City's campus project buys club breathing space
Sponsorship opportunities created by 80-acre east Manchester development can wipe out huge losses
The denizens of Old Trafford have had some fun with Etihad's sponsorship of Manchester City.
They'll tell you that the Abu Dhabi airline's name translates as "United" – even though it is actually Arabic for "Unity". After the wisecracks, though, comes the sobering reality, from a United perspective, of what a deal worth a little more than £300m, rising to £400m over ten years, might actually mean to the balance of power in British football.
After the stadium naming-rights deal provided the headlines yesterday morning, the general view from within the boardrooms of the Premier League's elite clubs was that having a Champions League venue named after your business is a privilege worth £10m a year and that the £40m-a-year figure City have procured from Etihad is higher than expected. For their part City say the stadium rights are just a part of the deal.
It is the other part which is the really smart bit. The new 80-acre "Etihad Campus" which City intend to create, if public consultation and the planning process go well, will enable them to create a lucrative new array of facilities. More sponsors may arrive with them and because the costs of creating them will not be factored into Uefa's assessment of a club's profit or loss, City can effectively build them for nothing. The only limit on it is the scope of Abu Dhabi imagination – and the Yas Marina Formula One track has given us an insight into that. Whether other clubs like it or not, City's owners have found a way to make their wealth continue working for them.
A picture of how the area prosaically known before as Openshaw West will look may take shape with an announcement as early as next month. Remediation work was started on the brownfield sight several months ago and it is likely to be where City's training ground is relocated. The future of the current Carrington base, across the fields from United's training ground, has looked in doubt since City embarked on a study of the world's best sports training facilities, 18 months ago. The Platt Lane academy could also be relocated, finally severing City's link with Moss Side, as well as Etihad's new call centre, to be located in Manchester from early 2012.
The steady stream of Etihad sponsorship opportunities this presents will justify to Uefa yesterday's £400m deal and perhaps offer scope for the sum to grow even bigger, if City need the money. Uefa's Club Financial Control Panel, under the chairmanship of the former Belgian prime minister Jean-Luc Dehaene, is in place to ensure "fair value" in sponsorship deals – but it is hard to see this being judged unfair, as nothing like it has been done before.
City cannot keep building forever. But Openshaw gives them the breathing space and the building space. The potential unlocked by the 80-acre area eases the pressures created by the astronomical player wages that City's chief Garry Cook has taken on during the club's pursuit of a Champions League place.
With a squad for European football still being assembled, the Financial Fair Play regulations have perhaps come five years too soon for a club which in October will post a rise in their £121m 2009-10 losses, as they account for the £96.6m net expenditure plus wages of Jerome Boateng, David Silva, Yaya Touré, Aleksandar Kolarov, Mario Balotelli and James Milner, who arrived too late to go into last year's published results.
Privately, City have always been comfortable with their ability to fall in line with FFP, which will oblige clubs to post no more than £45m losses over the next three years, and the commercial opportunity from the broad acres around their ground has always been the reason why.
How comfortable other clubs will be with their strategy is less certain. The suspicion that City's balance sheet is bein artificially inflated by Sheikh Mansour bin Zayed al-Nahyan makes full accounting transparency for the Etihad deal vita. The Abu Dhabi royal family owns the seven -year-old airline and has absorbed its losses. It was unclear last night whether Etihad – which, though in private ownership, does publish its annual accounts – would begin itemising sponsorship spend, including the new City deal.
Rival clubs such as Bayern Munich are annoyed after finding it far harder than they imagined to get hold of players City want to retain – Boateng in the Germans' case. "They are going to have 48 players under contract," Bayern chairman Karl-Heinz Rummenigge said only yesterday. "But you can only name 25 and last year they lost £123m. Under the new rules, with these numbers you wouldn't get a licence, that's for sure. Maybe they know a trick I do not."
The £400m deal is likely to see City through the Uefa challenge, though. The mood from Uefa is that clubs will be helped, not punished; that expulsion from Europe is a last resort – and by no means likely if a club fail to meet the loss target, but are cooperating and financially are moving in the right direction.
The consolation for United supporters is that City may not be able to boast they secured the most lucrative sponsorship deal for too long. United believe they can secure a world-record kit deal of £450m before their agreement with Nike expires in 2015. But Cook and the Abu Dhabis have redefined the term "sponsorship deal" and proved what a commercial power they are. Unity is a commodity that will remain in short supply across the two footballing halves of Manchester.
Big Sponsorship Deals
The closest to City's deal is between Arsenal and Emirates: for 15 years of naming rights and nine years of shirt sponsorship Arsenal received £100m.
The largest shirt deal in history was sealed this year: Barcelona will get £125m over five years for shirt sponsorship.
Manchester United and Liverpool
Both teams agreed £80m shirt sponsorship deals over four years, starting in the 2010-11 seasons.
Naming rights abroad
American sport has seen some naming rights deals nearly as big as those for the Etihad Campus:
*Citigroup sponsored New York Mets' ground Citi Field in a $400m (£250m) deal over 20 years.
*Barclays did a similar 20-year $400m deal for New Jersey Nets' new ground.
*Farmers Insurance Group have a 30-year $700m deal for an NFL stadium in Los Angeles that has not been built.
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