Tuesday - July 25, 2017
Home    About    Writers    Links    Contact     RSS

About the Author

Bobby McMahon

Bobby McMahon

You can see me on Soccer Central most Mondays and Thursdays on Rogers Sportsnet in Canada. I write a regular column for Forbes.com and Soccerly.com and frequently guest on various podcasts and radio shows.


Manchester City Lose $150M And Think It Is Great News

Written by on December 18, 2012 | 29 Comments »
Posted in Money Game

Last week Manchester City announced a loss of $157M for the year to May 2012. Most of the headlines focused on the reduction from last year’s record setting loss of $320M (exchange rate of 1.61 used for both).

Few articles pointed out that over the last four years of ownership by the Abu Dhabi United Group Manchester City has racked up cumulative losses of over $800M.

Even fewer pointed out that although the annual loss has been cut by 50% the club is even further from a sustainable business model than it was at the end of the 2009 financial year.

The spin from the Manchester City hierarchy was both predictable and echoed past years.

A further step… to read more please click on the link.

29 responses to “Manchester City Lose $150M And Think It Is Great News”

  1. J says:

    Are the gate receipts correct? There’s $100 million difference in 2012 between City and Arsenal?

  2. everwonthetreble says:


    Nice article from Andersred echoing some of your statements…


    I think the main point of the article is that City will have very little choice but to slow down with player acquisitions. I think you’ve seen that already with some of their recent transfer dealings.

  3. J – the numbers are correct and as reported by the clubs.

  4. John Bladen says:

    As expected, not a pretty picture. I’ve been told that the Etihad sponsorship deal won’t pass UEFA’s smell test… but it remains to be seen whether UEFA will treat all clubs evenly, or punish an also ran heavily while letting the big clubs off with warnings.

    Bobby; For those of us who do not deal with accounting on a daily basis, can you give a brief description of how Player Amortz, Valuation and remaining balance work?

    I assume that 2012 Amortz, for example, is how much of what they are owed (and a prorated portion of their purchase cost) comes off the books this year. How are these things calculated in relation to purchase price, wages, and any “net present” or residual valuation of the player contract?

    IE: if a player is purchased for $20m and signs a 4yr deal at $4m p/a, in year three what is his remaining valuation to the club?
    Is the full $20m in purchase amortized over the 4 years regardless of whether he signs a new contract to stay, or is sold before end of contract?

    Does any residual value get deducted from present value (if, in the example, the player is deemed to be worth $6m going into the final year of the contract, or is sold prior termination etc). If so, how is the player’s NPV calculated? Is it an assigned value or are there accepted methods for calculating these things? All footballers do not age and/or appreciate/depreciate at the same rate, obviously.

  5. The Amortization amount per year for a player is the remaining balance of just the transfer fee paid divided by remaining years in the contract.
    Bought for $20M and given a four year contract. Amortization charge is $5M per year. If a player with such terms for sold for $25M after two years the team would book an immediate gain of $15M ($25M new transfer fee less unamortized value of $10M)
    On the other hand if the same payer was sold for $4M then the club would have to book an immediate loss of $6M to their annual statements.

  6. If a new contract is signed part the way through then the amortization period would be extended and the residual value divided by the new extended period.

  7. J says:

    I guess we’ll find out whether or not FIFA thinks City’s behavior is beneficial to their business or not…if glamour clubs and ones that drive wages are permissible in stretches…and whether or not City has earned the right to be granted an exception.

    Perhaps more concerning to me is the long-term consequence of gate receipts representing less than 10% of total revenue. In that case, what is the club’s motivation to concern itself with the fan experience?

  8. Or the counter is that City are keeping prices down and encouraging fans to attend.

  9. Grant Skene says:

    I don’t know if you saw my comment on the Forbes site for this article, but I thought I would mention the gist of it here as well.

    I find the amount of commercial revenue City claims highly suspect. How trustworthy are the figures? Since they are not a publicly-traded company, is there any legal risk to inflating figures?

    How does a club like city double their commercial revenue in one year to the point that it is making 15% more than what United claims when United have been a major innovator in finding new revenue streams?

