#360business: NYCFC is the latest step in creating a global football giant

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New colours: David Villa helps unveil the NYCFC in New York last week.

When Manchester City football club was initially formed in 1880 in the name of St Mark’s church , they didn’t have countless riches to call upon. Far from it.

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Fast forward to 2014 though and with the creation of the latest arm of the City Football Group in New York moving ever closer to kicking a first ball in anger, there surely cannot be a newly created sporting franchise which has been blessed with the kind of financial and structural support NYCFC are armed with.

Simply being involved in top level sport these days, let alone actually trying to be competitive, is a rich man’s game. Rags to riches stories, sadly, belong in the past.

Naturally, Sheikh Mansour bin Zayed, UAE Deputy Prime Minister and Minister of Presidential Affairs, has made all this possible.

The incredible £1.2bn (Dh6.9bn) investment in City over the last six years has created a rock solid platform which allows everything else to flourish.

The NYCFC fans who attended a typically glitzy, loud kit launch in New York last Thursday probably don’t realise just how lucky they are.  

To have wealthy owners is one thing. Having the ability to call on the amount of football knowledge and expertise from not only the English Premier League champions but also strong footholds in Australia and now Japan (Sheikh Mansour bought a stake in Japanese J-League club Yokohama F-Marinos in May) really does set them apart.

Only PSG – thanks to their deal with Qatar Tourist Authority worth $262m (Dh962m) per year until 2016 – come close to replicating it.

Certainly, compared to Thierry Henry’s New York Red Bulls, their resources are on another level. 

The fact they are also the only side to be actually based in one of the five boroughs – Red Bulls play in New Jersey – is one marketing angle to be trumpeted from the rooftops.

Yet while most of the whoops of excitement were reserved for the revelation of the strip David Villa and Frank Lampard will wear from next March , the most eye-catching announcement, from a business point of view, was the recruitment of Etihad Airways as the club’s principal and founding partners.

Of course, the Abu Dhabi-based airline have enjoyed a fruitful relationship with Manchester City since 2011 so their involvement in New York was a no-brainer – for both the team and the company.

With new routes to San Francisco and Dallas set to open by the end of this year, Etihad are eager to make waves in the US market.

A £350m (Dh1.3bn), 10-year partnership deal has served City well and although the figure of the new five-year contract in the Big Apple was not revealed, sources insist it’s a ‘multi-million pound agreement.’

The jaw-dropping cash injection in Manchester was queried by UEFA when the regulations for Financial Fair Play were brought in last year yet City sources wasted no time in telling Sport360° they were never worried about any investigation.

They were vindicated in May when it was revealed the investment was judged as potentially under the value it should have been.

James Hogan, the Australian CEO of Etihad Airways, has spent over $100bn (Dh367bn) on aircraft. He is a man who knows the value of planning for the future and expanding brands.  

Becoming involved in NYCFC is a welcome extension to a powerful-looking sporting portfolio which already has F1 and cricket as lucrative mainstays.

He said: “What we are taking advantage of are strong brands in respective markets .

"In terms of Manchester City, that has been a strong partnership for us because in the early days it has helped building our profile not only in the UK and pan European markets but also on a global scale.

"They have been winning and doing well so the awareness is much stronger.

"When you look at all the sports we are involved with – whether it be hurling in Ireland, the ECB in cricket, it is all about finding the right property to help build the brand.

“But as with Manchester City we are helping to take sport into the community – we have done that with rugby, soccer – the UAE have built pitches.

"We see in America, somewhere we are not that well known, it is a great property for us to be involved with.

"Also with the MLS, it all comes together very nicely.

"We have looked at getting into the US sports market before but it’s all about being involved at the right time.

“We have just started operating to LA, twice a day into New York, next month we are opening routes into San Francisco and Dallas so it made sense to find a property we can use with our master association with Manchester City.

"Having a global presence is so important.

"We can link the relationships so that means there is strong awareness in Melbourne, Manchester and now in America.

"We link everything up, so as they develop their global brand we continue to develop ours. It complements us well.”

With a football-specific stadium still a long way from being created, NYCFC’s home will be at Yankee’s stadium in the Bronx for the next three years at least.

Not ideal yet with 10,000 season ticket sales already in the bag, a core support has already been created.

Huge inroads into community projects have also been made. 

