Last summer, the Saudi Football League attracted an unprecedented number of star players from European clubs (Benzema, Neymar, Mané...). In a recent working paper, Matt Gnagey and I examined the premium wage Saudi clubs paid. The answer? A whopping 400%!
https://drive.google.com/file/d/1kxGFymgYizFkXVvwDhI9vDcr7WB2_dSt/view
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We built a dataset with the 345 players that moved from one top European league (Bundesliga, La Liga, Ligue 1, Premier League, or Serie A) to another club in those same leagues or the Saudi Pro League in the summer of 2023. The key variable is the change in salary from 2022-3 to 2023-4
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The unconditional Saudi wage premium is about 200-300% of players' gross annual wage in their former club. After controlling for individual characteristics, it gets closer to 500%
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The result is robust to a bunch of alternative specifications. When using a propensity score matching to deal with the selection bias of those going to the Saudi League, the premium remains at about 400% (about €14 million per year)
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Do cultural differences drive the premium? It does not seem so. Players from Arabic-speaking or Islamic countries do not get a lower premium, and the cultural distance between the player's country of origin and Saudi Arabia is not a significant driver of the premium either.
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Álvaro La Parra-Pérez