Manchester City's owners have injected another £80m into the club, taking Sheikh Mansour bin Zayed al-Nahyan's investment since buying City in 2009 to more than £573m.
According to documents released to Companies House last Monday, Mansour purchased 37,547,169 new shares in the Eastlands club on 30 September, each costing him £2.12. It amounted to £79.6m of fresh investment. The sum is small change for the Abu Dhabi billionaire, but it raises fresh questions about City's capacity to meet new regulations coming in to force from next season.
Uefa's financial fair-play rules require that no club should make an aggregate loss of more than €45m (about £39m) over the three seasons from 2011-12, or it will face being excluded from European competition. City are taking steps now apparently in an attempt not to fall foul.
"Clearly our intention is to comply," says Garry Cook, the City chief executive, in an interview with the Guardian. "Our two-year plan was to take a budget and build a competency to compete at the highest level, not forgetting the need for succession planning in every position. We are pleased with how that worked, and will not be signing players to the same level of intensity in the next transfer windows. Financial fair play is on our conscience, we talk about it at every board meeting, and it's part of our long-term plan."
Those who believe City will escape the rule's effect by having spent extravagantly before it comes in to force misunderstand simple accounting mechanisms. The exact dates when cash changes hands on transfer fees are not relevant; instead there is a balance-sheet instrument known as amortisation by which the total value of the fee is written down according to the length of the contract, causing a natural lag in the financial impact of transfer activity.
When David Silva joined City for £26m on a four-year contract in June, it added £6.5m a year to City's amortisation charge. By the end of last season the total charge had already reached £71m — almost 57% of the club's £125m turnover. Between them the additions of Jérôme Boateng, Yaya Touré, Mario Balotelli and James Milner added close to £17m, which the departure of Robinho and his £8.125m a year in amortisation charges could only partially offset.
Unless more of City's expensively acquired superstars join Robinho in going through the exit door, it is safe to say that their 2011-12 amortisation charge will be close to £90m. Wages, the drain demanding so much cash support from Mansour, further compound City's difficulties.
That bill reached £133.3m last season, with Touré alone having added another £10m in the meantime. Given the summer arrivals, even conservative estimates would assume the club's basic wage bill is now beyond £150m.
The 2009-10 season at Eastlands brought no trophies, or even great success in the Premier League, and this meant no significant bonuses were payable. But if City transform their early-season form into something more tangible this term, it is more than possible their wage bill will hit more than £165m by the time the next accounts are released.
That would mean expenditure and accounting fees on players of £250m a year, against total incomes last year of £125m. Even the £25m that Champions League participation might yield would not dent that significantly, and City are likely to face a £100m-a-year deficit come 2011-12.
If the club remain that far in the red for even that season alone, it would seriously threaten future participation in Europe unless they can transform their current player-related losses into a £30m-a-year profit from football operations. That means raising the current £125m Eastlands turnover to the same level as Manchester United's has been in recent seasons — £280m and more — within two years.
Sheikh Mansour's billions cannot help here either – Uefa has placed restrictions on what "related companies" — such as the Abu Dhabi-owned Etihad airlines, whose name appears on City's shirts — may offer in sponsorships to "market rates".
The realities of the financial situation at Eastlands appear to have been overlooked by their rivals across Manchester. The Old Trafford hierarchy's decision to capitulate and commit at least £9m a year to Wayne Rooney upon renewing the England striker's contract last week had all the hallmarks of the fear that their best player could soon be turning out in a sky-blue shirt, as Sir Alex Ferguson's rather strange soliloquy about cows in fields suggested.United seemed to be fixating on concerns about the apparently close relationship between Brian Marwood, Manchester City's chief football administration officer, and Rooney's agent, Paul Stretford.
Yet as City attempt to demonstrate to Uefa that they will ultimately comply with the financial fair-play rules, they could never have gone through with an acquisition that would comfortably have amounted to £100m in transfer fees and wages.
Rooney's rumoured £250,000-a-week wages at City would have amounted to a £62.5m liability over five years. And United would surely not have been persuaded to relinquish a player with even only 12 months on his contract to their biggest and richest rivals for less than half the £80m for which Cristiano Ronaldo was sold to Real Madrid last year. In the new regulatory environment, these sums were beyond even City's reach.
So now United must find more than £4.5m a year just to stand still. Their chief executive, David Gill, says United have £150m in the bank, but projections by analysts at the club's banker, JP Morgan, suggest they must retain £70m in a restricted-cash account in line with the terms of their bond borrowings.
Matt Scott in The Guardian
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