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Bobby McMahon

Bobby McMahon

You can see me on Soccer Central most Mondays and Thursdays on Rogers Sportsnet in Canada. I write a regular column for Forbes.com and Soccerly.com and frequently guest on various podcasts and radio shows.


TANGENTS

Manchester City Naming Rights Deal Great News For Premier League

Written by on July 9, 2011 | 37 Comments »
Posted in Manchester City, Money Game

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

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37 responses to “Manchester City Naming Rights Deal Great News For Premier League”

  1. rahul says:

    thanks for sharing and adding some perspective.
    🙂

  2. J says:

    Bobby –

    Can you post a reference to a condensed explanation/primer of Fair Play rules?

    Thanks

  3. Gus Keri says:

    One important point:

    The chairman of the “Etihad Airways” is (Hamed bin Zayed Al Nahyan) while the owner of Manchester City is (Mansour bin Zayed Al Nahyan). They are half-brothers and from the same family that rules United Arab Emirates and governs the “Abu Dhabi” emirate. The current ruler of the UAE (Khalifa bin Zayed Al Nahyan) is their half-brother also.

    Man City is going to find a way to even the books before the financial fair play takes effect. By that time, the value of the club will be on par with the rest of top European clubs.

  4. Alberta Gooner says:

    Great article Bobby. One quick editor’s note — it’s bellwether not bell-weather.

  5. […] be filthy busy at work, here’s a bonus weekend update to tide you through. The ever-excellent Bobby McMahon breaks out the abacus to discuss Stockport Massive’s new stadium-naming deal that sounds a […]

  6. Gus Keri says:

    The curse of the PKs extended to the English women team.
    They lost to France on PKs in the quarterfinals of the women world cup after drawing (1-1)

    France deserved to win it after dominating performance over 120 minutes.

    France will play the winner of USA vs Brazil in the semifinals.

    Germany and Japan are playing right now.

    In the Copa America, Brazil is playing Paraguay just about right now.

  7. Here is the full UEFA FFP version
    http://tiny.cc/ioy87

    Here is a piece that The Anders Red Blog did at the start of the on some of the implications.
    http://tiny.cc/oy2jv and a follow up http://tiny.cc/pjiig

    This is a great summary here using Liverpool as the test case. http://tiny.cc/c2fk0

    In its simplest form it requires clubs to operate within the revenue they generate. The regulations cover just about every situation imaginable including an assurance that deals are at market value and are not inflated.

  8. A_G – thank you

  9. Gus – just a comment. UEFA FFP does not look at club valuations it considers the revenue and expense statement every year. It is is not a case of hitting the mark once and that then puts you onside for evermore. You have to do it each year.

  10. Gus Keri says:

    Bobby:

    I agree.

    But to start with a club value of a half of Million dollars for example is better than a value of a quarter of Million dollars. Thereafter, you can stay within the range of the revenue.

    You already have a set of players that are higher value than the other clubs and this assumingly indicate better quality players.

    It’s like having few laps on the rest of the runners in a race.

  11. Gus Keri says:

    Brazil needed a last minute goal to save a point against Paraguay who frustrated them throughout the game. Result finished 2-2

    Ecuador vs Venezuela will start at 5:30 pm EST in the last game of the second round.

    Regardless of that result, all teams will go to the final round with something to play for. No team has qualified to the quarterfinal and no team has been eliminated.
    I don’t remember the last time this thing happened.

    The gap between the best and the worst South American teams is getting smaller. It will make for an interesting qualification to the 2014 World Cup.

  12. Gus Keri says:

    What a huge upset!

    Japan beat the two-time defending champions and the host Germany 1-0 and eliminated them from the WWC.

    Japan will meet the winner of Sweden vs Australia (tomorrow) in the semifinals.

    The winner of the USA vs Brazil (tomorrow) will be the favorite to win it all now.

  13. J Rob says:

    Any thoughts as to why Arsenal are or have been so financially conservative relative to their rivals? It is just because the development of the Emirates stadium was so costly?

  14. J Rob – they made a decision many years ago to live within their means and develop young players instead of signing the ready made product.

    The new stadium certainly played a large part in that decision. Without a sugar-daddy the financing for the stadium would not have been forthcoming.

    The redevelopment of Old Trafford over a 15-20 year period made Manchester United an exception. Same for City as they benefited from the Commonwealth Games in 2002.

    Chelsea up to this stage have not had to worry because of Abramovich. Of the other traditional bigger clubs all are in difficult positions as far as the future is concerned re stadiums – Liverpool, Everton, Spurs stand out.

