By Andy Sambidge
Abu Dhabi-owned club says losses have now 'bottomed out' after massive investment
Abu Dhabi-owned Manchester City Football Club on Friday announced losses of £194.9m ($307.4m) for the 2010-11 financial year.
The loss was the biggest ever reported by an English Premier League club, exceeding the loss posted by Chelsea in 2005. Last year, Man City posted pre-tax losses of £121.3m.
Despite the losses, chairman Khaldoon Al Mubarak said the club would be "redoubling its efforts" to achieve its ambitions to establish Man City as an "internationally competitive" club.
And the club's chief financial officee said the figures represented a "bottoming out" of losses before as Man City move to a more "sustainable position".
The club's annual report said the loss was not unexpected and was "a result of the accelerated investment programme...between 2008 and 2011".
It also included "additional exceptional charges of £34.4m...related to the revised carrying values of intangible assets".
Al Mubarak said: “Now that we are witnessing progress, both on and off the pitch, it is more important than ever to redouble our efforts and to work towards achieving our ambition to establish Manchester City as a more successful, sustainable and internationally competitive football club.”
City’s spending has dwarfed that of its rivals in recent years. During the fiscal year, it spent more than £150m on players like Edin Dzeko, David Silva, Yaya Toure, Mario Balotelli and James Milner.
The club’s commercial revenues increased in the 2010-11 financial year by 22.5 percent - driving total revenues from £125.1m in 2009-10 to £153.2m - exceeding the £150m threshold for the first time in the club’s history.
Match day ticketing revenue - driven by increased average attendances, UEFA Europa League matches and FA Cup matches - increased by eight percent (from £18.2m to £19.7m).
Television rights income also rose by 27.4 percent on the previous year (from £54m to £68.8m), largely driven by the club’s highest-ever finishing position in the Premier League, participation in the UEFA Europa League and the club’s successful FA Cup campaign.
The annual report also showed that commercial partnership revenue increased by 49.7 percent on the previous year (from £32.4m to £48.5m), while profitability from retail activities increased to £2.6m.
Graham Wallace, the club's chief operating officer, said in the report: “Our losses, which we predicted as part of our accelerated investment strategy, will not be repeated on this scale in the future.
"These financial results represent the bottoming out of financial losses at Manchester City before the club is able to move towards a more sustainable position in all aspects of its operations in the years ahead."
He added: “As we undertake the club’s commercial transformation, we are cognisant of the incoming UEFA Financial Fair Play regulations and consequently we continue to maintain positive and ongoing dialogue with all appropriate football authorities.”
UEFA Champions League participation and the lucrative partnership with Etihad Airways signed in July are not reflected in the 2010-11 figures.
These aspects, combined with further improved revenue generation, will positively impact the club’s financial results in 2011-1, the report added.For all the latest sports news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
These losses demonstrate the arrogance and excess we have grown accustomed to in the premier league
With salaries at eye watering levels and ticket prices above weekly Payscales of the average Joe it's not a surprise we see losses of this magnitude
In any other business you would be bankrupt yet owners pour good money after bad.