The creation of the City soccer schools in Harlem has been a huge success while training programmes such as Saturday Night Lights and Safe Places to Play are directed at children in low income communities who are given chances they wouldn’t ordinarily have been given. 

The advantage of their tie-in with the New York Yankees – arguably one of the most famous and iconic sporting brands on the planet – should not be underestimated, especially when it comes to negotiating commercial deals.

“The Yankees relationship doesn’t get mentioned enough, “ stressed NYCFC Chief Business Officer Tim Pernetti.

“There are two important commercial elements to our business.

"No1 – the Yankees are in the market.

"They have existing partnerships which have been around forever and our relationship with them gives us a seat at the table and helps us have real discussions and put deals on the table.

“The other side is, being part of a global group like City football, we can access global relationships by selling assets all over the world.

"Not everyone has that. We have assets in New York, Melbourne, Manchester, Japan.

"That helps us have very different conversations.

“If you look at the trends right now, sporting organisations are starting to try and put more clubs under one roof.

"It gives you more assets to sell in more parts of the world. I think you will start seeing more and more of that.

"The difference with us is that we are the only global football organisation and we are spreading that across every continent.

“The way the model was built for NYCFC gives us the ability to make it successful. Running independent franchises in certain sports can be difficult.

"In terms of New York, because there is such a massive audience for soccer, because it is such a diverse market, there is a huge appetite to have a team and when you put together everything we have in our stable – including the Yankees – it gives us a real advantage on the commercial side of the business.

"Our ownership in Abu Dhabi are very supportive of everything we are doing.”

And how key that is. After all, without them none of this would be happening in the first place.

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Premier League fans forced to pay price of brand loyalty

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Premier appeal: 95 percent of EPL games were sold out last season.

As Europe’s best teams prepare to redraw battle lines in the Champions League this week, there is a growing chasm in the cost of supporting clubs across the continent.

The Premier League, self-styled as the best in the world, perhaps unsurprisingly, remains the least accessible to the ordinary fan, even if it can no longer claim to be the most successful.

As revealed by the BBC earlier this month, the expense of going to watch a football match in England has risen by 13 percent since 2011, almost double the cost of living. In the last year alone prices have leapt 4.4 percent, while inflation in the UK was just 1.2 percent.

That is not to say that the charges to watch Premier League football are extortionately more than on the continent. On the contrary, of teams in the top five leagues in Europe – the Premier League, La Liga, Bundesliga, Ligue 1 and Serie A – 15 boast prices bigger than England’s most expensive which is Arsenal at £97 (Dh569).

A ticket to Real’s Clasico victory over Barcelona would have cost Madrid fans as much as €236 (Dh1,085), while the cheapest was €70 (Dh322).

AC Milan offer a ticket at San Siro for a whopping €382 (Dh1,757), while rivals Internazionale – and Torino – sell tickets for €250 and entry to Paris Saint-Germain’s Parc des Prances stadium can set you back up to €221.

But where these clubs differ to their English counterparts is in the price of their cheapest ticket. On average the least expensive ticket in France is just €10.74, in Germany that rises to €15.16, in Italy it is €16.87 and in Spain it is €22. By contrast the average price of the cheapest ticket on offer at Premier League clubs is €36.55.

“I think the difference is there’s a range of prices,” says Andrew Gibney, a French football expert who swapped Celtic Park for Lille’s Stade Pierre-Mauroy four years ago.

“Even for the bigger games, you can get tickets from €15 up to the €120 for VIP. So they’ve got the expensive seats for the people that want to pay that but they’ve got really reasonable prices.”

The best value ticket to be found in the top five leagues is at Guin gamp, where it is possible to watch a Ligue 1 game for as little as €4 (Dh18.62). When you consider the average price of the cheapest admission in England’s League Two is €23.34 (Dh137), it’s easy to see why English fans have started to feel disenfranchised.

“The Premier League has got money coming out of its ears with its various worldwide media rights deals,” says Football Supporters Federation (FSF) chair, Malcolm Clarke.

“If you compare the current TV and media deals that they’ve got in total with the previous deals they had then by our calculation you could let every single spectator into every single Premier League game free and still have the same amount of money that they had before. Which gives an idea of the scale of it.

“For prices to continue to rise above the rate of inflation, in fact for prices to continue to rise at all given the new media deals, for the match-going fan is unacceptable.”

