Developing a winning mentality

Millions of dollars are pouring into sports infrastructure in the Middle East. Can staging high-level sporting events – and attracting international superstars to compete – provide the impetus needed to launch the region as a global superpower?

“The success of the last two Grand Prix events has done much to encourage the business community, not just in Bahrain, but around the Gulf”
-Martin Whitaker, CEO of the Bahrain International Circuit

Something is happening out in the desert. Countries once focused on the economic opportunities presented by the region’s oil and gas reserves have now hit upon a way to strike gold in fields of a different sort – those of international sports. And make no mistake: the sports business is big business. Not only do such events bring in increased foreign money in terms of sponsorship and the tourist trade, they also serve to bring the region to the attention of a whole new audience and are helping to establish the Middle East as a go-to destination for sports of every kind. As a branding exercise, staging such events is a major coup.

No wonder local leaders are pouring millions of dollars into developing the infrastructure to support such high-profile tournaments. Dubai already plays host to a number of prestigious sporting events, such as golf’s Dubai Desert Classic, horseracing’s Dubai World Cup – the richest purse in international racing – and the Barclays Dubai Duty Free Tennis Championships, to name just a few. Qatar recently played host to the Asian Games in 2006 and narrowly missed out on making the final cut for the 2016 Olympics; not to be outdone, the country is now considering an audacious bid for the 2018 football world cup instead. And Bahrain is widely credited with bringing the lucrative Formula One roadshow to the region – something for which Abu Dhabi, currently constructing the world’s largest permanent Formula One circuit (rumoured to cost in the region of US1 billion) in readiness for hosting its own Grand Prix, can certainly be thankful for.

“We want to establish Doha as a sports hub for the Middle East,” claims the Chair of Doha’s recent Olympic bid Hassan Ali Bin Ali, echoing a cry heard across the region as countries compete to attract the investment dollars and the TV audiences that will help play a major part in raising the profile of the Gulf region. “The vision is to bring sports to Dubai,” agrees Abdullah bin Suwaidan, Deputy Director of Dubai’s Tourism Department. “After all, what better way to get your name out as a brand than by showcasing your tiny country to hundreds of millions of viewers around the globe?”

Indeed, the business of hosting sports is proving so popular that entire cities are springing up out of the sand to cater for the increased demand. Take the US$8 billion Dubai Sports City development, for example, which claims to be the world’s first purpose-built sports metropolis. Set on 50 million square feet of land within the Dubailand development, it will feature four world-class stadiums, be the venue for Ernie Els’ inaugural golf course design in the Middle East, and host the first purpose-built Manchester United Soccer Schools facility in the world as well as the International Cricket Council’s own Global Cricket Academy, a David Lloyd Tennis Academy and the Butch Harmon School of Golf. In addition to the sporting facilities, Dubai Sports City will also boast all of the residential and commercial developments expected in a purpose-built city, including international schools, world-class medical facilities, hotels and leisure opportunities.

“Sport today is a multi-trillion dollar business, not only in terms of sponsorship, but also in terms of viewers,” explains U Balasubramaniam, Chief Executive of the development. “One of the great attractions of hosting such events is the increased tourism they bring into the region. I remember the first year Dubai hosted the international Rugby Sevens tournament, it only attracted around 7000 spectators; today, it brings in something like 50,000. People come from all over the world and make space in their calendars to come and watch this great spectacle. The same thing happens with tennis, and golf is another good example – over the five-day period of the Dubai Dessert Classic, we had something like 70,000 attend the event. The hotels benefit from it, the restaurants and other facilities benefit from it, tour operators benefit from it – there’s an elemental increase to the economic growth of Dubai through holding such events.”

Economic engine
And this is no short-term gold rush, either. Many believe the revenues generated in terms of increased tourism can provide a significant engine of economic growth for a region increasingly looking to diversify away from dependence on oil and gas. As such, considerable thought is going in to how to make such ventures sustainable in the long-term. “We want to create something that is active and robust the whole year round, not just for specific tournaments or events,” confirms Balasubramaniam. “As a result we’ve integrated our facilities within a living, thriving city to make sure they are utilised not only when the international events are being hosted, but also at other times of the year too.”

