Football body is to look into the club’s estimated $642m 10-year deal with Abu Dhabi’s Etihad Airways
Calls for European football body UEFA to launch an investigation into the sponsorship deal signed between Abu Dhabi’s Etihad Airways and English football club Manchester City are “just sour grapes”, the head of the team’s supporters’ club in the UAE told Arabian Business.
The deal, announced last Friday, saw Abu Dhabi carrier Etihad Airways sign an estimated $642m 10-year deal with Manchester City Football Club, which would involve the carrier continue as the team’s shirt sponsor and the renaming of the club’s home ground to Etihad Stadium.
New Financial Fair Play rules set up by the Union of European Football Associations – which were established to ensure that clubs are living within their means – mandates that teams may not lose more than $64m over the three years to 2014-2015.
Over the last two years, Manchester City, which is owned by Abu Dhabi’s Sheikh Mansour Bin Zayed Al Nahyan, reported losses of $342m.
While there have been calls for an investigation into whether the sponsorship deal and the links between the Abu Dhabi state-backed carrier and the Abu Dhabi-owned club breaches UEFA’s new rules, Mark Lynch, chairman of the Dubai branch of the Manchester City Supporters' Club, said it was “just sour grapes” on behalf of the club’s rivals.
“I think it is just sour grapes for anyone to look into it in more detail or to start saying it is corrupt… it is a lot of big clubs that are scarred of the finances and the fact that there is a new record that has been broken,” Lynch told Arabian Business, adding fans were glad it was Etihad who was chosen to continue as the main sponsor of the club.
“As soon as Manchester City Council gave them permission to have the stadium to use for naming rights that meant there was only going to be one company and I am glad it’s Etihad as it keeps the relationship with Abu Dhabi and the existing shirt sponsor, which is good,” he added.
A UEFA spokesperson has said it would “use relevant experts to make assessments as to the fair value of any major sponsorship deals, using appropriate industry benchmarks... These will then be considered by the Club Financial Control Panel.”
However, Lynch said it was obvious “there was a genuine reason that both companies could benefit from it.”
“For me, it is beneficial to both parties. Etihad are the best airline, voted the last two years, and they are gunning for a global brand appeal in doing that. The Premier League is the biggest in the world so it is an opportunity for them both.”
While the agreement was a record breaking deal, Ryan McKnight, editor of FC Business, the trade magazine for the UK football industry, said such groundbreaking deals were inevitable as the current football business model is not sufficient to allow clubs to keep growing and maintain the investments they need to succeed.
“It is a shock in terms of the biggest deal in football, but it is not a shock that it has happened. If you look at the business model in terms of football clubs, and you look at their losses, their organic revenue streams, in terms of ticketing and merchandise, retail, conference and hospitality, were simply never going to be able to grow to the extent to cover the losses,” McKnight said.
“Manchester United have match day turnover of about a £100m, while Manchester City’s is on about £35m. Even if Manchester United were to stagnate, it is going to take Manchester City a decade to catch up with United and depended on City’s continued success. So it is nearly impossible for Manchester City to compete with Manchester United on those kind of revenues.
“So where are they going to get the revenue to continue to spend at the current rate they are so they don’t fall fowl of UEFA financial fair play laws? They are going to need big sponsorship deals and try to organic revenue streams,” he added.
Earlier this month, research by Arabian Business showed Sheikh Mansour has invested £339m ($545m) in new players for the squad, starting with the record £32.5m ($52.2m) signing of Brazilian player Robinho.
In addition to the reported £210m ($337m) he spent acquiring the club in September 2008; this brings the total investment so far by the Abu Dhabi businessman to $882m.
With around $300m rumoured to be left in the war chest for new players, the total investment is likely to easily top the $1bn mark before the end of the current transfer season.