The Premier League is in a unique position from an economic point of view. Attendances have fallen in both Germany and Spain since 2012, yet the English top flight continues to report soaring crowds, with 95 per cent of games sold out last season.

One of the major reasons for Guinthat is the Premier League’s international appeal, but as foreign tourists flock to games the fear is that clubs lose touch with their communities.

Labour have outlined plans to install two fans on every club board should they win the 2015 UK general election, but while stadiums are full, there is little incentive to drop prices, especially when ticket revenue makes up such a large percentage of income for clubs striving to reach the upper echelons of the English game, and the perceived riches that await there.

“I think the problem with English football, or one of the problems, is that as you go down the pyramid everyone is trying to leap into the land of milk and honey above,” Clarke adds.

“Clubs spend in order to try and get the team necessary to get them to the next level, but the lower down you go the higher ticket income is as a proportion as total income. So, you get them charging high prices because that’s the only way they can get the extra income to buy the players to get them into the level up.”

The FSF talk to other fan groups around the continent through Football Supporters Europe, but Clarke says pricing is rarely on the agenda.

That does not mean other countries are not experiencing problems, it is just they are of a different nature. Attendances continue to tumble in La Liga, and outside of the big three of four clubs there is a real battle to entice fans back.

This has led to a fall in ticket prices at some clubs, but a haphazard approach to when matches go on sale, allied with a lack of coherent marketing strategies and a culture adverse to planning too far in advance, mean empty seats remain.

In Italy, although attendances have improved slightly over the past two seasons, prices need to be lower to attract those fans through the turnstiles, who may have been put off by the more unsavoury aspects of Italian football.

Eleven Serie A clubs offer tickets at €15 or less, while Verona have a €0.50 ticket for fans under 14, and Cagliari let in children under eight for just €1. Genoa, meanwhile, offer a season ticket in their family section for just €50.

But that is not to say that affordable pricing has to be borne out of a desire to fill stadia that have become empty – as the Bundesliga continues to highlight.

Like many, Clarke would like to see British football adopt a more German approach, where the 50+1 rule means supporters hold a majority stake in their clubs and costs have remained low.

In contrast to the Premier League, only one Bundesliga side currently charges more than €20 for their cheapest ticket, while on average the most expensive is €59.93. That would only get you into the cheap seats for a category A game at Barcelona’s Nou Camp, while it would not be enough to get you in to see El Clasico.

Reasonable prices have only enhanced the Bundesliga’s reputation as a hotbed for the affordable football experience, and fans flock to the Bundesliga in large numbers.

Nine of the top 20 average attendances in Europe last season were at German clubs, including FC Koln who managed to pull in 46,235 per home game, while playing in the second tier.

It is hard to envisage a time when the Premier League will be so revered for its fan experience, but Clarke is not about to start a walkout. He believes it would ultimately prove futile.

“They’ve got what marketing people would call 100 per cent brand loyalty and they abuse it,” he says. “We could all stop going.

I don’t think we could ever realistically organise that, but we partly say why should we? “Football clubs are part of our cultural heritage and it’s a pretty poor show if the only way you can get change is to stop going.”

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Business of Sport: Why golf is thriving in the UAE

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World class: Tiger Woods on the Majis course at Emirates Golf Club, one of the world class facilities in the UAE.

Golf has become more than just a sport. It is now a lifestyle statement, a niche which many endeavour to be associated with. 

With a sense of luxury attached to the sport, and the high-end target audience that it attracts, it becomes a challenge to maintain a certain standard when it comes to services at golf clubs.

The members have great expectations from the clubs, and that in turn extends to the fans’ and sponsors’ expectations at tournaments.

While the golf courses in the United States and Europe have been going through a period of decline in the past few years, the situation is different in the UAE. The sport here is witnessing a boom and attracting attention from golfers, investors and sponsors from across the globe.

Elsewhere, tournament sponsorship is taking a hit, with the recent news that Volvo, who have been associated with the European Tour for the past 25 years, are pulling out of the World Matchplay Championship and the Golf Champions tournament.

However, it is worth noting that the recent Ryder Cup at Gleneagles is being looked upon as the most successful golf tournament ever in the history of the game – with some experts estimating profits to the tune of €50 million.

KPMG’s 2013 report on ‘Golf participation in Europe’ suggests a healthier movement, but two of the biggest markets- UK & Ireland and Spain- saw the number of players dropping by 11,300 (-0.9%) and -3.5% respectively.

