The Etihad-Man City deal has the Premiership up in arms. Was it worth the hassle?
Manchester City have acquired a habit of scaring off clubs that are trying to target its players simply by opening a virtually bottomless wallet.
If there was one scrap of consolation for some of the less-monied Premier League teams, that came in the form of UEFA’s new ‘financial fair play’ rules, which came into force only a couple of months ago. Those rules stipulated that no club may lose more than $64m over the three years to 2014-2015, and that they have to breakeven by 2018. The punishment? A ban from the rarefied atmosphere and TV advertising revenue of European competition.
Such a move is all fair and good, you may say, during a period when big-spending clubs like Chelsea and Manchester City perennially rack up huge losses without batting an eyelid. However, eyebrows were raised last week when Manchester City inked a deal with Etihad Airways, the national carrier of the UAE, to provide various forms of sponsorship over a ten-year period.
Contrary to what has been quoted in the press, there has been no official confirmation on exactly how much this contract is worth. But the figure that has been bandied around most frequently has been £400m ($642m), a whopping sum of money for a club that has only just picked up its first piece of silverware in decades.
Cue splutterings of protest from other Premiership teams, many of whom believe that the glitzy new sponsorship deal simply represents the movement of cash from one Abu Dhabi-owned entity to another in a bid to circumvent the new regulations. Arsenal manager Arsene Wenger — never shy in coming forward if there’s a sniff of perceived injustice in the air — got on the warpath late last week.
“It raises the real question about the credibility of the financial fair play — this is what this is all about,” Wenger pointed out. Furthermore, in words that may not have been too well-received down the road in Dubai, Wenger added “we must have done a bad deal” — a blunt reference to Arsenal’s $158m fifteen-year contract with Emirates announced eleven years ago.
Nowadays, that Emirates deal, which also includes stadium naming rights, is looking more and more like a truly prescient piece of business. The biggest ever team sports sponsorship deal is generally regarded as that between Citigroup and the New York Mets baseball outfit, worth $400m and signed two years ago. Although the US sports sponsorship market is more mature than it is in Europe, that sum of money still only paid for naming rights to the Citifield stadium. Futhermore, the Mets brand doesn’t have quite the cachet of other baseball teams; earlier this year, advertising posters plastered around Manhattan for a local storage company poked fun at the fact that New York played host to “six professional sports teams… and the Mets”.
The team from Etihad are keen to point out that their own deal doesn’t just cover stadium and shirt sponsorship — it also covers the creation of the Etihad Campus, new community initiatives and customer database cooperation between the two entities, with the additional bonus of creating new jobs locally. As Manchester City’s profile grows in the lucrative Asian markets — which Etihad and other Gulf carriers see as core regions for growth — then the airline will hopefully start to see the benefits. In short, there are no complaints about whether Etihad is a suitable partner for Man City — it’s just the size of the deal that’s being questioned. But if there’s one certainty, it’s that records are there to be broken. Whether it’s Barcelona, Manchester United or Real Madrid, another major corporate will soon step in to pay big money to be associated with one of the world’s top brands. In five years time, you may even see the Manchester City manager bewailing the cut-price deal his team signed with Etihad all those years back. Admittedly, that may be something of a stretch, but the real value of this particular agreement may only be properly judged with the benefit of hindsight.
Ed Attwood is the deputy editor of Arabian Business.