Manchester City yesterday announced one of world football’s biggest sponsorship deals, which has been structured with Uefa’s new financial fair play (FFP) rules, introduced by Michel Platini, firmly in mind.

The name "Etihad" is set to get a lot more prominent for £400 million

City’s sponsorship deal with Etihad Airways, which is owned by the Abu Dhabi royal family, is worth up to £400m to the club over 10 years and led to yesterday’s announcement that the City of Manchester Stadium will from now on be known as the “Etihad Stadium”.

The rules are designed to ensure that football clubs’ Profit & Loss accounts are kept within stipulated limits – clubs are not allowed to have losses of more than £45m over the next three years. The purpose of this deal is to keep City in the big league by appropriately leveraging their owner Sheikh Mansour bin Zayed bin Sultan al-Nahyan’s great wealth within the rules thereby preventing them from being expelled from future European competitions. They believe that they have found a clever way to do this.

Etihad campus

The biggest part of the deal is the club’s proposed purchase of 80 acres of wasteland in east Manchester from the local city council for £20m over five years. Their aim is to create a potentially huge area of facilities in order to generate further sponsorship revenues. The new “Etihad Campus” will include the club’s relocated training ground, a youth set-up, a sports science facility and a Etihad call centre, in addition to retail areas. It is, of course, all subject to the normal planning process requirements.

These infrastructure projects are not counted as part of the club’s outgoings for the purposes of the FFP rules. The revenues will thus be created with no effective “cost” to the club.

City ran up losses of £121m in its successful bid for a Champions League place taking on enormous player wages in the process. Those losses do not include the wages of Jerome Boateng, David Silva, Yaya Touré, Aleksandar Kolarov, Mario Balotelli and James Milner, who arrived after the cut-off for those accounts.

Bigger than other sports deals

The deal is far bigger than recent deals to re-name Madison Square Garden in New York, and the home of the New York Mets. Arsenal’s shirt and stadium deal with Emirates was £100m over 15 years.

Andrea Traverso who has the job at UEFA of introducing introducing the FFP system, has said that he will  rigorously police any efforts by wealthy owners to use sponsorship deals to inflate their clubs’ balance sheets. City will argue that this arrangement whilst far bigger than other Premier League deals is fair because the Etihad Campus is much more than just a shirt and stadium deal.

The FFP rules are controversial. Many applaud them for stopping wealthy benefactors from splashing money around to distort football. The problem though is that it appears that it will entrench the top tier of clubs – and Manchester City have arrived just in time. It will not be possible for another Manchester City story to emerge in the future. The charge against the UEFA Champions League is that it has completely distorted the difference between the haves and the have-nots. It has certainly challenged some football fans’ love of the beautiful game.

City and the vast Abu Dhabi wealth behind it have redefined  what a “sponsorship deal” can be which is the envy of world football.

Abu Dhabi royal family, Etihad Airlines, football, football finance, Manchester City, UEFA fair play rules Business Finance & Law, Sports