    It will also be an issue for Chelsea as FFP really kicks in.

  15. Gus – Tim Vickery has written about the SA WCQ system a number of times and he puts forward a compelling case that the change to the 10 team (or 9 this time) league table from the old system of three groups is responsible for the traditionally smaller nations improving their relation position vs the likes of Argentina and Brazil.

    Interesting when you consider that outside of South America the 10 team table is looked upon as excessive and overkill.

  16. Max Bretos just tweeted and suggested that Sweden should not be dismissed as potential winners. Said the same thing to Derek last night – but off camera.

    Brave show from Japan – major upset.

    Positioning of the German goalkeeper was very poor on the goal. Too far off her near post and got the angle all wrong.

    Japan keeper was terrific.

  17. Gus Keri says:

    Bobby:

    “outside of South America the 10 team table is looked upon as excessive and overkill”

    The only ones who are complaining are the European clubs because of the increased number of games that their South American players have to travel back and forth.

    In spite of this 10 team table, over the 4 year cycle, South American players play almost equal number of official international games to the European players.

  18. Gus Keri says:

    Bobby:

    I didn’t think Sweden deserved the win over the USA. I thought the USA was unlucky and deserved at least a tie. I don’t see the same result if they meet again in the cup final.

  19. Soccerlogical says:

    Def agree about a very talented and creative Woman’s Sweden side.

    I’ve been watching some of the Womens WC, especially how technical and Barca-esque Japan were in their win over Germany. I gotta admit that true “team play” is much more visible in the Woman’s WC than the Men’s.

    Unless Neymar goes to Ligue 1 for a year or two to develop some more (perhaps mentally more than physically) he will end up being nothing more than a Robinho. Brazil needs Kaka to lead this team into the WC or they won’t get past the first knockout round.

    *NYRB vs DC United…. DeeeeeeeeeeRo and Charlie time!

  20. Gus Keri says:

    Venezuela beat Ecuador 1-0 with a wonderful long range shot by Gonzalez, ala Gerrard’s goal against West Ham at the FA cup final, and lead the group with 4 points.

    This Copa is full of surprises.

    Every team played two games so far and here are some facts:

    The four quarterfinalists of the 2010 world cup have two points from two draws: Brazil, Argentina, Uruguay and Paraguay.

    Only 4 teams has 4 points from a win and a draw: Chile, Colombia, Peru and Venezuela.

    Mexcio is the only team which lost their two games and pointless, while the other invitee, Costa Rica has 3 points from one win and one loss.

    Ecuador and Bolivia have only one point.

    Overall there were 7 draws out of 12 games so far.

    No team qualified to the quarterfinals yet and no team eliminated.

  21. loco4losche.com(valencia fan) says:

    the financial strength might be growing substantially but I still don’t respect the way they have been going in business end of the sport; paying bumper wages and transfers. hope they don’t become like valencia which has two stadiums: old mestalla which is not fit to hold in couple of years and nou mestalla which is 40% through construction. on top of that they have a 60million euros debt

  22. Soccerlogical says:

    Gus – Not really a surprise that Venezueala beat Ecuador. Venezuela have some real talent like Arango, Rincon, Rondon and Miku all from La Liga and Bundesliga PLUS the fact that Antonio Valencia was injured.

  23. Rhywun says:

    My problem with “naming rights” is the ridiculous names that ensue. Nobody in their right mind would visit a place called “Minute Maid Park” unless millions of dollars were changing hands. Someday visitors from another planet will wonder why every financial institution has a sporting venue attached to it. Maybe they will reason that bankers need to roll up their sleeves and kick a ball around on their days off.

  24. J Rob says:

    Bobby:

    Thanks. I didn’t realise that Man City benefitted from the Commonwealth Games in 2002. Maybe in the not-too-distant future West Ham will be bought by wealthy new owners when they become the new tenants at the Olympic Stadium in London.

  25. Gus Keri says:

    SL:

    I wasn’t referring to Venezuaela result in particular. I was talking in general.
    The top 4 teams in the continent (the 4 quarterfinalists at WC 2010)have failed to win any game.

    Venezuela has improved significantly in the recent years. In 2010 WC qualification, they missed the play-off by 2 points.

    They are no longer the minnow of South America and I pick them to finally make their first appearance at the WC finals in Brazil 2014.

  26. Gus Keri says:

    Games to watch for today:

    Sweden – Australia: 3-1 (WWC) (finished)

    Sweden qualify to play Japan in the semi. They also join France and
    Great Britain as the European representatives at next year Olympics.

    Germany is not only out of this world cup, they are also out of the Olympics.

