Middle East investors use sport to build brands

LONDON - On 1 September, Manchester City became the world's richest football club. Abu Dhabi United Group for Development and Investment confirmed that it had bought the club in the morning, reportedly for more than £200m, and by midnight the blue half of Manchester was toasting the signing of striker Robinho for a record £32m fee.

Foreign ownership of Premiership football clubs is nothing new, but it is the growing influence of the Middle East that has been most keenly felt and is changing the face of sport globally. Ownership of clubs and sponsorship of sporting events may be vanity projects stoked by rivalry between competing Middle Eastern cities, but the investments often have more to do with the creation of assets beyond the oil industry and driving tourism.

It is no surprise that airlines and tourist boards are the most proactive in sponsorship. Emirates, an airline whose tie-ups span sailing, golf, horse-racing, cricket, Australian Rules football, powerboats and rugby, has led the way, with Etihad and Gulf Air also boasting impressive and growing portfolios.

In football, Emirates is a global sponsor of the FIFA World Cup and Arsenal's shirt and stadium. Gulf Air became shirt sponsor of newly cash-rich Queens Park Rangers earlier this year, paying a record £7m, while Etihad sponsors Chelsea FC.

Rugby has also benefited from Middle Eastern outlay, with Emirates the title sponsor of the IRB London and Edinburgh Sevens tournaments and the England Sevens team, while rival Etihad became shirt and stand sponsor of Guinness Premiership rugby team Harlequins last year. Abu Dhabi Tourism aims to boost visitor numbers through its status as destination partner of the World Rally Championship and the Race of Champions.

With such high levels of investment, it would be easy to argue that brands such as Thomas Cook, current sponsor of Manchester City, will be squeezed out. But Rupert Pratt, managing partner of sponsorship agency Generate, is convinced that the impact on the sponsorship market will be positive and not lead to inflated prices.

'Such wealthy owners are not going to be so reliant on sponsors, so I would not be surprised to see Thomas Cook renew,' he says. 'But if the new owners want to bring in one of their own brands, then they will. Prices may go up slightly, but I don't think it will have a major impact on sponsorship. It's a buyer's market.'

Where travel companies lead, others follow. Manchester United may have deep pockets, but could not resist a mid-season friendly in Saudi Arabia last season, even at the risk of derailing its campaign. The club received a hefty cheque for its pains, and it seems the trip also helped the club secure a £9.3m deal with Saudi Telecom, the telco's first with a non-Saudi club. Then, last week, Saudi investment company Saudex Global signed a £500,000 shirt-sponsorship deal with rugby club London Scottish, a huge fee for a team outside the Guinness Premiership.

There has been colossal investment in sporting infrastructure in the Middle East. According to Pratt, more investors will use their influence with stake-holders to bring sporting events and tourism to the region. Dubai recently announced a bid for the 2016 Olympic Games, but then pulled out of the race. Nonetheless, it is pressing ahead with the development of its £2bn Dubai Sports City. 'Ultimately,' says Pratt, 'Dubai is using sport to build a tourist destination.' The management is seeking naming-rights partners for its world-class facilities, which, says Steve Martin, chief executive of M&C Saatchi Sports & Entertainment, should be snapped up by global brands.

Golf is another case in point. The finale of next year's European Tour is being hosted by Dubai, with the tour itself rebranded the 'Race to Dubai'.

The International Cricket Council, the sport's governing body, is now based in Dubai, making a first cricket World Cup in the Middle East a near certainty. 'It's not only cricket,' says Martin. 'A number of events could now be hosted in the Middle East. An equivalent to the Ryder Cup would be an obvious one, especially as Tiger Woods has designed a course in the region. I would also envisage a Rugby World Cup here before long, and a major tennis event such as the Masters would be another. The impact on the broadcast market will also be phenomenal, once major events start going to the region.'

Four years ago, Bahrain hosted its first Grand Prix and next year Abu Dhabi joins the Formula One calendar. The rise of these race venues has caused the sums paid to the FIA for the rights to host a Grand Prix to surpass those raised through the sale of broadcast rights for the first time.

The speed and scale of the takeover of Manchester City last week was extra-ordinary, but, as Martin notes, it is the tip of the iceberg. 'We have spoken to people in the Middle East in the past about various opportunities, but often the bravado eventually amounted to very little,' he says. 'But the region has a new-found confidence, backed up by investment on an unprecedented scale. The money is frightening.'

Major sponsorships

Emirates

  • Sailing (Team New Zealand)
  • Football (Arsenal, FIFA World Cup)
  • Rugby (Rugby Sevens)
  • Cricket (20Twenty World Cup,
  • ICC Test Match Umpires)
  • Golf (Dubai Desert Classic)

 Gulf Air

  • Formula One (Bahrain Grand Prix)
  • Football (QPR)

 

Etihad

  • Rugby (Harlequins Rugby Union)
  • Formula One (Ferrari, Abu DhabiGrand Prix)
  • Golf (Gulf Cup)

 Abu Dhabi Tourism

  • Motorsport (World Rally Champion-ships, Race of Champions)

 Mubadala Development Co

  • Formula One (5% stake in Ferrari, Ferrari Theme Park)

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