Hassan believes Qatar is taking a similar path. “What we want to do is really encourage our youth to take up sports, to concentrate on and develop their talent, and that will give us athletes from within Qatar and from within the region as a whole – which in turn will stimulate further interest in and growth of the sector,” he says, claiming that Doha’s recently rebranded Aspire Zone – formerly the Khalifa Sports City – plays an important socio-economic role. “It is not just a world-class sports facility for big tournaments. It is a place for people to have fun whether they want to go for a jog, have a picnic, enjoy a fashion show, get entertained by a band or see top class athletes in action. It also has a sporting academy to bring through the next generation of local talent.”

It’s all part of the bigger picture – one that uses the raised global profile generated by sport as a springboard for socio-economic transformation. “Our visionary Emir, His Highness Sheikh Hamad Bin Khalifa, has sent the country on a monumental modernisation programme to become a role model for economic, social and political transformation in the region,” explains Hassan. “We have a plan for our infrastructure, our health, our education, and we are going to go ahead with it even though we have been unsuccessful in our bid to host the Olympics. Sporting events are a great way of raising the profile of the region and accelerating that development.”

There’s certainly no shortage of money available to help things move in the right direction. Emirates Airlines has seen its global sports marketing budget mushroom from US$6 million in 1999 to US$100 million in 2008, and Dubai Duty Free has been upping its sports sponsorship for years and in 2007 spent about US$17 million on tennis, golf and horseracing. Elsewhere, British bank Barclays has splurged US$9 million to become title sponsor of the renamed Barclays Dubai Duty Free Tennis Championships through 2010 – its biggest such deal in the region – while watchmaker Omega and CNN have both been co-sponsors of the Dubai Desert Classic golf tournament since 2004.

Such companies know that the eyes of the world are watching, and for the local economies this increased visibility also brings with it the promise of an increased influx of foreign investment as businesses witness firsthand the many benefits the region has to offer. “These events will show our culture to the wider world, and show that we are part of that wider world,” says Hassan. “They will show modern states bringing together people of all different religions, beliefs and backgrounds, creating dialogue, understanding and hope for the region. The opportunities are huge.”

Full throttle
For instance, when F1 supremo Bernie Ecclestone awarded the Best Organised Grand Prix trophy to Bahrain International Circuit a few years back, his words were telling. “The great thing about doing business in Bahrain,” he said, “is that nothing is too much trouble.” It’s a perception that Martin Whitaker, CEO of the Bahrain International Circuit and one of the key figures in bringing Formula One to the region, has worked hard to reinforce. “Our Grand Prix is known throughout the world as the friendly race,” he says, backing his statement up with a confident smile. “Prior to the first race, the perception of many involved within the sport as to what the Middle East had to offer was unclear. However, the exponential growth of the race and the sell-out crowds and corporate lounges in the past two years has underlined the transformation that has occurred. Bahrain is now seen as a must-attend venue for many chairmen, CEOs, managing directors and corporate guests due almost entirely to the ease of access and the ability to do business in the country.”

Indeed, hosting the Formula One Grand Prix has done much to promote the diverse range of business and leisure opportunities that exists within Bahrain and across the region as a whole. Formula One’s TV figures make the Gulf Air Bahrain Grand Prix the focal point of the sporting world for the weekend of the race, while a regular place on the international calendar ensures that the kingdom is part of an exclusive club of countries that stage the largest annual sporting event in the world. “A new long-term contract up to the end of the next decade ensures that the race will continue to be a catalyst for building awareness, while the economic impact from events of this nature are increasing year-on-year,” confirms Whitaker. “In 2007, the value of the Gulf Air Bahrain Grand Prix in terms of direct and in-direct economic impact was US$548 million, while the V8 Supercars Championship in the same year delivered almost US$85 million.”

