Manchester City FC’s 2019 Finances – Levels Maintained

Manchester City completed an unprecedented domestic treble in 2018/19, winning the Premier League, FA Cup and League Cup in a sensation campaign for the club. In one of the most of the most remarkable title races of the Premier League era, Manchester City won the league by a solitary point against Liverpool after winning their final 14 games to end the season with 98 points.

Despite their domestic successes, it was another disappointing Champions League season as Manchester City were once again knocked out at the quarter finals stage by eventual runners-up Tottenham in one the ties of the tournament.

Off the pitch it was another financially successful year for Manchester City, recording a profit of £10m (also £10m in 2018), their fifth consecutive profitable year.

Let’s delve into the numbers.

Revenue Analysis

Manchester City recorded their highest ever revenue in 2019 as they continued their unrelenting revenue growth, increasing revenue from £501m to £535m (7%). This growth was largely owing to a new UEFA Champions League distribution cycle which saw all competing clubs receive more lucrative payments than in previous years.

Matchday Revenue

Matchday revenue fell from £57m to £55m (3%) after a change in accounting treatment of ticket sales. In fact, on a like-for-like basis Manchester City state matchday revenue actual grew, although from now on matchday revenue will be recorded differently which saw the above drop occur.

Manchester City saw a slight improvement in average league attendances, which grew from 54,073 to 54,132 (1%) as they continue their attempts to increase game attendances which are a function of a number of season ticket holder no-shows (although Manchester City still receive their cash).

Commercial Revenue

Commercial revenue fell from £233m to £227m (2%) after a lack of commercial success in the year after years of growth. This was the first time commercial revenue has dropped under their current ownership and Manchester City will be hoping this is a minor blip.

Manchester City now must look at new innovative ways to boost commercial revenue after reaching what appears to be a glass ceiling in 2019. New, lucrative commercial deals outside of what is received from Nike and Etihad will be necessary for growth to return and for the club to catch their Manchester rivals in commercial terms.

Broadcast Revenue

Broadcast revenue rose from £211m to £253m (20%) after a successful season on the pitch boosted revenue.

The increased distributions from the new UEFA Champions League broadcast cycle saw Manchester City’s UEFA prize money increase from £55m to £86m (57%) despite exiting at the exact same stage as last year.

Manchester City also saw a rise in FA Cup prize money after winning the competition, having only reached the Fifth Round in 2018.

The Premier League win also saw Manchester City bank £151m. Despite winning the league, Manchester City received less than runners-up Liverpool, who earned £152m after featuring on TV more frequently.

What does the future hold?

Looking ahead, Manchester City are relying on Champions League success on the pitch and commercial success off the pitch to have any significant revenue rise.

With the Premier League title looking unlikely at the mid-stage of the season, Manchester City may look to prioritise the Champions League in the second half of the season, giving them perhaps their best chance of reaching the latter stages in recent history.

Having seen a small dip commercially, this season, Manchester City will be hell bent on once again growing their commercial presence in the market.

Expenses Analysis

Manchester City saw overall costs rise from £526m to £560m (7%), in line with their revenue growth and therefore profitability remained relatively stable.

As always, the costs of competing in the Premier League and Europe continue to grow, with any increases in revenue (such as the increased UEFA distributions) being taken almost in its entirety by rising wages and other costs.

Amortisation

Amortisation costs fell from £134m to £127m (5%) owing to a relatively low level of investment compared to recent years.

The only notable incoming signing was Mahrez, while a host of fringe players were sold which inevitably led to a fall in amortisation.

Amortisation costs are likely to rise next year back to 2018 levels after a busier summer in 2019.

Net Interest Expense

Manchester City’s net interest expense remained stable at £2m, owing to the fact that debt levels remained the same.

Wages and Staff Costs

Wages rose from £260m to £315m (22%), despite only one notable arrival in Mahrez and a number of fringe departures.

This was due to a host of new, lucrative contracts for their star players with Fernandinho, Aguero, Sterling, Foden, Jesus and Laporte all signing new deals during the campaign to reward them after two sensational seasons where the club amassed 198 points in the Premier League.

What does the future hold?

Manchester City are likely to see costs rise again after more new signings and new contracts for existing stars.

The rise in costs isn’t likely to be huge, with Manchester City’s costs expected to remain below the £600m mark.

Transfers Analysis

Manchester City had two relatively quiet and inexpensive transfer windows during the 2018/19 season.

In came Mahrez (£61m), Palaversa (£6m), Sandler (£2m), Itakura (£1m) and Arzani (£1m) for a combined £71m.

Departing Manchester City were Diaz (£15m), Gunn (£10m), Maffeo (£8m), Denayer (£6m), Hart (£4m), Celina (£3m) and Kayode (£3m) for a combined £49m.

This led to a net transfer spend of £22m, down from a huge £199m in 2017/18, highlighting that Guardiola was already happy with his squad and for good reason.

Mahrez added to an already exceptional group, however struggled at times to stamp himself on the team and frequently found himself as a substitute. The players sold were all fringe players and Manchester City missed none of them while also managing their wage bill well. The one disappointment may be the departure of youngster Brahim Diaz, who many feel has a bright future at Real Madrid.

The sale of fringe players helped Manchester City record a profit on player sales of £39m, the same level as last season. As with last year, this means Manchester City would not have recorded a profit without player sales, a position Manchester City and all clubs strive to achieve.

Transfer debts

In debt terms, Manchester City are owed £54m in transfer fees, of which £49m is due during the 2019/20 season.

However, Manchester City owe a bigger sum of £86m, of which £73m is due during the 2019/20 season.

This is a net £32m that is owed to other clubs in transfer fees, of which £24m is due this season. This figure is relatively minor for a club of Manchester City’s size and will cause no financial issues.

Interestingly, Manchester City may end up owing an eye-watering £200m in signing-on clauses, contingent transfer fees and contract clauses if certain conditions are met. It is unlikely all of this will ever become payable.

Net Debt Analysis

Manchester City have been in a net debt position for the last three years however that all changed this year after a surge in their cash reserves.

Cash more than quadrupled from £28m to £130m (366%). The exact reason were not disclosed in the accounts however amounts owed to Manchester City fell from £279m to £198m, meaning that the drop of £81m would’ve been paid in cash to the club, a likely large reason for this cash balance. This combined with the timings of other financial figures will be the reason for this surge.

Manchester City do not traditionally maintain such large cash balances so it will be interesting to see what the balance will be used for. Usually, such cash balances are only present when a large stadium or training project is in the works.

Debt levels remained at £66m, meaning Manchester City’s net debt of £38m transformed into a net cash position of £64m, a very financially healthy position to be in.

Manchester City are in a golden era in their history with huge success on and off the pitch which shows no sign of relenting. The challenge of Liverpool has challenged them on the pitch while the financial successes of Manchester United off it are still the benchmark, showing there is still some way for the club to go.

Manchester are however as well placed as any Premier League team to be the most dominant club in England over the next decade.

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June 28, 2019June 28, 2019

Back-to-Back Champs: Does Winning Translate to Massive Profits for Manchester City?

