Flush with cash, the Middle East is ramping up investment in soccer as a soft power push

Manchester City's victory in the UEFA Champions League final over Inter Milan was historic for a number of reasons.

It was the club's first European triumph, securing a famous treble after its success in winning the English Premier League title and the FA Cup this season.

It also marked the first time that a state-backed club claimed Europe's top trophy, with the English soccer club owned by Sheikh Mansour bin Zayed, the brother of Mohammed bin Zayed, the third president of the United Arab Emirates and the ruler of Abu Dhabi.

Manchester City's win, heavily backed by UAE money, comes as Saudi Arabia and Qatar look to ramp up their investment in the sport. The Gulf states have sought to use sport as an economic diversification tool in recent years as well as an attempt to improve their international image.

The UAE's Sheikh Mansour purchased the club in 2008 and has since proceeded to spend more on transfers than any other club in world soccer. Data from German-based website Transfermarkt.com, which specializes in soccer transfers, estimates the club's net transfer spending since 2008 comes in at an eye-watering $1.64 billion, outspending arch-rivals Manchester United over the same period by roughly $200 million.

The scale of the investment has attracted criticism, with human rights group Amnesty International saying the UAE's spending amounts to one of soccer's "most brazen attempts to 'sportswash' a country's deeply tarnished image." A spokesperson for the UAE's foreign ministry did not respond to a CNBC request for comment.

"The success that Manchester City is achieving is not just vanity, it's not just economic," Simon Chadwick, professor of sport and geopolitical economy at the Skema Business School, told CNBC's "Street Signs Europe" on Friday.

"But in terms of soft power, image reputation, nation branding, I think it's significant as well."

Saudi Arabia is another Gulf state seeking to put sports center stage. The country's sovereign fund, the Public Investment Fund, acquired a majority stake in the English soccer club Newcastle United in 2021.

It also bankrolled the much-publicized LIV Golf, before a shock merger was announced last week between the breakaway circuit and the U.S.-based PGA Tour.

In recent weeks, the PIF has acquired 75% stakes in four of its country's clubs, with the aim of acquiring some of Europe's top soccer players.

Ballon d'Or winner Karim Benzema has signed a deal worth a reported 100 million euros ($107.7 million) per season with the Al-Ittihad Club, while there is feverish speculation of several other well-known international players being courted.

In an interview with CNBC last week, PIF Governor Yasir Al-Rumayyan cited the young demographic of the kingdom's population as he outlined the kingdom's sports strategy.

"In the past, I think eight, maybe five years ago, we created different numbers of federations for every sport that you can think of. So, we are interested in all these sports, it's not only golf or football or basketball, but it's many other sports there."

French soccer club Paris Saint-Germain was acquired by Qatar Sports Investments in 2011.

Now, Doha is attempting to purchase Manchester United after the club's American owners, the Glazer family, announced they would explore "strategic alternatives" for the club.

Little-known royal Sheikh Jassim bin Hamad al-Thani has bid for the club, facing up against INEOS founder Jim Ratcliffe.

If Qatar were to succeed with its reported $6.3 billion bid for Manchester United, it would be a major coup for the Middle Eastern nation, particularly given the club's storied past, worldwide fanbase and marketing appeal.

Irrespective of who acquires Manchester United, the recent rise in interest in soccer clubs from Middle East countries is unlikely to end anytime soon, according to Chadwick.

"I think what we're going to see, what we've already seen over the last 20 years, but what we'll see again over the next 20 years is the continuing investment in sport by these nations," Chadwick said.

That's "because it will help them to diversify, but as we know, there are other benefits associated with it too," he added.

Correction: This story has been updated with the current comparison for net spend between Manchester City and Manchester United. It has also been updated to reflect that QIA is not affiliated to QSI.