The World Cup, once viewed as the ultimate sporting event in the football calendar, is now viewed by some host countries as a bit of a poisoned chalice.
The men’s football World Cup will be held in Riyadh in 2034, after Saudi Arabia submitted the only bid to host the event.
The harsh reality is that hosting the World Cup costs a lot of money. And those costs are only increasing as organisers try to add more teams to the events so they can sell extra matches to broadcasters. Next year’s World Cup will see 104 games played. Qatar saw only 64 games. The number of participants has risen from 32 to 48.
Nonetheless, the World Cup should be a big deal for Saudi Arabia’s insurance sector, as becoming a sporting hub features highly in Vision 2030, encapsulating the nation’s ambitions to diversify away from dependence on oil.
The kingdom will also play host to football’s Asian Cup in 2027 and the Asian Winter Games in 2029.
The most obvious opportunity is designing and offering insurance cover for the plethora of infrastructure projects that will need to be undertaken to accommodate the influx of sports fans and teams alike.
These projects include eight new stadiums that will include a venue on the top of a cliff. Having so many new hubs will also put fresh demands on connectivity. The plan is to have the football games played in a total of 15 stadiums across five different cities.
Riyadh, the epicentre of much of this activity, is already seeing its airport get a serious make-over. This could have a spillover effect into the tourism sector overall.
The World Cup could represent a sizeable item on insurers’ revenue line – as protection for just about every risk imaginable picks up, from health to travel, cancellation or postponement of the event due to bad weather, fire, non-appearance of players or terror attacks.
When Qatar hosted the World Cup in 2022, the first time it had been held in the Arab world, six domestic insurers joined a National Insurance Consortium to provide adequate cover as per the requirements of FIFA, the governing body of the World Cup.
And Qatar found that it was not all plain sailing. According to Qatar Islamic Insurance Group group president and CEO Ali Ibrahim Al Abdulghani, “With the stadiums being built with state-of-the-art technologies to provide temperature control, it was not easy to convince our reinsurers. Most of the technology and facilities would be unique to FIFA Qatar 2022,” referring to the unique risks that this particular World Cup faced.
Saudi Arabia is not Qatar but nevertheless, there could be valuable lessons to be learned from the experience of three years ago.
At the time, S&P Global Ratings said, “We foresee a post-World Cup slowdown in economic activity in Qatar. Oversupply in the hospitality and real estate sectors could somewhat moderate their performance.”
Saudi Arabia is projecting the image of being more than capable of pulling it off in style. Here’s hoping. M
Paul McNamara
Editorial director
Middle East Insurance Review