Spanish football brands Real Madrid and Barcelona in top league for Gulf investments

With big investments and bigger ambitions, a number of the region’s companies will be keenly following Spanish football’s top teams as La Liga kicks off.

Qatar Airways paid the current La Liga and Champions League winners FC Barcelona more than Dh130 million last season in sponsorship alone. Kirill Kudryavtsev / AFP
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As Spain’s La Liga kicks off, starting tonight with Malaga against Sevilla, some of the Arabian Gulf’s top business executives will be among millions of football fans following the games.

Much is at stake for regional corporations during the new season, with some of the world’s best known – and richest – football clubs in action.

Qatar Airways paid the current La Liga and Champions League winners FC Barcelona more than €32 million (Dh130m) last season in sponsorship alone.

And Real Madrid have tie-ups with both Abu Dhabi's International Petroleum Investment Company (Ipic) and Dubai's Emirates.

With its historical connection to the Arab world, the Iberian Peninsula is no stranger to investment inflows from the Gulf.

In June the Spanish department store chain El Corte Inglés sold a stake worth US$1.1 billion to Sheikh Hamad bin Jassim bin Jaber Al Thani, the former prime minister of Qatar.

Other Gulf investments in Spain span sectors including energy – Ipic owns the Spanish multinational oil and gas company Cepsa, utilities (Qatar Holding bought a stake in Iberdrola in 2011) and banking (Qatar owns a stake in Santander's Brazilian arm).

But it is Spanish sport and, in particular, football that attracts the most high-profile investments from the Gulf. And there is a lot still to play for in that arena, experts say.

The branding expert John Brash, the founder and chief executive of Brash Brands, which has an office in Dubai, says the top-tier Spanish football clubs such as Real Madrid and Barcelona are a natural fit for many Gulf companies.

“Arguably these are the biggest club brands in world football and certainly two of the best teams in Europe. So for companies here – especially our airlines, where global expansion is a huge priority – Spanish clubs tick all the boxes: they’re the best; they’re passionately supported; and they’re global names. Our brands therefore gain massively from these clubs representing them.

“For the clubs themselves, it’s probably more prosaic: whoever offers the most cash generally gets the deal … Although you’d like to think some of those attributes work in reverse too and that the clubs also want to be associated with the biggest and best.”

Marwan Abu-Ghanem, a Dubai PR professional and the author of the football book Kullul-Arqaam (Arabic for "All Records"), says money from the UAE and Qatar has boosted the player-transfer market in Spain.

“Spain has been the stage for the most expensive transfers in the football world, securing eight of the top 10 most expensive transfer fees of all time,” he says. “So it is a win-win situation that has clearly been reflected in the recent achievements by Spanish teams.”

Aside from pumping tens of millions into Spanish football sponsorships, Gulf investors are looking to increase their exposure to the wider sports sector.

The Qatar-owned beIN Sports network hopes to boost the distribution of its Spanish channel through a potential deal with Telefónica, one of the largest telecommunications companies in the world in terms of market capitalisation and number of customers.

It is also tipped to bid for a share of the domestic rights to broadcast La Liga games.

Yet analysts say there is some potential for a backlash against the growing Gulf investment in Spain.

In France, Canal+ sued beIN Sports for unfair competition, although it eventually lost the case.

François Godard, a media analyst at Enders Analysis, said beIN Sports was being “cautious” in Spain but he added that some kind of resentment was possible, despite the network “playing by the rules”.

“The Qatari investments in France have provoked a few political reactions … Canal+ has played this card, saying ‘well, we are competing against these people who are full of money and they don’t care whether they lose money’,” says Mr Godard.

“In Spain I would expect no major backlash but I think the risk is always there of some competitor leveraging the Qatar ownership of beIN Sport to gain short term public attention.”

That said, Qatar is not looking for “domination” in Spanish football, despite targeting a long-term investment, Mr Godard adds.

“It is a very friendly investor. And I don’t think existing players in Spain can see that as threatening,” he says.

Yet not all Gulf investments in Spanish football have run smoothly.

The Qatari businessman Abdullah bin Nasser Al Thani in 2010 bought the Malaga CF team for a reported €36m.

But two years later the Spanish club was temporarily banned from the Champions League and Europa League for failing to pay players’ wages and tax bills on time.

And, in January, Josep Maria Bartomeu, the president of FC Barcelona, said the Spanish club was considering ending its shirt-sponsorship deal with Qatar because of concerns over “social issues” in the Gulf state.

James Dorsey, the author of a blog and related book entitled The Turbulent World of Middle East Soccer, says Gulf investments in Spanish football mark real business opportunities. But there is also an element of such investments helping put a positive spin on states such as Qatar in the West.

“If you put money on the table that’s real, by definition. There’s a trophy element to it, but I think that’s too simple,” Mr Dorsey says. “It’s about branding, it’s about soft power.”

Mr Dorsey also points to the possible impact on Qatar’s international sports holdings should the Gulf state be stripped of the right to host the 2022 World Cup, amid allegations of corruption at football’s governing body Fifa. Qatar officials have denied any wrongdoing.

“What will the mood be if the investigations in Switzerland and the US turn against Qatar? This is not without risk,” says Mr Dorsey.

Mr Godard says that, should Qatar lose the right to host the World Cup, it would be likely that beIN Sports would get less backing from the Gulf state. But it would not be completely scrapped as it has become a valid business venture, he adds.

“I don’t think they would scrap everything, because this thing has taken a rationale of its own,” he says.

“There is some real business prospect there.”

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