Only 29 new golf courses were added in the whole of Europe in 2013, an increase of just 0.4%. There are now a total of 6,811 golf courses in the continent, but the numbers again decreased in the UK & Ireland and Spain.

On the other hand, UAE tournaments have managed to attract a number of multinational companies as sponsors, while the number of rounds and memberships has constantly increased at the various golf clubs. 

In 2012, 365,559 rounds of golf were played on the 10 courses in Dubai, which increased by 13.3 percent to 414,177 last year. The three 18-hole courses and the two ninehole courses in Abu Dhabi have also shown healthy year-on-year growth with slightly more than 150,000 rounds recorded in 2013.

And after a brief period of respite as the country battled with the effects of the global economic downturn, the real estate companies are back, announcing exclusive golf community projects.

At the recent Cityscape in Dubai, both Dubai Sports City and Jumeirah Golf Estates announced new projects around their golf courses, while Damac have announced a second golf community – Akoya Oxygen – after the massive commercial success of Akoya. Both communities will have golf courses managed by the Trump Organisation.

One of the main reasons golf courses are still an attractive proposition in the UAE is because the demand has not yet outstripped supply (21 golf courses in the country), but also because how well it has been used by the real estate developers to enhance their offerings.

One bit of good news in Europe came at a course where real estate also plays a part. The Wentworth Club, home to the BMW PGA Championship and the only venue in England that hosts a top-class tournament on an annual basis, saw a change of ownership. The club was bought by the Chinese luxury conglomerate Reignwood Group for £135m, which showed there is still appetite for quality projects. The sale made a neat profit of £5m for previous owner Richard Caring.

Julian Small, CEO of Wentworth Club, said it was a proud achievement that in the challenging business environment of Europe, the club had managed to finalise a sound financial deal.

“In England, we host the only professional tournament that is held in the country every year. If we look at The Open Championship, it rotates among several venues. So we have been able to be the standout club,” Small said. 

Venues in the UAE are seen as a great destination for investors due to the boom in the economy and the strong business sentiment here. Chris May, CEO of Dubai Golf which oversees the Emirates Golf Club and the Dubai Creek Golf and Yacht Club concurs.

He said: “It is a very positive situation for golf in Dubai. What is needed to  develop a game in a city or area is 10 to 12 good golf courses and Dubai already has a good portfolio. So it has made the city very attractive to golf fans in general.

“People see Dubai Golf as a world-class facility. As a result, business has been very good. We have the Omega Desert Challenge and the Ladies Masters and that in turn leads to promoting the game here and it also attract tourists from all over the world. 

“The country has been made very accessible by Emirates Airlines and others and it just makes the UAE a fantastic package for golf.”

A crucial aspect in making that fantastic package is the real estate angle. Clubs and real estate developers see great sense in joining hands and maximising the returns for each other. 

The valuation of any property increases manifold if it is at or near a golf course, while the clubs enjoy a ready population that can use the facilities all year round or fill up the restaurants and other recreational centres there. 

Projects like the Arabian Ranches and The Address Montgomerie are great examples of the symbiotic relationship between golf courses and real estate, and it’s no wonder prestigious companies like Damac are banking on golf to deliver.

“Real estate development is essential to golf. You very rarely see standalone golf facilities, especially in this part of the world. At the beginning, we didn’t have a real estate plan at the Emirates Golf Club and Dubai Creek. But then we saw what phenomenal success The Montgomerie had in that area and every new facility ever since has had real estate attached to it,” May said.

“In 2005, when we redeveloped the Creek, we created 92 villas which are all for lease. They have been very successful with 100 per cent occupancy since we opened. Recently, we did something similar at the Emirates Golf Club too. There we created 82 villas and they have been fully occupied since opening four years ago.”

Real estate development is yet to kick off at Yas Links in Abu Dhabi (pictured left) but according to Chris White, general manager at the club, that will change soon.

He said: “Yas has three plots that border the golf course. They were always intended to be developed. And (developers) Aldar have launched three new developments in the area.”

In the UAE, golf is thriving and Dubai Golf’s May added: “If we look at the Gulf region, there are three Desert Swing events and then we end the season with the DP World Championship. It’s amazing that such a small place holds such an important place in the golfing calendar.

“Also, Dubai’s success in getting the World Expo 2020 will drive the game further ahead with tourism and real estate development set to rise. The next four to five years look very bright.”

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