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Manchester City Post Incredible Loss Of £195m For Last Season

Manchester City today losses of £194.9 million for the financial year 2010-11, the highest such figures ever posted by an English football club.

The £195m consisted of a net loss of £160.5m and £34.4m to write off player contracts. These are incredible numbers and City tried hard today to put a positive spin on them:

“Our losses, which we predicted as part of our accelerated investment strategy, will not be repeated on this scale in the future,” said chief operating officer Graham Wallace.

One thing to keep in mind with these numbers is that they are through May/June of this year. So they do not include the signings of Samir Nasri, Sergio Aguero,
Gael Clichy, Costel Pantilimon and Stefan Savic. Add on these and the loss would have been over £250m!

City fans will point out that the clubs overall turnover was £153.2m, which broke the £150m barrier for the first time. That £153.2m is only £10m less than Spurs made in the same period and does not take into consideration the £35m-a-year sponsorship deal with Etihad Airlines, or the riches that come with playing in the Champions League.

Yes City’s revenue gains are impressive but what cannot be overlooked is the fact that wages are out of control. In 2008-09 Man City’s wage bill was £82m. In 2009-10 it rose to £133m and now is at £174m. Yes Manchester City’s wage bill is more than it turnover! With these numbers City have past Chelsea as having the highest wage bill in England.

Most financial experts believe that clubs need to keep its wages at around 50% of its turnover. Since City’s wages will only go up, not, down,the club needs to grow its revenues from £153.2m to around £350m which is more than even Manchester United bring in (£334.1million). And that once again is without including the wages of the summer signings. So that £174m is probably really closer to £200m. So in essence. City need an annual turnover of around £400m to be financially stable. Is that realistic?

Luckily for City these figures will not be taken into account used as part of Uefa’s Financial Fair Play regulations as they fall outside the accounting window. Uefa’s Financial Fair Play rules, which come into full effect in 2013-14, say clubs must break even over three years. However the latest figures fall outside the accounting window for that.