After a tantalising title race that went to the wire, Manchester City successfully defended their Premier League title thanks to a narrow one-point lead over Liverpool.

On top of this fine achievement, an earlier Carabao Cup win and a resounding 6-0 victory over Watford in the FACup final ensured that the club ended the season with a historic domestic treble.

Indeed, these accomplishments coupled with Manchester City’s recent financial history mean that the club may be more valuable than ever before.

Gains from Prize Money, among other things

Planet Football estimates that the prize money received by each club in the Premier League this season, with City standing to rake in £147.5 million from the 2018-2019 season (excluding revenue from European and domestic cup games). This comprises of an estimated £38 million is from their final position, £30.1 million from television rights and the rest coming from their equal share that every club gets each season.

Considering the extra revenue gained from their cup runs, their overall profits could skyrocket once the final numbers are revealed.

As things stand though, Manchester City are set to become only the 2nd highest earning club in the league, with Liverpool beating them by just £1.5million. While the Reds may have finished 2nd in the league, the extra income comes from having more televised games.

High-quality players on lower wages

Furthermore, news that Manchester City have overtaken Manchester United as the most valuable club in the Premier League certainly helps. City are reportedly valued at £2.364 billion while their cross-town rivals are valued at £2.087 billion. These figures were calculated by the University of Liverpool’s Centre for Sports Business Group, taking into account factors like the gate receipts, wage control, account revenue and average profits on players sold over a three-year period, among other factors.

The research found that City’s position at the top of the Premier League as well as the fact they’ve got a number of players on lower wages (£260m in 2018) compared to United’s loftier salaries (£296m in 2018) has meant City have moved ahead of them in the rankings.

More wins, more investment

In football, it’s no secret that club owners generally see winning as a must to gain a return on their investment. This is the reason why some clubs see no problem with spending millions on certain players; with the expectation being that these players will help the club become recognised globally.

For Manchester City, they have household names such as Sergio Agüero, Kevin De Bruyne, Bernardo Silva and of course, manager Pep Guardiola. In the 2017/18 season, Guardiola’s influence saw Manchester City reach a record 100 points, while also winning his first Premier League title.

Last season he fell just short of that tally but still managed to lead City to another league title.

The Guardian notes Guardiola stands alone as City’s biggest star, having raised his side’s standards yet again, after guiding the Citizens to a second consecutive title, and outplaying rivals Liverpool.

Owner Sheikh Mansour has great belief in Guardiola and has always believed that he would guarantee a return on investment, when he brought the Spaniard to the club. So, for now, as long as Guardiola stays, it seems City could well be entering an era of dominance.

Last year, many wondered how Manchester City could possibly top their historic 100 league points. This year they demonstrated exactly how; while narrowly missing the 100-point mark they did make history by winning the domestic treble for the first time in the club’s history.

So, if City keep up their current form, and Pep Guardiola continues to innovate, it’s very likely that the club’s value will continue to soar, making the Sheikh a very happy man indeed.

Post written for financialfootballnews.com by Emma Graham

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February 22, 2019February 22, 2019

Liverpool – The Kop’s Commercial Weakness

Liverpool FC released their financial results recently to great fanfare, record profits, growing revenue and a competitive wage structure were all reasons for Liverpool fans to get excited. Among all this excitement the composition of their revenue went under the radar.

Roughly half of their revenue was from TV money and prize money, which although shows success in a season, isn’t something that can be relied upon each year. Unless your Real Madrid or Barcelona, Champions League finals/trophies are a rare occurrence due to the strength of the competing rivals.

Roughly a fifth of Liverpool’s revenue came from matchday earnings which has remained fairly stable but is increasing as the capacity of Anfield increases.

This leaves around a third of Liverpool’s revenue being from commercial revenue. Commercial revenue is made up of sponsorship deals and merchandise sales. This is the area where Liverpool are below Europe’s top table and an area that has significant room for improvement.

The Problem

The graph above shows the potential Liverpool have to grow this area of revenue and boost income significantly to boost their financial muscle. Liverpool’s commercial revenue is the 8^th highest in Europe according to Deloitte and is less than half the amount Real Madrid command. Although no one is saying Liverpool are as big a club as Real Madrid, the difference is much bigger than it should be.

Liverpool lag their northern rivals in Manchester significantly too, by more than £100m in Manchester United’s case. This gap needs to shrink if Liverpool are serious about mixing with Europe’s finest.

Mr. Popular

The reason Liverpool have so much potential and are currently under achieving when it comes to commercial revenue is the growth the club has experienced in popularity and appeal worldwide under Klopp.

Liverpool have struggled over the past couple of decades to ‘get with the times’ and match their rivals in digital popularity as football moved into the modern era. Manchester United perfectly exploited and channelled the new commercial era and as a result saw their finances explode with Liverpool playing catch up ever since.

However, Liverpool are catching up and are ahead of many in terms of social media followers. The club have the 6^th highest number of twitter followers of the twenty teams to make up the Deloitte Money League. They also have 9^th highest number of followers on Instagram which could be improved upon with more engagement and is an area for growth.

The club only has the 10^th highest number of Facebook ‘likes’ and should look at these platforms as areas that could grow significantly. In all these areas they aren’t far of moving further up the social media chain as the club engage to a greater extent with the fans and their success on the pitch attracts more digital fans.

The importance of this nowadays cannot be underestimated, a club’s social media pull gives companies a great way to advertise directly to their target market being football fans or geographical location. A greater number of followers makes it much easier to negotiate lucrative sponsorship deals, especially the smaller club partners who can make up a considerable amount of a club’s commercial revenue.

Kitted Out

Liverpool currently earn roughly £28m from their kit manufacturer New Balance annually. This is almost a third of the amount Manchester United attract in their £75m deal with Adidas and 5 times less than Barcelona’s high of £140m from Nike.

Liverpool are (and should be) entertaining offers from the likes of Adidas and Nike as they look to match, if not exceed the amount earned by Manchester United when their deal with New Balance runs out at the end of next season.

Liverpool should be able to increase their kit deal significantly as Manchester United negotiated their deal a few years ago so by now, this should be well within the grasp of Liverpool considering the growth in popularity the club has sustained of late.

Their current deal is also below the likes of Chelsea and Manchester City, clubs of a similar stature social media wise however Liverpool also have a larger fan base outside of this and would therefore hope to command at least in excess of the £50m Manchester City recently negotiated with Puma.

Getting More Shirty

Liverpool have stayed loyal to their shirt sponsors historically, seemingly married to Carlsberg until they parted ways a few years ago and Standard Chartered took their place. Liverpool chose wisely and have recently renegotiated their deal on £40m a year for four years, up from £30m. This was a shrewd move and Liverpool are doing well in terms of their shirt sponsor and there is not much room to improve in this area.

The club should focus on maintaining a good working relationship with Standard Chartered and negotiate at the appropriate time to improve the terms, maybe by incentivising additional performance related bonuses that will reward the club on the back of successes on the pitch.

Opportunity Knocks

Liverpool have many additional areas that could enhance commercial revenue with some controversial and others just sensible.

