Man City halve their losses

(Getty)

(Getty)

Manchester City have announced pre-tax losses of £93.4 million for the 2011-12 season.

It means the Premier League champions have halved their losses, following a record loss of £197.5 million in the 2010-11 campaign. City’s annual revenue also rose beyond £200 million for the first time, partly because of their debut campaign in the Champions League.

In total, City’s revenue went up by 51% to £231.1 million, including £22 million from their Champions League campaign and £97 million in sponsorship, up from £48.5 million the previous year.

City hope the increase in their turnover will help them on their long-term goal of breaking even.

UEFA’s Financial Fair Play rules come into effect next season but City believe they will be able to meet the guidelines because £15 million of their expenditure is attributable to infrastructure and youth development costs while £80 million comes from contracts that predate 2010, which should qualify them for some relief.

Read the entire article, excerpted above, at ESPNFC. Meanwhile, The Guardian delves deeper into the challenge faced by Manchester City to comply with UEFA Financial Fair Play rules that will come into force for the 2014-15 season.

…Uefa rules allow clubs in European competitions to make a total loss of €45m between 2011 and 2013, if that loss is bankrolled by an owner. So, City’s loss for 2011-12 alone is almost treble the figure allowed.

The club indicated it will rely on Uefa’s detailed exemptions in the hope of complying. The ultimate sanction for a flagrant breach of the rules, which are aimed at stabilising European football’s finances, is exclusion from continental competition.

The rules allow a club to deduct from their losses money spent on infrastructure – mainly their stadium and youth academy. City are building a £140m training campus on 80 acres near their Etihad Stadium, but the bulk of the construction has not yet been done and so that expenditure does not eat far into the £97.9m loss.

The exemption on which City are set to rely begins with an allowance Uefa will make if a club’s losses are higher than €45m for the 2011-13 years, but are being steadily reduced. City have halved their loss from the £197m, the highest ever in English football, in 2010-11, so will show Uefa that positive “trend”. In this 2012-13 year, despite exiting the Champions League at the group stage, City will again expect to diminish the loss by increasing their income from commercial sponsorships and reducing costs by being prudent in the transfer market.

If that trend is happening, clubs can escape a Uefa sanction if they can show their overall loss is higher than the €45m allowed only because they made a loss in 2011-12 caused by the wages of players’ contracts signed before 1 June 2010. That is vitally important to City, who did heavily invest in several top players, including Gareth Barry, Joleon Lescott and the £200,000-per-week Carlos Tevez, before that date.

Announcing the figures, City said with confidence: “The application of allowable reliefs, for certain categories of expenditure and investment, position the club well for compliance with Uefa’s financial fair play rules.”

That will be assessed in the spring of 2014, so Uefa’s view will depend on these accounts, and City’s 2012-13 financial performance.

How exactly will Financial Fair Play affect clubs? What exactly is Financial Fair Play (FFP)? TKTG has covered these very questions, in our earlier article on the subject.

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