SOCCER NEWS: MANCHESTER CITY'S owners have injected another €90 million into the club, taking Sheikh Mansour bin Zayed al-Nahyan's cash investment in the past 12 months over the €280 million mark.
Mansour purchased 37,547,169 new shares in the Eastlands club on 30 September, each costing him €2.39. It amounted to €89.7 million of fresh investment.
The sum is small change for the Abu Dhabi billionaire, but it raises fresh questions about City’s capacity to meet new regulations coming into force from next season.
Uefa’s financial fair-play rules require that no club should make an aggregate loss of more than €45 million over the three seasons from 2011-12, or it will face being excluded from European competition.
“Clearly our intention is to comply,” says Garry Cook, the City chief executive. “Our two-year plan was to take a budget and build a competency to compete at the highest level. We are pleased with how that worked, and will not be signing players to the same level of intensity in the next transfer windows.”
Those who believe City will escape the rule’s effect by having spent extravagantly before it comes in to force misunderstand simple accounting mechanisms.
The exact dates when cash changes hands on transfer fees are not relevant; instead there is a balance-sheet instrument know as amortisation by which the total value of the fee is written down according to the length of the contract, causing a natural lag in the impact of transfer activity.
When David Silva joined City for €29 million on a four-year contract in June, it added €7.3 million a year to City’s amortisation charge. By the end of last season the total charge had already reached €80 million – or almost 57 per cent of the club’s €140 million turnover.
Between them the additions of Jerome Boateng, Yaya Toure, Mario Balotelli and James Milner added close to €19 million, which the departure of Robinho and his €9.2 million a year in amortisation charges could only partially offset.
Unless more of City’s expensively acquired superstars join Robinho in leaving, their 2011-12 amortisation charge will be close to €100 million.
Their huge wage bill further compounds City’s difficulties, given the summer arrivals.
Meanwhile Manchester United chief executive David Gill insists the club can still compete with big-spending neighbours City despite being overtaken in the pay league.
City’s wage bill of €150 million has rocketed up €56 million in the last year, overtaking United’s €148 million.
United agreed a bumper new deal with Wayne Rooney last week but are still maintaining their policy of ensuring wages remain less than half their turnover.
Asked if he was concerned that United were now behind Manchester City in the wages league, Gill said: “No not really – I’m not concerned by that as ever since we have been a public company we have had a policy that wages should be 50 per cent or less of turnover.
“We believe we can do that and still retain and attract the stars we need on the pitch. We think that’s the sensible model.”
United have managed to match Chelsea on the pitch in terms of silverware since Roman Abramovich took over at Stamford Bridge.
Gill added: “That’s exactly right – we have remained competitive.”
United’s latest financial figures earlier this month revealed the club’s wage bill is €148 million. Chelsea’s is €159 million, City’s €150 million and Arsenal are fourth with €124 million spent annually on salaries.
United’s total wages are 46 per cent of turnover – the lowest ratio among Premier League clubs, Arsenal have the next lowest ratio on 49 per cent, while City spend more on wages than their total revenue.
The healthy wages-turnover ratio is one of the reasons United are confident that they will meet Uefa’s financial fair play rules – despite the sums they have to pay out in interest to service the loans taken out by the Glazer family when they bought the club in 2005. Guardian Service