Sleeves

Liverpool currently have a 5-year deal with Western Union as their sleeve sponsor, mainly in line with their rivals. Arsenal are currently leading the way with an £8m-a-year deal, something Liverpool should consider exceeding considerably when their current deal expires in 3 years, something for the future.

Training kits

Liverpool’s training kit is sponsored by BetVictor and their current deal expires at the end of the season, making it an opportunity to bring in a more lucrative deal. For comparison, Barcelona have reportedly the highest training kit deal (with Beko) at around £16m a year, which offers a sizeable boost in revenue should Liverpool get anyway near that figure, either by improved terms of a new sponsor.

Naming Rights

Stadium naming rights are a controversial topic in England among fans with many opposed to the idea of ruining club traditions all for the sake of a few quid. However, recent studies have shown it is no longer a few quid with valuations in excess of £10m being placed on Anfield and other famous stadiums. A boost of even £10m in commercial revenue would by over 5%.

Club Partners

Liverpool could attempt to go a different way and go for volume with sponsors. Club partners can add small multi-million-pound deals here and there however if this was scaled up, could run to the tens of millions. The main drawback here is the time it may take and the devaluing of their main sponsor who may not be best pleased to see all these deals that take the shine of their large deals.

Go Strange

What if Liverpool find the newest trend like the sleeve sponsor? This is an option for the creative. How about shorts sponsors? Press conference sponsors? These are all options and many more. The club could also develop a new medium to share their content that substantially boost their social media following and attracts more lucrative deals.

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September 14, 2018

Manchester City 2018 Financial Review – Guardiola-Sized Gains

Manchester City Financial Review 2017:18

Manchester City had a record-breaking season on and of the pitch as their financial and footballing strategies continue to bring success.

On the pitch the investment in Guardiola has begun to pay off. Manchester City recorded the highest goals, games won and points ever in the Premier League, winning the division in the process. This was complemented by a League Cup win.

The overall goal of European glory was once again halted; however, many make them favourites this year, showing the progress made in recent times.

Manchester City achieved record revenue in excess of half a billion pounds while curtailing costs in order to become more financial sustainable. For the fourth year in a row Manchester City recorded a profit as they brought in £10.4m in profit this year.

Note that last year Manchester City changed their financial period to June. This meant there was a 13-month financial period last year which distorted results. As June is off season anyway, the main effect was reducing profits as it added an extra month of costs without any corresponding revenue.

Let’s delve into the numbers.

Revenue Analysis

As mentioned, Manchester City achieved record revenue in excess of half a billion pounds, growing revenue for the 10^thyear in a row under their Abu Dhabi ownership. Revenue rose from £473.5m to £500.5m (5.7%) as revenue growth slowed as their sheer size makes growth more and more difficult.

Matchday revenue was the biggest growth area for Manchester City, increasing from £51.9 to £56.6m (9.1%) as Manchester City’s successes in the League Cup and the Champions League (to a lesser extent) added extra home games that helped boost matchday income. A record-breaking attendance of 54,073 at the Etihad Stadium this season also boosted this figure.

Broadcasting revenue rose only slightly from £203.5m to £211.4m (3.9%) despite winning the Premier League and League Cup, whilst also going further in the Champions League.

Commercial revenue is now vital to Manchester City’s financial strategy as it’s the main area where Manchester City can still grow substantially. It was another good year as commercial revenue grew from £203.5m to £211.4m (6.7%) as the club continued to grow in popularity due to their fantastic commercial strategy and playing style. The current deal with Nike is due to expire and a new more lucrative kit deal of around £50m a year is rumoured to be close.

Manchester City’s revenue is likely to continue to grow. Matchday income is likely to remain relatively stable while broadcasting revenue is entirely dependent on their successes on the pitch. The key area is commercial revenue which will probably rise between 5-10% next year.

Expense Analysis

Manchester City saw a huge jump in revenue last year as they invested hugely in the Guardiola project however this year was different, and costs stabilised with a small rise. Costs to £506.0m to £525.7m (3.9%) as Manchester City look to control costs and increase profitability, all while being a success on the pitch.

Amortisation costs rose from £121.7m to £134.3m (10.4%) due to player investment and a large turnaround in players as 10 players joined and 13 departed the Etihad Stadium.

Net interest expense moved from a net interest income of £0.4m to a net expense of £1.9m as interest earned fell significantly and in repaying bank debt, Manchester City incurred additional costs of £0.7m.

Other general expenses rose from £94.2m to £105.3m (11.8%).

Manchester City paid no taxes in the year as they continue to have their profit offset against the large losses in the early years of Abu Dhabi ownership.

Wages surprisingly fell despite a huge transfer window, falling from £264.1m to £259.6m (1.7%) as the club sold/let go of many high earners who weren’t justifying their wages and were surplus to requirements. The likes of Bony, Nolito, Kolorov, Nasri, Clichy and Zabaleta all left.

This new tighter control of wages is helping to propel Manchester City to financial sustainability as they focus more on paying their stars huge money rather than attracting lesser talents on huge wages, Manchester City now having drawing power that means the wages offered to squad players need not be extravagant.

The drop in wages works out at a rather modest £87k less a week in wages.

No directors were paid in the period nor were any dividends paid due to having negative reserves currently.

Manchester City’s expenses will most likely remain relatively stable over the coming year. Mahrez was the only big arrival whilst Touré and Hart both departed meaning wages are likely to have in fact gone down, however new contracts to their Premier League winning stars will probably see wages increase slightly. Overall expenses are unlikely to increase by more than 5% to around £550m.

Transfers Analysis

Manchester City were unbelievably active in last season’s summer and winter transfer windows buying 10 players while 13 departed.

In came Laporte (£58.5m), Mendy (£51.8m), Walker (£47.4m), Silva (£45.0m), Ederson (£36.0m), Danilo (£27.0m), Luiz (£10.8m), Harrison (£3.6m), Kayode (£3.4m) and Ilic (£2.3m) for a combined eye-watering £285.8m.

Leaving the club were Iheanacho (£25.0m), Unal (£12.8m), Bony (£11.7m), Mooy (£8.2m), Nolito (£6.3m), Fernando (£5.4m), Kolorov (£4.5m), Ntcham (£4.5m), Nasri (£3.2m), Hart (Loan – £2.1m), Sobrino (£1.8m), Zuculini (£1.1m) and Denayer (Loan – £0.5m) for a combined £86.7m.

In in all, Manchester City had a huge net transfer spend of £198.9m as they completely backed their new manager Guardiola following a disappointing first season.

He and their new players did not disappoint with Walker and Ederson proving key to their title win. Mendy would have added extra quality had it not been for injury while Danilo and Silva added significant strength in depth.

Of the players sold, only Kolorov could be argued to of been missed after Mendy’s injury with the rest not of the quality to improve Manchester City.

Manchester City made a large profit on player sales once again, earning £39.1m on these sales after selling long-serving players as well as a couple cheap youth players in Iheanacho and Unal.

Concerningly for Manchester City they owe other clubs a huge £140.5m in transfer fees, of which £102.2m is due in the next year.

This is offset a fair bit by being owed £83.1m in transfer fees, of which £53.6m is due in the next year.