Clearly, business is booming. During 2007 alone, Whitaker’s team organised 441 revenue-generating events and a further 120 community and charitable events. “The circuit is just a catalyst – a showcase, if you like – for people to get excited about the development of many new business ventures and developments such as the Bahrain Financial Harbour, Bahrain Bay and the new World Trade Centre,” says Whitaker. “Additionally, it has driven considerable interest in residential developments such as Durrat Al Bahrain, Amwaj and Riffa Views, where further sporting initiatives such as the Colin Montgomerie Golf Course and Boris Becker Tennis Academy have raised even more interest.”

Most important of all, however, Whitaker believes the success of the Grand Prix has helped change perceptions so that the Middle East is now seen as a safe area, not only for tourism but also for business. “The organisation at the track has complemented the business-friendly approach of the country, and the economic impact year-on-year – as well as the number of events that are run at BIC – underlines the success that can be achieved with such a project. Let’s not forget that the Bahrain Government’s US$150 million investment has been repaid many times over within an incredibly short period of time.”

Track star
Another project that is indicative of the region’s love affair with sport is Dubai’s sparkling new Meydan racing complex. In 2007, Frank Gabriel Jnr, the CEO of the Dubai Racing Club, unveiled an ambitious plan to build a cutting-edge racecourse facility – just a stone’s throw from the world-famous Nad al Sheba track – that promised to take horseracing in the region to a whole new level. The landmark development is the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, and will span 76 million square feet and feature state-of-the-art dirt and turf tracks, while a world-class grandstand will boast a capacity of between 55,000-60,000. “The racing facilities will be outstanding,” enthuses Gabriel. “However, it’s not just about the racing season. We want to maximise entertainment all year around.”

As part of this vision, Meydan will offer residential units, office blocks, retail space and leisure facilities as well as the huge new racecourse. There will be 17 building blocks offering 2.9 million square feet of office space to all types of businesses, while a tramline will connect the grandstand, business park and city. A large retail complex will cater to high-spending shoppers, and on completion in 2010 officials expect the city to have between 60,000 and 100,000 people living and working in it.

And with millions of dollars pouring into sports infrastructure across the Middle East, it is no surprise to find that racing is proving to be an attractive investment. People in the region have a particular affinity with horses and horseracing, and attendances for events at the Dubai Racing Club’s current home at Nad Al Sheba are soaring.

Gabriel agrees. “There’s obviously a financial driver for the growth of racing in the region, but it’s also cultural,” he says. “For many years, the Maktoum family has had a love of the sport, of the horse, and they’ve established a vision for building up a racing empire – in the UAE, and also on the international stage in Europe and Asia and North America. I think the growth of sports in the UAE region – not only in Dubai, but overall – has grown tremendously, and we’re a big part of that. It brings not only financial stability to a lot of the infrastructure, but it also brings exposure, and that exposure can lead to other benefits such as financial growth, more tourism, greater retail spending, and so on. I think it will really explode over the next few years.”

Which brings us back to the new venue. Construction is moving at a furious pace ahead of the official opening in March 2010; the new venue is already half-built, although the economic downturn and a dispute with its major contractors, the Malaysian engineering company WCT and its partner Arabtec, over project delays does threaten to slow progress somewhat. Meydan Group, the master developer, terminated its US$1.3 billion agreement with the consortium in January, but insists the racecourse will be completed on time. And with 2600 construction workers currently employed on site – a figure that will rise to 5000 at the height of the works – it’s easy to see why they are so confident. “It will be one of the most unique and iconic buildings in Dubai,” says Gabriel.

Without doubt, the current global crisis in the credit markets provides challenges to those involved in the sports construction business. But it also provides immense opportunities. The revenues involved in the hosting and marketing of high-profile events (plus the added economic stimuli of increased tourism, greater consumer spending and higher foreign investment) make developing world-class sporting infrastructures an attractive proposition – in any economic climate.