Manchester City set to narrowly pass Uefa's Financial Fair play test, avoiding a ban from the Champions League next season

City reported losses of £51.6m for 2012/13, down from £97.9m the previous year

Manchester City are on course to narrowly pass Uefa’s Financial Fair Play test, despite another big increase in wages which their 2012-13 accounts have revealed to be £233m, up by more than £30m.

The salary bill means City, who beat Tottenham Hotspur 5-1 at White Hart Lane last night to go top of the league, are paying out £639,000 a day – or £26,000 an hour, £433 a minute – in wages. Two key new internal financial manoeuvres by the club, however, have brought in one-off revenue lifts of more than £42m, allowing them to restrict losses to £51.6m for 2012-13, and thus be on course to comply with FFP and avoid a ban from the Champions League next season.

The first is the sale of the club’s image rights to an external company, which has reaped City £24.5m. The second is the sale of City’s services to the other clubs which it owns – the New York FC franchise which it launched last year, along with the new Melbourne Heart franchise and Manchester City Ladies FC. That “sale of intellectual property to related parties” brought the club another £22.45m and is vital to City getting anywhere near complying with Uefa’s regime.

The club also took a major hit by paying off former manager Roberto Mancini and his staff last May. Mancini is understood to have walked away with £7.5m, though the accounts did not stipulate exactly how much in its breakdown of extraordinary one-off operation costs.

The losses reported yesterday are down from £97.9m in the previous year but still leave the club with a total loss of £149.5m across the past two years – a full £112.5m more than the £37m losses which Uefa said it would allow in those two seasons, as clubs prepare for FFP. That makes them a borderline FFP pass, as The Independent predicted two weeks ago. Though it will be for the Uefa Club Financial Control Body to decide whether the image rights and external services figures are acceptable, it seems highly unlikely that City – whose focus on FFP compliance has been so intensive – will fail to convince the organisation that they are.

Vital to City’s ability to bring the headline £149.5m loss figure down towards the allowable amount is the subtraction of wages for players signed before June 2010. That figure, which would include the huge sums paid out for leading players such as Emmanuel Adebayor, Carlos Tevez, Wayne Bridge and Robinho when previous manager Mark Hughes took City through the early development stage, might total £80m.

It will be supplemented by another hefty figure for stadium infrastructure work and youth development, which are also subtracted from the losses to reach the so-called “acceptable deviation” figure of £37m which Uefa allows.

The European governing body will rule in the next few months whether City have complied with FFP. The judgement will also include an assessment of whether City’s Etihad sponsorship deal – worth around £400m over 10 years and a significant part of City also reporting an annual turnover of £271m for 2012-13  – is a means for the club’s Abu Dhabi owners to inject cash artificially to reduce losses. The club denies that emphatically and insists the figure is in line with market rates.

Even if City do marginally fail to reach the £37m figure, their proximity to it would suggest that a dramatic Champions League expulsion is unlikely.

Daniel Geey, the competition and football law specialist at legal firm Field Fisher Waterhouse, who has advised clients and written extensively on FFP, said: “With City confident that they will comply with FFP, although the £150m headline aggregate loss figure seems high, this can be recalculated when Uefa reliefs like pre-2010 wages, infrastructure, community and youth development costs are removed. As such, the club for FFP purposes are then likely to be around the permitted €45m loss cut-off point.”

The club has not felt the need to offer any warning of the risk of non-compliance in the commentary which supports the 2012-13 figures. Though it is a common practice for businesses to provide advance warning of serious challenges in their operating environment, City’s position on that last night was that the annual report is a statement about the club, rather than the football landscape it operates within.

 The club said that it was operating with zero financial debt for the first time, having paid off all remaining borrowings. Though City will need to break even in this financial year, they will be able to account for the new TV deal and the removal of the wages of players who needed huge financial incentives to join City’s “project” between 2008 and 2010, yet were then surplus to requirements. Tevez’s sale to Juventus last summer alone saved them £198,000 a week in wages, which would have added up to £17m across the remainder of his contract. The sales of Wayne Bridge, Kolo Touré and Roque Santa Cruz also allowed City to spend nearly £80m on Alvaro Negredo, Fernandinho and Stevan Jovetic in the close season.

Progress to the Champions League knockout stages for the first time will also increase revenues on 2012-13, when there was group stage elimination and not even Europa League football for City. The club also believes it can cross-sell sponsorship deals into its three global franchises.

 

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
Britons buy more than 30 million handsets each year, keeping them for an average of 18 months
tech
Arts and Entertainment
Alloysious Massaquoi, 'G' Hastings and Kayus Bankole of Young Fathers are the surprise winners of this year's Mercury Music Prize
musicThe surprise winners of the Mercury Prize – and a very brief acceptance speech
Arts and Entertainment
TV Presenters Ant McPartlin and Dec Donnelly. Winners of the 'Entertainment Programme' award for 'Ant and Dec's Saturday Night Takeaway'
musicAnt and Dec confirmed as hosts of next year's Brit Awards
Arts and Entertainment
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
film
News
video
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain