A real estate joint venture has been profitable for the soccer club’s Gulf owners, researchers contend, but possibly less so for its English hometown.
MANCHESTER, England — In the 14 years since an investment vehicle linked to the state of Abu Dhabi bought Manchester City, the emirate’s wealth has transformed the soccer club from a Premier League also-ran into a serial domestic champion and one of the sport’s global powers.
The breadth of that investment, though, stretches far beyond the confines of the club’s Etihad Stadium, according to a report published Thursday by researchers in England. In it, the report’s authors said the club’s owners have benefited from what they called a “sweetheart deal” with local lawmakers that allowed them to buy vast tracts of public land in Manchester at substantially reduced prices.
The 65-page report, published by academics at the University of Sheffield, found that Manchester Life, a joint development venture between the Manchester City Council and the Abu Dhabi United Group — a private equity company owned by Sheikh Mansour bin Zayed al Nahyan, the deputy prime minister of the United Arab Emirates and the brother of the country’s president — has resulted in a “transfer of public wealth into private hands that is difficult to justify as prudent.”
A Manchester City Council spokesman disputed the report’s conclusions in a statement.
“Land was valued by independent experts, using the nationally accepted ‘red book’ valuation benchmark, and we got the best overall deal we could for each site at a time when there was very little market interest in the area,” the city’s statement said, adding, “These were always envisaged as longer-term arrangements — the Council is due to receive several million pounds in this financial year through the first such payments.”
Manchester has been held up, in recent years, as a standard-bearer for the regeneration of Britain’s cities, overhauling years of postindustrial decline to recast its downtown as dynamic and desirable. Its construction and property boom has been outpaced only by London; by some metrics, it is England’s fastest-growing city.
Manchester City’s ownership group has been central to that, investing millions of dollars in the deprived areas in the immediate vicinity of the stadium that bears the name of the U.A.E.’s state-backed airline, Etihad. When the Manchester Life venture was launched in 2014, six years after the group bought the soccer team, it was designed to extend that investment to Ancoats, a district sandwiched between the stadium and Manchester’s city center.
The researchers claim, though, that A.D.U.G. did rather better out of the deal than its partner. They found that nine sites in the Ancoats district had been sold to holding companies registered in the offshore tax haven of Jersey — but ultimately owned by the investment vehicle — at prices below the comparable market value of similar sites.
The Manchester City Council insisted that each of the deals — which granted the United Group’s holding companies leases on the properties stretching for 999 years — told the researchers that all of the proposals “achieved best consideration.” Yet despite a chronic homelessness problem in the city, the developers were excused from meeting commitments on including affordable housing by planning officers who decreed there was enough supply in the area to meet demand, the report found.
The report also concluded that the “traceable rental and sales income streams” from the 1,468 homes built on the sites so far “flow to Abu Dhabi interests only.” Although the Manchester City Council claims to have a revenue-sharing arrangement with its partners, the researchers said they had found “no income from the Manchester Life investment in the council’s accounts.”
Though the management company that oversees the developments booked 10.1 million pounds of rental income in 2021 (just over $12 million), the researchers found that because its ultimate owner is a holding company based in Jersey, it paid only 4,000 pounds in corporation taxes.
“Our assessment of the Manchester Life development is that Manchester City Council ‘sold the family silver too cheap,’” the researchers concluded.
That is particularly damaging, they said, in light of the “reputational risks” for lawmakers in a British city becoming sufficiently entwined with a group backed by the elite of an autocratic state, one described by Amnesty International as one of the “most brutal police states in the Middle East.” In recent years, countries like Russia, China, Qatar and Saudi Arabia have all been accused of using money and influence, in sports in particular, as a way to “wash” their reputations. But investments in property and other ventures, and the people that enable them, also have drawn scrutiny.
“Longer-term, it raises questions about what values, and whose values, the city represents,” the researchers wrote of the land deals approved by the Manchester council, adding: “This is important because Manchester is heralded as an urban regeneration model that other authorities should follow, but if that model is built upon attracting developers in the short term by selling access to its assets at a discount, then that may not be a sound and sustainable model for others.”
Source: Soccer - nytimes.com
