17th Biggest Club In The World Still Loses Money
Last week Deloitte published their tenth annual Deloitte Football Money League List (“the List”). There are a number of different methods of defining a club be it the size of the fanbase, attendances, TV audiences or success on the pitch. The List however, rates the clubs by looking at “financial muscle” in terms of income from day to day football business operations. The List does not look at outgoings or the potential value of a club and only details the top 20 Clubs worldwide.
City were first included in the 2005 List which analysed the 2003/04 season. City had moved to CoMS and the additional revenue had catapulted our Club into the top 20 at 16th place. At that time 41% (£25.5m) of our Club’s income came from TV Revenue, 31% (£19.3m) came from Commercial Activities and 28% (£17.1m) from Matchday Activities. In the 2003/04 season City had finished 16th in the Premier League which had a bearing on the level of TV Revenue but City still managed to be the 7th highest Premiership club ranked in the 2005 List.
In the 2006 List (which analysed the 2004/05 season), City had fallen one spot to 17th place. At that time 43% (£26.1m) of our Club’s income came from TV Revenue, 32% (£19.7m) came from Commercial Activities and 25% (£15.1m) from Matchday Activities. In the 2004/05 season City had finished 8th in the Premier League which had lead to a slight rise in TV Revenue (despite poor Cup runs) and City still managed to stay the 7th highest Premiership club ranked in the 2006 List. Crowds had fallen but were still averaging around 45,000 per match.
Last week, in the 2007 List (which analysed the 2005/06 season), City had managed to stay in 17th place. At that time 39% (£24.2m) of our Club’s income from TV Revenue, 36% (£21.9m) came from Commercial Activities and 25% (£15.7m) from Matchday Activities. In the 2005/06 season City had finished 15th in the Premier League which had lead to a drop in TV Revenue (despite a good Cup run) and City still managed to stay the 7th highest Premiership club ranked in the 2007 List. Crowds had continued to fall but were still averaging around 43,000 per match.
Of course, being listed as the 17th ranked club in the world when looking at income from day to day football business operations can be misleading. What the figures do not tell you is that our Club still cannot trade profitably from normal day to day business. The Shaun Wright-Phillips sale, almost two years ago now, balanced the books but our Club is still expected to make a large loss in this current financial year.
Almost one year ago Alistair Mackintosh, our Club’s current Chief Executive, gave an interview to Accountancy Age where he was quoted as saying “where you finish in the Premiership should be reflected in the wage budgets”. Accountancy Age's article can be found here
Fast forward a few months to October 2006 and Mackintosh commented on our Club’s website that our Club currently have the seventh highest wage bill in the Premiership and also said “we’ve invested heavily in our wage bill. And whilst the players may have come here on Bosman transfers, they generally have a high wage attached." He also confirmed "It's a strategic choice to have a high wage bill. But then you want performance that is commensurate to that as possible".
The Board have clearly gone for a strategy of paying big wages hoping that by doing this performances on the field will be reflected in equal measure. At the time of writing this article our Club lie 16th in the Premiership. Having spoken to an independent accountant (who is not part of our Working Party), he feels that our Club whilst paying the higher wages could lose as much as £10-11m before player trading in this current year. Hopefully, the additional TV Revenue due from the new deal will ease the pressure to sell players to balance the books.
Later this month our Club will announce their half year results which will enable all City supporters and shareholders to look at the progress being made off the pitch and to evaluate the effectiveness of the Board’s current strategy. The results will more than likely be announced in the week before our Open Meeting and the club’s financial situation is one area of concern but there are of course several others.
We will be presenting our concerns and aims for the proposed trust at our Open Meeting on Sunday 4th March at the University of Manchester’s Renold Building, Sackville Street Complex, Altrincham Street, Manchester.
Further details and a map for the venue can be found on this blog here or alternatively e-mail us at firstname.lastname@example.org.
Colin Howell, Colin Savage, Gavin Cooper, Ian Barton, Mickey Horan, Miles Webber & Ollie Goddard.
MCFC Supporters Trust Working Party