WEEKEND READ: Status symbols

ft.com
As Manchester United kicked off their defence of the English Premiership this month, a small group of Saudis was enjoying the very best of VIP treatment at the football club's Old Trafford ground. Amid the fanfare came the announcement that Saudi Telecom Company and United had reached a five-year marketing deal reportedly worth about £10 million.

For STC, the agreement – believed to be United's largest apart from shirt sponsorship – gives it the rights to distribute match highlights, ringtones and club news through mobile phones. The deal was the latest example of how companies and governments throughout the oil-rich Gulf are turning to high-level sports as a means to reach domestic and global audiences.

Millions of dollars are being poured into hosting international events and filling prize money purses; billions more are being invested in sports infrastructure. The Gulf states and Jordan are spending almost $US12 billion on motor sport and motor sport-related business alone, according to statistics compiled for the Financial Times this year by KHP consultancy group.

It is all a long way from the traditional Arab sporting pursuits of falconry and horse and camel racing. Gulf states could only muster a single medal at the Olympics between them – and that by a Moroccan running under Bahraini colours. But sport is increasingly seen in the region as a means to create internationally recognised cities.

By tapping into their oil wealth, Gulf states are attracting prestigious events that command global television audiences. Ultimately, say sports consultants, it is about selling their brands worldwide and bolstering strategies to develop tourism and reduce dependence on hydrocarbons. "They are not going into this blind – they are very professional and looking to use the best western consultants available,” says Nick Massey, chief executive for Europe and Middle East at Octagon, the sports consultancy.

International sports events in the Gulf now range from football – Abu Dhabi will host the Fifa Club World Cup in 2009 – to rugby sevens. Bahrain has hosted a Formula One Grand Prix since 2004 and Abu Dhabi will hold its first race next year as it spends about $40 billion on the development of an island that will be home to the racing circuit and a Ferrari theme park.

At the same time, money is flowing out of the region into sports and sports-related businesses. Deals include the acquisition of a five per cent stake in Ferrari by Mubadala, an Abu Dhabi state investment vehicle, and a 30 per cent holding in McLaren by Mumtalakat, Bahrain's state holding company. Leisurecorp, established by Dubai World in 2006, has a portfolio ranging from investments in a South African golf complex to a stake in a ski resort near Aspen.

Added to the mix are a gaggle of sponsorship tie-ups. Etihad, Abu Dhabi's young airline, has sponsorship packages with Chelsea, the English Premiership football club, London's Harlequins rugby club, an Irish hurling championship and Ferrari. Abu Dhabi's tourism authority sponsors the World Rally Championship. Emirates, which has been in the game longer than the others, is a leading sponsor of London's Arsenal football club, whose new stadium bears the airline's name.

On home turf, Dubai, Qatar and Abu Dhabi host European tour golf tournaments. In November 2009, the world's top golfers will tee off at the Dubai World Championship, a new event that will be the last round of the European Tour and offer the largest prize money – $10 million – in the sport. Such rewards have lured top names: Tiger Woods was rumoured to have received a $2 million appearance fee to compete in the Dubai Desert Classic.

Dubai is already home to the richest horse race, the Dubai World Cup, which has a $6 million purse for the winner. It was also the source of a failed bid to buy Liverpool football club by Dubai International Capital, a government controlled private equity group owned by Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum.

Qatar hosts a MotoGP and a Qatari official was quoted this year as saying its circuit would eventually be upgraded to F1 standards. It has spent $522 million on its Aspire Zone – a complex of stadia and other facilities – and hosted the Asian Games in 2006. The economic benefits, consultants say, derive from the thousands of visitors that can be lured to a world-class event and the money they spend in hotels, restaurants and retail outlets. Research carried out for Mumtalakat, which owns the Bahrain International Circuit, estimated the economic impact of the F1 race in the tiny emirate at $548 million in 2007, up 40 per cent on the previous year.

"The country becomes the focal point of world sport that one weekend,” says Martin Whitaker, chief executive at the Bahrain International Circuit. "Five years ago we had to help journalists to understand this was a safe place.”

Dubai, which has less oil than its neighbours and was quicker to diversify its economy, stole a march on other Gulf states in terms of hosting big events. It is constructing a highly ambitious sports city that will boast a 60,000-seater all-purpose stadium, a 25,000 capacity cricket stadium, as well as hockey and basketball stadia, surrounded by residential and commercial real estate.

The city will be the new home of the International Cricket Council, which moved to the emirate after 96 years at Lord's in north London, lured by a tax-free environment and a cricket academy in the sports city. "Dubai had the right package,” says James Fitzgerald, ICC spokesman, adding that it beat off competition from the likes of Kuala Lumpur, Singapore, Monaco and Dublin to host the council.

U Balasubramaniam, chief executive of Dubai Sports City, says sports and leisure is a natural extension of the emirate's existing tourism industry. "It's a win-win situation because for Dubai you have the facilities done, and as far as the stakeholders are concerned they make money out of the residential and commercial property,” he says.

But developing local sports among tiny populations in countries where summer temperatures soar to the high 40s will not be easy. While Dubai's Sheikh Mohammed may be an avid equestrian, many young Gulf citizens today spend their time in air-conditioned malls or coffee shops and have a penchant for fast food. Obesity is a big concern. "The Emirati youth has little interest in sport compared to young people in other countries, with the exception of football,” Ibrahim Abdul Malik, the secretary general of the UAE's Olympic Committee, complained to a UAE newspaper. "Emiratis have a soft and easy lifestyle. But sport is not easy.”

Filling stadiums and ensuring the various states do not saturate the market will also be a test. "From afar it looks like a kind of ‘Build it and they will come' model, but they won't come unless you invest and make them come,” says Mr Massey. "And if you effectively build over-capacity it's going to be very difficult.”