Why Etihad sponsorship leaves City still needing more money

Quite rightly there was a celebratory air to City’s new sponsorship deal with Etihad. Early speculation guessed it might be worth £100m, then the figure rose to £300m and finally it was reported as being worth up to £400m over 10 years.

The structuring of the deal to cover stadium naming rights, shirt sponsorship and the new developments on the area surrounding the ground should enable it to fit within Financial Fair Play rules (FFP).

With Liverpool and Manchester United earning £20m pa on their current shirt deals, it was important for City to improve on the previously reported £2.3m pa Etihad were paying. Claiming parity with United and Liverpool accounts for half of the new money.

Clubs such as Chelsea who have been seeking stadium naming rights deals were looking for £10-12m pa. Again Garry Cook can claim we obtained something similar. The rest can be put down to the unprecedented new developments that will lie within the Etihad Campus.

£400m is probably at the upper limit of what City could claim and get away with. In the current tough economic climate other clubs will struggle to match it and those such as Karl-Heinz Rummenigge at Bayern, John W Henry at Liverpool and Arsenal Supporters Trust have been quick to cry foul.

Of course they all have vested interests in seeing City’s commercial deals capped. Arsenal often appear to occupy the moral high ground when it comes to FFP, yet is their latest attempt to make millions out of a property deal really within the spirit of Platini’s rules?

Anyway back to City and why the new deal still leaves City needing more money to compete with the big clubs. We’re at the top end of the Premier League, set to bring in vital Champions League revenue, yet there is one significant gap in our finances – matchday revenues.

The last published figures were for 2010, showing City earning £24.4m. This is likely to have increaseed to around £30m for last season, and will go up again with increased ticket prices and by charging the full amount for Champions League games.

Elsewhere United and Arsenal both make £100m per season. Liverpool and Spurs both pull in more than City despite lower crowds as they have higher prices. A season ticket in the Anfield Road stand can cost £790, far more than the City equivalent.

In terms of revenue, hopefully City will pull away from Spurs and look to overtake Liverpool next season. However our £40m sponsorship plus say £35m matchday revenues comes to £75m. That’s still £25m below United and Arsenal’s matchday revenues alone.

There’s talk that the plans for Etihad Campus will include some revenue generating developments. That will be fantastic, but it’s hard to see how the serious amounts of money required to make up the gap in matchday revenues will be achieved.

Ever since Sheikh Masour took over the club there has been talk of expanding the stadium. Even with the Etihad sponsorship, FFP pushes the case for increasing the ground capacity.

The arguments against this centre on the awkwardness of developing the current design, and the fact the stadium isn’t always sold out.

The design issues can be overcome, albeit at an added cost. With regard to crowd numbers, Maine Road wasn’t always sold out either, yet the crowds still went up when we moved to Eastlands.

With the glamour of regular Champions League football and world class players, the club’s appeal would be sure to grow, as it has with Chelsea. The demand for tickets at Stamford Bridge is far greater these days than before the team were in the top four.

How big would an expanded ground need to be? 60,000 is an oft quoted figure, yet financially would still leave us behind United, and Arsenal where ticket prices are so much higher. 70,000 with a lot of corporate facilities would be needed to put City in touch with the leading clubs, and keep us ahead of Liverpool and West Ham when they finally get their new stadia.

The Etihad deal is a fantastic one, and things are progressing well on the field. There’s just no time to rest on our laurels with FFP coming in, and once the development of Etihad Campus is under way, hopefully attention will turn to matchday revenues and the stadium.