The sheikhs are no longer splurging. Now they are making a profit

They cut salaries, laid off staff, and had record revenues. Thanks to this, after 10 years, English club Manchester City ended up in the black.

Five years ago, English football giant Manchester City recorded a record loss of almost 200 million pounds. The club’s owner, Sheikh Mansour bin Zayed Al Nahyan, and the Abu Dhabi United Group at the time spared no expense, willing to pay anything for anyone to achieve success. The situation has changed. In the last financial year, Manchester City posted a profit of more than 10 million – their first since the sheikhs entered English football in 2008. A study by KPMG looked at the causes of this radical shift to balanced finances. According to the study, in addition to increased revenues from television rights and sponsorships, staff layoffs and pay cuts for star footballers also played a role. “While in 2011 the wage-to-revenue ratio was 114 percent, last year it was only 55 percent,” the KPMG study states.

Financial Fair Play stopped them
One of the key reasons why the sheikhs became financially responsible owners are the so-called Financial Fair Play rules of the Union of European Football Associations (UEFA). “If these rules controlling club finances did not exist, Manchester City might behave differently. The club even faced penalties and fines for breaking them,” sports analyst and football agent Jozef Tokos told the Economic Daily. In 2014, the club had to pay UEFA 60 million euros and was also punished by a reduction in the number of players eligible for the Champions League – instead of 25 names, they could only use 21. This blow most visibly resulted in a sharp cut in the wage bill for football stars. In the 2012/2013 season, they spent over a quarter of a billion pounds annually on salaries. The following season, this dropped to 205 million, and last year it fell by another 12 million. “The wage-to-revenue ratio is one of the main indicators UEFA monitors. That ratio should not exceed 70 percent of total revenues,” explains the KPMG report. Manchester City is also distinguished from other clubs by the fact that the Abu Dhabi United Group from the United Arab Emirates owns, in addition to the English team, clubs in the USA (New York City FC), Australia (Melbourne City FC), and Japan (Yokohama F. Marinos).

New coach, new challenges
Even greater revenues and stability are expected to come from Manchester City’s new minority shareholder, the Chinese media giant China Media Capital, which at the end of last year paid more than 300 million euros to Abu Dhabi United Group for a 13 percent stake. “Such cooperation opens up the very important Chinese market to the owners, whose progress in football was confirmed by the winter transfer window,” says Tokos. The three most expensive transfers during that period were made by Chinese clubs. Jiangsu Suning paid Ukrainian club Shakhtar Donetsk as much as 50 million euros for Brazilian attacking midfielder Alex Teixeira.

The future of European football may belong to Manchester City also thanks to the arrival of the most successful coach of the past decade, Josep Guardiola. He will take over the club in the summer of this year, and speculation has already begun about which star players he will attract to the English northeast. Names mentioned include FC Barcelona defender Gerard Pique, Mario Götze of Bayern Munich, who scored the winning goal in the World Cup final in Brazil, and, of course, the sheikhs’ long-standing dream since arriving in Manchester – signing Lionel Messi.