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.

Thank you, Mr Abramovich – Chelsea lose heavily, but wages climb

CHELSEA really did hit the jackpot when they were taken over by Russian oligarch Roman Abramovich in 2003. He has not only presided over one of the big success stories of 21st century football, funding the unprecedented growth of the club and covering financial shortfalls, but trophies have poured into the Stamford Bridge boardroom at an average of almost one a year. 

In the current climate, Chelsea’s ownership model has allowed the club to ride the waves of the pandemic, even though in 2020-21, they made a massive pre-tax loss of £ 155.9 million. But the Blues rewarded Abramovich with their second UEFA Champions League triumph, won in an all-England final against Manchester City in Porto. This brought the total number of major trophies won by Chelsea in the Abramovich era to 17 in 18 seasons.

Furthermore, Abramovich sanctioned the spending of £ 222 million on new players in 2020-21, including big names like Kai Havertz (£ 72m), Ben Chilwell (£ 45m), Timo Werner (£47m), Hakim Ziyech (£ 36m) and Édouard Mendy (£22m). Abramovich’s backing, whatever the fans may think of it, has proved to be resolute, consistent and unwavering. This has cushioned Chelsea during a difficult time for the game and allowed them to remain highly competitive in the transfer market, even if they did suffer a transfer window ban.

Trophies in the Abramovich era

PLFA CupLge CupUCLEuropaTotal
Chelsea5532217
Man.United5241113
Man.City5260013
Arsenal150006
Liverpool111205
Leicester110002
Tottenham001001
Wigan Ath010001
Portsmouth010001
Birmingham001001
Middlesbrough001001
Swansea City001001

Chelsea’s pre-tax loss, while having limited impact, could so easily have been less, although the influx of new talent obviously pushed their expenses up. But the deficit of close to £ 156 million represented a negative swing of £ 185 million from the profit of £ 35.7 million made in 2019-20.

Turnover increased by 7% to £ 434.9 million, largely thanks to a 50% rise in broadcasting income to £ 274 million. Unsurprisingly, given that most games were played behind closed doors, matchday revenues slumped by 86% to £ 7.7 million.

Against this backdrop, Chelsea’s wage bill soared by £ 49.4 million, a rise of 17%, translating into a wage-to-income ratio of 77%, a jump of seven percentage points on 2019-20.

Abramovich’s ownership of Chelsea has also been characterised by a revolving door on the manager’s office. Trophyless seasons are rarely tolerated and in the 18 years since he arrived in London SW6, the club has never gone more than one season without some form of silverware. Ironically, the two Champions League successes have come in a year in which the manager changed mid-term. In 2012, Roberto Di Matteo was effectively a stand-in manager and in 2021, Thomas Tuchel was appointed after the first half of the campaign under the popular Frank Lampard suggested a second consecutive barren season was unfolding.

Season-by-season trophies

SeasonCupsWinning coachWage bill
£
2003-040 Ranieri116m
2004-052Premier, EFL CupMourinho109m
2005-061Premier Mourinho114m
2006-072FA Cup, EFL CupMourinho133m
2007-080 Grant172m
2008-091FA CupHiddink166m
2009-102Premier, FA CupAncelotti173m
2010-110 Ancelotti190m
2011-122Champions League, FA CupDi Matteo171m
2012-131Europa LeagueBenitez176m
2013-140 Mourinho191m
2014-152Premier, EFL CupMourinho216m
2015-160 Hiddink222m
2016-171PremierConte220m
2017-181FA CupConte244m
2018-191Europa LeagueSarri286m
2019-200 Lampard284m
2020-211Champions LeagueTuchel333m

Chelsea also depend on player trading as part of their business model and in 2020-21, they made a profit of £ 27 million from sales, a big decline on 2019-20 when the sale of Eden Hazard to Real Madrid boosted their bottom line. Among the players unloaded in 2020-21 was Victor Moses, who joined Spartak Moscow after multiple loan periods. Chelsea had around 40 players out on loan at various stages during 2020-21, a strong feature of their player trading activities.

Between 2003-04 and 2020-21, Chelsea spent £ 2 billion on new players but also recouped over £ 1 billion on player sales. Their net outlay during this period was £ 950 million, a figure exceeded by Manchester City (- £ 1.3bn) and Manchester United (-£962m).

Chelsea’s squad, valued at € 790 million by Transfermarkt, had 10% of the Guardian’s top 100 players for 2021 and four of the top 30 most valuable players according to KPMG’s Football Benchmark. Furthermore, no club had more players than Chelsea’s 15 among the Euro 2020 squads.

