Why Michel Platini and not a Ã‚Â£92.6m loss is the cause for concern at City
The release of the official accounts for the year to 31 May 2009 showed Sheikh Mansour has invested Ã‚Â£395m in the club with Ã‚Â£305m of loans now turned into shares. The Ã‚Â£92.6m loss was the talk of the papers, but the real concern for the City project lies in UEFA’s upcoming financial rules.
Ploughing money into City in the early years was always part of the plan for Garry Cook’s “project”. The end result should be a leading football club on the global stage, and the cost should not be greater than that of buying an already established club.
Sheikh Mansour was rumoured to have looked at Arsenal and the shares bought by Alisher Usmanov this week values the Gunners at a whopping Ã‚Â£900m. Buying Liverpool would be a little cheaper. A Real Madrid is said to be worth around Ã‚Â£1 billion, but can’t be sold unless the club’s members vote for a change to the constition – which is highly unlikely.
The project which Garry Cook sold to Sheikh Mansour was to buy City, who were readily available, for a relatively cheap price, then invest in players and infrastructure in a similar way to Chelsea under the early years of Abramovich.
As a result, City are constantly compared to Chelsea, though the ultimate aim of Sheikh Mansour is likely to be closer to the model of Arsenal.
On the back of sustained on-field success Arsenal saw a 38,000 capacity Highbury become oversubscribed and have been able to move to the 60,000 capacity Emirates which they now fill. The huge match day revenues combine with Champions League money, Premier League money, and associated global commercial activities to make the club self-financing. This is also maintained by the emphasis on bringing through young players.
Abramovich is trying a similar policy with young players through the work of Frank Arnesen. It’s yet to bear fruit as the players haven’t been good enough, and he also has the problem of not being able to increase the capacity of Stamford Bridge.
Given time and the continued investment from Sheikh Mansour, City’s project could be a winner. The Independent claimed that Sheikh Mansour had earmarked up to Ã‚Â£771m for our project, though goodness knows where they got that figure from.
City are in the process of buying a successful team in the short term, and are then looking to switch the emphasis to bringing through young players without need for the huge transfer spending. The fabulous track record of our Academy was a key attraction at City and it’s significance could return once the current spending spree is over.
On-field success will see Champions League income, increased commercial revenues from a global brand and increased match-day attendances. A new or expanded stadium could come into play once we have a waiting list for season tickets. This has been the case at Old Trafford and Highbury. City can’t charge London prices for tickets, so an increase in crowds would be necessary for the club to be self-financing in the long term.
Michel Platini and his new proposals for “financial fair play” are now looking like the biggest threat to City. These proposals have yet to be finalised and made public, but the talk is of clubs only being allowed to spend a percentage of their income from football related turnover. The Guardian gives details here. The 2013-14 season has been earmarked as the date for the new rules to come into play, though their has previously been talk of an additional three years before any clubs would face punishment by being excluded from the Champions League.
In the accounts just published City had turnover of Ã‚Â£87m and operating expenses of over Ã‚Â£120m. Turnover is set to increase, but will need to do so at incredible rate if we’re to break even in time for 2013.
For City to get their turnover up to the likes of Arsenal and Chelsea, never mind United and Real Madrid in three years would be a big ask. Maybe with the additional three years it would be possible with continued success. The pressure to get into the Champions League sooner rather than later is clearly on.
Quite possibly this was a factor in the dismissal of Mark Hughes. City may well have been on course for 6th place this season, but with a Champions League spot up for grabs and Platini’s proposals on the horizon, we need to go flat out for success now. Mancini says he can deliver it, and that’s what Sheikh Mansour wanted to hear.
As has been documented elsewhere, Platini’s ideas are full of flaws as they look to favour clubs with the highest turnovers. Rather than survival of the fittest, it looks more like a consolidation of the fattest.
As a consequence there could be a mad scramble get in the Champions League by 2013-14. The irony is that with no constraints in the meantime, a club like City would do well to spend what they can, while they can. Making big long-term signings prior to 2013 would be a priority for clubs without huge turnovers.
If we pip Liverpool to a Champions League spot this season, then a monster bid to get Torres makes even more sense.