UEFA to probe Man City's £400m deal

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Manchester City stadiumAfter Manchester City FC announced a 10-year deal with Etihad airlines worth £400m – more than double the £150m first rumoured – European governing body UEFA has announced it is to investigate all major sponsorship deals involving top European clubs.

The deal has raised eyebrows because Etihad is the state airline of Abu Dhabi, whose ruler is the half-brother of City owner Shiekh Mansour bin Zayed bin Sultan Al Nahyan. The links between the new sponsors and the owners has led to questions about whether the club is effectively subsidising spending.

UEFA has now said it will "use relevant experts to make assessments as to the fair value of any major sponsorship deals, using appropriate industry benchmarks." City say they have already spoken to UEFA about whether the deal fits with the Financial Fair Play regulations that prevent clubs spending more than they earn.

Arsenal and the Emirates

One benchmark industry observers are using is Arsenal's £100m deal with Emirates. That deal gave Emirates the right to carry its name on the club's new stadium for 15 years. But it also included an eight-year shirt sponsorship, so City's originally rumoured £150m stadium only deal was more than double that.

Etihad CEO John Hogan insists that "We're a standalone business, owned by the Emirate", but the feeling that City are circumventing the new UEFA rules is fuelled by looking at other deals which contribute revenue of £32.4m.

The club has contracts with telecoms company Etisalat and Aabar Investments, both of which are based in the same country which another sponsor – the Abu Dhabi Tourism Authority – promotes. Eagle-eyed readers will have spotted a common thread.

Sports lawyer

But can these deals realistically be challenged. Sports lawyer Andrew Nixon of Thomas Eggar LLP says: "That's an easy legal question. There are no grounds for objection." He says anyone looking at the deal would have to ask "Is there a viable alternative market place? And the answer here is yes.

"Competition law challenges rarely succeed on sponsorship deals. There is a vast number of football teams and leagues airlines can sponsor and there are many viable market alternatives."

In short, there would seem to be no way for UEFA's 'team of experts' to establish what a proper market value is, because the counter argument is that the market value is what someone chooses to pay. As Martin Samuel asks in today's Mail, will UEFA ban clubs from cutting a deal?

One criticism of the UEFA rules is that, far from levelling the playing field, they preserve the cartel of rich clubs at the top by preventing competitors from spending their way into contention. It's rather ironic that the world's richest club is able to use this argument.

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