While Chelsea are in a privileged position, they have one glaring weakness in their model and that is dear old Stamford Bridge. A neat, modern ground it may be, but the capacity of 40,000 is way behind the elite group dominating Europe. Whether the project to create a statement stadium designed by the likes of Herzog & De Meuron is rekindled now that Abramovich has more flexible movement remains to be seen. But with fellow Londoners Arsenal, Tottenham and West Ham all boasting 60,000 capacity arenas, Chelsea are missing out on a huge chunk of revenue.

It also means a lot of Chelsea fans are unable to see the team at Stamford Bridge because of limited ticket availability. However, their global franchise is underpinned by a vast social media following that numbers almost 100 million across the three main platforms (Facebook, Instagram and Twitter). Only Manchester United have more followers in the Premier League.

Chelsea’s position in post-pandemic European football is relatively robust compared to many of their peers in England. It is worth noting, though, that since Pep Guardiola arrived at Manchester City, the trophy haul has been eight to City, four to Chelsea and since 2011 when the new City won their first piece of silverware, they have lifted 13 to Chelsea’s nine.

Although the club remains reliant on the financial support of its parent company, Fordstam, there is no sign the Abramovich era is coming to an end any time soon. The enigmatic Russian has proved he acquired Chelsea for the long haul.

Celtic’s loss is manageable, but the pain of the Rangers revival will be worse

CELTIC may find losing their league title was considerably more painful than the losses made during the covid-19 pandemic. Rangers ended the club’s nine-year run at the top of the table, but the manner in which they did it, going the entire league campaign unbeaten, signalled the end of an era for the hoops. From a financial perspective, an £ 11 million pre-tax loss probably seems a lot less damaging.

Scottish football has its cycles and Celtic have presided over the rest of the nation while Rangers recovered from their meltdown and climbed their way back to the top. When Celtic were all-conquering in the 1960s and early 1970s, they went nine years at the top of the league table. Rangers did likewise in the 1990s, just falling short of 10 years. Now Celtic have done it again. Modern football being what it is, it’s hard to see anyone outside the old firm winning the title in the foreseeable future.

Celtic’s revenues for 2020-21 held up remarkably well, a £ 10 million (13.4%) drop in a season without supporters coming through the turnstiles. Compared to the 25-point gap between them and Rangers, the discomfort is bearable. 

Celtic’s near decade of superiority, arguably, was never fully exploited. They were still found wanting in Europe, a sad fact for a club that has been to three major European finals. In short, they have been flat-track bullies in Scotland and, financially, they cannot compete with the elite clubs. Over the past decade, they have reached the group stage of the UEFA Champions League four times, winning just five of their 24 group games. Only once, 2012-13, did they get out of the group, no great surprise given they have come up against Paris Saint-Germain, Bayern Munich, AC Milan and Ajax. The gulf between Celtic and the top names of Europe was highlighted when they were thrashed 7-0 by Barca in 2016-17.

Celtic’s current position in Europe can be determined by the status of the teams that have eliminated them from the Champions League and Europa League – Ferencvaros, CFR Cluj, AEK Athens, Maribor, Midtjylland, FC Copenhagen and Malmo.

Regardless of this, Celtic remain a big club with enormous cachet in Scotland and the United Kingdom and enjoy unwavering support from their fans. But the pendulum at home has swung across, perhaps temporarily, to Ibrox Park and the feeling of coming second in a two-horse race isn’t good for a club that won 19 of 27 Scottish prizes between 2011-12 and 2019-20, including four consecutive trebles.

While revenues dropped in 2020-21 from £ 70.2 million to £ 60.8 million, so too did expenses, which were down 7.6% to £ 74.4 million. Celtic managed to make a profit on player sales of £ 9.4 million, a drop from 2020’s £ 24.2 million, but still a demonstration of the importance of player trading to the club. According to Transfermarkt, Celtic spent £ 14.1 million in the market and recouped £ 16 million. Rangers spent £ 11 million and received just under £ 1 million. These figures dwarf the rest of Scottish football. Over the decade, Celtic spent over £ 100 million, Rangers around £ 50 million.

Of Celtic’s £ 60.8 million of income, £ 20.1 million was attributable to “football and stadium operations”, a third of overall earnings but some 56% lower than 2019-20. Merchandising rose by 50% to £ 22.6 million, but multimedia and broadcasting contributed £ 17.3 million, falling 11% compared to the previous season.

Celtic’s chairman, Ian Bankier, spoke of Celtic’s robust business model and how it allowed the club to navigate through the pandemic. “In the face of this adverse swing in financial performance, we are satisfied we took sufficient and appropriate steps to mitigate the losses and control costs in the business,” he said.

Meanwhile, with Celtic’s team now managed by Greek Australian coach Ange Postecoglou, they have had a mixed start to the 2021-22 season, losing three of their first six league games. They’ve also been knocked out of the UEFA Champions League and lost their first Europa League group game at Real Betis. Things will, surely, get better, both on the pitch and on the balance sheet. How they react will depend on what goes on over in the Govan district of Glasgow.