Thread by @SwissRamble

Manchester City’s 2018/19 financial results covered an “extraordinary” season when they won the domestic treble of Premier League, FA Cup and Carabao Cup, though were eliminated in the Champions League quarter-finals by Tottenham. Some thoughts in the following thread #MCFC

#MCFC profit before tax was flat at £10m, despite revenue rising £35m (7%) from £500m to a record high of £535m, as the revenue growth was offset by costs increasing by the same amount. Profit on player sales was also unchanged at £39m.

#MCFC revenue growth of £35m was entirely due to broadcasting, which increased £42m (20%) from £211m to £253m with Champions League up £31m (57%) to £86m and domestic TV up £11m to £167m – due to a combination of success on the pitch and new deals.

In contrast, #MCFC commercial and match day revenue were both down, by £5m (2%) to £227m and £2m (3%) to £55m respectively. Wage bill shot up £55m (20%) from £260m to £315m, though other expenses were £14m (11%) lower at £105m. Player amortisation also fell £8m (6%) to £127m.

Worth noting that a new accounting standard has led to a change in the presentation of catering receipts, which has reduced revenue (and costs) by £5.1m. Without this restatement, match day revenue would have grown £1.6m, while commercial income would only have fallen £3.5m.

#MCFC profit of £10m is actually the lowest of the “Big Six” in the Premier League. The only other club to have published 2018/19 accounts to date is #MUFC, who made £29m. In 2017/18 the others all posted massive profits: #THFC £139m, #LFC £125m, #AFC £70m and #CFC £67m.

#MCFC strategy has not been overly reliant on profit on player sales. Made £39m in 18/19, but this was a long way behind mega profits from others the prior season: #LFC £124m, #AFC £120m and #CFC £113m. Included Diaz to Real Madrid, Gunn to Southampton and Maffeo to Stuttgart.

This is the fifth consecutive profitable year for #MCFC, which is in stark contrast to the early years under the ownership of Sheikh Mansour when the club incurred many heavy losses, due to significant spending in order to build a competitive squad.

Although player sales are still not as high at #MCFC as many other clubs, they have had an increasing impact on the club’s profits: £146m in the last 5 years, compared to just £32m in the preceding 5 years. 2019/20 accounts will include sales of Danilo, Douglas Luiz and Delph.

Looking at the five years up to 2017/18, #MCFC only made £108m profit from player sales, which is only better than #MUFC £50m in the Big Six. In this period #CFC £337m, #THFC £265m, #LFC £260m and #AFC £165m all made significantly more from this activity.

#MCFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as a proxy for cash operating profit, as it strips out player sales and exceptional items, fell from £125m to £118m, though this is still City’s second highest ever.

#MCFC EBITDA of £118m is very good, underlining the club’s financial progress, but it is still a fair bit lower than #MUFC £186m, who may be suffering on the pitch, but still generate loads of money.

#MCFC revenue has grown 11 years in a row under the ownership of Abu Dhabi United Group. In the last 3 years alone, it has increased by £143m (37%) from £392m to £535m, mainly thanks to TV (up £92m), but commercial also grew £49m, though match day only £2m higher.

Interestingly, broadcasting (47%) has overtaken commercial (42%) as the most important revenue stream at #MCFC for the first time since 2011. In fact, commercial’s share of total revenue has fallen from 53% in 2013.

#MCFC £535m revenue is the second highest in England, though they still trail #MUFC £627m by nearly £100m. A fair gap to the next clubs (#LFC £455m, #CFC £443m, #AFC £388m and #THFC £381m), but these are all from 2017/18 and some will be higher in 2018/19 (#LFC in particular).

This season’s figures will be very interesting in Manchester, as #MUFC have already given guidance that their revenue will fall to £560-580m due to a lack of Champions League football, while #MCFC will see an increase following the new Puma deal, so could overtake their rivals.