    I get the feeling that City are either just making those numbers up to hide an even greater loss, or they are manufacturing those numbers by fake deals with their ownership. Either of which should really test if FFP has any teeth.

  10. J says:

    DailyMail lists these matchday prices, here: http://www.dailymail.co.uk/sport/football/article-2219460/Big-rise-football-ticket-prices-revealed–Arsenal-expensive.html

    It doesn’t look like you need to watch out for falling prices at the Etihad.

    Last year City attendance = 421,756

    Arsenal = 480,764

    The huge difference in gate receipts doesn’t compute.

    Are you allowed to pump investment into the club via “seat licenses”?

  11. Grant

    I pointed to the source of the increase in commercial revenue – Manchester City appear to have booked $60M as part of the 10 year Etihad campus etc sponsorship deal that totals $640M.
    Just because a company is not publically traded does not mean it can just throw numbers out in an audited financial statement. A publically traded company is subject to more additional requirements but it does not mean that its numbers are more “accurate.”
    The additional point I made in the article is that City has not shown itself to be global in terms of sponsorship but a club highly dependent on sponsorship from the oil and gulf states.

  12. J – I think you might want to revisit the attendance numbers. Based on 19 home games in the BPL the numbers compute to average attendances of City – 22,000 and Arsenal 25,000.
    Both are less than half capacity.
    As I said the numbers are as reported in annual reports. AnderRed blog points out that some different clubs classify gate receipts and commercial revenue differently and so there may not be apples to apples comparison on individual revenue lines.

  13. Ed Gomes says:

    I still don’t understand what exactly is the problem. Yes, if the owners lose interest and ignore club, it will turn bad quickly. But if they sale, new ownership should make sure of the club’s financial situation.
    Rules will always get circumvented. In the NFL contracts get stretched out all the time for cap reasons. The only problem is that there will be a day of reckoning. But in the futebol world, there’s no sharing of revenue.
    Why should UEFA care if City owners dump money from their other holdings into the club at inflated rates? As long as it doesn’t circumvent real world financial regulations, huh huh, what’s the problem? We would all complain if an owner put one of his companies on a jersey for nothing? That would hurt a club, right?
    Wait until City starts pocketing huge amounts of money from friendlies played abroad. Fees from match sponsored by Etihad.

    Everyone wants a level playing field, because it’s good for the game? What type of ratings would a Schalke vs Valencia would get for a CL final? How is that good for the game. While I admit a Schalke or Valencia verse one of the big boys would bring a nice cinderella factor if they beat other big boys along the way.
    Fans just want their team to have a shot. The fact is that they could get a shot every few years if handled right. Maybe bad management/ownership has as much to do with failure to do so, as money does.

    By the way, don’t Arsenal fans wish their ownership acted a little more like City?

  14. John Bladen says:

    No, Ed, we don’t… I’d like Arsenal to be better, and for them to either sign a couple of big names or commit to rebuilding with quality youth. At the moment, they seem to be trying to do a bit of both… some interesting young players mixed in with middling (at best, second tier) transfers that absorb money but don’t really seem to improve the odds that much.

    I don’t want Arsenal to be “like” City, because I know in doing so they could well put themselves out of existence (and we don’t need to list the clubs that have done that recently).

    With regard to the topic at hand… City’s relatively low revenues and relatively high expenditure, I don’t see that changing, despite what the club says it’s long term intention is.

  15. John Bladen says:


    As far as you know, is there anything stopping Man City ownership (or their friends/brothers/associates) from buying a Chinese, African or Middle Eastern club and using it as a dumping ground for bad contracts?

    Suppose City needs to straighten out their books after the Etihad sham is brushed off by UEFA FFP accountants (any number of other financial claims could be disallowed, of course). Could they buy (or just invest in, officially or otherwise) an obscure club in a non-UEFA confederation, then sell off some of their worst investments for Torres-like money to transfer the burden from City to “Al-Folly” (sorry, couldn’t think of a better name…)?

    Obviously, the player would have to agree to go… but a rich new contract for a player expecting to have to take a pay cut and a free transfer generally smooths such items over.