Therefore, Manchester City are in a net owing position of £57.4m, of which £48.6m is due in the next year.

This is further compounded by the fact that Manchester City may owe another £158.9m in contingent transfer fees should certain clauses be met such as appearances and trophies. This may explain the lack of transfer activity of Manchester City this year however due to accounting rules, clubs do not disclose contingent transfer fees they could receive and as such they may have similar figures in this regard.

Net Debt Analysis

Manchester City released very little information relating to their cash flows this year despite their cash reserves increasing substantially, rising from £18.7m to £27.9m (49.2%) due to increased profits and incoming transfer fees received.

These added cash reserves help Manchester City to have a useful buffer should any financial surprises spring up.

Debt levels remained essentially the same, falling from £66.3m to £66.0m, however this debt is now all ownership debt after repaying all external loans this year and relates entirely to debt on the Etihad stadium of which £63.8m is due after 5 years or more so will have no short-term effect on Manchester City’s finances.

Hence net debt has fallen from £47.6m to £38.1m (20%) as Manchester City continue their drive to being financially sustainable and show their rivals how to operate efficiently and successfully.

Manchester City are quickly becoming a financial role model of a club and their rivals must wise up fast in order to compete on and off the pitch.

If you want to compare this to last year report, read it here.

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August 16, 2018

Premier League 2018 Review – Wages

As Premier League clubs grow richer, so do the players as we saw in our revenue analysis, revenue has increased dramatically and so have wages, rising 18.5% to surpass the £2.5bn barrier.

In this new Premier League world, we have wages of £150k a week as commonplace throughout the league, not just the top 6. Wages rose by over £7.5m per week and this includes the growing wage of directors and key management as their competence off the field grows in importance.

This article analyses the wages of players and directors among Premier League clubs competing in the 2016/17 season.

Who’s Up, Who’s Down?

Wages increased on average by 28.6% as the majority of clubs saw sharp increases due to increased player investment.

The promoted clubs were key contributors here with Burnley (59.4%), Middlesbrough (100.3%) and Hull (104.3%) experiencing the highest growth rates as they looked to align their wages with their newly earned Premier League riches. Interestingly, only Burnley survived despite being considerably more cautious with their wages than the other two.

Chelsea (-1.2%) and Liverpool (-0.6%) were surprisingly the only clubs to experience a fall in wages, albeit very small drops. Chelsea’s sales of high earners Oscar, Cuardrado (Loan), Ivanovic and Mikel were the main reasons for this in a season of few high-profile purchases. Liverpool similarly saw the exit of Benteke, Skrtel, Balotelli and Sakho who were all on high wages as Jurgen Klopp began his rebuild.

Tottenham saw wages grow by 26.9% as they looked to reward their players performances with new, improved contracts such as Kane, Alli and Eriksen. The purchases of Sissoko, Janssen and Wanyama supported this growth with the only high-earner to depart being Chadli.

Manchester City financial growth saw no signs of slowing down as wages grew by 33.5% as the Guardiola era began with a summer transfer spree featuring minimal departures as surplus players entered the final year or two of their high paid contracts, we expect wage growth to fall as these players depart at the end of their contracts.

Rivals Manchester United experienced a smaller rise of only 13.5% despite the high-profile purchases of Pogba and Ibrahimović due to a number of departures and the relative size of their wage bill already.

Leicester rewarded their Premier League winning squad with substantial pay rises leading to wage growth of 40% as the likes of Vardy, Mahrez and Schmeichel signed new deals which was added to by new higher profile players.

On the low side alongside Chelsea and Liverpool were Sunderland (0.6%) and Stoke (3.2%), possibly signalling they were worried about their soon to be relegations and were preparing for as much.

In absolute terms, the average wage rise was £375k per week, or £19.5m a year. Leading the way however was Manchester City’s astronomical rise of £1.3m a week in wages after their transfer spree to introduce Guardiola to the Premier League.

Crystal Palace saw wages rise £600k a week after the introduction of Sam Allardyce who used the winter transfer window to significantly strengthen the squad with a sizeable investment, a tactic that ultimately worked as they secured survival.

Middlesbrough also experienced a £600k a week increase but were unfortunately much less successful in doing so after suffering relegation and the unenviable wage reduction strategy required. Wages are likely to fall automatically as relegation wage clauses come into effect.

Tottenham significant contract renewals contributed to wages rising by £517k a week as Harry Kane and Co became richer after another top 4 finish for the club.

Manchester United saw wages rise by £600k a week despite a relatively small % increase due to the enormous size of their wage bill to begin with.

As mentioned, on the other end of the scale is Chelsea and Liverpool who saw minimal wage drops per week of £50k and £15k, remaining relatively stable in terms of wages after offloading deadwood.

Arsenal also remained relatively stable with wages growing by £77k a week, a minimal 2% increase for the club.

Wage to Revenue Ratio

A key performance indicator for all clubs, the wage: revenue ratio is key to a club in measuring financially stability and prudence. A high ratio suggests overspending, making profitability almost impossible whilst a ratio too low suggest over cautiousness and a failure maximise the use of resources. The average is 57% and most clubs will be aiming for a ratio of 50-55%.

The ratio shows a clear trade-off between risk and reward with clubs having to balance the need to grow and meet their targets and their financial future. Clubs near the bottom of the Premier League are likely to have higher ratios due to their lower revenues, however these clubs still spend an awful lot on wages due to the riches of staying in the Premier League.

Those higher up the table pay higher wages but see relatively higher revenue – which is what those spending large near the bottom are aspiring to.

Crystal Palace have the highest rate at 78.5% after their huge spending in the winter transfer window to preserve their Premier League status, a gamble that paid off but also potentially jeopardised their future, however such a gamble has enriched those at the club including senior management (more on this later).

Swansea’s was nearly as high at 77.3% due to low revenue and relatively high wages, a situation we hope they have remedied in 2018 after relegation which will cause this key ratio to increase.

Tottenham much discussed wage policy sees them achieve the lowest ratio at 41.4% as Daniel Levy continues to run a tight ship, something he is proud of considering their recent domestic performances, an increase in revenue will however help them increase their wages more in line with their rivals.

North London rivals Arsenal are 3^rdon the list at 47.6%, another club who are notoriously known under Wenger to watch the purse strings, it must be something in the water up in North London!

Manchester United despite have one of the largest wage bills in world football have a wage to revenue ratio of only 45.3% due to the huge revenue they generate, showcasing that potentially player investment and huge wages leads to larger revenue, a model that Manchester City seem to have adopted in their earlier years.

Chelsea at 60.8% have the highest ratio due to providing players with historically high wages whilst also stockpiling young talent meaning they have more player wages on their books.

Liverpool (57%) and Manchester City (55.8%) complete the top 6 who all have lower than 61% ratios which is around the ball park most clubs should be.

Other than Chelsea, Crystal Palace and Swansea, the only other clubs with ratios above 60% are Everton (61.1%), Southampton (61.2%), Stoke (62.5%), Sunderland (66.8%) and Watford (60.3%), all clubs with aspirations of growing despite Sunderland and Stoke’s recent troubles.