Using 2017/18 figures, #MCFC £503m revenue was fifth highest in the Deloitte Money League, (for the third year in a row), only below Real Madrid £665m, Barcelona £612m, #MUFC £590m and Bayern Munich £557m.

However, based on media reports, #MCFC will slip to sixth in the next edition of the Money League, as their £535m has been overtaken by PSG £565m. In addition, the gap to the top club has widened, as Barcelona’s revenue grew £143m in 2019 to an astonishing £755m.

Broadcasting income was the driver of #MCFC revenue growth in 2018/19, up £42m (20%) from £212m to £253m, primarily due to the new Champions League broadcasting rights, allied with the changes in distribution methodology, which increased European TV money from £55m to £86m.

#MCFC TV money from the Premier League increased £2m to £151m, though this was £1m less than #LFC, despite finishing ahead of them. This resulted in a £1.9m higher merit payment, but was offset by the Reds being shown live 3 more times, so a £3.4m higher facility fee.

#MCFC earned £83m (€94m) for reaching the Champions League quarter-finals, €30m more than the previous season when they reached the same stage, as TV rights were 50% higher. Also boosted by finishing 1st in prior season’s PL, so they got 40% of first half of the UK TV pool.

However, #MCFC earnings were restricted by the introduction of a new UEFA coefficient payment (based on performances over 10 years), as they received €24m for this element, compared to their neighbours #MUFC, who received €31m based on former glories.

This UEFA coefficient meant that #MCFC £83m ended up earning around the same as #MUFC, though less than Champions League winners #LFC £99m and finalists #THFC £90m. Europa League finalists #CFC and #AFC received £45-50m less with £39m and £32m respectively.

Despite their fans’ ambivalence about UEFA, the Champions League has been a good earner for #MCFC, bringing in €338m prize money over the last five years. That’s the highest in England, ahead of #LFC €265m, #THFC €236m, #AFC €228m, #MUFC €221m and #CFC €217m.

#MCFC commercial income dropped slightly from £232m to £227m, though growth since 2016 is still a healthy £54m (31%). Interestingly, growth at #MUFC has also stalled, only rising from £268m to £275m in the same period. City are rated 5th most valuable football brand in Europe.

To place this into context, #MCFC £227m commercial income is still £60-70m higher than their next closest challengers: #CFC £165m, #LFC £154m, #THFC £109m and #AFC £107m. However, worth noting that these are all 2017/18 figures, so may increase when new accounts published.

#MCFC Etihad shirt sponsorship worth £45m a season, while naming rights for stadium and campus estimated at £15-20m. City Football Group will have a 10-year £65m kit deal with Puma from 2019/20, a big increase on current Nike £20m. Nexen Tire sleeve sponsor is £10m.

However, these deals are still a fair way below the leading Spanish clubs with Real Madrid earning around 45% as much: Emirates £62m & Adidas £97m (from 2020). Some will say #MCFC rely on sponsorships from their owners, but they would surely find similar replacements if required.

Despite staging 1 more FA Cup game, #MCFC match day income fell £1.6m (3%) to £55m. However, this was still only 6th highest in the Premier League, around half of #MUFC £111m. In fact, lowest of any club in the top ten of the global Money League.

#MCFC average attendance was a record 54,132, though again the 5th highest in the Premier League, around 20,000 below their Manchester neighbours. Season ticket prices have increased by an average of 3% in 2019/20, though cheaper tickets and under-18s have been frozen.

#MCFC wages shot up £55m (20%) from £260m to £315m, due to a combination of new players, contract extensions and bonus payments (the price of success). Interestingly, 463 headcount is now higher than 2013, reversing the significant reduction in 2014 following outsourcing to CFG.

Even after the increase, #MCFC £315m wage bill is still below #MUFC £332m (the last time that City were above United was 2013). However, City’s wages are a fair way above the other leading clubs: #LFC £264m, #CFC £244m, #AFC £223m and #THFC £148m (all 2017/18 figures).

