Dubai: Promotion to the Top Flight

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16 January 2007
Dubai looks set to enter the first division of world football, with news that the state owned corporation Dubai International Capital (DIC)Dubai International Capital (DIC) is closing in on a buyout of English Premier League giant Liverpool.

In a deal worth an estimated $880m, DICDIC would acquire the majority stake in the club, winner of 18 English league titles and a number of European trophies, including the 2004-05 Champions League.

Liverpool's chief executive officer, Rick Parry, said on January 15, that DICDIC was in the process of putting the finishing touches to the details of its bid and completing the legal work associated with the offer.

It is a case of finalising the due diligence and pulling everything together, which we hope will be completed relatively quickly, Parry said during an interview with British media. A huge amount of work has been going on from both parts. I imagine we'll have something to say relatively soon on that.

If the deal goes through, as all parties expect it to, it would not be the first time that overseas buyers have gained control of one of English football's icons. Both Manchester United, the current Premier League leaders, and Chelsea, the reigning champions, are foreign-owned, by American and Russian concerns respectively. A number of other teams in the English leagues have large shareholdings in foreign hands.

Owning a football team does not just mean getting the best seats at games. Should the DICDIC buyout of Liverpool go ahead, the Dubai investor would have a billion dollar business on its hands and own an internationally recognised brand. Television rights, shirt sales, merchandising and promotional value are all the up side of such a deal.

Of course, football is a high-risk enterprise, and failure on the pitch can bring with it losses away from the playing field. If it becomes the owner of Liverpool, DICDIC will be expected to invest heavily in star talent, as well as in the new stadium the Reds have long been planning.

Football is increasingly becoming big business in Dubai, with a number of top European clubs being drawn to the emirate during their mid season breaks. Taking advantage of quality training facilities and the mild weather, teams such as Germany's Bayern Munich, Benfica of Portugal and Italian outfit Lazio, came to Dubai in January to both sharpen their training regime and recharge their batteries. Such visits serve to not only earn money for the local tourism industry but also help promote Dubai in the overseas media, which always keeps a close watch on the doings of their sides.

Dubai is taking the task of becoming a football venue seriously, having poured millions into staging a showcase competition early in the new year. The Dubai Football Challenge 2007, which kicked off on January 8, pitted the national sides of the UAE and Iran and foreign teams such as German Bundesliga Hamburg SV and Vfb Stuttgart against each other.

Played at Dubai's showcase Maktoom Stadium, the three-day tournament drew good crowds throughout and rated highly on television.

According to Jochen Schneider, Vfb Stuttgart's manager and sport administrator, the success of the first Dubai Football Challenge will become a major fixture in the future to enhance the appeal of the emirate for leading teams.

To get such high class teams for the first tournament is testament to its global appeal, and the attraction of Dubai to big teams, he said. We came to Dubai in January 2006 and that successful trip has been part of our domestic success throughout last year.

Increasing the profile of sports such as football in Dubai is part of a wider strategy to expand the economy's base as well as the emirate's appeal to visitors. More than $2.5bn is being spent to develop Dubai Sports CityDubai Sports City, a sporting and tourism project that aims at offering world class facilities and act as a spring board for Dubai's bid to host the 2016 Olympics.

Billing itself as the world's first fully integrated purpose built sports city, the development will feature four major stadiums, and offer facilities for sports such as football, cricket, tennis, golf, rugby, athletics, swimming and hockey. One of its features will be a Manchester United Soccer School, continuing the strong push towards promoting football in the region.

© Oxford Business Group 2007