Can Man City Ever Make a Profit: We Do The Maths…
by Ryan Baxter on October 19th, 2009 1,062 words | 27 commentsA financial disaster waiting to happen? Ryan Baxter takes a look at the figures.
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Manchester City’s billionaire owners have wasted no time in splashing the cash in an effort to win silverware and establish the club among the world’s elite.
They’ve spent an unbelievable £216.5m on players in the last 12 months and look set to continue their outrageous spending spree after the owners pledged a further £100m to manager Mark Hughes in January if he can identify targets.
Some experts even believe that Man City’s owners have spent more money in a year than Zimbabwe has in its federal bank reserve!
The figures don’t even take into account the £100,000+ a week average that players like Gareth Barry are taking home each week!
Return on investment?
It’s all well and good spending that kind of money if you’ve got cash to burn, but have the owners ever thought about how long it will actually take them to make a return on their investment?
The figures suggest that even if they win every competition in European football for the next 20 years, they still probably won’t make a profit!
So let’s take a look at what Man City can potentially earn, and what they’ll realistically earn, over the next couple of seasons.
TV money
Let’s start with television revenue. This is the largest source of income for most Premier League clubs – and Man City are no exception.
City will net around £40m in television deals as a reward for their 10th place finish last season.
A massive amount of money you may think – and it is – in normal people terms. But take into consideration the fact that City is the first club in Premier League history to spend £100m a year on wage bills alone!
Among City’s top earners are miniature Brazilian playmaker, Robinho (£160,000 a week), Argentinean barrel-shaped striker, Carlos Tevez (£150,000) and Togolese beanpole, Emmanuel Adebayor (£150,000), with Gareth Barry and Kolo Toure each taking home £120,000 a week.
At the moment, Premier League champions and local rivals, Manchester United, rake in £55m in television deals. So even if City do miraculously win the title this season, they’ll still face a shortfall of £45m in the wages vs. tele deals battle.
Potential earn for 2009/10: 1st, £55m
Realistic earn for 2009/10: 5th, £45m
Premier League
The Premiership hands out money on a sliding scale depending on the club’s league finish. Last season, Man Utd pocketed over £15m for winning the title, whereas the last placed team, West Brom, were awarded just over £1m.
City winning the league would just about cover the cost of Kolo Toure (£14m).
Potential earn for 2009/10: 1st, £15.6m
Realistic earn for 2009/10: 5th, £10.2m
F.A Cup
There might not actually be any point in Man City winning the F.A Cup – at least from a financial viewpoint.
With a measly £2m on offer for the winners, it’s only enough to cover Robinho’s wages for three months!
Still, City will have their eye on this trophy and will see winning it as a realistic aim. The prestige of winning the cup would certainly expose them to a worldwide audience, almost definitely picking up some global fans along the way.
Potential earn for 2009/10: Winners, £2m
Realistic earn for 2009/10: Semi finalists, £250,000
League Cup
Probably City’s most realistic chance of winning silverware this season, the League Cup is one of the least cared about competitions in England and only represents a pitiful £100,000 in prize money for the winners.
City are sure to take this competition seriously as it gives Mark Hughes an opportunity to give his huge squad a run out. At least that’s Gareth Barry’s wages covered for a week – oh, hang on, no it’s not.
Potential earn for 2009/10: Winners, £100,000
Realistic earn for 2009/10: Winners, £100,000
UEFA Cup (Europa League)
City would probably have had a decent run in this newly formatted competition – had they qualified for it.
A 10th placed Premiership finish last season wasn’t enough to give City European football. But Hughes, who is targeting a top four finish this season, will surely deliver European football next season, with a 7th placed finish guaranteeing it.
However, even if they do qualify for the Europa League next season and then go on to win it in 2011, they’ll still only receive a combined total of £4m – and that’s if they win every single match on their way to the final!
Potential earn for 2010/11: Winners, £4m
Realistic earn for 2010/11: Semi finalists, £1.5m
Champions League
Mark Hughes’ team will definitely have a good crack at breaking into the top four this season – but whether or not they can do it depends largely on Arsenal and Liverpool’s ability to play without any ability.
