Club post record losses

Hardly surprising news:

Manchester City football club has reported an annual loss of £92.6m ($148m) for the 2008/09 financial year.

The figures reflect the large sums of money spent on top-class players by Sheikh Mansour since he bought the Eastlands club in September 2008. They include the £32.5m signing of Brazilian star Robinho.

The figures of course are only up to the period ending May 2009 so will not include the outlay on transfers made during the summer of 2009, so expect similar results when the figures are next produced.

Whilst it makes for good headlines, the loss is only a reflection on what the club has stated would happen when they took over, in that for the short term at least the club would have to spend well beyond their means in order to accelerate its progress to a time where the club becomes self-financing, although as we have seen with Chelsea this is not something that is particularly easy to achieve.

David Conn has more on this in The Guardian, stating that ADUG has poured in £395 million of his fortune into the club:

That huge and rapid expenditure is recorded in a document filed at Companies House on Christmas Eve, showing the cancellation of £305m which Mansour initially put into the club as loans. That includes some debt Mansour inherited when he took over the then stricken club from the former prime minister of Thailand, Thaksin Shinawatra, and his expenditure since on players including Robinho, Craig Bellamy, Nigel de Jong, Shay Given, Wayne Bridge, Gareth Barry, Roque Santa Cruz, Joleon Lescott, Carlos Tevez, Emmanuel Adebayor, Kolo Touré and other investment in the infrastructure at Eastlands.

According to the document, all £305m of the loans from Mansour's Abu Dhabi United Group were cancelled in return for new shares in the club. Mansour's group also bought further shares for £89.6m, to finance City's hugely increased wage bill and other expenditure this season.

City last night released figures from their official accounts for the year to 31 May 2009, which includes the first nine months of Mansour's ownership. The club recorded almost a tripling of the previous year's loss, to £92.6m, caused, it said in a statement, "primarily by increased playing staff costs".

Apart from perhaps the level of investment made by ADUG into the club, there isn't much in the way of 'new' news about this. The same situation rings true as it always has done since the takeover; namely that whilst ADUG continue their investment and association with the club any losses (in the short term at least) can be easily absorbed, but if they were to pull we would be in a whole heap of trouble.

Fortunately, that appears to be the last thing ADUG appear to have in mind, with plenty of long term plans rumoured to be in the pipeline - mainly developing the area around the stadium, and with the money invested into the club converted to shares as opposed to loans, the club is of course not saddled with huge debts hanging around its neck.

City announce £7million loss

The club today announced to the stock exchange today that we had a posted a £7million loss for the six month period upto the end of November 2006.

Below is the statement that appeared on mcfc.co.uk, and I have added some brief comments where applicable - apologies for the briefness but a lack of time permits anything too in depth at the moment:

For the six months ended 30 November 2006 turnover decreased by 9% to GBP25.7million (2005: GBP28.2million). This fall was predominantly due to fewer concert nights being hosted at the Stadium with Take That and Bon Jovi performing for a total of 3 nights, compared with 5 nights being held in the six months ended 30 November 2005.

Not entirely unsurprising and it will be likely that there will be another loss the next time figures are announced - unless we really go deep in the FA Cup and have a late season boost to our current league position.
The interesting point is that the loss was generally explained away by having less concerts held at the stadium!
The increase in TV revenue next season though should see income increase tremendously and as mentioned over at the Supporters Trust, which actually provide an opportunity for the club to finally beginning operating at a profit.

Matchday ticketing sales also fell by GBP1.5million, largely as a result of 1 less home game being played in the comparable period. Conversely the conference and banqueting business continued to grow with a 21% increase in revenue period on period.

A mentioned above, I don't expect the next set of financial results will see a healthy increase in this particular category, but maybe the club will focus even more on the commercial activities which seems to be becoming more of a lucrative area.

Operating costs have increased by 4%, mainly as a result of expenditure on player wages that increased by GBP1.8 million over the same period last year. It is the Board’s strategy to run a higher wage bill in this very important year for the Club.

The club have alluded to this previously how important avoiding relegation is, and it follows a pattern of recent years where they believe paying upper level wages to attract players is a key strategy in maintaing Premiership status.

The sale of former Academy players including Lee Croft, Bradley Wright-Phillips and Willo Flood, as well as the sale of David James helped the Club to generate a net profit of GBP2.0million on disposal of players. The comparative figure for the prior year included the proceeds for the sale of Shaun Wright-Phillips.

This illustrates the benefit of the Academy, not just in terms of players coming through into the first team but in terms of generating revenue for the club when they are deemed to not make the grade.

Net interest payable, before stadium finance lease charges, remained static at GBP2.0 million. Stadium finance lease charges fell by GBP0.8 million as reduced income from concerts and Premier League matches led to lower resultant rental charges.
The retained loss in the period amounted to GBP7.1 million (2005: GBP13.2 million profit).

Would this affect the potential takeover? Probably not, but another loss probably illustrates that there does need to be a change in direction/ownership of the club to be able to re-structure the current financial set-up. It does, however still remain unclear at this stage as to exactly what shape a takeover bid would form and an obvious concern is that any bid could land us in even more debt depending on how it is structured.

Financial results announced

The club have announced the financial results to the year end 31st May 2006. The full document can be downloaded here, but the main points in summary are:

Turnover up by £0.9 million to £61.8 million.

Operating profit up 46% to £5.1 million.

Salaries down to £34.3 from £37.7.

Profit on disposal of players £19.1 million

Net external debt reduced from £38.5 million to £32.2 million.

The press have picked up on a few of Wardle's comments as well - mainly the emphasis he placed on the West Ham cup defeat which of course resulted in the downturn of results over the remainder of the season (and arguably into this season) and certainly lost the club the potential for increased revenue from a higher league position and further FA Cup gate receipts.

Perhaps focusing on the stadium issue - which has been a hot topic in recent times when debating the clubs finances, the results also focused on the additional increased revenue generated from the commercial activities of the stadium (namely concerts and corporate events).

A point which has been picked up as a possible warning shot for Stuart Pearce, Wardle also stated that due to the wage bill that the club operate with "...Premiership survival remains an objective, (but) it alone does not represent a successful season for Manchester City."

And with a potential new TV deal looming on the horizon, it also strikes as even more vital to the clubs future that the unthinkable doesn't happen this season and we end up falling out of the Premier League.