    11:30 am EST
    USA vs Brazil (WWC quarterfinal)
    Winner to meet France

    3:00 pm
    Colombia vs Bolivia (Copa America)
    Colombia needs one point to move on to the last 8. And if they do, all teams with 4 points will be guaranteed a spot in the last 8 and those are Venezuela, Chile and Peru

    3:45 pm
    Germany vs Brazil (U-17 WC third palce game)
    Who would’ve thought this game won’t be the final?

    6:30 pm
    Mexico vs Uruguay (U-17 WC final)
    Look on the Aztica crowd to push the home team to the title.

  27. Gus Keri says:

    WWC quarterfinal:

    USA – Brazil: 2-2 (PK: 5-3)

    USA moved to the semi to meet France.

    It was an amazing game. Both teams went after the win but the US showed superior physical conditioning that helped them keep the pressure on the Brazilians until the end.

    Abby Wambach’s goal in the 122nd minute to tie the score reminded me of Landon Donovan’s goal agaisnt Algeria in the WC 2010.
    It had the same dramatic effect on every body even the fans at home.

    It was a classic match but unfortunately refereeing controversies spoiled it.
    The referee kept the yellow card in her pocket on three intentional handballs, yet she showed a straight red for a 50/50 ball.

    At the end, the more deserving team won and the USA played to thier potential for the first time this cup.

    Next is France and it’s not going to be easy. France is the dark horse in my opinion with their Barca-like soccer.

  28. J Rob

    You have nailed it. If/when the West Ham move is completed they will instantly become a more valuable property and they will be snapped up – Championship or not.

    Location, location, location?

  29. Gus Keri says:

    Copa America:

    Colombia – Bolivia: 2-0

    Two goals by Porto and Europa league leading goal scorer Falcao.

    Colombia is the first team to qualify to the last 8 and Bolivia is the first to be eliminated.

    With 7 points, Colombia wins the group and will play one of the third place teams.

    With this result, any team with 4 points is guaranteed a spot in the quarterfinals. Venezuela, Chile and Peru join Colombia in the last 8.

  30. Gus Keri says:

    Three players from New York Red Bulls and four from Los Angeles Galaxy in the MLS all-stars IX:

    Keller, Marquez, Ream, Gonzalez, Franklin. Beckham, Donovan, Jewsbury, Shea, Henry, Wondolowski

  31. J Rob says:

    Bobby:

    It would seem that three clubs in the EPL have a huge advantage long-term: Man Utd, Man City and Arsenal because of their state-of-the-art stadiums.

    Even Chelsea with the implementation of the Financial Fair Play rules will struggle to redevelop Stamford Bridge.

    As for Liverpool and Spurs – they both seem to be in very weak position because of the cost of redeveloping their respective stadiums or building a new ground.

  32. France and Japan will get to the finals.
    France and Japan will only lose by own goals and headers in play with the States and Sweden respectively. Japan isnt australia defensively, germany knows that. France have the best midfield trio with abily, necib and delie. I like Delie and Thomis as the best pair up top, the last game against england, thomis was excellent. Wambach will give Georges a tough game all game but Georges is a warrior

    http://www.associatedcontent.com/article/8220825/wwc_semifinals_predictions.html

  33. Gus Keri says:

    U-17 WC third place game:

    Germany – Brazil: 4-3

    Germany came back from 1-3 down to beat Brazil for the bronze medals.

    Yesil didn’t add any to his goal tally.

    Here are the top goal scorers:

    1- Souleymane Coulibali (Ivory Coast) 9
    2- Yesil (Germany) 6
    3- Adryan (Brazil) 5
    3- Ademilson (Brazil) 5
    3- Benzia (France) 5
    6- Fierro (Mexico) 4
    6- Aydin (Germany) 4

    Germany finished with a total of 24 goals in 7 games, followed by Brazil 15 (from 7) and Mexcio 15 (from 6).

    the final between Mexico and Uruguay to start in 45 minutes

  34. Gus Keri says:

    U-17 WC final:

    Mexico – Uruguay: 2-0

    Congratulations to Mexico on winning their second U-17 world cup at home. they are worthy winners.

    List of winners:

    Brazil 3 titles
    Nigeria 3
    Ghana 2
    Mexico 2
    France 1
    Russia 1
    Saudi Arabia 1
    Switzerland 1

  35. Oooh you had to mention Saudi Arabia didn’t you. Now the therapy has to start again.

  36. Gus Keri says:

    Bobby:

    Sorry for opening an old wound

  37. Gus Keri says:

    WOW

    The Wambach’s goal made the CNN morning news.

    What has become of this nation?

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