Let’s say they do finish in a Champions League position this season, the chances of them winning the trophy are slim to none. Many City fans will even agree.
It is a lucrative competition to be in, though. Qualification for it automatically gives the club a handy £3m, plus an additional £2.4m just for participating in the group stage.
A group stage win pockets the club £600,000, with £300,000 just for a draw. Quarter finalists receive £2.5m, semi finalists get £3m and the winner is awarded a massive £7m (£4m for the runners up.)
City’s United Arab Emirates based owners have pinpointed a Champions League trophy as their main objective, but they may be waiting a few years (or decades) to realise their goals – and even then, it wouldn’t cover Carlos Tevez’s transfer fee!
Potential earn for 2010/11: Winners, £21.5m
Realistic earn for 2010/11: Non-qualification, £0m
The Verdict
City’s owners will struggle to ever make a penny back on their investment. They must either be in it for the love of the game or for the celebrity status that accompanies owning a Premier League club.
This year, their potential earnings total £72m (if they win every competition.) Next year, their potential earnings total £93.5m (that’s again winning every competition, including the Champions League.)
A tidy sum you may think, but when you’ve spent more than £320m on signing players and paying their wages in a year, it suddenly sounds like a pittance.
Realistically, City will rake in £55m this season and £56.5m the year after (qualifying for the Europa League rather than the Champions League.)
And taking into account the £100m spent on wages each season, our computers have calculated that City’s owners will begin to make a profit… never.
Ryan Baxter writes for www.ballsandwhistles.com
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anonymous - October 19th, 2009 at 3:01 pm
A family who has wealth of at least £500Bn does not require a return on their investment.
anonymous - October 19th, 2009 at 3:03 pm
This article is a complete and utter rotten waste of bias rubbish, as is the ‘thinks he knows more than he actually does’ author.
anonymous - October 19th, 2009 at 3:04 pm
Your maths are terrible. City had revenues last season of more than the figure you produce if they won everything this year. That revenue figure was also around 40% higher than the year before. Your annual wage figure is inaccurate also. Well done. Nearly your entire article is bobbins.
anonymous - October 19th, 2009 at 3:07 pm
The money they are spending is used to build the “Manchester City Brand” globally, and post like this helps,!! the media can stop talking about us! It takes a while, top players and trophies and a lot of money for a club to become recognized globally, Manchester City had invested in players and the results this season against clubs like Arsenal and pre-season game against Barcelona shows they are on the right path. They will be both a success on and off the pitch wining trophies etc. Interestingly this article didn’t seem to include the capital selling hundreds of thousand of t-shirts across middle east, Asia, Africa and South America would bring in. If you have a tenner a pence here and there hardly matter
anonymous - October 19th, 2009 at 3:16 pm
The question in your title and the question you have answered are both completely different. You have asked can we ever make a profit (Which would be over a year period) and answered can our owners ever get an overall return, Not even taking into considoration the sale of future players and the overall increase in value of the club (As expected the club is already worth more than when we were taken over)
You also have to take into considoration that the wages and Transfer spending costs don’t actually make it onto our end of year Balance Sheet as they have been written off as “Gifts” as this has been well documented, again this contrasts with your actuall title question as yes, we will be able to make a profit, however, it could be difficult for the owners to see an overall return on a yearly basis if no players are sold and the value of the club stays the same (Unlikely)
anonymous - October 19th, 2009 at 3:16 pm
Ryan Baxster just let me take a stab in the dark, you havn’t a clue about city’s finances and never will, you make a completely unfounded and presumtious, biased blinkered opinion, your just another jealous fool. SIMPLESSSSSSSSSSSSSSSSSSSSS
anonymous - October 19th, 2009 at 3:20 pm
absolute drivel from people that dont understand business
anonymous - October 19th, 2009 at 3:21 pm
What about merchandise, ticket sales, sponsership deals, etc., etc. Pointless non sensical article
anonymous - October 19th, 2009 at 3:30 pm
Glad to see an article where the writers’s lack of financial knowledge is so obvious that it negates any point he was attempting to make. What a waste of space.
