If modern Dubai’s success story was all about its power as a global brand, then last year’s debt crisis represented more than just a serious loss of financial face.
The revelation that Dubai was $80 billion in debt - with three-quarters of that sum generated by Dubai World, the Dubai government’s investment company - was bad enough.
That Dubai then relied on the UAE’s richest federal partner, Abu Dhabi, to stump up over $10 billion to avoid defaults on repayments was even more damaging to ‘Brand Dubai’.
For the sports industry, which has come to see the Gulf in general as a secure region for growth and investment, Dubai’s financial crunch was also cause for concern.
There were immediate repercussions when Dubai World’s property arm, Nakheel, the company behind the European Golf Tour’s ‘Race to Dubai’ and the Jumeirah Golf Estates, reduced the winner’s purse by 25 per cent in 2009, guaranteeing a mere $1.25 million to last year’s champion Lee Westwood.
Of course, in the greater scheme of things, this represents a tiny blip in Dubai’s sporting exposure. So how else have the financial troubles affected the sports-focused policies of the UAE? And what has it meant in terms of the balance of sporting power between Dubai and Abu Dhabi?
For the sports industry, Dubai World’s financial overstretch has naturally had the most visible effect on other property-related ventures.
Tiger Woods Dubai, for example, an expansive Woods-designed golf course and luxury home development in Dubailand - not to be confused with Dubai World - was slated to open in September 2009, but construction work had reportedly only reached the eighth hole as of February 2010. Nothing to do with Tiger’s personal issues, all to do with a downward spiral in property prices, which fell by a crashing 50 per cent in Dubai last year.
Work on residential developments like the much-vaunted Sportsmen Towers in the Dubai Sports City (DSC), the jewel in Dubai’s sports venue crown, have also slowed down, while reports last year of deserted construction sites attached to the DSC’s biggest stadium project fuelled negative speculation over the entire plan.
But the DSC’s local difficulty should not be overstated. Many elements of the DSC Masterplan are now complete or taking shape, and SportBusiness International has learnt that ALL the elements should be completed by 2013.
Doom-mongers will also be disappointed that the UAE’s major sports event properties have shown little sign of wilting under the financial heat. In Dubai, from the moment back in 1970 when a group of expatriate Brits founded the Dubai Rugby Sevens, the ruling Maktoum family has sought to build up an impressive event portfolio.
For a full commercial breakdown of the situation in the Middle East, please see the latest issue of SportBusiness International out April 1.
