Manchester City are back in front and back in profit

ON THE field of play, Manchester City overtook their neighbours United almost a decade ago, but in 2020-21, they became the first Premier League outfit to earn more than the team from Old Trafford. City’s revenues for 2020-21, totalling £ 569.8 million, were a club record, but they also topped United’s income by more than £ 70 million.

The 2020-21 season saw City win their fifth Premier title since 2011-12 and their 13th trophy since 2010-11. Since they were taken over by Abu Dhabi, City have won more than anyone else, including Chelsea, who have won 12 pieces of silverware in that timeframe. They have also finished above United nine times in 13 seasons. In 2020-21, they also won the EFL Cup and reached the final of the Champions League and semi-finals of the FA Cup. No surprise the club called it a “very special season”. Their win rate across the campaign was 77%.

City have become a sporting multinational that has more depth and reach than virtually every other footballing institution worldwide. They have arguably the best, most balanced squad in Europe, the most sought-after coach, a good stadium, an admirable style of play, a decent community presence, growing commercial operation and they have the fourth best brand in football (source: Brand Finance). City have also enjoyed a 47% growth in social media interaction and have around 80 million followers across the three main platforms. 

In short, Manchester City’s owners have not just built a good team with a top coach, they have aimed to create what looks like a solid, corporate structure that can ensure success is self-perpetuating. 

At the same time, the club is much-envied and disliked by many opponents and their success has often been dismissed as the product of limitless piles of money from the middle east. But what sets them apart from many monied projects is the long-term view they seem to have taken. Whether this is good for the competitive balance of the Premier League is a matter for debate. Already in Europe the Bundesliga and Ligue 1 have been monopolised by Bayern Munich and Paris Saint-Germain respectively, the Premier could be next.

City, after making a net loss of £ 126 million in 2020, moved back to a small profit of £ 2.4 million. Nevertheless, this was an impressive swing to the positive of more than £ 128 million. Net debt was also reduced significantly, largely due to an increase in cash of £ 27.3 million.

The revenue mix was dependent on commercial activity and broadcasting, more than compensating for the loss of matchday income. Broadcasting increased by 56% to £ 297.4 million, largely due to City’s run to the Champions League final, while commercial was up by 10% to £ 271.7 million.

City generated a £ 68.6 million profit on the sale of players, almost £ 30 million more than 2019-20 and the highest in the past decade. The club’s outlay in 2020-21 amounted to £ 155 million (only Chelsea spent more in the Premier), but they recouped £ 51.7 million. The biggest signings were Rúben Dias (£ 62 million, Benfica), Nathan Ake (£ 40 million, Bournemouth) and Ferran Torres (£ 20.7 million, Valencia). Among the players sold was Leroy Sané, who moved to Bayern Munich for £ 54.8 million.

Over the past decade, City have spent £ 1.37 billion on players, versus Chelsea’s £ 1.32 billion. Their income from sales is much lower, £ 465 million compared to £ 870 million. One notable feature of City’s transfer activity is that they make fewer mistakes than some of their peers, but if things don’t work out they are quick to move them on.

The 2021 current squad cost more than £ 800 million. The wage bill reached a record high, £ 354.7 million, representing 62.2% of income, more than 10 percentage points lower than the previous season. Since 2008, City’s wages have risen by 654%.

They have also made a strong commitment to women’s football and are one of the top clubs in the Women’s Super League. In 2021, they were runners-up and had extended runs in every major competition.

One prize eludes Pep Guardiola and his City project – the UEFA Champions League. It was clear to many people that Guardiola slipped-up in 2021 in his approach to the final and Chelsea deserved their victory. Despite this setback, they are the only English club to play in every Champions League for the past 10 years and they are in this season’s last 16.

Nobody should forget this is a club in a privileged position, but so much of what they do is not about short-termism. Admittedly, they are, to quote David Conn’s book title, “richer than God”, but it will be interesting to see how Newcastle United approach their new found status. If they are sensible, they will look at Manchester City.

Manchester City huge loss fails to tarnish “super season” prospects

IF ANY club among world football’s elite can withstand a substantial £ 125 million pre-tax loss it is surely Manchester City, who also remain on target for an unprecedented quadruple of major honours in 2021. 

City’s loss may have highlighted the impact of the pandemic on even the biggest football entities, but the club was quick to reassure and predict they would return to profit in the current campaign. For most clubs that would sound an over optimistic claim, but there was an underlying sentiment that City had paved the way to make 2020-21’s accounts as normal as possible, which explains the caveat that 2019-20 and 2020-21 had to be viewed as one long, covid-affected balance sheet. City are also insistent their long-term approach means they are not over-dependent on revenue streams most compromised by the crisis. 