anonymous - October 19th, 2009 at 3:31 pm
“But take into consideration the fact that City is the first club in Premier League history to spend £100m a year on wage bills alone”
This single statement domonstrates what an utter utter pile of shit this artical is and your utter lack of knowledge – as of June 06 the following clubs wahes were
Chelski – 171 Million
Man Ure – 121 Million
Arsenal – 101 Million
Maybe you would be better doing some research before posting shit like this
anonymous - October 19th, 2009 at 3:41 pm
I trust Ryan you don’t actually deal with the finances of business on a regular basis. No disrespect, but it is clearly obvious from your very simplistec evaluation of financial activity that you don’t.
It is fair to say that football clubs are now businesses. With that we are all agreed.
With every takeover of any business there is a period of “rationalisation” which can take the form of massive cash injection or asset stripping. In Manchester City’s case this has resulted in massive cash injection.
This is where the understanding of business practice, logic and passion becomes a bit vague.
In a “normal” business situation, the investor of the cash injection will be looking for the return within an agreed period. The thing with football is that the investor is not usually looking for a return, and in City’s owner I am sure this is the case.
Therefore, a football club, now ceases to be a business, but a “club” with financial backer, one who happens to be the owner and the rest the shirt buying, ticket paying customer. The owner, may have plenty of cash, but he/she is one of the lads.
I am simply highlighting the fact that it’s folly to assume football clubs must break even, why should they as long as they have no debts. Platini’s suggestions want all clubs to at least break even, without owner investment. No business in the world is regulated like that.
If I was extremely rich and decided to launch a car hire company called, “You Bet” in 5 airports, I would need to invest heavily. I would spend, borrow, and probably make loss over the first few years, but I would be free to do that. Platini and others are suggesting regulation of investment, which would stop long term goals.
His suggestion is also illegall.
Ryan, it’s Utd in debt, Liverpool in debt, both with no way of paying it back. That is real debt, it’s called insolvency.
anonymous - October 19th, 2009 at 3:59 pm
now you see, this is what happens when football fans who read the Sun (actually i presume this guy is a scouser so probably the Star or Mirror), listen to Talksport and generate their football opinions by talking with blackcab drivers, try to make an intelligent contribution to a debate which involves more than making more than a stereotype induced judgment on a player or club
your lack of knowledge on the subject has already been ridiculed enough Ryan lad, i wont add to ur embarrasment enymore by picking more holes in ur “Maths”
anonymous - October 19th, 2009 at 4:08 pm
Seriously guys the arabs were conned into thinking they had bought man u, robinho was conned into thinking he was going to chelsea and now wants to go to barca.
If city can keep up this conning streak, then yes they can make a profit inb the future.
anonymous - October 19th, 2009 at 4:12 pm
You also have absolutely no idea of maths regarding business my friend …..this isn’t just about winning trophies it’s about developing a brand! Once that is established go and get your abacus out again : )
anonymous - October 19th, 2009 at 4:15 pm
Oh Dear Oh Dear Ryan. Did no one teach how to use that abacus you were given by Santa. Very poor indeed young lad.
anonymous - October 19th, 2009 at 4:26 pm
tripe!
anonymous - October 19th, 2009 at 5:03 pm
I remember once my wife complaining that Elton John had paid £80K for a piece of furniture, I then explained to her that if you compared EJ income with hers it was probably the equivelant of her paying 80p for the same peice of furniture.
The money being invested in MCFC is little or nothing to these guys they are looking at the bigger picture, and few of us mere mortals are able to comprehend or even understand the business reasoning behind it.
I myself a company owner with lots of cash, but not even pocket money for the MCFC owners.
anonymous - October 19th, 2009 at 5:17 pm
Pure Gash! Enough Said.
anonymous - October 19th, 2009 at 5:42 pm
What an idiot this person is. Liverpool put out figures that in their CL winning year they made an extra £40m through the competition.
So lets look at the actual figures and not the ones seemingly plucked from outta the air.
