The European Super League, which was planned to attract more investment, did not take place. The football fans, and not only them, protested and the project failed. There was especially a great turmoil in England, where equality is most protected.
If we look at the current Champions League, we will see, that the semi-finals are packed with the clubs, that have always spent the most money.
Florentino Perez was the first to start spending astronomical sums on the transfer market. His Real has been acquiring outstanding world stars and breaking transfer records almost every year – Figo, Zidane, Beckham, Ronaldo, and during the next project – Ronaldo, Kaka, Benzema, Alonso. Perez has never been hindered by financial fair play.
After him appeared the Russian oligarch, Roman Abramovich, who overshadowed even Real Madrid in his activity in the transfer market, especially in the initial stage – before Chelsea started to generate money themselves. The focus was on the stars here too, most of them failed to live up to expectations, more specifically, those from whom they expected the most – Shevchenko and Fernando Torres, but Roman has never been reluctant to spend money.
And then it was the turn of the second semi-finalists of the current Champions League, with Arab investment, City and PSG became major players in the transfer market. But out of these four teams, there is one that has put in the most effort in establishing the structure and system, as well as the proper use of human resources and that is why it has become the best project that will be successful for many more years.
In the article, we will talk about Manchester City.
CFG – City Football Group
When things go wrong for a football team, they blame it on luck, bad tactics, terrible refereeing or too many injuries. The result of the research showed that these motives are regarded as the main reason for failure in England. The majority thinks so, but Ferran Soriano is not included in the majority, he is a person with a different opinion.
According to Soriano, these reasons are self-justification, which are due to a limited perception of the problems. Failure only means that you are not thinking big enough.
Soriano spent six years at Barcelona implementing his theories, later writing a book on how to do things more productively and then received a new offer – from the club with unlimited financial resources and a desire to win.
Based on Soriano’s ideas, City Football Group (CFG) became an empire stretching from Yokohama to New York. Since 2013, when Ferran Soriano was appointed as CEO, CFG has grown to include 10 clubs across five continents.
Manchester City
New York City
Melbourne City
Yokohama F. Marinos
Montevideo City Torque
Girona FC
Sichuan Jiuniu
Mumbai City FC
Lommel SK
Troyes
The Athletic has looked for information around the world to find out why CFG acquired 10 clubs (10 so far), how they share vision and resources. So the article will explain:
How Soriano came to the idea that creating a club network would be his main weapon in defeating Manchester United.
How they use one part of the clubs to promote the brand, and the other – to nurture talents.
Guardiola’s tactical lessons are available to the coaches of each club in the network.
Reasons why a certain group of people are dissatisfied with the football empire.
In the second part, the business side will be analyzed, by what principles CFG buys and sells football players, by what methods they try to attract investment, what are their goals, how they try to take the place in the football world that New Zealand holds in rugby.
Forbes valued CFG’s biggest project, Manchester City, at £2 billion. We will consider how business functions in the conditions of an imperial network.
To a certain group of people, CFG will always be a business group that degrades the sport, trying to circumvent the rules of fair play or enjoy unlimited financial opportunities, but for business specialists, potential investors and even rivals, CFG’s multi-club model is a new and effective challenge in modern football, which can avoid many problems. The global demographic project guarantees that you will lose less money and have more insurance than your rivals in case of a failed idea.
Vision – football as a Disney product.
“We are dealing with two fundamental events that have changed the rules of the game forever – Abu Dhabi and Ferran Soriano,” says sports business professor Simon Chadwick. “Together they brought an individual and special vision that sets them apart from other multi-club networks such as Red Bull, which owns clubs in Austria, Germany, Brazil and the USA.”
Chadwick met Soriano for the first time in 2005, when he was involved in the revival of Barcelona. A year later, the vice-president of Barcelona was lecturing the students of Chadwick at the University of London. The professor kept his slides and after moving to the University of Salford, he introduced them to different audiences. Meanwhile, Soriano became the CEO of Manchester City.
“He was already a millionaire at the age of 30. When he joined Laporta’s team, he invested million euros himself,” – says Professor Chadwick.
“He was partially educated at ESADE, a business school in Barcelona, one of the best in the world. The school is based on the ideas of St. Ignatius. He believed that individuals must learn about the universe and develop a stronger vision of it in order to think and act in new ways.”
“You see the result of all this when you look at Ferran Soriano. He made a lot of money at an early age, then contributed greatly to the reformation and revival of Barca and finally ended up at City, where he laid the foundations of a new empire that looks like a harmless Disney entertainment product.”
