Uefa to examine Abu Dhabi ties in City's £400m sponsors deal


Ian Herbert
Thursday 14 July 2011 00:00

Manchester City may have to prove that their Abu Dhabi owner is not "influenced" by his half-brother, who chairs Etihad Airways, if their £400m sponsorship deal with the emirate's national airline is to avoid failing one of the key tests of the Uefa Financial Fair Play (FFP) regulations.

Though Liverpool's owner John W Henry, who is clearly deeply unhappy with the transparency of the Etihad deal, backed Arsenal manger Arsène Wenger's criticism of the deal as "financial doping" yesterday, City are comfortable that it represents "fair value" and is not simply a means of the Abu Dhabi royal family, which founded Etihad, artificially inflating the balance sheet of the club owned by Sheikh Mansour bin Zayed al-Nahyan and enabling it to meet the FFP rules.

However, detailed analysis of Uefa's 91-page Licensing and Fair Play regulations by The Independent reveals that the family relationships between City and its sponsor may fall foul of Uefa's "related party" test. Uefa will consider that club and sponsor are related parties if a family relationship exists. The rules stipulate that a club will fail the "related party" test if money comes in from a "close member" of the club owner's family who "has significant influence over the [club]".

It will be for City to demonstrate that several members of Sheikh Mansour's family who have been integral to Etihad do not exert that influence over him. They are the sheikh's elder half-brother, the Abu Dhabi ruler and UAE president Sheikh Khalifa bin Zayed al-Nahyan, who founded the airline, Etihad chairman, Sheikh Hamed bin Zayed al-Nahyan, and vice-chairman Sheikh Kaled, both half-brothers.

Uefa will come under intense pressure to submit the £40m-a-year Etihad deal, the largest in world sport, to rigorous scrutiny when FFP comes into force, for the 2013-14 season, with some Premier League owners readying themselves to press the organisation to disallow any income from related parties.

Liverpool's owner, Henry, first hinted at his displeasure with the Etihad deal at the weekend when he tweeted: "How much was the losing bid?" The inference was that City had not sought any other potential sponsors because they wanted only an inflated deal from Etihad. After Wenger joined the debate on Tuesday, accusing City of disrespecting FFP rules by not adhering to the market price in their Etihad deal, Henry commented again yesterday: "A club's best player has to be worth at least 10 per cent of your naming rights," he said. "Mr Wenger says boldly what everyone thinks."

There is scepticism in some rival Premier League boardrooms about the fact that Etihad, who have yet to make a profit in their seven-year history and have a similar-sized fleet of planes as Flybe, are paying such a colossal sum. But one of the leading lawyers in the FFP field, Daniel Geey of Field Fisher Waterhouse, said that even if the deal fell foul of related party rules, it could still be deemed acceptable if Uefa considered it to represent fair value. "The first hurdle is whether the Etihad deal can be deemed a related party transaction. Only if it is will an economic judgment have to be taken to assess whether it is fair value," Mr Geey said.

Etihad's financial performance certainly has no relevance to the size of the deal and City do appear to have a strong "fair value" case, based on the fact that they have broken new ground in the way the deal is constructed. They are also planning a vast redevelopment project on land adjacent to their stadium which accrues new sponsorship opportunities for what will become the "Etihad Campus".

City have not disclosed the breakdown of their 10-year deal but they could argue that £20m is fair value for a shirt deal, given that Standard Chartered deliver that sum to Liverpool and that, globally, City are currently a more viewed club than Liverpool in terms of live games screened. If £20m is City's shirt figure, that leaves £15m between the stadium and the campus – the deal is £35m a year in its initial stages, rising to £40m. Wenger's decision to intervene raises the question of how good a piece of business the north London club's own deal with Emirates was, in 2004. They now find themselves locked into a 15-year, £90m contract, for shirt and stadium, until 2019.

As The Independent revealed last month, midfielder Patrick Vieira has decided to retire from the game and is expected to be revealed as a coach and club ambassador at City today.

Vieira had discussions with Arsenal about a role at the Emirates but the club did not propose anything concrete. Despite his having played nine years at Arsenal and 18 months at City, manager Roberto Mancini gets his services. The 35-year-old is expected in Los Angeles with the City pre-season tour, where he will explain his decision next week.

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