Although City’s revenues declined by almost 11%, their total of £ 478 million representing their third highest annual result. They were just £ 22 million shy of a third consecutive half billion of income, but 2019-20 was also their first loss since 2013-14 – they had been in profit for five successive seasons.

LeagueFA CupFL Cup
2010-11 W 
2013-14W W
2015-16  W
2017-18W W
2019-20  W
A decade of silverware

It’s very clear where the revenues were hit the most – both broadcasting and matchday were down by a quarter, with the former declining by more than £ 60 million. The club also took a £ 106 million hit on player amortisation, taking their pre-tax loss to £ 125 million.

The loss is likely to be the second highest in the Premier League in 2019-20, although Liverpool have yet to announce their results. Of those who have made their financial performance public so far, only Everton (£ – 139 million) have made a bigger loss. Only Manchester United’s revenues (£ 509 million), have been higher. Premier League clubs in 2019-20 lost around £ 780 million, but the figure is rising.

Over the past decade, City’s revenues have grown from £ 153 million in 2010-11 to the current level, a jump of 314%. No other major club has seen such a trajectory in their income generation. Liverpool’s total revenues have risen from £ 184 million to £ 489 million in 2020, a grow rate of 268%. During this period, Real Madrid and Barcelona experienced a 139% increase and Bayern Munich climbed by 192%.

City have almost closed the financial gap between themselves and Manchester United even though United have greater crowd potential than their one-time “noisy neighbours”. City are also more successful on the pitch now, having won 11 trophies since 2011 compared to United’s five. United’s global appeal is wider, though, as their social media presence across the three main channels shows. United have around 140 million followers versus City’s 75 million. Effectively monetised, social media expansion can reap big rewards for a club.

Revenue growth has been vital to accomodate player remuneration. City’s wage bill has gone from £ 174 million in 2011 to £ 351 million in 2020. However, in 2011, City were paying out more than they earned, as evidenced by a wage-to-income ratio of 113.7%, compared to 73.4% in 2019-20, the highest level since 2013. That said, the ratio was 58.9% in 2018-19, so an 11% increase in wages, coupled with lower revenues, put more than 15 percentage points on the ratio last season. By comparison, wage bills at some top clubs declined in 2019-20, for example, Arsenal went down by 3%, Barcelona 12%, Juventus 13% and Manchester United 15%. By contrast, Leicester City (+26%), Real Madrid (+5%) and Everton (+4%) all paid out more cash to players than they did in 2018-19.

By their own lofty standards, City’s transfer market activity was relatively muted in 2019-20. They spent, according to Transfermarkt, £ 144 million, with top signings being Rodri of Atlético Madrid, who cost the club £ 56 million and João Cancelo, a £ 58 million capture from Juventus.  City’s net expenditure in 2019-20 was £ 79 million, which was exceeded by four Premier League clubs (Arsenal, Aston Villa, Manchester United and Wolverhampton Wanderers). Over the past five years, City have had the highest net deficit in the European market, however, their £ 590 million outlay around £ 100 million more than the second biggest net spender, Manchester United. 

Since 2010-11, City have spent £ 1.4 billion, more than any other club, but how the current climate affects their ability to buy big remains to be seen. One could assume that they will fare better than most of their rivals in snapping-up young talent like the sought-after Norwegian, Erling Haaland. The club has said it will only entertain a “smart market” and will only pay “fair prices”, but even Pep Guardiola has made teasing remarks about paying a record fee for a player, a comment obviously aimed at the bidding war that will open up when the season ends.

The pandemic has, inevitably, impacted the club’s cash reserves which have fallen from £ 130 million in 2018-19 to just £ 18 million. Any big signings going forward will undoubtedly be made with one eye on ensuring City don’t run into Financial Fair Play trouble.

2020 £m2019 £mGrowth %
Profit/loss, after tax-12611-1255
Manchester City’s 2019-20 Financials – at a glance

Manchester City are a club that will always divide opinion, from their ownership model to the power and influence of their expanding City Football Group. They will surely be at the heart of any discussions around restructuring European football, including the creation of a super league. They appear to be the epitome of modern corporate football, a topic that continues to be controversial. That is unlikely to concern City too much as they pursue their goal of domestic and European dominance. The 2020-21 season may just be the year it all comes right for them, even if their recently-published financials show they are mortal, after all.