Of the rest, Burnley’s low ratio (50.5%) should be commended due to their performances in 2017 and 2018. Outside of those already mentioned Bournemouth (52.4%), Hull (52.4%), Middlesbrough (53.5%) and West Ham (51.8%) all have ratios below 55%.

Rich Directors

Directors and key management staff are becoming increasingly vital to the success of football clubs with their business acumen key in driving revenue from off the field sources. The work of many executives has been praised in both the transfer market and in raising the profile of their club. A good executive can propel a financially ruined club into a viable business and footballing success.

This is apparent in the fact that directors’ salaries rose 19% to £41.5m despite not playing a minute of football, with the average salary being just under £4m, working out an average of £72k a week which is a respectable Premier League footballer wage.

However, note that director salary disclosures in the accounts may not show the full picture with some directors paid in other opaque companies and through other means which are hidden and difficult to locate so the numbers here are likely to be understated to some degree.

The highest director compensation paid was by Manchester United unsurprisingly considering their global profile and stock listing. Manchester United directors were paid £12.5m last year with this including stock options that may be more valuable than recorded currently.

Tottenham are the next closet some way behind with payments of £9m with Daniel Levy paying himself £6m as a golden pat on the back for the recent successes of the club that few would argue with despite his insistence of being more prudent than that on his players.

Arsenal also pay highly with directors being paid £3.4m despite performing poorly as of late.

Liverpool’s directors were paid relatively poorly compared to their above rivals, receiving a meagre £1.6m.

Chelsea and Manchester City had minimal values in their accounts. This may have to do with Chelsea having no CEO for the majority of the year and until the appointment of Guy Laurence. The payments for other key management were likely to not have been disclosed and as such no analysis can be performed. There is a similar story for Burnley as well.

The lowest outside of this appears to be Hull with payments of only £185k made to directors.

Also, below £1m were Leicester (£325k), Stoke (£806k), Swansea (£634k) and Watford (£571k). The most surprising club here is Leicester due to the absence of any significant rise in director payments despite the incredible season they recently had.

Crystal Palace have a notably high compensation package for directors with wages paid to directors of £2.4m, with Steve Parrish paying himself all of that as the club’s only director after the club steered clear of relegation last year, a controversial decision by the Mr. Parrish.

Wages Summary

There was £2.5bn in wages last year, an eye-watering £48.1m a week with Premier League clubs incurring an average wage bill of £125m. The Premier League Top 6 account for a huge 51% of total wages, showing their unparalleled financial power.

There was a change at the top of the wage bill chart as Manchester City’s continuing financial growth saw them shell out £264.1m in Guardiola’s first season, overtaking Manchester United who paid out £263.5m in wages.

Chelsea (£219.7m), Liverpool (£207.5m) and Arsenal (£199.4m) follow at around the £200m mark as they continue to pay players top dollar to maintain their power and clutch of world class players.

The ever-rising Tottenham lag their rivals yet again in this department, paying out ‘only’ £126.9m on wages due to Levy’s tight wage policy, a strategy that may see them struggle to keep competing with their rivals.

Burnley must be commended for their comfortable survival despite operating the lowest wage bill in the Premier League of £61.2m.

Bournemouth (£64.9m) and Hull (£61.3m) were the only other clubs with wages under £70m.

On the other end of the scale, Leicester (£112.6m), Everton (£104.7m), Crystal Palace (£111.8m) and Southampton (£112.4m) were the only clubs outside the top 6 with wages exceeding £100m.

With this all said, wages are likely to continue increasing as the amount of revenue continues to rise in the Premier League and player wage demands continue to rise and the price of relegation becomes costlier. Wages are likely to increase to around £3bn in the coming year.

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August 13, 2018

The True Costs of Transfers

Premier League True Summer Transfer Cost

The True Costs of the Premier League 2018 Summer Transfer Window

The Premier League transfer window has officially shut with over £1.2bn spent by Premier League clubs ahead of the new season.

Clubs have to be wary of Financial Fair Play when purchasing players to avoid penalties and bans (for more on this click here) and also need to ensure they are running sustainably for their owners etc.

This brings us to this article, which will explain the true costs of transfers from the 2018 summer transfer window explained briefly below:

When clubs sign a player, from an accounting perspective this is not all charged in the year of the transfer as the payments are matched to how the player will be used. So, a player signing for £50m on a 5-year contract is deemed to cost the club £10m a year, known as the amortisation cost. This is the true costs of the transfer per season for the club.

Another key element is player sales. In this regard the profit the club gain is not simply the transfer fee received minus the transfer fee paid, it is the transfer fee received less the remaining value of the player sold. So, for a £50m player on a 5-year contract, he will be ‘worth’ £50m minus the amortisation charges to date, so after two years of charges, the player will be ‘worth’ £30m. Hence, should a player be sold 2 years later for £50m, a ‘profit’ of £20m will be recorded, rather than nothing like many people believe.

This article will analyse each Premier League club’s business and compare to their counterparts.

Due to the availability of data, this excludes the costs of loans and player wages. All transfer fees and contract lengths are via Transfmartk.co.uk. In order to simplify the amortisation costs, we have ignored contract renewals which make the calculation more complex without much added insight.

Let’s Not Talk About Spend, Let’s Talk About Net Spend

Premier League clubs had an active transfer window despite its shortening, spending over £1.2bn, receiving only £353m in return, leaving the club with an astronomical net spend of £909m.

This was due to higher spending by certain clubs, with Liverpool leading the way by a distant after investing heavily following their Champions League heartache with Naby Keita, Fabinho, Alisson and Shaqiri joining while only Danny Ward left, leaving the merseysiders with a net spend of £151m.

Fulham became the first promoted club to ever break the £100m barrier after a barnstorming transfer window with 7 players arriving for transfer fees and only 1 leaving. This led to the club having a net transfer spend of £101m with Seri the pick of the players signed.

Fellow West Londoners Chelsea had the third biggest net spend at £92m after breaking the world transfer record for a goalkeeper in the £72m paid for Kepa after losing Courtois to Real Madrid and they also signed Jorginho.

Manchester United and Manchester City had quiet windows with both making one big purchase a piece with Fred joining United (along with Dalot and Grant) and Mahrez joining City.

At the other end of the scale were Watford with a net transfer spend of minus £23m after not reinvesting all of their Richarlison windfall. Newcastle also were in the black after recording a net transfer spend of minus £13m as Mike Ashley used transfer cash received to purchase House of Fraser rather than reinvest in the Toon.

Additional Amortisation Costs

Premier League clubs face additional transfer costs of £275m this year alone after a huge transfer spend of over £1.2bn, with this cost spread of the players signed contracts which average at just over 4-year contracts.

Amortisation costs are, as explained above, based on transfer spend and contract lengths and as such the costs are higher for larger spends and also higher when contract lengths are shorter. A key example is Kepa, a £72m keeper who signed a 7-year contract, costing Chelsea just over £10m a year. While Mahrez, a £61m purchase on a 5-year contract cost Manchester City more at just over £12m a year despite the smaller transfer fee.

