Clash of business models comes to a head

Manchester plays host to one of the fiercest rivalries in football on Monday night with the Premier League title at stake and the city abuzz, with tickets changing hands for as much as £1,000.

But the 163rd Manchester derby between City and United – described by some as the biggest game in the Premier League’s 20-year history – will be as keenly followed in the desert town of Bani Yas as Moss Side.

Ali Waleed Al Saeedi, an eight-year-old from the town near Abu Dhabi, will lead out the Manchester City team as a mascot, a symbol of the international dimension to this very local conflict. It pits US-owned United against the upstarts of City, flush with Middle Eastern oil wealth.

Ali, who attends a City soccer school in the wealthy emirate, won a competition with Etihad airways and the tourism board of Abu Dhabi, ruled by the City owner Sheikh Mansour bin Zayed al-Nahyan, who bought the club in 2008.

Louis Cooper, meanwhile, will be missing his first home derby for almost 30 years. After a lifetime supporting the Blues he handed back his season ticket following the FA Cup triumph in May, finally sated by a first trophy since 1976.

“No one contacted me to ask why or if there was anything they could do to keep me,” he said. “You are just a commodity to them I suppose.”

The feeling is one familiar to those in the red half of Manchester, where some local United fans have long felt alienated by the club’s push to promote its global brand.

United was acquired by the US-based Glazer family in 2005 in a highly leveraged deal that has laden the club with heavy debt. They set about repaying the money by exploiting United’s worldwide appeal, taking an estimated £500m out of the club but boosting commercial revenues.

Monday night’s match could decide the destination of the league title because the cross-town rivals are separated by just three points with three games to play, marking the first time in four decades that the clubs have gone head-to-head for the title.

Kieran Maguire, a finance expert at Manchester Metropolitan University, said the game was as much a clash of two business models as two teams.

“The Glazers did a business deal, a classic leveraged buyout, while the Abu Dhabi investment is purely an issue of raising the profile of the emirate. You can’t see it earning a return.”

The Glazers have taken what was already a profitable business thanks to its global appeal, huge fan base, 76,000-seat stadium and league and European success, and increased it with more aggressive commercial activity.

However, some fans fear its ability to compete at the top level could be damaged permanently by United’s profit-driven approach. A spokesman for Must, the 177,000-strong supporters trust, said the club had underinvested and only the ability of Sir Alex Ferguson, the longserving manger, had kept it in Europe’s elite. Many fans fear what will happen when the 70-year-old retires.

Revenue in the first half of 2011-12 season grew 11.8 per cent but net debt remains £308m. Moreover, the Glazers’ exit looks complicated with a proposed Singapore flotation postponed because of the financial crisis.

City too have financial challenges. The club set a new record for British football with a loss of £195m in 2010-11.

This reflects the £156.5m spent on player transfers to build a team of world class stars, such as Carlos Tevez and Sergio Aguero, to compete United’s longer-established thoroughbreds, such as Wayne Rooney and Ryan Giggs.

City can carry its heavy losses as long as Sheikh Mansour remains involved. But Uefa’s “financial fair play” rules, which will apply to clubs in European competitions from the 2014-15 season, require them to be close to breakeven.

City has responded by signing a 10-year deal with Etihad believed to be worth £350m for the stadium naming rights and shirt sponsorship.

It is also building a £100m academy to grow and harvest the best talent from around the world. But to attract them it needs success on the pitch, starting with this big match.

Tony Tanner, a communications engineer who lives a few miles from the Etihad stadium, will be at the game. First taken aged three by his parents, he still accompanies them and his brother, along with four young Tanners, to matches. He pays £450 for the 19 home games, his children £95, but he is realistic that will rise.

“We couldn’t have a better owner,” he said. Asked when City might match United off the pitch as well as on it, he is sanguine. “Another 10-20 years.”

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