Can Manchester City Afford to Pay £45 Million for Edinson Cavani?

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Can Manchester City Afford to Pay £45 Million for Edinson Cavani?
Gabriele Maltinti/Getty Images

We are now three weeks into the transfer window and Manchester City have yet to make any new signings. There were rumours in the build up to the transfer window opening that Napoli striker Edinson Cavani would be on his way to Eastlands, but the move now looks unlikely to materialise. 

The main reason the move looks doubtful is that Manchester City can not possibly afford his £45 million transfer fee. Despite the vast wealth of Sheikh Mansour of Abu Dhabi, who has bankrolled the club to the tune of £1 billion since buying City in 2008, the financial accounts show that City are on the verge of failing to comply with the new Financial Fair Play (FFP) regulations.

Just before the transfer window opened, Manchester City announced a loss of £98 million (€116 million) for the last financial year. The UEFA FFP rules (which are explained in detail by football blogger The Swiss Ramble) will come into play from the 2014-2015 season. Manchester City are allowed to make a loss of €45 million for the combined 2011-2012 and 2012-2013 seasons. This means that they will need to make a profit of €71 million this season to meet the rules, an impossible task considering the revenue they have lost out on by crashing out of the Champions League so early.

The ultimate sanction UEFA have is refusing to allow a club that flouts the rule to play in Europe. UEFA will almost certainly not ban Manchester City from European competition because they have shown that they are trying to reduce their losses. In the 2010-2011 season they made a record loss of £197 million, last year it was £98 million, and this year losses will decrease further. Spending £45 million on Edinson Cavani would unnecessarily antagonise UEFA at a time when they need to be in their good books.

 

Shaun Botterill/Getty Images

It is also telling that the biggest signing made by the red half of Manchester is not a footballer but a commercial sponsor. Manchester United showed the extent of their sponsorship revenue this week by announcing Japanese paint manufacturer Kansai as their first ever paint partner. That’s not a joke, Manchester United now have an official paint partner. The Glazers know that they would be run out of town if they were to sell the naming rights to Old Trafford so instead have been steadily selling every other part of the club, and have now built up a collection of official sponsors that includes Chevrolet (official automotive partner) and Mister Potato (official savoury snack partner).

Manchester City are now following this same route as they need to increase their commercial revenue to break even for the 2018-2019 season. Income from gate receipts will remain steady and TV rights deals have already been agreed on for the next few years, so the only avenue City have to increase their revenue is through commercial sponsors.

The ‘Sugar Daddy’ days are over and City now are facing up to the harsh new realities of life under FFP. They will still be able to spend big over the next few years as FFP rules will allow them to offset their losses with the cost of building the new £140 million Etihad campus. But the age of ‘kamikaze spending’ is well and truly over. 

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