Liverpool unsurprisingly lead the way after their impressive transfer window where they spent £164m with Alisson signing a 6-year contract while Keita, Fabinho and Shaqiri signed 5-year deals. Liverpool will have additional costs of £31m after these deals.

Fulham had the second highest net spend after their £105m 7 player splurge with contracts lengths 4 years on average, bringing amortisation costs of £24m over that period.

Leicester despite their relatively small net spend have a large transfer costs due to their £103m spend with the Mahrez deal diluting their net spend after the club reinvested the Mahrez cash and then some, leading to an amortisation cost of £22m.

Chelsea and West Ham also had large amortisation costs above £20m after their productive transfer windows.

Tottenham were at the other end of scale after an inactive transfer window, becoming the first club since the transfer window came into effect in 2003 not to purchase or sell a player.

Crystal Palace were the only other club to have an additional amortisation cost below £5m.

Amortisation Costs Savings

Premier League clubs saved £41m on amortisation cost after after player sales of £353m with many players sold either brought cheaply or have been long serving players that no longer attract amortisation costs after staying longer than their original contract.

Amortisation costs savings are driven again by the transfer fee paid when the player was brought and their original contract length. So, for instance Daley Blind signed for Manchester United 4 years ago for £15.8m on a 4-year contract, costing Manchester United just under £4m a year for those 4 years. Now that the 4 years are up, Blind costs United nothing from an accounting perspective, so no amortisation costs are saved and hence no savings included in our calculations.

As such many Premier League clubs didn’t recorded any savings as the players sold had already seen their entire transfer fee amortised. This includes players signed as youths such as Danny Ward at Liverpool or long serving players such as Courtois at Chelsea.

In a couple of situations, players were signed and immediately sold. This was the case for Benik Afobe at Wolves and Mikel Merino for Newcastle. In both these cases the amortisation costs were excluded when calculating additional costs and savings.

Bournemouth were the biggest savers, saving just under £8m after the sales of the after mentioned Benik Afobe to Wolves (before Wolves later sold him to Stoke), Lewis Grabban and Max Gradel.

Everton (£7m), Newcastle (£6m) and Watford (£5.5m) were the only other clubs to save in excess of £5m on player sales after the sales of the likes of Klassen, Mitrovic and Richarlison.

Burnley, Cardiff, Crystal Palace and Tottenham sold no players hence the reason for their lack of amortisation costs savings.

Chelsea, Liverpool, Manchester United, Southampton and West Ham also had no amortisation costs savings despite player sales due to the players sold having been at the club for at least their original contract lengths such as Courtois, Danny Ward, Blind, Tadic and Kouyate.

Profit, Profit, Profit (Or Loss)

Premier League clubs due to this made profits on their sales of £247m after selling players for £353m, a 70% return on investment.

When players are sold, as seen above, this may not lead to amortisation costs savings if the players amortisation costs were low due to the price paid or they have been at the club a long time.

This doesn’t mean they receive nothing, as the amount earned is recorded as a profit on player sales. This is recorded as the transfer fee received minus their remaining value as explained in the introduction. However, to avoid you having to scroll up, here is an example from this season using Courtois.

Courtois cost Chelsea £8m 7 years ago on a 5-year contract, costing the club £1.6m a year initially. Each year he is worth less of his transfer fee, so after 1 year he is worth £6.4m and after 2 years £4.8m etc. After 5 years he is worth essentially zero, at this point when he is sold the transfer fee received is all profit, so Chelsea record a profit of £31.5m.

Clearly the biggest benefiters here were Leicester after their sale of Mahrez was essentially all profit and hence the club recorded a profit of £67.1m.

Chelsea also benefited as described above, whilst Watford were the only other club to record a profit of more than £30m after their sale of Richarlison.

Everton were one of only two clubs to make a loss after the costly purchases of Klassen and Funes Mori who they both made a loss on after buying them recently and then selling on the cheap. Leading to a loss of £3.8m.

Arsenal also made a loss on the flop transfer of Lucas Perez, diluted slightly by the sale of academy graduate Akpom.

Burnley, Cardiff, Crystal Palace and Tottenham made no transfer sales and hence recorded no profit or loss this year.

The Summary – The True Cost

To work out the true cost of this transfer window we use the following formula:

Additional amortisation costs – Amortisation costs saved -/+ Profit/Loss on player sales.

This gives an interesting picture for Premier League clubs with a net transfer costs of minus £13.9m! Meaning Premier League clubs as a whole have saved on transfers this year from a Financial Fair Play perspective.

This is heavily skewed due to the net savings made by Leicester, Watford and Newcastle in particular.

Leicester, due to the Mahrez deal have made a saving of approximately £50m after their new signings, while Watford and Newcastle have also saved in excess of £20m.

Both Manchester clubs are in the black after making one big purchase each and selling a couple fringe players.

Chelsea are also in the black after selling Courtois.

Fulham have the highest cost of £20m after their sensation transfer window in which they spent hugely for a Premier League newcomer, making a statement on their ambitions.

Liverpool were unsurprisingly up there with a net cost of £18m. Everton and Arsenal were the only other clubs with a net cost exceeding £15m.

To put this all into perspective there is a mismatch. The profits received are all given in the period of sale, while new transfers are spread over their contract. This means that Chelsea, despite making a profit on Courtois, and hence their net costs are negative, will indeed see amortisation costs rise in the long run as next year they will not have that Courtois profit.

The same is the case for amortisation costs saved, for some of the players sold, they may only have had one more year of amortisation costs and as such this saving will not be there next year and hence they will see amortisation costs rise the following year.

Amortisation costs have risen over the years and will continue to as long as clubs net spends are still as large as they are.

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June 24, 2018June 29, 2018

Premier League Financial Review – Summary

Here is your summary of Premier League financial performance for all Premier League clubs in 2018. As financial accounts are released one year in arrears, finances are based on 2017 season performance. In depth summaries of these finances are available by clicking the club’s name or the infographic.

Arsenal – Wenger’s Wonga

Bournemouth – Finances With a Cherry on Top

Burnley – Marking Their Turf

Chelsea – Riches of Champions

Crystal Palace – The Price Of Survival

Everton – Stuck Toffees

Hull – Tigers Timid Roar

Leicester – Foxes’ Fortunes

Liverpool – Top 4, Top Finances

Manchester City – Sky’s The Limit

Manchester United – No Top 4, No Problem

Middlesbrough – Down The River

Southampton – Saints Keep Marching On

Stoke – Cold, Wet and Windy But Safe

Sunderland – Out of Lives

Swansea – Survival Swans

Tottenham – White Cash Lane

Watford – Honest Hornets

West Brom – Unusual Addicks

West Ham – Ambitious Hammers

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March 26, 2018

Financial Football News Round-Up Edition 19

Financial Football News Weekly Round-Up 19

Here is your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 19th March 2018, featuring Manchester City, Juventus, Manchester United, La Liga, Esports and MLS.

CFG – More, More, More!

Manchester City owners City Football Group (CFG) have announced they are on the lookout for more clubs to invest into and own.

The Abu Dhabi group already own Manchester City, New York City and Melbourne City, while they also have a sizeable stake in Spanish side Girona and have begun a joint venture with UK based Goals Soccer Centres in the US.

