The announcement of the Manchester City/stadia naming rights deal set a lot of people into the land of hyperbole. With figures of £300M to £400M being bandied about it was open season on the financial cloud of City and the circumventing of UEFA Fair Play rules.
But a peek under the covers shows that the numbers are exaggerated in relation to an apples-to-apples comparison. The Guardian claimed that the City deal to be more than double the amount paid for the new Madison Square Garden.
It is only later in the article do we find out that much of the suggested sponsorship is going to go into a yet to be started property development.
Without the specifics of the deal being made public it is safe to say that the widely quoted £300M to £400M is on the same footing as David Beckham’s $250M contract with the Los Angeles Galaxy.
Given the magnitude of the proposed development it is probably fairly safe to go with around £10M per year for the rights to rename the existing Eastlands.
Despite many suggestions to the contrary there is nothing particularly exceptional about a £10M per year stadium sponsorship for a major sports team. (Reports also indicate that the £100M over ten years may includes more than naming rights as well).
No lesser source than “The Swiss Ramble” came up with an estimate of £15M per year when he mocked up a financial recovery plan for City as part of a blog from last October. The article laid out a plan to cut the £121M loss reported for the year to May 2010 by Manchester City.
A number of articles that discuss the City deal infer that it will incur the wrath of UEFA and use the Arsenal/Emirates deal as a benchmark for comparison purposes.
Such a bellwether is disingenuous.
It is widely accepted that Arsenal’s deal is now very much low-end and asking prices and deals negotiated in the years since 2004 have increased significantly.
The original Arsenal deal also extended to shirt sponsorship and came in at around £100 million for a 15-year deal.
The European market was a late-comer to the naming rights game compared to North America.
But given the global awareness of European football (and in particular the Premier League and the growing importance of overseas TV rights) as opposed to the narrower North American focus of NFL, Baseball and Basketball interest from owners and potential corporate sponsors has risen considerably in the last few years.
If you compare the Manchester City/ Etihad Airways deal with some recent North America announcements or reported negotiations the numbers begin to converge.
Just a couple of weeks ago MetLife was reported to be close to a naming rights deal for New Meadowlands Stadium.
The reported price range between $17 million and $18 million per year.
At the very top end Farmers Insurance just signed-on for the Los Angeles NFL stadium project. It is reported that the insurance company will pay AEG between $600 and $700 million over 30 years.
Closer to home for Manchester City the $100M figure was widely discussed when Messrs. Hicks and Gillett publicly discussed how a new stadium for Liverpool might be financed.
Admittedly you have to consider the delusional source and no term was ever floated. Nonetheless there was no outcry about the number or that it might exceed “market-value.”
Some of the media may be positioning the deal as one that flies in the face of UEFA Financial Fair Play regulations but it is highly unlikely that the deal will fail any “market-rate” scrutiny by regulators.
Other football clubs are unlikely to be upset at the deal announced by Manchester City on Friday. In fact they will look at it positively and something that will work in their favour.
After-all City have set a new high-water mark just as Arsenal did seven years ago.
Five years from now City’s deal with Etihad Airways will, in all likelihood, rank low on the totem pole of naming-rights deals.
Assorted North American Naming Rights Deals (Annual)
Source ESPN Sports Business
American Airlines Centre – Dallas Mavericks, Stars – $6.5M – expires 2031
Bank of America Stadium – Carolina Panthers – $7M – expires 2024
FedEx Field – Washington Redskins – $7.6M – expires 2025
Invesco Field at Mile High – Denver Broncos – $6M – expires 2021
Lincoln Financial Field – Philadelphia Eagles – $6.7M – expires 2022
M & T Bank Stadium – Baltimore Ravens – $5M – expires 2018
Minute Maid Park – Houston Astros – $6M – expires 2030
Phillips Arena – Atlanta Hawks – $9.3M – expires 2019
Reliant Stadium – Houston Texans – $10M – expires 2032
You can also find other Soccer Report Extra.com contributors on Twitter by following this link.
Please refrain from posting comments that;
The House reserves the right to delete any such comments and to block further participation on the site.