When Manchester City defeated its longtime rival Manchester United last year to clinch the Premier League Cup, some of the loudest cheers were from Abu Dhabi, the capital of the United Arab Emirates (UAE). Royal family member Sheikh Mansour bin Zayed bin Sultan Al Nahyan bought the U.K. soccer club in 2008 for a reported US$320 million, and spent more than US$600 million on signing marquee players.

His club is favored to take this year’s Premier League championship again, as its fortunes in the field finally catch up to the advantage over its adversaries brought by the fortunes of the Sheikh, whom The Independent newspaper dubbed ‘The Richest Man in Football.’

Feeling financial pressure, Manchester United went public in early August. The storied soccer club raised US$233.3 million in its U.S. initial public offering. It was a rough start, as shares sold for US$14 each, below what the club marketed to investors before the IPO.

Manchester United’s public offering had its critics, who wondered what sort of returns could a sports team guarantee for investors. "Pro franchises don’t throw off a lot of profitability," Robert A. Boland, a professor of sports business at New York University‘s Tisch Center for Hospitality, Tourism and Sports Management, told The New York Times. "They function more like real estate."

But Manchester City’s private ownership by Sheikh Mansour puts it above those concerns. Additionally, his investment in the club has been buttressed by Abu Dhabi’s airline Etihad Airways, which paid US$600 million for the naming rights to the club’s jerseys and stadium. The airline even had a livery plane painted in the club’s baby blue colors.

The ability to cut generous checks and bring sponsorship to a club is one reason why European soccer franchises have become investment targets for Gulf states and patrons. From Sheikh Mansour’s ownership of Manchester City and Qatar’s winning bid to host the 2022 World Cup, to a fanciful plan to open a US$1 billion Real Madrid-themed theme park in the UAE’s coastal emirate of Ras Al Khaimah, European soccer has lured healthy Gulf investment. Arab investors, in turn, seek brand association with the best of the world’s biggest sport.

"It’s not just about money. It’s more about image and reputation," says Professor Kenneth L. Shropshire, director of Wharton’s Sports Business Initiative. "The measure of success is about how happy and excited their citizens are. It’s not like a mutual fund where you’re looking for a return on investment of 5% or 10%. The mission is to make people better off, but not necessarily in monetary terms."

Brand Building Exercise

In a new book about Manchester City released this month, author Gary James quotes then club chief executive Garry Cook about how he pitched ownership to the Abu Dhabi royals. "The final thing we talked about is where we could go," Cook said. "Nobody had taken their football club and turned it into a brand, other than Man United."

Abu Dhabi’s royals aren’t the first to buy into European soccer as a means to broaden their country’s exposure to the world. Dubai-owned Emirates airline has a stadium and jersey sponsorship deal with Arsenal, the English Premier League soccer club. Another Dubai firm, Royal Emirates Group, bought the Spanish La Liga club Getafe in 2011 for US$130 million, while Qatari billionaire Sheikh Abdullah Al Thani bought another Spanish club, Malaga, for US$52 million.

The promise of a large sum of money also helped convince the FC Barcelona club to allow for jersey sponsorship, agreeing to a $US196 million deal with The Qatar Foundation, the country’s non-profit organization that oversees all of its educational, social and outreach initiatives.

It’s not all for show; the Middle East itself is a robust market for soccer. It is the most popular sport in the Middle East, based on a study conducted by analytics firm Grant Thornton. The study states that nearly half of males in the region between the ages of 15 and 24 play football regularly or occasionally.

The study estimates that the value of soccer in the Middle East will increase by 52% to US$14 billion by 2022, and another US$10 billion by 2042. The study also reports that television viewers of the FIFA World Cup in the Middle East have grown almost 350 percent since 1986, one reason why television broadcast rights in the region for soccer games are expected to rise 30% to US$550 billion.

European clubs see the growth potential in Asia and, in the Eurozone’s current financial crisis, are loath to turn away such princely sums of money. It’s one reason for the most ambitious, and improbable, European soccer-related investment in the Middle East: A plan to build a US$1 billion Real Madrid-themed theme park in the UAE’s coastal emirate of Ras Al Khaimah.

The project would be built over 124 acres on an artificial island, and feature a variety of sport and leisure facilities, including a 10,000-seat soccer stadium, luxury hotels, a shopping mall, sports academies, a marina, an amusement park, a club museum, and private beaches.

Addressing reporters at the project’s unveiling, Real president Florentino Perez said, "This is a decisive and strategic step that will enhance the strength of this institution in the Middle East and Asia, a key region in which the passion for this club is very apparent and growing. The project may be seen as unusual for a football club, but we feel this will set a trend across the industry as clubs try to find new ways to make money."

World Cup Prize

The biggest soccer prize, though, went to Qatar when it won the rights to host the FIFA World Cup in 2022. It also comes with a big price tag: Bloomberg reported that Merill Lynch estimates Qatar will spend $US65 billion on preparations. Even with the significant price tag that goes with hosting a World Cup, Shuaa Capital estimated that the Qatari government would spend 57% more than the projected amount on infrastructure, according to the Kipp Report.

"We expect most of the infrastructure will be financed via revenues from the oil and gas sectors," said credit analyst Luc Marchand in a Standard and Poor’s report titled ‘FAQ on the Economic and Financial Impact of Qatar’s 2022 World Cup.’ Marchand added that the World Cup "will have a substantial impact on Qatar’s already promising economic growth over the next few years as the country readies itself to host this major sporting event."

Compared to the $US11.4 billion that South Africa spent on infrastructure, the impact of the investment in the region will be significantly substantial.

Qatar is also readily accessible from both Europe and Asia, which could bring tourists in from these areas. India alone, with a population of 1.1 billion people, is only 2.5 hours away from Qatar. Karthik Hosanagar, Wharton professor of operations and information management, notes, "It’s highly likely that many more potential fans in India will tune in to the event than in the past. Even though the Indian team has not played in previous World Cups, the event is followed by a large group of people in urban India."

The value of the World Cup to Qatar could also be measured in confidence. Euphoric about its success snagging the World Cup, the tiny Gulf country made an unsuccessful bid this year to host the 2016 Summer Olympics. Undeterred, it is now bidding for the 2020 Summer Olympics.

Wharton’s Shropshire visited South Africa before, during, and after the recent World Cup. In comparing the first World Cup in Africa and the future first World Cup in the Middle East, he notes, "It’s very similar in theme about going to new frontiers in world sporting events. People who normally wouldn’t have visited South Africa had the opportunity to do so. For Qatar, the tougher question is will people want to go to the Middle East where it’s really hot?"

He points out that major sporting events are like "coming-out parties. The 1964 Olympics in Tokyo, nearly twenty years after the end of World War Two, was a chance for Japan to prove to the world what they were capable of. For the Middle East to host the World Cup, it’s also an opportunity to show the world what they are capable of."