    If an obscure club wants to put in a ridiculous offer for a player who isn’t worth half of his wage packet, much less a transfer fee, who would stop them? UEFA may have the right under “membership” agreements to look into the finances of clubs, officers and ‘resident’ businesses, but it’s highly unlikely they’ll be given access to treasury accounts in non-member nations, much less the personal accounts of third parties or royal family members in sovereign nations.

    Am I missing something here? Could UEFA actually do anything about this type of thing? This is just one possible example, of course. There are many other ways that FFP could be circumvented by sufficiently rich club owners. UEFA seems to have planned for only a few possible methods.

  16. Ed Gomes says:

    Instead of asking if UEFA could, the bigger question is would they want to?

    I get not wanting Arsenal going by the wayside ala Pompey. But Arsenal is in a much better position than Pompey ever was. They don’t have to go crazy like City to get established. Actually, now they just might. Too many players have wanted out, and CL play is tougher.

    I just watched FSN, and I had to hear commentator keep repeating how Malaga would be a nice Cinderella story. I may agree with that, but he kept going on about them having no money, which is far from the truth. Another pundit not bothering to do any research.

  17. FFP would likely deem contract dumping as a related transaction plus the chance that a top player in the prime of his career is going to embrace such a fate willingly is unlikely.

    One thing that keeps on being missed is that 200 major clubs voted the regulations in.

  18. Malaga banned from next European competition on account of not settling outstanding debts. This is being linked to FFP but it has very little to do with FFP. UEFA had this power long before FFP came into being.

  19. John Bladen says:

    I’m not suggesting any of these contracts represented “dumping”, but we’ve already seen Eto’o, Anelka, Drogba and others take the big money deals to move to (relatively) obscure clubs for more than they could have gotten in Europe.

    It’s true that, with the exception of Eto’o, none of the players that have done so could truly be called ‘in their prime’, but in the agent driven world that is professional sport today, it seems to be the money that talks, no matter where you end up playing/living (which don’t have to be the same place, of course).

    It is probably true that Ronaldo, Messi and the like wouldn’t go regardless what the offer was, but I was thinking more of players like Drogba, K. Toure, Adebayor etc. Guys who still have game left and are unquestionably “name” stars, but who aren’t youngsters any longer and may not be worth the contract they are on, much less an improved one.

  20. John Bladen says:


    It’s difficult to look back and relate the modern game to the past with respect to “my” club… the formation of the PL and the economic expansion that went with it has truly transformed the game at the top end. So I won’t delve into “Arsenal history” and compare eras, regardless of how tempting that sometimes is.

    Nonetheless, I do think the club has been very much at a fork in the road (cliche alert… oops, too late…) the last year or three. I’m not sure that the board even knows what direction they want to go, and there’s certainly little evidence that they have unified behind a singular plan. Every time someone comes out and claims there’s a boatload of cash to be spent and makes it sound like that decision is Wenger’s alone (which I don’t believe), it turns out more shrewd and conservative financial moves are on the horizon.

    Right now I’d say increased spending without taking it close to the level of City, Chelsea or MU is probably not going to ‘help’ Arsenal. It’s possible they’ll not make the top four next spring and we’ll all look back and rue decisions not to spend to improve the squad. But barring a run of bad results and injuries (for which they still do not have sufficient cover), I expect them to be in the top four but some way from the very top come May.

    A CL qualifying position does seem to be the club’s goal these days. That drives some supporters nuts as AFC appears not to be trying to “win”. I can understand that. We all want to win.

    I suppose the question none of us have the answer to is: would spending an additional $20-25m actually make a difference? I would guess the board thinks that that won’t get them to a title challenge (and they are right about that part, IMO), so unless they think they might fall out of a CL position for 2013/14, what would be the benefit to the club as a business in doing so? If you can’t attract the very best players, what is the benefit of buying additional second tier stars? Arguably, the club already has more than it’s share of $3-6m p/a players who contribute very little. Several appear to be reserve squad fixtures and will likely spend the remainder of their current contracts in that role, as I’m sure you know. Instead of Wenger being criticized for ‘not spending’ (something he likely doesn’t control, despite the reassurances of the board…), I wish fans paid more attention to what he has spent the money he has been given on. As with Benitez @ LFC, that’s an area I believe he can fairly be criticized for.

