Manchester City bank record £400m sponsorship deal with Etihad Airways

Posted Saturday, July 09, 2011 by theguardian.com

• Uefa poised to assess fairness of the 10-year arrangement
• City consulted with Uefa to ensure deal breaks no rules

Manchester City bank record £400m sponsorship deal with Etihad Airways
Manchester City's ground will be known as the Etihad Stadium as part of the record £400m sponsorship deal with Etihad Airways.

Manchester City will bank up to £400m under their new sponsorship arrangement with Etihad Airways, making it the largest deal of its kind in sport and reinforcing City's position as a football club with unprecedented financial power.

The 10-year agreement, which means City's ground is renamed the Etihad Stadium, will be worth more than twice the previous record, JP Morgan Chase's $300m (£187m) for the new Madison Square Garden, while simultaneously demonstrating the growing disparity between the top clubs in English football.

To put it into context, the deal Arsenal struck with Emirates in 2004 was valued at £90m over 15 years. Around £48m of that came via shirt sponsorship, with the naming rights worth only £2.8m a year. Chelsea and Tottenham have both scoured the market for a deal in the region of £10-15m a year but found no serious interest. Newcastle have also been unable to find a sponsor since the club's owner, Mike Ashley, tested the waters with a short-term arrangement in the 2009-10 season that resulted in their ground taking the name of his sportswear business as the sportsdirect.com@St James' Park Stadium.

Etihad's deal includes a 10-year extension to their shirt sponsorship at City, as well as financial backing for what will be known as the Etihad Campus, a vast area of land around the stadium that already includes the City Square fans' village, and has other major development planned, including a new training ground and sports science centre.

Garry Cook, the City chief executive, described it as "one of the most important arrangements in the history of world football", made even more remarkable because City do not own the stadium. Manchester city council allowed City to negotiate the naming rights as part of an improved rental agreement, agreed this year, which means the club will pay £20m over the next five years to an authority in the grip of financial cuts.

City must now convince Uefa that the amounts involved do not contravene the incoming financial fair play regulations and, specifically, the condition that stipulates sponsors with close links to club owners pay a fair price.

Etihad are owned by the Abu Dhabi government and the airline's association with the City owner, Sheikh Mansour, a member of the Abu Dhabi royal family, will almost certainly prompt Uefa's Club Financial Control Panel, under the chairmanship of the former Belgian prime minister Jean-Luc Dehaene, to investigate.

A Uefa spokesman said: "We are aware of the situation and our experts will make assessments of fair value of any sponsorship deals using benchmarks."

Under the terms of financial fair play, clubs have to show they can break even in the medium term if they are to take part in European competitions and, for City, that represents a significant issue given that their last financial figures reported a £121m loss and the next accounts, to be published in September, are expected to be worse.

The club have, however, made extensive inquiries of their own, consulting with Uefa in the process, to ensure the Etihad deal fits in with the rules and cannot be construed, in essence, as a different twist to 'mates' rates'.'

A significant part of the deal will go towards developing the Etihad Campus and, crucially, Uefa does not count money spent on improving infrastructure, regenerating surrounding areas and youth development when it comes to totting up losses. Although the club have not been willing to provide the media with the precise breakdown of where the money will be spread, they will present the figures to Uefa if necessary.

Nonetheless, City face the possibility of other clubs raising the matter with Uefa. Arsenal's Supporters' Trust has already signalled its intention to ask the London club to request that Uefa look into it as a priority and deliver an early verdict.

Tim Payton, the Trust spokesman, said: "The deal at Manchester City stretches credulity to the limit. The numbers just don't stack up."