Since Sheikh Mansour bought Manchester City from former Thai prime minister Thaksin Shinawatra for £210m, he has spent £500m in four years to free the club from debt and build a new team.
That investment won the club the FA Cup in 2011 and the Premier League in 2012, but City have been without a CEO since Garry Cook left the club. After Arab investment entered the market, UEFA adopted new regulations and restricted the club’s spending of money and there was a need for a man who could use the resources by bypassing the regulations.
Although in the 2011/12 season, Manchester City, on the last matchday, swept the title from United in the most dramatic battle, City were still unhappy because United were considered a more popular club and had a much bigger income. City had players of equal quality, if not better, but it turned out that United had 600 million fans worldwide, which Manchester City couldn’t even come close to, and this had a direct impact on revenue, not investment, but direct, generated revenue. In terms of business and marketing, they had the main rival in the same city. They realized in the club that they could not overcome this only by winning the titles.
Based on Daniel Smith’s 2018 book “Killing the game”, we know that City chairman Al Mubarak and his team spent three months considering a suitable candidate and spent nine months trying to get Ferran Soriano to accept the position of CEO.
“Abu Dhabi was looking for a new and bigger vision based on strong ideas and meanwhile Soriano wanted to return to football and implement his ideas to bring a new reality to the world of football. Everything went perfectly,” – says Professor Chadwick.
“Abu Dhabi is an absolute monarchy that will not change its business model due to the protests of the people or the whims of capitalist businessmen, they do not care. The Persian Gulf economy will not depend on the annual income from the sale of carbon fuels, as it invests capital in other sectors.”
“Abu Dhabi uses investments from abroad to balance the domestic tax system. By canceling taxes the royal family strengthens their position and CFG is the result of their business experience and global demographic vision, great ideas and unlimited financial opportunities are gathered here.”
Both sides knew what they wanted, with City already champions of England still wanting to climb to the next level, while Soriano had already turned Barcelona into a football empire, but needed a club with greater scope for his ideas.
Manchester City CEO – Ferran Soriano and Chairman of the Board of Directors – Khaldoon Al Mubarak (Photo by Sean Botterley)
Before selecting a candidate City bosses could always read his book – Goal: The Ball Doesn’t Go In By Chance – which, along with the author’s vision, includes the opinions of Johan Cruyff and Lionel Messi on clubs that have become global brands.
In the book, Soriano talks about how Europe’s elite clubs should write an action plan, how they should become multinational corporations, in order to be more effective in increasing engagement both within their own borders and beyond.
He tells how Barcelona launched a Japanese version of the site to sell club memberships to Japanese customers. That summer, Barca flew to Japan and in the match against Yokohama it appeared that the crowd at the stadium was split into two halves, with Yokohama fans on one side and Barcelona’s Japanese fans on the other, some of whom even sang club’s anthem.
It seems this experience has impressed City bosses, as in 2014 CFG acquired a 20% stake in Yokohama, making the Japanese club the fourth member of the CFG network.
The book describes three main models to make the club a global brand:
Distribution of the product in the foreign market, increase of broadcasting rights, productive planning of summer tours;
Academies abroad – as Barcelona opened its academy in Mexico;
Natural progress: use of franchise.
Soriano also recalls meeting MLS representative Don Garber in New York in 2005 to see if any American club was interested in playing under the Barcelona brand. First they considered the option of Miami, then New York. Soriano was unable to get the idea off the ground, despite MLS expressing interest and being willing to do a lot of work in terms of marketing and promotion.
Instead, Soriano’s idea was listened carefully by City directors. The only question, City chairman Khaldoon Al Mubarak had, was – why stop at New York?
Soriano flew to New York the day after taking office and signed a franchise agreement nine months later, with City paying MLS $100 million. At the time New York was in 20th place in the league. According to one of the representatives of CFG, the alchemy of the group was formed after the appointment of Ferran.
Until 2015, the sole owner of CFG was Sheikh Mansour, with a 100% stake (Abu Dhabi United Group). In 2015, a Chinese state-backed investment firm (CITIC Group) paid $400 million (£298 million) for a 13% stake and in November 2019, another group – Silver Lake emerged, paying $500m (£373m) for a 10% stake.
CFG shareholders
Another club network co-owner, Paul Conway, whose group owns Barnsley, Belgium’s Oostende and Switzerland’s Thun, comments on CFG. CFG’s goals and vision are absolutely clear to him:
“There are four decisive arguments for a multi-club network: the first is commercial synergy and CFG has an ideal situation in this regard – if you want to become one of the main sponsors of Manchester City, then you should also sponsor Uruguay’s Montevideo Torque – it is an ideal model.”
