/ 11 December 2009

Dubai’s end game

Sports stars feel the squeeze as Dubai runs out of cash, with developments they endorsed now under threat.

As Michael Owen swooped over Dubai in a helicopter to promote property in the region, he may have seen Steven Gerrard Tower and the half-built Boris Becker Business Tower below. He may have just made out the luxury villa that David Beckham still owns on the huge Palm Jumeirah development reclaimed from the Gulf.

Now the future of many of those developments named after, and actively promoted by, sports stars, and Dubai’s continued ability to invest in ever more ambitious venues to attract global sporting events, are in doubt in the wake of Dubai World’s request for a six-month repayment moratorium on $60-billion of its $80-billion debt.

”I chose to invest in Dubai because I believe there is huge investment potential in Dubai,” said Owen in the glossy promotional video for the First Group, one of a number of investment companies that sell the dream of luxurious living in the manmade oasis of Dubai.

Owen is just one of a string of global sports stars, including Nikki Lauda and Michael Schumacher, and sporting events to have been used by the emirate as a shortcut to global exposure. In almost all cases the stars involved have been sold property at knock-down prices and been paid handsome retainers in return for the use of their names.

Golf courses in the region bear the names of Ernie Els and Tiger Woods. A spectacular shot of Andre Agassi playing Roger Federer on the roof of a Dubai hotel made the front pages of newspapers around the world.

Tim Crow, chief executive of Synergy sponsorship consultancy, said: ”It’s cost them a lot of money but as a strategy you’d have to say it’s been incredibly successful. But we have reached a point where things are obviously going to change.”

Just this year, the world class 25 000-capacity Dubai Sports City cricket stadium was opened with great fanfare, the latest stage in a drive to attract the world’s best cricket teams to the region.

The sport’s world governing body, the International Cricket Council, was persuaded to move there from the historic environs of Lord’s in 2005 by the favourable tax rates on offer, in a move that, at the time, seemed to embody the shifting sands of the global sports world. It was envisaged as the first of four stadiums to be completed as part of the wider Dubai Sports City development, with a 60 000-capacity football stadium, a 5 000-capacity hockey ground and an indoor arena for 10 000 to follow.

”What they’ve done in sport has been fantastic for the region. They always got the best people there and they’ve sold lots of property off the back of it. The model they have used of attracting people to the region via their sporting events has worked,” said Andrew Dwyer, managing director of sports agency BrandRapport. ”The International Cricket Council are based there. But other sporting bodies might think twice now.”

Across Dubai, major projects are in stasis. There are fears that the ambitious Palm Islands development and its neighbouring man-made islands will never be finished, leaving behind a building site rather than a slice of paradise. More than 400 projects worth more than $300-billion are said to have been cancelled or shut down.

Dubai World, the government-owned conglomerate that sparked panic in the global markets by asking for a repayment holiday, owns Nakheel, the company behind the Palm Islands and its even more ambitious cousins, Earth and Universe. Nakheel made no secret of its focus on the luxury end of the business and homed in on sports stars as a means of marketing them.

On their way to the 2002 World Cup in Japan and South Korea, the entire England football squad stopped off and Beckham and others, including Kieron Dyer and Joe Cole, signed up for apartments at discounted rates on the Palm, constructed from 94-million cubic metres of sand that doubled the length of the coastline to 135km.

Like Owen and golfer Sam Torrance, he had a contract to act as a First Group ambassador but his agent said that the agreement had ”come to a natural end”. Beckham is understood to still own his villa, holding on to it as an investment. — Guardian News & Media 2009