Saudi Premier League contracts: Greater player incentives
Financial muscle has always played a pivotal role in shaping the football landscape., From taking Chelsea from relative obscurity to Champions League winners, to the meteoric rise of the MLS, money has always driven football. As we dive into the 21st century, a new chapter is being written with the rise of big money in football. The Saudi Premier League (SPL) has begun to attract superstars such as Ronaldo and Neymar. Following in the footsteps of historical mega-deals of the Chinese league like Brazilian wonder kid Oscar transferring to Shanghai SIPG for the most expensive ever transfer the Saudi league is attempting to make their mark on football through vast investment.
But in the case of the SPL it’s more than just the monetary wages attached to the contracts, it’s the broader players rights under the contracts themselves. The major investment pouring into the league and teams within the league is allowing for players to have more control over their image, have better performance based reward clauses and pay less tax.
Neymar Jr and Christiano Ronaldo are two of the biggest names in modern football, with the latter being arguably the greatest player of all time. They also both currently play in the Saudi League. Ronaldo was one of the first to join the league for a reported $200M per year. Neymar has recently signed for a record breaking $300M with an additional $700M in commercial deals. This signing is even more significant as it goes against the norm of older players moving to the league for a pre-retirement cash boost as the Brazilian star is in the prime of his career at 31 years old. However, the league failed to attract the signature of French star Kylian Mbappe who turned down a reported billion-dollar deal.
Other notable players that have recently joined the league include
Karim Benzema (Real Madrid)
N’Golo Kante (Chelsea)
Edouard Mendy (Chelsea)
Riyad Mahrez (Manchester City)
Jordan Henderson (Liverpool)
Steven Gerrard in a coaching position (Liverpool)
Currently, the quality of football or notoriety and acclaim of winning trophies in the SPL are not massive draws to players looking to make the move to the Gulf nation. So, what is it? Simply stating players earn more is oversimplifying the situation. The truth is, players are earning more, in more ways and with more control.
Central to the rise of the allure of the SPL moves are the contractual clauses that accompany these deals. These clauses are often just as enticing as the initial wages and can include cars, homes and almost always tax exemptions. These clauses can be broken into the following 3 categories:
Salary and Compensation Clauses: These clauses outline the player's basic salary, signing-on bonuses, performance-related bonuses, and any other financial incentives. This is also where the contract will stipulate the players playing in the Saudi League will pay little to no income tax.
Performance-Based Clauses: These clauses tie a player's compensation to their on-field performance. This can include bonuses for scoring goals, assists, appearances, clean sheets (for goalkeepers), or achieving specific team or individual objectives. Neymar Jr has a clause in his contract that stipulates he will receive a $100,000 bonus for every match his team wins. This is where clauses like the houses and cars will come in to play.
Image Rights and Commercial Obligations: Another benefit of joining the Saudi League is players can retain complete control of their image. Contracts may detail how a player's image rights will be managed and used by the club and player and in other leagues clubs will stipulate far more power in their favour. Players such as Neymar and Ronaldo will retain full control of their image and have outlined per post fees for promotional social media activity of over $500,000.
The recent surge in activity moves in the SPL has resulted from Saudi Arabia's sovereign wealth fund, Public Investment Fund (PIF), has becoming a significant player in the league. After engaging in a diverse range of sporting investments such as acquiring stakes in Newcastle United to hosting high-profile events like the Dakar Rally and the LIV golf tour. Saudi Arabia's influence in sports is growing exponentially internationally, now the focus has become internal.
So, what exactly is the PIF? The Public Investment Fund is a privately run sovereign wealth fund which invests on behalf of the Kingdom of Saudi Arabia, who since 2018 have been operating with the goal of diversifying the kingdoms economy beyond fossil fuels. This explains both the how and why of such major investment in the SPL.
The relationship between the Saudi government and the PIF is that of a parent entity and its subsidiary. The PIF operates under the oversight and guidance of the Saudi government, particularly the Ministry of Finance. While the PIF operates with a certain level of independence in its investment decisions, it is ultimately accountable to the government.
The PIF's activities and investments are aligned with the strategic goals and priorities of the Saudi government. Its main investments are in projects and companies that are considered vital for the economic transformation of Saudi Arabia, such as initiatives related to technology, infrastructure, tourism, entertainment, and various other sectors. This close alignment with the government's vision allows the PIF to play a crucial role in advancing Saudi Arabia's Vision 2030 plan, which aims to reduce the country's dependence on oil. Additionally, an association with elite sport assists Saudi Arabia in rejuvenating its perceived poor global image in regards to human rights.
In the dynamic world of sports law and contract, the rise of big money Saudi moves echoes the historical path carved by many other major leagues. These transactions, while transforming the industry, also prompt us to examine the delicate balance between the law and the essence of sports. As Saudi Arabia's influence continues to grow, stakeholders in the sports ecosystem must navigate the intricate clauses and contractual frameworks that underpin these investments and make deals too good for players to miss. As the lines between sports and business blur, the global sports community faces the challenge of safeguarding the spirit of competition while embracing the financial opportunities that Saudi investments present.