Money Flowing into English Soccer

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Andrew Yates / AFP / Getty

Manchester City, right, competes against FC Midtjylland during a UEFA Cup match

The news late Monday that Manchester United, current champions of English and European league soccer, had bought the Bulgarian star Dimitar Berbatov might usually have rankled the long-suffering fans of Manchester City, United's fierce crosstown rivals. City supporters have spent years living in the shadow of their more illustrious and wealthier neighbors, and the acquisition of the prodigious talents of Berbatov would make United even harder to beat. Instead, City fans had plenty of reason to cheer even as United shelled out $56 million for the Bulgarian: Manchester City was bought by an Abu Dhabi holding company, which pumped so much cash into the franchise that City was able to make an audacious last-minute bid for Berbatov — and then topped that by spending a British record of $59 million to sign Brazilian striker Robinho, from Spain's Real Madrid. Snatching Robinho from under the nose of Chelsea confirmed City's sudden arrival as a major player in the high-stakes transfer market of European soccer.

The effect on the fans of a team that hasn't won a major trophy in more than three decades was electric. "It's quite surreal, to be honest," says Kevin Parker, general secretary of the Manchester City Supporters' Group and a fan for 35 years. "We're having trouble wiping the smile off our face."

The dramatic reversal in the (literal) fortunes of Manchester City came when Abu Dhabi United Group (ADUG) — a holding company backed by the tiny Gulf emirate's royal family — reached a $380 million deal to buy the team from former Thai Prime Minister Thaksin Shinawatra. Exiled in London, Shinawatra — the subject of an arrest warrant in his home country after failing to appear in court last month on corruption charges — had paid just $148 million when he bought the club just over a year ago.

And the investment in City may have only just begun. Sulaiman al-Fahim, a residential- and commercial-property tycoon who led the takeover for ADUG, pledged to turn English soccer's ninth best team of last season into world dominators. "To reach that goal, there is no limit," the billionaire said. "We really have deep pockets." As if to underscore the point, al-Fahim said today that City would make an astounding $243 million bid to sign United's MVP, Cristiano Ronaldo, in January, as part of his plan to bring in the world's best players.

Given Manchester United's dominance of the Premier League in recent years and the money thrown around by clubs such as Chelsea and Liverpool, it's little wonder that the chance to finally compete has made City followers happy. Boosted by the sale of lucrative TV rights worldwide, Premier League clubs generated a little more than $3.1 billion in revenues in 2006-'07, making the league by far the world's richest and a magnet for overseas players, coaches and investors who are keen to cash in. (Foreigners now own eight of the league's 20 teams.) But making enough money to compete at the top level is becoming harder. Of that revenue, clubs poured some $2 billion into wages alone. The result: less than half of the Premier League's teams scored a profit in 2006-'07 — which is why wealthy foreign backers are so welcome in English soccer.

So what's in it for ADUG? For super-rich investors, short-term profits are an unlikely motive. Russian oligarch Roman Abramovich has sunk more than $1 billion into Chelsea since buying the London club in 2003. But while that's earned the team two Premier League titles and a place in the finals of Europe's élite club competition, Chelsea still couldn't manage a profit in 2006-'07.

More attractive to ADUG, perhaps: the United Arab Emirates (UAE), including Abu Dhabi, are eager to raise their sporting profile, says Simon Chadwick, a professor of sport business strategy and marketing at Coventry Business School. Abu Dhabi will host its first ever Formula One motor race next year, and Dubai even considered bidding to host the 2016 Summer Olympics. Snapping up Manchester City, then, is another way of "announcing your presence to the world," Chadwick says, of "establishing relationships with key decision makers in football, demonstrating they have the confidence and expertise and have the money to spend." ADUG's move into England may not be the last from the UAE either. Dubai International Capital has been pursuing a possible takeover of Liverpool Football Club for months. With oil-rich Gulf and Russian buyers ready to shop, expect fans from other English clubs to have reason to smile in the coming months as well.