“The second reason is internal synergy, which contributes to the development of the domestic economy. Every club does not need a separate general and financial director.”
“All this leads to the third advantage – this is a unified vision. In this business, money is easily lost due to carelessness or decisions made by incompetent people, but in this case, you have a kind of insurance, a unified system and structure minimizes the probability and risk of error.”
The final, fourth advantage of Conway: – “Of course, the football side, which is an integral part of the business. Here you can focus on the player who is a product of your own system. The transfer from one club to another will be neither difficult, nor expensive and the club will see a profit in every way.”
Due to the fact that multi-club networks are a new phenomenon in football, we do not have a lot of such transfers yet, but in time we will see that Manchester City will be supplied by their own donors.
Image plays a big role in building such a big football empire. City recruited stars, brought in Pep Guardiola, who is provided with all kinds of comfort and City has already become the club where Pep stayed the longest. But the attitude towards the UAE is not so positive – Abu Dhabi is a good place for tourists, but not for the people who work there. This place is known for frequent human rights abuses and is also exposed for supporting the ongoing civil war in Yemen.
Organizations such as Amnesty International and Human Rights Watch consider the CFG to be a colorful cover for the UAE, with stories shrouded in mystery behind it.
There are other parties who evaluate their activities in football and the formation of CFG as follows: – “Isn’t this just a clever way to bypass the financial fair play?!”
Since 2014, City have been threatened with sanctions from UEFA twice, with the second occasion particularly dangerous, the timeline of which can be found here. As we know, City’s lawyers prevailed both times and the sanctions were avoided, perhaps for good.
When you don’t have B team
Nowadays, Soriano almost never appears in the media and his remarks are almost nowhere to be found, therefore, as soon as he appears, he immediately arouses great interest.
After Soriano signed a contract with the French second division club Troyes, a journalist asked him: – “If I’m not mistaken, this is your ninth club, what is the purpose of all this?”
Soriano answered: “It’s not the ninth, it’s the tenth, we already have a club in Belgium.”
“Football is an area where we like to work and we want to make it better. We have a large network of clubs that play good football, are financially stable and offer us many perspectives in technical and football terms,” – says Soriano.
Brian Merwood, Global Football Manager at CFG, has a slightly different view: – “We have clubs that are being built to be the best in their leagues. It doesn’t matter which league it is, Asian, CONCACAF or Champions League. There are clubs that we consider as a good option for young talents.”
Ever since the idea of global dominance emerged in 2013, CFG has been paying special attention to young talents. Merwood also serves as City’s football administrator. The global network was originally formed for commercial purposes, to increase the club’s popularity and engage fans more.
The idea was simple: more focus on CFG meant more commercial deals and more partners, with special attention, of course, to Manchester City.
After specific works, new places for investments appeared, first in the USA and then in Australia – CFG invested just £7 million in Australia’s Melbourne. The Australian A-League has a salary cap, so most of the investment has gone into infrastructure, scouts, coach education, medical team and the formation of the academy.
According to a CFG representative, it costs £3 million a year to maintain a mid-tier Premier League academy. In 2016, Aaron Mooy moved from Melbourne to Manchester City and was later sold to Huddersfield for £8 million. Even this one deal was enough to secure the work of the Melbourne Academy for three years.
CFG made club investments in China and India and later found the network’s ninth and tenth clubs in Belgium and France.
In 2008, Manchester City’s academy underwent a big change. They aimed to have a number of future first team players brought up by City’s academy. Phil Foden is the clearest example of this. A product of their own academy is Jadon Sancho, who chose to leave the team. The fact is that City’s academy works and they want more and more.
For more than two years, there was a study on how the Academy should work properly. In addition to successful soccer academies, be it Ajax or Barcelona, they have borrowed ideas from other sports academies, set up a recovery and hydrotherapy center on the NBA and NFL lines and also visited NIKE’s base in Oregon and the Australian Institute of Sport to make their academy the best in the world.
Also, in the academy, they tried to invite the best football players from all over the world from 14 to 16 years old. It should be noted that Bachana Arabuli was given the opportunity to train in Manchester City, after the Georgian U17 national team defeated the English U17 national team under his leadership.
They invited Karim Rekik (Netherlands), Rony Lopes (Brazil) and a little older Kelechi Iheanacho. They could not become stars in City’s main team, but they were sold profitably:
Rekik – £4.5 million
Lopes – £9 million
Iheanacho -£25 million
This is entirely thanks to the scouts. The model works, the business is smooth and profitable, the number of fans is increasing, more fans means more partners, more partners means more income, which will be spent on new and good players and the profit will be much bigger.
