Football: Egypt's Potential Economic Boom

Updated 6/20/2023 8:00:00 AM

In Egypt, football is the sport with the biggest fan base. Many citizens schedule their plans and friendly gatherings around a football match. Accordingly, football has become a successful industry that brings in foreign currency and supports the economy.

Football Industry Economics

Football is no longer just a sport but an industry that has grown into one of the most competitive and lucrative industries in the world of finance. Egypt has three local football competitions, the biggest of which is the Egypt Cup, with 32 clubs and a total market value of €165.45 million (around $181.41 million), according to data from Transfermarkt.

Each football club can boost revenues not only in terms of market value but also through broadcasting rights. Amr Mostafa Kamel, CEO of I-Friends Sports, tells Arab Finance: "In the past, channels were used to buy broadcasting rights, and the payment was divided among clubs according to certain equations.”

“Ten years ago, each club started selling broadcasting rights on its own, rather than collectively like before, and a company called Presentation started to buy these broadcasting rights and sell them to channels," Kamel adds, noting that "the Egyptian Football Association takes 15% of these broadcasting payments."

Moreover, football clubs sell their trademarks through franchises. The more awards a club earns, the higher its trademark value becomes.

Football clubs also contribute to the economy through player contracts’ taxes. In February 2020, Egypt’s parliament approved a draft law imposing “financial development fees” on contracts related to the buying, selling, loaning, or renewing the contracts of Egyptian or foreign athletes and coaches.

Kamel states that "when an economy faces challenges, many industries are affected. Except in Egypt and when it comes to football. In the time of COVID-19, football clubs were earning well."

Football clubs can also offer good investment opportunities. Ahmed Metwally, an economic analyst, tells Arab Finance: “If I put myself in the shoes of a person who is going to invest in a football club, I will choose a small club with a very small market value. I will start with raising its market value by boosting assets, winning tournaments, and increasing the number of players.”

Football Economic Contribution: Positive or Negative

Football can have an indirect effect on the economy. When the country hosts a regional tournament like the African Cup of Nations (AFCON) or a global championship like the World Cup, it attracts tourists from all over the world. This is a chance for the country to boost tourism by using the tournament as a promotional event for the country’s tourism.

During the AFCON hosted by Egypt in 2019, occupancy rates of hotels located in the main hosting cities of the event were more than 90%, according to an article published by CGTN in 2019.

Metwally explains: “Football clubs with huge fan bases travel and go to tournaments organized in countries that provide tourism. Hence, many fans do not just attend football matches in these host countries. This promotes tourism, introduces currency to the state, and increases the number of tourists. In addition, airports, hotels, restaurants, and public places are meant to be operating, there is movement in the country. Therefore, it is one of the most important types of tourism.”

Moreover, football clubs bring foreign currency into the country when they participate in regional and global tournaments. The Confederation of African Football (CAF) previously announced a financial reward of $4 million for the winner of the CAF Champions League title this season, in addition to the financial prizes that the winning club will receive for taking part in the Club World Cup.

However, earlier in June 2023, Amal Abdel Hamid, a member of the Parliament’s Plan and Budget Committee, sent a proposal to the Parliament’s Speaker Hanafi Jabali, directed to Minister of Youth and Sports Ashraf Sobhi, calling for the privatization of sports clubs in Egypt to increase their contribution to the national economy. Abdel Hamid explained that clubs and sports still represent a huge burden on the state budget, as they annually receive a large amount from the youth and sports budget to support construction and sports activity. She said that the average annual support offered by the ministry for sports clubs reached EGP 800 million.

Some football clubs have already started being listed on the Egyptian Exchange (EGX). Ghazl El-Mahalla Football Company, Egypt’s first football club to be listed on the EGX, offered its private placement at the end of 2021 to boost the company’s capital. The IPO kicked off in June 2022.

Yet, football clubs’ privatization is not going to happen anytime soon. Kamel explains that “clubs like El Ahly or El Zamalek cannot be privatized, but we have private clubs playing in the Egyptian Premier League like Ceramica Cleopatra, Pharco, El Gouna, and Zed, but clubs in the sense that you know: El Ahly, El Zamalek and so on, we have been talking about that for 20 years, and nothing will happen."

Meanwhile, Metwally claims that “if we are going to talk about the mass level and the power of football, we will find that privatization diminishes the joy of football or reduces public friction; fans would be less, which would, of course, affect the club’s ticket sales.” Metwally adds that at the level of marketing for clubs with smaller fan bases, privatization is beneficial.

Despite the challenges faced by the economy, football has thrived as one of the most competitive industries in the world of finance, and it has remained the nations’ number one favored sport. If given its full potential, football can boost the economy by attracting larger investments. Whether you are a fan or not, football can become a great source of foreign investments and cash.

By Sarah Samir