CL Winners £40m
TV Money £55M
PL Money £15m
Cups £5m
so at a conservitive estimation City could look to have £115m – £120m coming into the coffers through the playing side of the business. Add to that expected full houses, increased sponsorship money and merchandise etc.
Adding only £30m through this would give City an annual figure of £150m minimum.
Over a five year plan that would mean upwards of £750m. Now expectations of players purchases would say that they would decline in numbers as the team gets better. A team of excellent players needs few replacements, so the hope would be that the team may only need a max of £50m per year for players.
Final consideration is the money we get through player sales, it is nice to note you have completely forgotten to mention the fact that as a football club we produce more acadamy players than any other prem team and at an average price of say £5m per player could recoup another £20m per year. Giving a possible grand total of upwards of £170m. A figure that is realistically viable, especially when set against the fact that as a club we have nil, zero, zilch in the way of debt to finance.
But hey never let the actual figures get in the way of some muppet making a story up that makes City look poor.
Also seeing as this is all pure speculation why not do a story on how Man U will repay their debt if the lose out on the CL one year or a similar story on Liverpool.
anonymous - October 19th, 2009 at 5:44 pm
Ryan,
I think that the school you attend will be hanging it’s head in shame.
If you want to be a journalist, when you grow up, then please try to put some facts in your articles. Unless you want to work for “The Sun” of course.
Try starting with including money from attendances and sponsorship, as mentioned earlier.
anonymous - October 19th, 2009 at 5:46 pm
Apart from all of the financial errors and omissions, and the lack of intelligent insight into the motives of City’s owners, what does the author suggest is the alternative for an ambitious club to break into the top 4? Build a Champions League team by developing youth players and plucking undiscovered talent from the lower leagues (meanwhile hoping they won’t be illegally poached by a Big Club)? Oh yes, can’t see any flaws in that plan. And they can stop for a slap-up fish & chip supper on the way back from the Champs League final.
anonymous - October 19th, 2009 at 6:24 pm
Guys city are the best! Cristiano ronaldo would have played for us, if he secretly wasnt scarted of all the leprecauns our pots of gold attract!
anonymous - October 19th, 2009 at 6:58 pm
Been said before but city kit sales are expected to rocket to bridge the gap – first moslem owned premier club will generate massive sales in Asia, Middle East, Northern Africa, Indonesia & Turkey, particularly as the RedS**T fans in these areas are only fickle pot hunters. We need Chinese & Indian involvement I suggest double or triple sponsorship -current sponsor’s name on shirt front – all players will have to change their names to a Chinese sponsor so that name appears on the back of shirt & get an Indian Co. to sponsor the shorts. Mega dosh. Profits rolling in. Reason that these owners bought club is to advertise Abu Dhabi to compete with Sheik’s father in law in Dubai -not return on investment. They make their money buying stakes in Barclays Bank – how much was it they made – £600m+ just the size of Arsenals & RedS**T’s debt
Just 1 other point all clubs in top 4 except Chelski have massive loan debts- so how do they make a profit – THEY DON’T DUMMY
anonymous - October 20th, 2009 at 10:42 am
Has this article sparked a huge response? Job done.
anonymous - October 20th, 2009 at 5:05 pm
whats ur point?
so the aim of this website is just to publish inaccurate, unfounded, nonsense articles just so people can come on and ridicule it?
i dont think so.
it is a platform to discuss rumours, and football opinions
this guy has tried to sound clever by making up his own facts and has been rightly deriled for it
anonymous - October 21st, 2009 at 8:45 am
I agree, this guy is a bit of an idiot, there’s no doubt about that. But maybe his source of information was poor or he didn’t do enough research? I think it’s mainly over defensive Man City fans who feel like they’re being picked on that are taking offence. I like to give people the benefit of the doubt but let’s hope his next article is a little more accurate!
anonymous - January 25th, 2010 at 11:39 am
So funny reading all the bitters on here trying to defend their small club – get on and play some football and perhaps you may win a trophy – perhaps…
Huddersfield Town 3
Wolves 3
city 2
Liverpool and United 18
You cant change history you can only hope you will be part of the future.