MANCHESTER, England — Within 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 right into a serial domestic champion and certainly one of the game’s global powers.
The breadth of that investment, though, stretches far beyond the confines of the club’s Etihad Stadium, in response 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 purchase vast tracts of public land in Manchester at substantially reduced prices.
The 65-page report, published by academics on the University of Sheffield, found that Manchester Life, a joint development enterprise between the Manchester City Council and the Abu Dhabi United Group — a personal 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’s difficult to justify as prudent.”
Manchester has been held up, lately, 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’s England’s fastest-growing city.
Manchester City’s ownership group has been central to that, investing tens of millions of dollars within the deprived areas within the immediate vicinity of the stadium that bears the name of the U.A.E.’s state-backed airline, Etihad. When the Manchester Life enterprise was launched in 2014, six years after the group bought the soccer team, it was designed to increase 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 reasonably higher out of the deal than its partner. They found that nine sites within the Ancoats district had been sold to holding firms registered within the offshore tax haven of Jersey — but ultimately owned by the investment vehicle — at prices below the comparable market value of comparable sites.
The Manchester City Council insisted that every of the deals — which granted the United Group’s holding firms leases on the properties stretching for 999 years — told the researchers that every one of the proposals “achieved best consideration.” Yet despite a chronic homelessness problem in town, the developers were excused from meeting commitments on including inexpensive housing by planning officers who decreed there was enough supply in the world to fulfill 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 to this point “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’d found “no income from the Manchester Life investment within the council’s accounts.”
Though the management company that oversees the developments booked 10.1 million kilos 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 kilos in corporation taxes.
“Our assessment of the Manchester Life development is that Manchester City Council ‘sold the family silver too low-cost,’” the researchers concluded.
That is especially damaging, they said, in light of the “reputational risks” for lawmakers in a British city becoming sufficiently entwined with a gaggle backed by the elite of an autocratic state, one described by Amnesty International as certainly one of the “most brutal police states within the Middle East.” In recent times, countries like Russia, China, Qatar and Saudi Arabia have all been accused of using money and influence, in sports particularly, as a option to “wash” their reputations. But investments in property and other ventures, and the those who enable them, even have drawn scrutiny.
“Longer-term, it raises questions on what values, and whose values, town represents,” the researchers wrote of the land deals approved by the Manchester council, adding: “This is vital because Manchester is heralded as an urban regeneration model that other authorities should follow, but when that model is built upon attracting developers within the short term by selling access to its assets at a reduction, then that might not be a sound and sustainable model for others.”