With the acquisition of shares in NYC and Melbourne, it was clear that the number of viewers of the Australian A-League and MLS would increase, so the price of TV contracts also increased. When CFG was joined in 2017 by newly promoted Spanish side Girona in La Liga, the TV contracts were revised at the same time and switched to the Premier League model, meaning that Real Madrid’s and Barcelona’s biggest share of the broadcasts were split much more evenly among all clubs.
Commercial opportunities became the reason for making this investment in Spain. The price of a footballer playing in the Spanish La Liga is increasing. As their research showed, prices in the transfer market have been increasing by 20% every year and even if they kept the player for two years, he would bring in much more income.
Manchester City have transferred players to Girona several times, starting back in 2016. In 2015, Pep Guardiola’s brother, who is a football agent and businessman Jaume Roures, who is close to Soriano, bought 80% of Girona’s shares. After investment, 48% of the shares were transferred into CFG’s ownership.
It is clear what City are using Girona and other clubs for, but Soriano still cannot hide his desire to be allowed to have a B team in a lower league.
“One of my biggest frustrations is that we still don’t see how many opportunities we are taking away from 18- to 22-year-old players. Of course, we can loan them out, but it often ends up being unsuccessful. It can do more harm, than good. We have seen such examples many times,” – Merwood says.
“In an ideal situation, we would have the opportunity to have a B team, which would make the structure of the team’s work much easier, but in this country it is impossible, so we are constantly looking for other ways. Together with Lommel (Belgian second division team), we can give new players more motivation and opportunity to develop”.
“We are at risk of losing exceptionally talented players. That is why we are working to use their talent fully.”
The acquisition of 100% stakes in the Uruguay’s Montevideo Torque was carried out through the talent discovery and development program. CFG are proud of their achievements, with Soriano citing Bruno Fornaroli as an example, who went from being an ordinary player in Uruguay to becoming Australia’s best player after being transferred to Melbourne. Merwood cites the example of Valentin Castellanos, who moved from Torque to New York.
Manchester City have a large army of scouts in South America, led by John Opatsy, who is a close friend of one of City’s directors, Txiki Begiristain. Txiki played for Cruyff’s Barcelona and later became sporting director of Laporta’s Barcelona. As a result of the rebranding of the Uruguayan club, Atlético Torque became Montevideo City Torque. Their goal is to bring together talented Uruguayans and promote the best of them to the CFG’s best club.
“They have children’s football in Uruguay at a different level, because they start playing at a very early age. They train on the similar pitches we used to play about 20-40 years ago. It’s a great place to develop your character and will. To a certain extent, the mentality of a street fighter is formed, they are hungry and determined. If they have a technical arsenal in order, in any case, we will get a very interesting player in our hands”, – says Merwood.
For CFG, different clubs are a registration platform. Simply put, there are not many places in Manchester City, so there is a redistribution of interesting players.
Brian Merwood talks to England national football team coach Gareth Southgate (photo by Alex Lives)
The Belgian Lommel and the French Troyes play a major role in this format. Neither of them can play in UEFA tournaments, because UEFA allows only one team from the network to play in a particular tournament. Also, Lommel has a very difficult time to increase the number of fans, because it is close to Genk and Eindhoven. Therefore, the majority of people support these clubs.
However, all these teams were bought on the cheap. Lommel had problems with the license. They were no longer able to participate in the championship and at that time CFG stepped in, who, according to the contract, paid off the debt of £2 million, while Troyes’s and Torque’s shares were only bought for £12 million.
The acquisition of the Central European market was important and aimed at combining with other markets. For example, CFG is starting to look for talented players in Japan through Yokohama and research shows that Japanese players play particularly well in Germany, Belgium and Holland. As for Troyes and Girona, they are mostly intended for Uruguayans, so Torque’s best players find their way to these clubs. Players from MLS have the same path. Troyes has a dream B team for City. Clubs in France have the right to do so, so this circumstance provides additional opportunities.
According to Merwood, the English Premier League is the most desirable for Australian league players, specifically Melbourne players, because Australians are characterized by good physical condition and speed.
“Owning clubs in other leagues is leverage against Brexit,” – says Conway, who is currently trying to buy Nantes. CFG also considered Nantes option, but in the end they settled on Troyes.
“There are 26 professional clubs in Belgium, eight of which have strategic investors and most of them are interested in English clubs.”