Schalke Plump For Polygonvatro Deal

Schalke have signed a new sponsorship deal with fire and water damage specialist Polygonvatro for an initial 3 year period which can be extended.

The deal is worth around €700k a year and Polygonvatro will receive significant advertising and marketing rights at Schalke’s stadium, Veltins Arena as Schalke capitalise commercially on a successful season to date with the club second in the Bundesliga.

Bundesliga Say No To Revolution

The Bundesliga has voted against revolutionary change after clubs voted for the 50+1 rule to stay in place.

The rule means clubs must retain 50% of shares plus one additional share, hence prohibiting a third party owner having majority shares in the club.

This has been widely debated as it acts as a barrier to finance as the rule makes investing in German clubs less attractive as the investor can never have the majority say on club matters.

Manchester United’s Women Team – Finally!

Manchester United have announced the long overdue recreation of their Women’s football team, who will begin life in the Women Super League (WSL) 2.

The move is likely to have significant initial costs in order to create a competitive team, however as the popularity of Women’s football continues to rise, this investment should be recouped whilst the positive media coverage the deal has already brought helps.

Juventus – The J Hotel

Juventus have taken the huge step of branching out from football, as the club begin construction on their very own hotel, The J Hotel.

The Hotel will be 138 room, 4 star hotel with an entire wing dedicated to the club’s first team.

Juventus purchased the lease over the land very close to the stadium for a measly €1m however development will run into the €100m’s however it is sure to prove a popular destination for football fans and the Italian public in general as the Italian side look to stay financially competitive.

LA Liga – Game On

La Liga have announced they will be going the growing Esports industry as part of a new marketing and commercial drive.

The Spanish league is looking to better engage with millennial and sees the Esports industry as the way to do it, with an initial rollout in the coming months.

MLS Drink To New Heineken Deal

The MLS have extended their relationship with Beer company Heineken, signing a new 5 year deal on the agreement that began in 2014.

As part of the deal, Heineken will continue to sponsor ‘Rivalry Week’, a week where loads of rival games take place in the MLS.

The FA Finances In Order

The English FA have recorded an after tax profit of £16m while investing a record £127m into the game with the FA in good financial health.

This record investment was despite revenue falling due to the lack of international tournament this year, dropping from £370m to £351m (5%)

CFG are Losing Money

City Football Group have also announced today losses of £71m, despite a good year for Manchester City, their main investment.

Manchester City contributed 92% of the revenue generated by CFG with majority of the losses due to their American venture New York City.

This is unlikely to worry CFG, who experienced early losses with Manchester City before they begun being profitable

Fulham Craving Extra Space at Craven Cottage

Fulham have had permission granted to begin work on expanding craving cottage with the addition of a new stand that will take their stadium capacity to 29,600 as the club prepare for a potential Premier League return.

The London club will begin works in summer 2019 once building plans are formalised and the development is expected to cost in the region of £80m – however it is likely to exceed this figure as do most significant building developments do.

Brentford’s New Stadium

Another piece of Stadium news is given by Brentford who hope to move into their new 17,250 seater stadium by December 2019.

The new ground, at Lionel Road, is part of ambitious plans with the club having lofty ambitions of gaining promotion to the Premier League.

The new stadium will boost the club who’s current stadium Griffin Park holds only 12,300 seats.

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March 18, 2018June 24, 2018

Manchester City Financial Review 2018

Manchester City had a disappointing 2016/17 season with so much being expected of them. The appointment of Pep Guardiola was a message of intent followed by significant player investment, however he failed to get Manchester City going, finishing trophy-less with an early Champions League exit the biggest failure of the lot.

Fast forward to 2018 and things look a lot more rosy with the team cruising to the Premier League title while already having a trophy in the bag and the chances of a historic treble still on the cards.

This article looks at the financial performance of the club last season in a year where profits dropped significantly despite record revenues due to rising costs from investment into the squad.

The financial accounts for Manchester City this year are for 13 months after the club decided to change their accounting period, this means that figures are slightly overstated as compared to last year on the basis of an extra month being included.

Revenue Analysis

Revenue rose impressively in the year, growing from £391.7m to £473.4m (20.9%) despite poorer performances on the pitch, this growth was driven mainly by the commercial success of the club and the new Premier League TV deal which has boosted all Premier League club’s income.

Matchday revenue stayed fairly consistent with last year, falling ever so slightly to £51.9m from £52.5m, a measly 1.1% drop on the back of the introduction of an away ticket price cap of £30, limiting the revenue that all Premier League clubs can earn on away days.

Broadcasting revenue rose significantly, increasing from £161.3m to £203.5 (26.2%) with the new Premier League deal masking a large revenue loss due to their poor Champions League performances. Champions League revenue fell from £61.2m to £47.9m (21.7%) after Manchester City were knocked out at the last 16 stage having made the Semi-Finals the previous season. However the new Premier League TV deal, coupled with a League Cup win over Liverpool led to broadcasting revenue domestically rising from £100.1m to £155.6m, a huge 55.4% increase.

Commercial revenue is a key barometer to success for Manchester City, who this year broke the £200m barrier for revenue from this area. Commercial revenue increased from £177.9m to £218m after a raft on new sponsorship deals as the club continue their aggressive global strategy.

Manchester City’s revenue growth shows no sign of slowing down, the club will be expecting revenue to rise once again with a Premier League trophy all but sealed and an improvement on their progression through the Champions League already, broadcasting revenue will definitely rise. Commercial revenue will continue to increase and should break the £250m barrier next year, while the club expect to announce a new kit deal with Puma who will replace nike, the full effect of that will not be seen for a couple of years however.

Manchester City are well on course to break the £500m barrier in terms of revenue. Talking about £500m …

Expense Analysis

Operating expenses rose in a big, big way as Manchester City broke the £500m as the club continue to expand massively in order to become a dominant European force. Expenses rose form £389.8m to £506m (29.8%). This was due to all areas of expenses rising, notably amortisation and wages.

Amortisation costs rose from £94m to £121.7m (29.5%) as the club continues to invest in players with 10 players joining the club with more to come on this in the next section.

Other costs such as stadium maintenance and general expenses to keep the club running rose as well, increasing from £76.9m to £94.2m (22.5%) as the club matches their investment in players with running the club off the pitch.

Wages broke the £250m barrier rising significantly from £197.6m to £264.1m (33.7%) as the club’s new players commanded huge wages as well as new contracts for their top stars and the arrival of Pep on a huge salary. These costs will be expected to rise past £300m in the coming season on the back of even larger wages after transfers this season and contract renewals. The wage increase of an eye-watering £66.5m works at at nearly £1.3m extra a week in wages!

Manchester City are a well run club, carrying minimal financial debt (more on this later) and instead having debt in relation to their stadium. This has led to the club having no net interest expense, helping to keep the club growing in a sustainable way.

The club paid no tax on their profits in the year, taking advantage of carried forward losses in the club from the early years of the Abu Dhabi era where significant investment was not matched by revenue, leading to heavy losses.

