the host country.

4.         Sportswashing and tipping the scales

However, these actions have garnered significant criticism. On the sporting side, rival clubs and fans have expressed their discontent with such large sums of state-sanctioned capital flowing into the league, since it makes it more difficult to compete. Humanitarian organizations have also been highly critical of the choices of Gulf host countries due to their human rights record, in particular when it comes to the treatment of women and migrants. Success on the pitch, the organization of glamorous events and favourable media coverage has led to the focus not generally being placed on these issues, a process known as ‘sportswashing’. In a world increasingly concerned with ethics when forging financial and political partnerships, it is clear to see how this would be a top priority of these states and justify such large expenditures. The winning bids have also been subject to allegations of corruption from FIFA and Expo officials in order to secure partnerships with these wealthy states, and in 2015 several high-level FIFA officials were forced to resign as a result. Finally, in recent years there has been pushback from regulators concerned about state ownership of a key social and financial asset, as seen during the Newcastle United takeover process and more recently when a Qatari consortium attempted to buy Manchester United.

In sum, state ownership of football clubs has been steadily increasing over the past two decades. While seeming like an initially large outlay of capital for little immediate return, success on the football pitch leads to increased visibility, both locally and abroad. Furthermore, investing in a foreign country allows for deeper partnerships to be forged, increasing their economic interdependence, while also being an effective showcase for key events and infrastructure projects that by far transcend sports. While there are drawbacks such as the potential ulterior motives, social issues and corruption, there have been some liberalisation reforms, notably in Saudi Arabia and the UAE. As for the future, it is likely that as clubs struggle to compete financially, their fans will see state ownership as an easy fix, increasing the demand for more petrodollars.