Manchester City seizing global potential with China venture

The landmark, €377m alliance to capitalise on the growing appetite for football in China has completed a month at Manchester City which has illustrated four core elements in the extraordinary story of the previously hapless club's ownership by the oil-rich emirate of Abu Dhabi. The first, highlighted by this revolutionary purchase of a 13 per cent stake in the umbrella City Football Group to China Media Capital, a Chinese state-backed investment conglomerate, is the overarching global ambition of the Abu Dhabi ownership. An initial perception that City was a rich prince's indulgence when Sheikh Mansour bin Zayed Al Nahyan bought the club in 2008 has ceded to a realisation that the intention is to make serious money out of it, and this deal values City at a round $3bn and rising.

The second, seen in City’s position at the top of the Premier League - which their expensively bought, all-star team are the favourites to win - and in their qualification for the Champions League knockout stage, is the financial muscle and seriousness being applied to the football operations themselves.

The third, perhaps most surreal given City’s former status as Manchester’s gloom-laden, perennially cocking-up second club, is the geo-political power of the men now in charge; who, wearing their Abu Dhabi government hats, wield forceful diplomatic influence in 10 Downing Street, as the Guardian has revealed.

While City is still owned by Mansour, who bought it from the former Thai prime minister Thaksin Shinawatra in a private equity deal, the club is run by the chairman, Khaldoon al-Mubarak, who in his senior financial and political roles reports to Mansour’s brother, the Crown Prince, Sheikh Mohammed, seen as the de facto ruler in Abu Dhabi where he is deputy supreme commander of the armed forces.

The fourth, exemplified by last week’s announcement that City will develop a new club badge, returning to the round design dearly loved by fans of 1960s and 70s vintage, is the expertise the Abu Dhabi executives have applied to the detail of running a modern English football club, understanding they need to soften the commercial zeal by nurturing, not ripping off, local sentiment.

They now take the machine they have built, the trio of City clubs they own in Manchester, New York and Melbourne, and the youth development, scouting, marketing and logistics operations which service them, into China - potentially the biggest future football market of all. In doing so as full partners with CMC, a company supported by China’s communist government, City move ahead of other Premier League clubs, many of whom have long tried to figure out how to capitalise on Chinese interest. While the Glazer family’s sweating of multiple international sponsorships for United has been envied by other clubs as a lucrative commercial model, this more substantial partnership minted by City could herald a round of similar ventures in China and elsewhere.

This move will enable the Abu Dhabi owners to seriously expand into China, commercially selling the clubs, principally Manchester City, as brands, and the allied companies which are constituted to provide services and expertise outside the City group. The intention of the alliance is also to service the aspirations of the Chinese government, whose president, Xi Jinping, earlier this year announced a 50-point plan to make China a “soccer powerhouse”. The City operations will expect to contribute substantially to the requirements for more coaches, academies and building a football infrastructure, while also capitalising on the burgeoning Chinese television following for the Premier League.

City explained this in their statement announcing the partnership, saying: “the deal will create an unprecedented platform for the growth of City Football Group clubs and companies in China and internationally, borne out of CFG’s ability to provide a wealth of industry expertise and resources to the rapidly developing Chinese football industry.”

Ruigang Li, the influential Shanghai communist party member who founded and is the chairman of CMC, talked in the statement about "unprecedented growth opportunities" for developing football with City Football Group's "differentiated systematic approach to building a global platform," and pointed to the Chinese government's political ambition in the 50-point plan, including to host a future World Cup.

“We and our consortium partner CITIC Capital also see this investment as a prime opportunity for furthering the contribution of China to the global football family,” he said.

The statement said the parties had taken six months to find the right structure, culminating in the issue of new shares for a 13 per cent stake in City Football Group. With the €377m paid for that, the City group has cash to invest independent of Mansour’s royal wealth, which they could spend building the new stadium required for New York City, the MLS franchise acquired two years ago.

The Chinese partnership was enabled by the top-level political connections between the countries, most visible here when Mubarak hosted president Xi at the Etihad Stadium during Xi’s lavish state visit to Britain last month. On the day, the Chinese former City player Sun Jihai, who weeks earlier was appointed a City ambassador to China, was enrolled in the hall of fame at Manchester’s National Football Museum, a status which prompted widespread bewilderment within football.

Last month, the Guardian revealed internal United Arab Emirates documents which showed that Sheikh Mohammed, and Mubarak in his role as political advisor, pointed out to David Cameron and the British ambassador the UAE's large financial investments in the UK, while calling for a crackdown here on the Muslim Brotherhood, which the UAE forcibly opposes. In 2013, further documents showed a specific Whitehall unit was set up to secure investment from Mubadala, the $70bn fund of which Sheikh Mohammed is the chairman and Mubarak the chief executive.

Last year, Manchester City Council announced that Mansour’s Abu Dhabi United Group is to build €1.4bn worth of apartments in Manchester, following the acclaimed €283m building of City’s academy and “campus” in impoverished east Manchester, which included funding a local college and leisure centre.

That, and the care the Abu Dhabi regime has taken to honour City’s traditions and fans’ diehard sentiment while spending more than €1.4bn amassing players and becoming a football power, has won them acceptance in Manchester. City fans now boo the anthem of Uefa, the European governing body of football, principally because they believe its financial fair play rules have clipped the wings of owners from the Gulf most have greatly welcomed. The China venture underlines how deft these Abu Dhabi operators have been, seizing the global commercial potential of the people’s game, while keeping the City-till-I-die folk happy at home.

Guardian Services