Manchester City: club’s finances look better in black than red

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

For most enterprises, wage inflation is a worry. Not for top football clubs such as Manchester City which reported its latest financial results on Wednesday. A mark of success for teams is their ability to buy top players and sell them profitably.

Measuring the returns from football clubs depends on one’s perspective. Operating profits, covering the day-to-day activities of the club, are a good yardstick. However profits and losses on purchases and sales of players may be excluded from that metric, yet make a big difference to the real outcome.

Despite its success on the pitch — winning both the English Premier League title and Europe’s Champions League — City consistently loses money at the operating level. Last season, its loss widened by two-thirds to £35.6mn. Over a decade those losses have summed to £334mn, according to data from football analyst Kieran Maguire.

The club’s wage bill is one of the highest in the Premier League at £354mn. Its wage to revenue ratio of 59 per cent, though relatively low, has not shifted since 2019.

But City, like some other top Premier League clubs, makes tidy profits from trading in players. In the decade through last season, City earned nearly half a billion pounds in this way. This is good news for the owner, Sheikh Mansour bin Zayed al-Nahyan, a businessman and politician from the United Arab Emirates.

Crosstown rival Manchester United, the subject of endless takeover speculation, made £150mn from trading in players.

These transactions have kept City’s pre-tax profits in the black every year bar one since 2014. The club, it must be added, faces 115 charges from the Premier League over financial fair play rules, raising questions on how sustainable returns are.

Player sales income could go higher. This year’s figures do not include large sums the new Saudi Pro league teams have spent to lure top stars from all leagues, such as Cristiano Ronaldo. This season so far the figure stands at €145mn, similar to the transfer fees for France’s Ligue 1.

City’s results show that Europe’s top football clubs can turn a profit if they put their minds to it. The era of all football clubs as sinkholes for cash has come to an end.

The Lex team is interested in hearing more from readers. Please tell us if you think football club profits are sustainable in the comments section below.