    It will be interesting to see how the approach changes as the new commercial deals come in and stadium debt is retired (which, frankly, is a bit of an issue for me… if they aren’t going to take a shot at winning – something I understand all things considered – I’d actually rather see them spend a portion of the transfer kitty to retire stadium debt early, thus freeing up funds to improve the club ‘sooner’. My guess would be the board’s answer to such a demand would be “Not at the expense of CL revenues, we won’t”). There’s no doubt that spending will increase when those funds are available. The trouble is, I’d expect rival’s spending to increase at least in step with that as well. It seems to me the long term result is likely to be an increased gap between the top 4-5 clubs and the rest, but still a major chasm between the top 2 and the next 3 or 4 challengers.

    One wonders if the talk recently about scrapping Europa league and expanding the CL isn’t in some part driven by an underlying desire in UEFA to try and close the gaps between the top 2-4 clubs in Europe’s elite leagues and the rest?

    If so, UEFA is ignoring the obvious and easier answer: distribute the wealth more evenly. The present system, unsurprisingly, just guarantees that the rich get richer. In many ways, regardless of their relative success in CL (see market pool discussions).

  21. Alberta Gooner says:

    Wow, an excellent piece and some great comments in this thread. Thanks for another great year of punditry, Bobby. Wishing you and yours a merry Christmas and looking forward to reading and hearing more of your insights in 2013.

  22. AG – thank you to you and all the positive contributors over the last 12 months. With the demise of Fox Soccer Report it made for a very tough year but brighter days ahead I think.

  23. John Bladen says:

    We’re all very sad that FSR went away. I do not understand how the new owners of the program couldn’t see that they had a continent wide following and a program that was relatively cheap to produce.

    Best wishes to all for the holidays & new year!

  24. Ed Gomes says:

    First and foremost, I would like to wish everyone a Merry Christmas. May you and your families have a great Holiday.

    JB, it’s not about spending or realizing that an extra 20 to 25 mil will not better the squad. For me Arsenal’s troubles go much deeper than that.
    They have, in the last few years, lost players due to incompetence. They weren’t lost due to Wenger wanting to turn over the squad and still turn a profit. These players left do to their future becoming stagnant, and an opportunity to earn more elsewhere.
    If I was an Arsenal fan, I would be more worried about not being able to convey the right plan going forward, in order to keep your stars. We all know it’s cheaper to keep players, especially world class one’s, instead of going out and trying to sign one. The lack of trophies, and any course of action in improving the club led them to leave. In my opinion even Cesc, who was always going to go back to Barcelona, would have stayed if the future was bright. He had plenty of time left before moving on.
    Arsenal did nothing, contractually, in order to have some relief. They’ve let contracts come down to the end, where they aren’t even able to maximize the most out of the transfer fees. Not good, if you are a selling club.
    I know they’ve just signed a group of youngsters, whose future looks bright. But how much brighter would the club look, if those youngsters were making their inroads with Cesc, Song, RVP, etc… still in the club. Yes, they would see action in Cup ties and season. And being so young, you were always going to be able to lock them up now.

    People could say City is just bad business, and we could argue about that. Arsenal for me, is bad business. They’ve started paying for B Class players, that would never sniff the field in a BPL top four squad. They’ve picked up enough of them, that it’s actually cost them.
    For me Arsenal was much better off spending on 1 big player along with one B Class, instead of picking up several lesser players. Defense is still shaky, and no real forward presence. For me, they still have leadership issues. Let me add that bringing back Henry should have sounded alarms instead of inspire anything. Just a distraction for the loyal fans.
    Arsenal will be able to justify their current squad, once they don’t qualify for the CL. Unfortunately for the fans it’s being built while still participating in the CL.