Transfers Analysis

Manchester City had a busy transfer window bring in 10 players at a cost of £191.7m while letting go of half that amount in 5 players for a total of only £31.8m, arriving at a net spend of a huge £159.9m.

In came Stones (£50m), Sane (£45m), Jesus (£28.8m), Gundogan (£24.3m), Bravo (£16.2m), Nolito (£16.2m), Marlos Moreno (£4.5m), Rulli (£4.2m), Zinchenko (£1.8m) and Pablo Mari (£0.2m).

Out went Jovetic (£12.2m), Dzeko (£9.9m), Rulli who had just joined (£6.3m) and Lejeune (£1.4m) while Bony left on loan for a fee of £2.1m.

Manchester City increased their net spend from £132.7m to £159.9m (20.5%) with a mixed degree of success last season. Players such as Stones and Sane struggled to adapt at their young age, Unlike Gabriel Jesus who started on fire after his January move. Bravo and Nolito failed to adapt to the physicality of the Premier League, with Bravo being replaced by Ederson in goal for the current season and Nolito moving back to Spain. Gundogan struggled for fitness and has looked more assured this season.

Manchester City saw a huge increase in profit on player sales as Dzeko and Jovetic helped the club to a profit of £34.6m, up from £20.7m last season, a impressive 67.1% rise.

Asset/Liability Analysis

As alluded to, Manchester have little financial debt instead, most of their debt relates to the costs of their stadium for which Manchester City have a lease for. This didn’t stop net debt from rising after a large decrease in cash levels.

The value of their lease debt stayed fairly stable, falling from £66.7m to £66.3m (0.6%).

Cash fell dramatically from £55.8m to only £18.7m (66.5%) as the club invested greatly in itself. A huge increase in transfer fees paid in cash was a large reason for this, increasing from £130.9m to £199.3m (52.3%) while investment in facilities also rose significantly from £18.1m to £27.6m (52.5%).

This led to net debt rising from £10.9m to £47.6m, a remarkable 336.7% increase.

Manchester City City did however see their potential liability on loyalty bonuses and transfer fees fall 10% from £121.4m to £111m on the back of the exits of Jovetic and Dzeko and legacy transfers failing to meet clauses set on them.

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March 12, 2018

Financial Football News Round-Up Edition 17

Financial Football News Weekly Round-Up 17

Here is your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 5th March 2018, featuring Amazon, Manchester City, Bundesliga, Chinese Super League, Liverpool, Leicester and Wolves.

Amazon Infiltrate La Liga In New Documentary

Amazon continue to increase their presence in football with the consumer giants set to produce a documentary on La Liga.

The documentary, Six Dreams is to feature Atletico Madrid midfielder Saul Niguez and Athletic Bilbao forward Inaki Williams among others, following their day to day activities aimed at the Spanish football fans.

Amazon are producing similar documentaries with Manchester City and Juventus having completed one for Argentinian giants Boca Juniors, with rumours of a second series of Six Dreams featuring Real Madrid and Barcelona already rife.

The documentary is scheduled for a 2018 fall release.

Serie A Have A New Chief In Town

Gaetano Micciché has been unanimously approved as the temporary president of Italy’s Serie A by all Serie A clubs as the Italian league look to overhaul the division to better compete with their European rivals.

Micciché is presently the chairman of financial services group Banca IMI and will be hoping to bring a fresh look at the troubled league that with the exception of Juventus, have failed to progress on and off the pitch.

Their new TV deal significantly lags those experienced in Germany, Spain and England and will need a long term strategy to bridge the gap.

Manchester City Agree US Barclays Deal

Barclays have agreed a sponsorship deal with soon-to-be Premier League champions Manchester City to be their sponsor during their US preseason tour, where they compete in the International Champions Cup (ICC).

Barclays branding will appear on interview backdrops during pre-season player and manager interviews, while Barclays will hold various competitions and offers during the tournament.

IMG Win Chinese Super League TV Rights

Global sports agency IMG has agreed a three-year extension with the Chinese Super League for the distribution of the global TV rights to the upcoming league.

The new contract also includes in-flight rights, while IMG will also advise the Chinese Super League on television production for the league.

SWM Motors Secure Chinese Team’s Name

Continuing on a successful commercial week for the Chinese Super League, SWM Motors have also signed a sponsorship deal with the CSL club Chongqing Dangdai Lifan to rename the club!

The club will be named Chongqing SWM until 2020 for a fee of £21.3m, something that would cause complete outrage in England but is seen as financially wise in the forward thinking Chinese Super League.

Bundesliga are Completely Sleeved After Freiburg Deal

Freiburg have become the final Bundesliga side to sign a sleeve sponsor, signing a deal with energy company Badenova.

This means all Bundesliga clubs next season will sport sleeve sponsors, the first league to do this. The Bundesliga have done a good job of remaining financially competitive despite low TV rights compared to Spain and England and this is just another example of that impressive feat.

Wolves – Foul or Fair Play?

Wolves inevitable pursuit to the Premier League has hit a bump in the road after Championship clubs complained of Financial Fair Play, with accusations of suppressed transfer fees for their star players so they can

Wolves connections through super agent Jorge Mendes has lead to some of Europe’s top young talent now plying their trade in the Molineux Stadium such as Ruben Neves and Diego Jota, players who have been linked with top Premier League clubs for fees larger than they paid in the past.

Wolves are “entirely comfortable” with their compliance with Financial Fair Play. We will watch this develop with intrigue and keep you up to date with developments.

Flurry of Financial Statements

In a big week of financial announcements the following clubs have released their financial results:

Premier League

Leicester

Liverpool

West Ham

Watford

Championship

Cardiff

Ipswich

Nottingham Forest

QPR

Reading

Sheffield Wednesday

Wolves

League 1

MK Dons

Rotherham

We will be analysing all these accounts at FFN, stay tuned !

Directors On The Move

A new feature! Here is a list of Director movement at Premier League and Championship clubs this week:

Chelsea
- In: Jonathan Guy Laurence
West Brom
- In: Mark Jones Jenkins
- Out: Richard Garlick

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Revenue Analysis

Matchday Revenue

Commercial Revenue

Broadcast Revenue

What does the future hold?

Expenses Analysis

Amortisation

Net Interest Expense

Wages and Staff Costs

What does the future hold?

Transfers Analysis

Transfer debts

Net Debt Analysis

Gains from Prize Money, among other things

High-quality players on lower wages

More wins, more investment

The Problem

Mr. Popular

Kitted Out

Getting More Shirty

Opportunity Knocks

Sleeves

Training kits

Naming Rights

Club Partners

Go Strange

Revenue Analysis

Expense Analysis

Transfers Analysis

Net Debt Analysis

Who’s Up, Who’s Down?

Wage to Revenue Ratio

Rich Directors

Wages Summary

The True Costs of the Premier League 2018 Summer Transfer Window

Let’s Not Talk About Spend, Let’s Talk About Net Spend

Additional Amortisation Costs

Amortisation Costs Savings

Profit, Profit, Profit (Or Loss)

The Summary – The True Cost

Revenue Analysis

Expense Analysis

Transfers Analysis

Asset/Liability Analysis

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