City losses of €120m to present stern test for Uefa fair play rules
Manchester City will present a stern test for Uefa’s new financial fair play rules when they come into force for the 2014-15 season after the club announced a loss of €120 million for the last financial year. Uefa rules allow clubs in European competitions to make a total loss of €45m between 2011 and 2013, if that loss is bankrolled by an owner. So, City’s loss for 2011-12 alone is almost treble the figure allowed.
The club indicated it will rely on Uefa’s detailed exemptions in the hope of complying. The ultimate sanction for a flagrant breach of the rules, which are aimed at stabilising European football’s finances, is exclusion from continental competition.
The rules allow a club to deduct from their losses money spent on infrastructure – mainly their stadium and youth academy. City are building a €170m training campus on 80 acres near their Etihad Stadium, but the bulk of the construction has not yet been done and so that expenditure does not eat far into the €120m loss.
The exemption on which City are set to rely begins with an allowance Uefa will make if a club’s losses are higher than €45m for the 2011-13 years, but are being steadily reduced.
City have halved their loss from the €240m, in 2010-11, so will show Uefa that positive “trend”.
In this 2012-13 year, despite exiting the Champions League at the group stage, City will again expect to diminish the loss by increasing their income from commercial sponsorships and reducing costs by being prudent in the transfer market.
Clubs can escape a Uefa sanction if they can show their overall loss is higher than the €45m allowed only because they made a loss in 2011-12 caused by the wages of players’ contracts signed before June 1st, 2010. That is vitally important to City, who did heavily invest in several top players before that date.
City, whose spending is bankrolled by the oil-based fortunes of Sheikh Mansour of Abu Dhabi, made their €120m loss despite increasing income to €283m during their Premier League title-winning season.
Mansour invested a further €207m to subsidise the spending, principally on players and wages, taking his investment in City to almost exactly €1.2bn .
Announcing the figures, City said: “The application of allowable reliefs, for certain categories of expenditure and investment, position the club well for compliance with Uefa’s financial fair play rules.”
That will be assessed in spring 2014, so Uefa’s view will depend on these accounts, and City’s 2012-13 financial performance.