As expected Manchester City have reported a record loss for a Premiership club, an eye watering £194.9m. This easily beats the £141m loss recorded by Chelsea in 2005, the second year of Roman Abramovich’s ownership.
As expected Manchester City have reported a record loss for a Premiership club, an eye watering £194.9m. This easily beats the £141m loss recorded by Chelsea in 2005, the second year of Roman Abramovich’s ownership.
However, Manchester City are insistent that this marks the high water mark of their losses. Revenue is increasing as they consolidate their position as one of the country’s top club and they hope that they have arranged their affairs in a way that will meet Uefa’s financial fair play rules (if Uefa rule that they don’t, expect a protracted legal battle).
There was truly a blue moon over Manchester when Sheikh Mansour arrived. He has spent £800m on the club, personally providing £291m of new funds in two tranches during 2010-11. Fans of other clubs may resent his lagesse but it is a sharp reminder of changed geopolitical realities in the world which are not going to go away. Indeed, as Europe weakens economically and politically with its ageing population and often structurally weak economies, the balance will shift even more towards wealthy Gulf states.
In the financial year ending in May, City’s total operating expenses amounted to £348.1m. No less than £156.5m was spent on new players. This was less than their turnover of £153.2m, but what is important is that that figure was substantially up. This came largely from improved commercial revenues and television rights which will improve again in next year’s figures as a result of participation in the Champions League.
An important revenue contribution will be the £35m a year naming rights contract over ten years with Etihad, facilitated by Sheikh Mansour. This will contribute to a major new training and academy complex being built on a brownfield site formerly occupied by a chemical factory and a coal mine. Capital expenditure of this kind can be written off against losses under Uefa rules, at least in principle.
The stadium itself is a major asset, having been paid for by Sport England (£78m) and Manchester City Council (£49m) as the centrepiece of the 2002 Commonwealth Games. Should they go ahead with their planned move, Chelsea in contrast will have to fund their new stadium.