Business of Sport: China deal a boom for Manchester City

Alam Khan - Reporter 18:36 28/12/2015
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  • Sought after: Manchester United are now showing results on and off the field.

    Cast your mind back to 2008 and the scepticism, and even vitriolic comments, when Sheikh Mansour bin Zayed Al Nayhan bought Manchester City for £210 million (Dh1.14bn) and subsequently provided considerable sums to create a side that could win the game’s biggest prizes.

    Talk of building a dynasty was derided as his transfer spending, now more than £1 billion (Dh5.44bn), was criticised from near and afar. Seven years, and two Premier League titles and FA Cup and League Cup triumphs, have shown his investment has not proved futile since resurrecting a club heading for administration.

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    As City now challenge for trophies in every campaign, the millions have helped them muscle in on the established order of Europe’s elite and particularly, neighbours Manchester United.

    So when China’s President Xi Jinping headed to the Etihad Stadium – rather than Old Trafford given reports he was a United fan –  during his State visit to the United Kingdom in October, it was significant in more ways than one.

    Having met stars like Sergio Aguero and impressed by facilities at the new £200m (Dh1.09bn) Etihad Campus, the reasons were made clear two months later when China Media Capital (CMC) Holdings, a government-backed investment firm, bought a 13 per cent stake in the City Football Group (CFG), Manchester City’s parent company, for £265m (Dh1.44bn).

    Summit meet: President Xi Jinping and PM David Cameron at the City Academy.

    The move comes within increasing ties between the countries. A recent state visit to China by His Highness Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, saw a number of strategic agreements signed.

    “Nobody would ever have thought, when the Sheikh bought the club, that we would have come this far and become almost so powerful,” says Kevin Parker, general secretary of the Manchester City Supporters Club. “When you see how quickly we have gone from a club that had no money to a club worth £3bn, it’s just unbelievable.

    “I think the other teams are absolutely scared to death of this deal. City have stolen a march on them, definitely. The rest of the footballing world has looked around and said ‘crikey, wow’. You look at Manchester United and Real Madrid and this is the sort of deal that they would have been doing – and it’s our deal.”

    Considering Sheikh Mansour had dismissed previous approaches, the City deal – which followed six months of talks – surprised many, including Stuart Brennan, who covers the club for the Manchester Evening News.

    Khaldoon Al Mubarak, chairman of both the club and City Football Group, was quick, though, to allay fears that the Abu Dhabi owner was plotting an exit strategy.

    “He said the opposite and this is 13 per cent in the City Football Group…quite a small slice,” adds Brennan. “This does seem to be a partnership where both are going to get something out of it. City in that market and the Chinese learning from their expertise. It’s win-win. Teams have tried there before with pre-season tours, shirt sales, and had success to a limited degree, but this is a whole new level. To get the State backing you as well, it opens up the entire country.”

    Through astute decision-making and strategic partnerships, CFG, whose chief executive is the former Barcelona vice-president Ferran Soriano, has grown in stature since creating MLS team New York City FC in 2013 to join City as part of its footballing family. Melbourne City FC followed to give them a presence in Australia, while a link with Yokohama Marinos FC raised their profile in Japan.

    China was regarded as one of the final frontiers, a nation rich in potential, yet strangely untapped. A decade ago, and even when City had Dragons international Sun Jihai on their books, Professor Tom Cannon spoke about how clubs had gone to the Far East ‘for what they see as a football gold rush, but in many cases what they have found has been fool’s gold’.

    “If this market was going to be cracked then it was going to be cracked with this kind of deal” – Professor Cannon

    Now, City could well have struck gold. “If this market was going to be cracked then it was going to be cracked with this kind of deal,” says Prof. Cannon, a football finance expert at Liverpool John Moores University. “A lot of English clubs have dabbled in the China market, but not taken it seriously and haven’t established the strategic partnership that City are doing.

    “They are a very ambitious club and have a vision of football and sporting globalisation that I have not seen anywhere else, even in the clubs that have been longer established like Liverpool, Manchester United and Real Madrid. They haven’t had the vision that you have seen with City, not only in this deal, but developments in North America, Asia and across Europe.”

    While the Chinese investment will further help comply with UEFA’s controversial Financial Fair Play rules, City announced a £10.7m (Dh58.3m) profit for the 2014-15 season, the first since the takeover, and a record annual revenue of £351.8m (Dh1.92bn).

    Where once they were followers, casting envious eyes at United’s commercial deals and global appeal, they are now leaders.

    “Absolutely,” adds Brennan. “This China deal has trumped everyone. United have got into the China market better than anyone, but this deal destroys anything they had built up. It seems everywhere you look, on the field, their academy, they are all over United.”

    No longer are they just ‘noisy neighbours’ as Sir Alex Ferguson once claimed, but making themselves heard worldwide.

    “A lot of people were outraged President Xi didn’t go to Old Trafford on his visit because that is seen as synonymous with Manchester,” says Brennan. “But a lot of people at City think, with a lot of justification, that it’s all happening there now. It’s more dynamic, not just on the field, but off it. The work in the community with the investment around the ground and the whole Campus idea, it fits more with what China wants, something forward-looking than backward.”

    With President Xi announcing football will be a compulsory part of the national curriculum and revealing a long-term aim to host, and win, a World Cup, the deal reflects China’s desire to develop the game to a higher level – and so too City’s standing as a “premium brand”.

    “It’s a stepping stone,” admits James Ducker, Northern Football Correspondent for the Times. “Potentially, a big stepping stone. If you look at the acceleration in City’s commercial revenues since Sheikh Mansour took over, it’s extraordinary. People say yeah, but they are striking deals with lots of Middle East sponsors, but I do see signs of that starting to change.

    “People questioned the value of the £400m (Dh2.18bn) 10-year agreement with Etihad Airways, but then United came and signed a deal with Chevrolet for £53m (Dh288.8m) a year and the Etihad deal now looks undervalued.

    “Ferran Soriano is quite a visionary, bold and ambitious, and the City group are trying to push the boundaries all the time. It has looked at China and seen a market very difficult to get into and establish strong reliable contacts. You go there and don’t know who you are dealing with. Now they can immediately tap into a well of knowledge and give them a strong platform to develop commercially.”

    Ducker believes CFG will also look at gaining a permanent foothold, whether through a club association or founding a new team, and keep pushing City to become the world’s No1 club, be it through buying the best players or developing young talent.

    It is a journey that fills fans with much excitement. Coincidentally, the first Chinese branch of a Manchester City Supporters Club was set up in Shenzhen just eight months ago. “There’s about 60-70 members so far,” says Parker.

    But he expects more to follow…many more.