“Look, how much talent is coming from Belgium and France. City used to pay 2 million to give a promising player a chance, now they have bought a club for that price. I don’t understand why other groups don’t work like them, it’s a very profitable model.”
Brexit has made things more difficult, players are no longer free to move to the English league, they have to go through the same procedures as non-EU countries and English clubs can no longer sign players under the age of 18 from abroad.
How can Manchester City sign young talents such as Pedro Porro or Pablo Moreno if these players do not meet the criteria to be allowed to work in England? Simply – any CFG club will sign before they turn 18. In this sense, Manchester City has a colossal advantage compared to other English clubs.
There was talks about Diego Rosa, a Brazilian talent, who was linked to Lommel and the price was set at £20 million. It is clear that he is intended for Manchester City, not for Lommel.
According to the FIFA regulations, a limit was also set on the number of players, that can be loaned. Previously, their number was eight, but now it has been reduced to six. Manchester City signed Japanese Ko Itakura, who was on loan at Groningen, but simply moved him to Lommel after the regulations were introduced, removing all problems.
Prices in Belgium are increasing. For example, in 2018, Gent bought Canadian Jonathan David, who two years later sold to French Lille for £27 million. Transfer market specialists say, that these prices will increase even more. According to Merwood, Lommel will be used mainly for youth development and they appointed Liam Manning, director of the New York Football Club’s academy, who has a lot of experience in working with young people, as their coach.
To find and recruit young talents, Lommel spent £12 million, which is a very large amount for the level of Belgium. Even the clubs of Belgium’s first division do not spend that much.
As for the Chinese market, they bought Sichuan Jiuniu, which were promptly promoted from the third to the second league, due to the debts of the teams in the second league. 11 teams were relegated and the desired place was taken by Sichuan. City have happily agreed to cooperate with China media Group, which have also owned shares in Manchester City since 2015, with Sichuan already playing in the Chinese Super League.
Taking the car apart and putting it back together – the philosophy of the academy
The biggest advantage is that all ten clubs are under the same system, both in terms of infrastructural and internal technical equipment, as well as in terms of methodology. Therefore, moving from one team to another is not a big obstacle for the player – he is fully adapted to both the playing style and the environment.
This is Merwood’s prerogative, who explains all this with the following analogy: – “To take apart a car and put it back together.” Every detail is calculated and “dead parts” are quickly removed. Be it human resources or technical, if you disrupt the work process, you will not be a part of this team even for a minute.
There is a single database accessible to all CFG clubs. For example, Guardiola’s methodology is also used by the coach of Mumbai, just as the structure of medical services works with a single system, whether it is recovery or rehabilitation. It does not matter which club we are talking about, Chinese or French, Spanish or Indian, women’s or men’s clubs, all are part of a single system.
“Of course, Pep’s methods are used by everyone, in Melbourne and in New York alike, but Pep is the best micromanager among modern coaches, so it is almost impossible to copy his methods directly. It is necessary to retrain coaches. We have an online network where everything is explained and elaborated. Coaches have access to the network and they can implement the same methods step by step,” – says Merwood.
There is also an experience of transferring a coach from one club of the network to another. An example of this is Erick Mombaerts, who was recommended to Merwood by Arsene Wenger and Gerard Houllier. Mombaerts has also worked in Yokohama and Melbourne and his future was linked to Troyes.
However, CFG’s methods have their critics. The biggest scandal was Caceres’s case, who City bought from Australian Mariners in 2016 and loaned him in Melbourne after a short time, which is an infringement, because transfers from one Australian club to another are not allowed. Rivals were outraged and the protest led to tightening of regulations and specification of provisions to fill the gap in the law. The new regulation, known as the Caceres Rule, makes it impossible to transfer a player from one Australian team to another through an intermediary.
To attract fans, CFG clubs focus on stars. For example, in Melbourne they brought in Alessandro Del Piero and Heskey, in New York – Pirlo, Villa and Lampard.
The biggest turbulence was caused by the possible transfer of Messi, with just a few days to go before signing the contract, when the deal fell apart. According to contract Messi had to play three years at City and the next three in New York, making it CFG’s biggest acquisition yet.
Source:
Goal: The Ball Doesn’t Go In By Chance: Management Ideas from the World of Football – Ferran Soriano (2009)
Killing The Game: The inside story behind the transformation of Manchester City and the creation of City football group (2018)
The Athletic – Special Report: City football group (2020)
Football Benchmark – Manchester City – From zero to hero (2016)