    As for the CL being expanded, it’s ridiculous. UEFA is just afraid that certain leagues, will really suffer if they don’t compete in Europa. Europa is usually cared more about in Spain, Portugal, Russia. With the Big League clubs ignoring it, it brings down their coefficient. Serie A as an example has lost out on a CL spot. It’s not only a CL spot, but the third place team will now have to go through qualifiers as well. It’s grinding and too early in the campaign to be a full strength. Qualifiers start in July, and even though Chelsea didn’t have to play until the Playoff, it was still in mid August against tough opposition.
    I know more sometimes brings in more money, but it will water down the competition. I actually agree with AVB when he said third place group stage CL finishers shouldn’t qualify for Europa. The sweet sixteen losers should. It would heighten interest in Europa and provide better competition.

    As for FSR, I heard plenty of complaints, so lets be careful. As for the new format, I like it. It looks and it’s put together much better. Money can do that, in the right hands. Yes, there’s still comments made about teams that shouldn’t be. That’s laziness on the pundits part. I’m dating myself, but I think that one of the hosts, forgot name, has a very Max Headroom quality about him. Not sure if its good either.

  25. shmish says:

    To Bobby and others,

    Have some good holidays, and know that many people out here love getting their weekly fix from you! I miss FSR and the SRE Podcast but of course still enjoy the blog and Forbes articles.

    take care

  26. Ed Gomes says:

    Mancini got himself fired yet?
    Sunderland? Really?

  27. John Bladen says:

    Ed, I never thought I’d hear anyone else mention Max Headroom in my lifetime…

    I’m actually in favour of shrinking CL participation, so we seem to agree on that front (IE: too many teams). One can certainly make the argument (and many have) that the 4th place BPL or DFB club is “better” than some of the smaller league champions. However, it would likely be true that the 17th place finisher in the BPL is better… yet I don’t hear demands for Wigan, Granada or Hoffenheim’s inclusion in the CL

    Nonethless, what we think doesn’t matter that much as I’m pretty sure UEFA is headed in a different direction on this…

  28. Ed Gomes says:

    Since we’re discussing futebol, money, etc… Pundits and fans, of their respective countries, have been speaking about the Netherlands and Belgium leagues merging. Apparently, top clubs are discussing it, as FA’s might be as we’ll. I’m not a big fan of that happening but it makes sense. Neither country is big enough to support large leagues, if anything both leagues should be smaller. Joining should bolster the quality and financial situation of both leagues.
    It’s an interesting proposition that will leave plenty of people angry. But if growth is what you want, it might make sense on both fronts.

    On a side note, this is exactly what the Portuguese league needs, but joining Spain in an Iberia league would be foolish. Spain is big enough, size and population, to carry a league on its own. Portuguese clubs, outside the Big 3 and maybe Braga, would get lost in the shuffle. Due to its location Portugal is stuck.

    Sorry for high jacking the article/post. I just found it interesting.

  29. Seattle Loon says:

    Late to this party but I loved Bobby’s piece for Forbes on Man City. It stood in stark contrast to a piece of ‘analysis’ on the BBC website the same day that claimed Man City had turned a corner.

    Which brings me to the bigger point. The sort of unsentimental, fact-based reporting and analysis that Bobby does is a wonderful exception in the glut of material and discussions about the beautiful game.

    Too often journalists and pundits are content to follow a well-rehearsed narrative or indulge in ‘churnalism’ where the same themes and pieces of info. are constantly recycled. Case in point – Stoke – plucky, unfairly maligned over-achievers or a rich-owner’s play thing whose net spend of over 60 million since promotion is only exceeded by Man City and Chelsea?

    Wishing everyone a happy festive period. And hoping that 2013 is a good year for everyone and in particular Bobby’s talents are rewarded with an even bigger stage.

Leave a Reply

Your email address will not be published. Required fields are marked *

House Rules

Please refrain from posting comments that;

  • Attempt to demean, intimidate or bully fellow readers
  • Are racist, sexist, homophobic, sexually explicit, intolerant or otherwise abusive
  • Includes language likely to offend or attempts to try and circumvent this request
  • Could be considered spam

The House reserves the right to delete any such comments and to block further participation on the site.

Soccer Report Extra
© copyright 2010. All rights reserved.
Designed and Developed by:
Bills'eye + Underscorefunk Design