Manchester City financial results: City close in on breaking even as TV deal offsets huge wages

City were hit with a penalty by Uefa last year after posting record losses but figures show they would have been close to breaking even had Uefa not withdrawn £16m

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The Independent Online

Manchester City have come within touching distance of breaking even for the first time under Abu Dhabi ownership, with their share of the Premier League’s new £1bn television deal crucial to them halving their losses for a third successive year and avoiding being hit with Uefa Financial Fair Play sanctions for a  second successive year.

Sunderland v Manchester City - as it happened

Six years after the arrival of Abu Dhabi owners delivered accelerated spending, losses which peaked at £194.9m in 2011 and an admission by the club’s then football administrator Brian Marwood that “we have a huge amount of work ahead of us to make sure we are sustainable,” the club lost £23m in the year to 30 May 2014.

City are still spending a huge amount on wages, though the £205m figure is down from £233m last year. But the ratio of wages to earnings has dropped sharply from the figure of 87 per cent last year – and 110 per cent a few years before that – to a sustainable 59 per cent. The £23m loss would have been close to a break-even figure had Uefa not withdrawn £16m of revenue from City – listed as a “Uefa settlement” in the accounts – after ruling in May that the club had failed their FFP test.

 

When the spending on capital infrastructure and youth development, which Uefa does not include in its FFP calculation, is taken out, City have recorded an £8m profit. Uefa had allowed them losses of £20m in the last financial year, so while heavy spending on players will not be possible, they have established a  comfortable buffer against the threat of more sanctions.

The figures published yesterday reveal how Michel Platini’s FFP regime at Uefa came a year too early for City, who – despite the unfair assumption in some quarters that they are only interested in conspicuous spending – have been talking about reaching break-even at this point since when former chief executive Garry Cook was at the helm.

The huge salaries waved before such players as Carlos Tevez, Emmanuel Adebayor and Robinho, as City faced a fight to persuade them that they were a club at which they could further their careers, have given way to more incentivised deals – with lower basic wages – which Cook’s successor Ferran Soriano has imposed.

For City the transfer market used to represent the Wild West. “City Price” was the expression coined by exasperated senior executives, who found selling clubs demanding extortionate sums in the knowledge that the new rich kids on the block were desperate to become competitive. When it became clear that Everton wanted £50m for midfielder Ross Barkley this summer, City looked elsewhere. There will be a similar response if the  Merseyside club’s price expectations remain the same next summer.

City’s halving of losses to £52m a year ago came after they earned a sum of £24.5m from players image rights and a further £22.45m from the sale of its own expertise to City’s growing number of affiliate clubs. Those one-off figures – which Uefa is understood to have taken a dim view of – are not repeated in this set of financial results.

The accounts also demonstrate the value of a harmonious year, under the management of Manuel Pellegrini. The pay-off to his predecessor, Roberto Mancini, and his large entourage of staff – all dealt with in the previous financial year – proved to be a factor in City falling foul of Platini’s regulations. The only loss of personnel accounted for in this year’s figures are the 110 who have been shed from the overall “football staff.” Some of that number are understood to be lower-paid members of the ancillary staff who have not been replaced. Others have moved around in the re-organisation of the company structure.

Mangala.jpg
City's outlay on Fernando, Mangala (pictured), Caballero , Sagna and Lampard have not been considered

The new TV deal has played the biggest part in helping City to record revenues in excess of £300m for the first time – £347m in total – with TV income up £51m to £133.2m. But it is also evident that Abu Dhabi sees its global string of football clubs – Yokohama in Japan features in their results statement as well as Melbourne and New York – as part of the drive for profit. City have lent New York £300,000 to help get them started and it is hoped that lucrative sponsorship revenue will come from corporate partners who can be persuaded to establish a foothold in all four franchises.

The accounts do not include the spending on Fernando, Eliaquim Mangala, Willy Caballero, Bacary Sagna and Frank Lampard in the summer. The holy grail for the club is now to develop its own players. That is proving an onerous challenge, though City will next week reveal their new City Football Academy which brings together the club’s training facility and youth players into one venue adjacent to the  Etihad Stadium.

Chairman Khaldoon al Mubarak said in the annual report which accompanied the results that the “commercial success” had never been an “afterthought” for Abu Dhabi at City. “It has always been an integral part of the strategy,” he claimed.

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