#MCFC £315m wage bill is the fourth highest in Europe, around the same level as Real Madrid £321m (depending on exchange rate used), though Barcelona £444m are miles ahead. It is possible that they might be overtaken when PSG publish their 2018/19 accounts.

#MCFC wages to turnover ratio up from 52% to 59%, the highest (worst) since 2014. In fairness, this is still pretty good, around same level as #LFC and #AFC (both 58% in 2017/18), though higher than #MUFC 53%. Significantly improved since 114% in 2011, the year of the £197m loss.

Interestingly, #MCFC wages to turnover ratio of 59% is the same as Barcelona, though higher than Bayern Munich 51% and Real Madrid 48%. On the other hand, better than Juventus 66%.

#MCFC transferred some staff to other group companies, which then charge the club for services provided, which partly explains the large increase in external charges since 2013 from £42m to £105m in 2018, though this fell to £98m in 2019.

#MCFC player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, dropped from £134m to £127m, the first decrease since 2015. Still up £57m (80%) in the last four years, reflecting investment in the squad.

Despite the decrease, #MCFC player amortisation of £127m is the highest in the Premier League, just ahead of #MUFC £126m and #CFC 124m (2017/18 figure). These three clubs are way ahead of #AFC £77m and #LFC £67m.

After record player purchases of £328m in 2017/18, #MCFC “only” spent £87m last season, their lowest expenditure in the transfer market since 2012/13, with the only major acquisition being Riyad Mahrez. To place this into perspective, City averaged £236m over previous 3 seasons.

Although #MCFC have increased expenditure in 2019/20, their £89m net spend (mainly Rodri & Cancelo) is still relatively low This is in stark contrast to £162m annual average for preceding 3 years, when City played catch up following UEFA transfer restrictions for FFP breach.

#MCFC reported debt of £73m includes £66m leases on the Etihad stadium and £7m short-term borrowing with Barclays. In addition, there is £86m payable on transfers, though other clubs owe City £54m, so the net amount owing is only £32m (down from prior season’s £61m).

Worth noting that #MCFC have massive contingent liabilities of £200m, based on the achievement of certain conditions contained within player and transfer contracts. This is more than the rest of the Big Six combined £135m (#MUFC £66m, #LFC £41m, #THFC £15m, #AFC £8m & #CFC £5m).

#MCFC £73m gross debt is very low for a leading club, much less than #MUFC £511m (still over half a billion after all the Glazers’ refinancings), #THFC £466m (new stadium), #EFC £224m, #BHAFC £223m and #AFC £217m. #CFC have £1.2 bln debt in their holding company.

Similarly, #MCFC have relatively low annual interest payments of £3.6m, far below #MUFC £19m, #THFC £14m and #AFC £12m, the latter two due to stadium financing. Mansour’s funding via additional share capital (instead of debt) provides a competitive advantage here.

Using the broadest definition of debt, #MCFC total liabilities are only £425m, which is one of the lowest of the leading European clubs. For context, Barcelona and #MUFC are around €1.1 bln, followed by Tottenham £1 bln, Juventus 807m and #AFC £609m.

#MCFC cash balance climbed from £28m to £130m, their highest ever, though still less than half of #MUFC £308m and #AFC £231m. That said, United’s cash mountain has fallen to £140m in Q1 2019/20, mainly due to stage payments on previous transfers.

#MCFC have become self-sufficient in the last few years, so no additional share capital was issued in 2018/19 (£58m in 2017/18). To date, the owners have provided more than £1.3 bln of funding via new shares or loans.

A cloud is hanging over #MCFC in the shape of UEFA’s ongoing investigation into claims they breached FFP rules, which could potentially result in a ban from the Champions League (and its associated riches), though the directors are “entirely confident of a positive outcome”

#MCFC CEO Ferran Soriano said, “Manchester City is a consolidated, economically sustainable operation that will continue to use its financial strength to fuel its growth.” It will be difficult to repeat last year’s success, but the Champions League is surely the main objective.