Manchester City Cuts Full-Year Loss in Half as Revenue Rises
Manchester City, the team owned by Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, cut its annual loss in half to 97.9 million pounds ($158 million) from last year, when it reported the largest loss ever in English soccer.
City, which won the Premier League last season, boosted sales to 231 million pounds in the 12 months ended May 31, 2012 from 153 million pounds in the year earlier period. The team also benefited from 10.6 million pounds from the sale of players.
The reduction from last year’s record loss of 197.5 million pounds comes as European soccer’s ruling body tries to put financial rules in place to prevent teams from becoming overextended. City is six points behind 19-time English champion Manchester United and was eliminated from continental competition after finishing last in its Champions League group.
“This improvement has been driven by increases in broadcast, match day, ticketing and partnerships revenue, reflecting broad based growth in the club’s commercial performance,” City Chief Operating Officer Graham Wallace said in the annual report.
The team said it took advantage of U.K. reporting rules to not release the company’s financial statement, instead focusing on group results. The company’s loss was 115 million pounds. The previous record for worst financial performance was by Chelsea, which recorded a 132.8 million pound loss in 2005.
City, which won its first trophy in 35 years with a victory in the F.A. Cup in the 2010-11 season, said the “peak of the club’s investment in its playing squad has passed.”
It paid 70 million pounds in net transfer fees, compared to 120 million pounds in each of the three previous years. The soccer staff, including players, rose to 237 in the 2011-12 year from 205 in the year earlier period.
City spent a net of 39 million pounds on players after the close of the financial reporting period. It bought Maicon from Inter Milan, Scott Sinclair from Swansea City, Jack Rodwell from Everton, Javi Garcia from Benfica and Matija Nastasic from Fiorentina, and sold Adam Johnson to Sunderland, Nigel de Jong to AC Milan and Emmanuel Adebayor to Tottenham.
City has spent more than 500 million pounds on transfer fees and salaries since Mansour bought the team in September 2008.
The team benefited from the start of a record 10-year naming rights agreement worth more than 300 million pounds with Abu Dhabi national airline Etihad.
Unlike Manchester United, which has debts of more than 360 million pounds, City’s spending has been covered by its owner. Mansour has pumped more than 300 million pounds of equity into the club since June 2010, including 169 million during the past year. That brings his total investment to more than 900 million pounds, leaving the club with no debt.
The loss comes at a time when other teams across Europe are reigning in spending to meet governing body UEFA’s financial regulations. Teams with losses of more than 45 million euros ($61 million) could be barred from the Champions League from 2014. Clubs that show trends of reduced losses could be spared the sanction, according to UEFA’s Financial Fairplay regulations.
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