Manchester City, the Premier League team owned by Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, had the largest financial loss ever in English soccer.
City, which is five points clear at the top of the league, had a loss of £197.5 million ($312.4 million) in the 12 months ended May 31, the team said on Saturday on its website. That’s £76.2 million more than last year’s loss and surpasses the record £132.8 million loss posted by Chelsea in 2005.
City has spent more than £500 million on transfer fees and salaries since Mansour bought the team in September 2008. The club won the F.A. Cup last season, its first trophy in 35 years, and qualified for Europe’s top club competition, the Champions League. It’s leading Manchester United, the record 19- time English champion, in the league this season and defeated the rival a 6-1 at Old Trafford last month October.
“Our losses, which we predicted as part of our accelerated investment strategy, will not be repeated on this scale in the future,” City’s Chief Operating Officer Graham Wallace said in the team’s annual report.
City’s spending has dwarfed that of its rivals in recent years. During the fiscal year, it spent more than £150 million on players like Edin Dzeko, David Silva, Yaya Toure, Mario Balotelli and James Milner. Acquiring such a roster meant its wage bill of £174 million outstripped its revenue by £21 million. Manchester United’s annual sales of £331.4 million are more than double City’s.
Wallace said the results represent a “bottoming out of financial losses at Manchester City.” Revenue will be strengthened next season thanks to Champions League income and the start of a record 10-year naming rights agreement worth more than £300 million with Abu Dhabi national airline Etihad.
Unlike Manchester United, which has debts of more than £400 million, City’s spending has been covered by its owner. Mansour has pumped £291 million of equity into the club since June 2010, bringing his total investment to almost £800 million, leaving the club with no debt.
Buying the best talent hasn’t always gone smoothly. The team said it wrote off £34.4 million on the value of players it previously signed. It may soon have another loss when Carlos Tevez leaves the club.
Media reports said City paid as much as £47 million for the Argentine two years ago and he’s expected to leave in January after first refusing to play in a game and then returning to his homeland without permission.
The loss comes at a time when other teams across Europe are reigning in spending to meet governing body UEFA’s financial regulations. Teams with losses of more than euro 45 million ($61 million) could be barred from the Champions League from 2014. Clubs that show trends of reduced losses could be spared the sanction, according to UEFA’s Financial Fairplay regulations.
The deal with Etihad, which is controlled by Sheikh Khalifa, Mansour’s brother and the ruler of Abu Dhabi, is among a slew of commercial deals signed with companies from the Emirate. That’s led rival owners like Liverpool’s John W. Henry to question whether City’s contracts are valued correctly. UEFA said it has a team of specialists that will examine the pacts.
“As we undertake the club’s commercial transformation, we are cognizant of the incoming UEFA Financial Fair Play regulations and consequently we continue to maintain positive and ongoing dialogue with all appropriate football authorities,” Wallace said.
Commercial sales grew 49.7 per cent to £48.5 million and television income increased 27 per cent to £68.4 million as City was the third most-broadcast team last season. Champions League appearance will probably move that figure to close to £100 million next year.
City’s spending hasn’t been confined to the pitch. Earlier this year, it announced plans for a youth development complex, sports science institute and a new training ground around the Etihad Stadium.