5 Ways Manchester City Improved Finances to Offset FFP Threat
Manchester City have posted their 2013-14 financial accounts and look set to avoid any further Financial Fair Play (FFP) sanctions, according to the club's official website.
The results are healthy and once again show that City are heading in a direction toward self-sustainability. Having been hit by a fine and spending cap this season by UEFA after breaching FFP rules, the club is now firmly in the belief they will comply this season and avoid any further sanctions.
One of the more tired jibes from fans of other clubs has always been the insinuation that City would be left in a financial mess that would be impossible for anyone else to continue if owner Sheikh Mansour was to leave.
That, of course, is nonsense.
The club is debt-free, and as their accounts each year show, they are becoming increasingly profitable and financially stable.
There is still a bottom-line loss of £23 million, but that includes the fine for breaking FFP rules this season. The club expects to make a profit next season for the first time under ADUG ownership, with the period of heavy investment that followed Mansour's arrival in 2008 now over.
Club chairman Khaldoon Al Mubarak said:
"We have moved beyond the period of heavy investment that was required to make the Club competitive again, it is commercial growth of the kind we are seeing today that will underpin and support our operations in the future.
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Here we look at five ways City have improved their finances this season and look set to avoid FFP sanctions.
1. Revenue Is Up Significantly
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City’s revenue has increased by 28 percent in this financial year, breaking the £300 million barrier for the first time in the club’s history.
Their income was £347 million, a £76 million increase on the previous year.
It’s a significant increase and one which reflects City’s growing status and consistent on-field success.
As their name becomes synonymous with winning trophies, their financial muscle increases, and this latest revenue figure represents the biggest in the club’s history by some distance.
How did they do it?
2. TV Deal Increase
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City won the Premier League under Manuel Pellegrini last season, which gave them the biggest slice of the new £5.5 billion television deal that was struck last year.
It’s an eye-watering deal which looks set to bring a big financial boost to all top-flight clubs.
According to the Guardian’s football finance expert David Conn, City netted £102 million from domestic broadcasting alone.
It’s big money, and it has helped City improve their financial situation.
3. Going Further in the Champions League
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Pellegrini also led City to the knockout stages of the Champions League for the first time in the club’s history.
It’s a lucrative competition as well as being a prestigious one, and City bagged themselves £31 million for their place in the last 16.
With City needing a win in Rome on Matchday 6 of this year’s competition to stand any chance of going through, the importance of doing so is further underlined by their financial accounts.
4. Commercial Revenue Increasing All the Time
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Often the biggest source of income for a football club is through commercial partnerships.
Whereas television money and gate receipts are to some extent capped, the possibility to earn money through commercial ventures is untold.
This is where City have been particularly clever. It’s a model Manchester United have been using for years, and City are doing a very good job of following it.
This financial year, City say their “commercial partnerships”—which are seemingly announced on a daily basis—brought in £166 million.
It’s an area the club will continue to try to grow.
5. Wage Bill Down
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One other key aspect to City’s improving financial situation has been the reduction of their wage bill.
Immediately after the ADUG takeover in 2008, City’s spending spiralled out of control as they tried to bridge the gap between themselves and the established elite.
Overspending on transfer fees and wages followed in an attempt to convince top players to come to a club that had no guarantees of success.
That period in the club’s history is now over, though. City are now successful and can attract players on that basis. This has seen a £28 million reduction in the club’s wage bill.
It now stands at £205 million.
"#MCFC 2014 wages down £28m (12%) to £205m (2013 £233m) with wages to turnover ratio falling from 86% to 59% following high revenue growth.
— Swiss Ramble (@SwissRamble) December 4, 2014"
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