Manchester City football club is riding high at the end of this year. After winning its second Premiership title in two years in the summer, the Abu Dhabi-owned club, currently breathing down the neck of league leader Chelsea, qualified for the last 16 of the UEFA Champions League for the second successive season, thanks to an impressive 2-0 win away to Roma last week.
Equally noteworthy perhaps are the club's efforts to pioneer an ambitious new international business model, which will involve it running multiple franchises on different continents, the likes of which have yet to be seen in the global game.
Broadening the appeal and reach of a football club beyond its home territory is, of course, nothing new, as fans of Manchester United, Barcelona, Brazil and many others will recognise. Leveraging a club’s brand in markets such as Asia, Africa and the Middle East has reaped enormous financial dividends for such clubs for decades.
In recent years a number of clubs have taken matters a step further, by establishing partnerships with clubs in other territories to assist them in talent acquisition, hoping to find the new Lionel Messi or Cristiano Ronaldo early enough to sign on favourable terms.
Manchester City however are determined to take things to another level, led by the chief executive Ferran Soriano and inspired by the vision and resources of the club’s owner, the UAE’s deputy prime minister Sheikh Mansour.
Rather than just signing partnerships and setting up sales offices overseas, the club, under the City Football Group (CFG) corporate structure, is seeking to build a genuine international enterprise by acquiring teams in developing leagues in strategically important markets.
Over the past 18 months Manchester City have acquired clubs in carefully selected growth markets including the US and Australia.
"We have an ownership and a chairman who understand the business enough. They're passionate about football but are prepared to rely on the technical expertise we have," Mr Seriano, formerly financial vice president at FC Barcelona, told the Sunday Telegraph earlier this year.
“They have the resources to invest when needed. Everybody has been trying to create global football brands but in truth, the end result is still very shy when compared to other industries.”
CFG got the ball rolling in May of last year, when it acquired a franchise in Major League Soccer in conjunction with the New York Yankees, for $100 million. The new club, named New York City FC, will play its home games at Yankee Stadium when the MLS starts up again in the new year.
The group then acquired the Melbourne Heart of Australia’s A-League for $12m in January of this year, promptly changing the club’s name to Melbourne City FC. Most recently in May, CFG acquired a minority stake in the J-League’s Yokohama F Marinos, majority owned by Nissan.
Creating such a group allows CFG to create a network of clubs where players can be nurtured and from an early age, with loans and transfers across the group forming a key part of their development.
Such a strategy will be underpinned by the 200-acre Etihad Campus, a state-of-the-art development facility in the east of Manchester. The initial phase of the campus, the City Football Academy, was opened last week by the CFG chairman Khaldoon Al Mubarak, and George Osborne, the UK’s chancellor of the exchequer.
Added to the mix is the expansion of the Manchester City brand. With the exception of the Marinos, CFG’s clubs will all use the “City” brand in their name, sporting the Manchester club’s light blue colours in their home kit.
Such strategies are not untested; Italy’s Pozzo family owns Udinese of Italy, Granada of Spain and Watford of England, with frequent loaning of players between the three teams. The energy drink manufacturer Red Bull, meanwhile, owns five football teams in Germany, Austria, the US, Ghana and Brazil, all of them known as the Red Bulls.
But the depth and breadth of CFG’s strategic vision is unique, according to Professor Simon Chadwick, chair of sport business strategy and marketing at Coventry University Business School.
“It’s a strategy that’s not haphazardly put together based on opportunities. It’s carefully and systematically putting together a portfolio of franchises to cover key target markets across the world. It’s about diversifying the group and truing to build sustainable businesses in different marketplaces,” he says.
Such a network of franchises is intended to create an ecosystem where many of the uncertainties surrounding the acquisition and development of talent are minimised, according to Mr Chadwick.
“If you can get the next [Lionel] Messi on your books at the age of 13 or 14, you can take him across a programme of development for 10 years and then he fits into the team and you know where he’s going to go. That creates some certainty,” he says.
“Whereas currently, if you sign someone and it doesn’t quite work out, you send him out on loan, bring him back and it still doesn’t work out and you sell them at a loss, there’s a lot of uncertainty in that decision-making process.”
City’s critics say that the club’s franchising strategy is a ruse to bypass UEFA’s Financial Fair Play rules, designed to prevent clubs repeatedly spending more than their revenues. The club was fined £49m (Dh281.6m) by UEFA in May, with the French club Paris St-Germain also fined.
The club refutes such allegations, saying that its aim is to build a sustainable global business.
While difficult to predict the location of CFG’s next franchise, China presents itself as an obvious target market, says Mr Chadwick, following in the footsteps of rivals like Real Madrid and Tottenham Hotspur, both of whom already have partnership agreements with local teams.
Such a move particularly makes sense in the wake of a new guideline issued by the Chinese government in October to help boost the country’s sports sector to 1 per cent of its total GDP from the current 0.6 per cent.
“The guideline marks the first time the Chinese government has tapped into the economic value of the sports industry,” says a Beijing-based associate with the law firm Sheppard Mullin.
“With the issuance of the guideline, the market expects China to be the biggest fitness market in the world within the next 20 years. In particular, foreign investors can see great opportunities as the guideline encourages foreign investors to invest in [the] sports industry in China.”
City’s franchise model also lends itself to a certain type of sponsor that the club is looking to attract, one that is seeking a global reach for its brand. Such a profile fits with CFG’s lead sponsor Etihad Airways, Manchester City’s long-time main shirt and home stadium sponsor.
The Abu Dhabi airline was announced as the main shirt sponsor for Melbourne City in July, followed last month by a similar deal with New York City FC.
But CFG’s global franchising model is also considered a good fit for similar brands looking to attract an international audience. In July came the announcement of a global branding agreement with Nissan, which will result in its brand being prominently displayed across the group’s stadiums.
“City are presenting themselves as a global business operating in a global marketplace, and are targeting brands that are looking for a global presence,” says Mr Chadwick. “And so while you may pay more for sponsorship you get global coverage in return.”
Such a proposition seems to sit well with Nissan, which in recent years has signed several high-profile sponsorship deals, including with the UEFA Champions League and the 2016 Olympic Games in Rio.
“It’s nice because the [City] deal gives us access to four different time zones and global regions,” says Andreas Sigl, head of global sponsorship strategy at Nissan.
“So far it’s been a very positive relationship, we haven’t felt the need to force things. There’s a lot of common values and on that basis we want to grow together.”
jeverington@thenational.ae
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