Financial results

[john@staustell]

I know it's in Chinners bollox but surely the club statement requires it's own debate? My observations would be:

1) that it's nice for the owner to buy equity in advance as well (£89.6M)!!
2) that's where Chelsea suddenly got the idea from after all these years
3) the next 12 months income should shoot up
4) they dont mind carrying several years' hefty losses

Over to the financial wizzards on here!

http://www.mcfc.co.uk/News/Club-news/20 ... -announced

Manchester City today announces its financial results for the year ending 31st May 2009. This is the first period under the ownership of His Highness Sheikh Mansour bin Zayed Al Nahyan.
The financial year to May 2009 marked the beginning of a period of significant planned investment in all areas of the Club; the playing squad, the youth academy, infrastructure, website and technology applications and our people.

Not surprisingly, this substantial investment has had a significant impact on this year's financial results. This investment is also forecast to similarly impact the financial results of the next several years as the Club seeks to achieve success both on and off the field.

Turnover for the year ended 31st May 2009 increased by 6% to £87.0m (2008:£82.3m), with this increase being offset by a significant increase in operating expenses to £121.2m (2008:£83.9m) primarily driven by increased playing staff costs.

This resulted in a Net Operating Loss of £34.2m (2008:£1.6m) and a Net Loss for the Year after amortisation of player contracts and financing charges of £92.6m (2008:£32.6m).

Match day attendances were up to 42,890 from an average of 42,081 in the previous season, with ticketing revenues ahead by £1.8m mainly as a result of the extended UEFA Cup run. TV Revenues were up 12% to £48.3m mainly as a result of UEFA cup performance, offset partially by a lower league placing than in the previous year.

Revenues from other commercial activities decreased by 8% to £23.3m mainly due to a £4.5m reduction in events revenues, primarily as a result of having no events based activities in the 08/09 season, whereas in the prior year the Stadium held the UEFA Cup Final as well as music concerts and a major boxing event.

This decrease was offset by significantly improved performances in the Club's core commercial areas of Retail and Partnerships.

Costs relating to amortisation of player contracts increased in the year, rising to £39.4m from £25.4m in the previous year and reflecting again the costs of building a new young playing squad. Interest payable and similar charges increased significantly as a result of the increased level of shareholder loans made to the business during the year.

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Commenting on the financial performance and balance sheet restructure, Chief Financial and Administration Officer Graham Wallace said:

"The financial results reflect a period of rapid change at the Club, the result of long-term planning and investment by the Board and our owners, to create a sustainable business in the future. We have always said that this transformation will take a number of years and these figures reflect that.

“The owners' decision to convert debt to equity is in line with their previously-stated financial strategy and is fantastic news for supporters of Manchester City, whose Club is now on a secure financial foundation that gives a tremendous platform to build from in future years."

[Chinners]

I'm disappointed. I honestly believed that the club were catching up with Man U on all fronts. To be lagging behind them so much on the finance debt side is a worry.

[john@staustell]

I'm disappointed. I honestly believed that the club were catching up with Man U on all fronts. To be lagging behind them so much on the finance debt side is a worry.

Dont worry, a few more transfer windows and we'll be up around £700M!

[Futbol]

How long before some tit at the `Mirror' makes up a story linking the Glazer's with 'a deal to buy City'.

[avoidconfusion]

I'm disappointed. I honestly believed that the club were catching up with Man U on all fronts. To be lagging behind them so much on the finance debt side is a worry.

Hahaha for a second I was like "what the fook is he on about?" .... got me there!

[lythamblue]

So what's new here then?

The Glazers have put the Manures in the shit financially and our Sheik has stonked up a load of personal cash to make us debt free and financially secure. We already knew that.

Does all this mean that we will now have a 2 goal start when we play our CC semi final againt them this month ..... and even if they still beat us we will be the ones going to Wembley because we have more financial fluidity??

I hope so ..... but I doubt it.

[MaineRoadMemories]

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

I was unware we were "doing a Roman" with Shareholder loans as it was described in the media as gifts from Sheikh Mansour. So technically we haven't been debt free the last 18 months until today :-)

[lythamblue]

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

I was unware we were "doing a Roman" with Shareholder loans as it was described in the media as gifts from Sheikh Mansour. So technically we haven't been debt free the last 18 months until today :-)

This was always the case and we were indebted to the Sheik who would not pull the plug as opposed to Banks who would.

Technically, you can't just make a 'gift' to an organisation unless it is a charity. This is one of the few ways that you can legally put money into a business. Either you loan it (knowing that it is unlikely that they will ever pay you back) or convert it into shares (which ultimately dilutes value of the existing shares). Either way, as the owner you lose initially ..... so effectively it is a 'gift'.

[Alex Sapphire]

So compared with the Scum it looks like this?
Scum:
2009 Revenue: c260mill
Interest on Debt: 80 (if they pay less like last year, the debt goes up)
Tranaldo Income: 80 (money they won't get every year, plus a reduction in their "assets")
"real" Income: 100 mill
This in the year when they won 2 of the 4 competitions they entered were 2nd in a third and lost in the semis of the FA cup, so hard to see how they could earn more from games.

City:
Income: c80
Interest: 0
Assets: on the up quickly
...with potential to earn more from Europe, sponsorship AND merchandising.

Not far away are we?

or am I oversimplifying it?

[King Kev]

Sorry if this is a stupid question, but does this

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Mean that we are not in debt to Sheikh Mansour?

[lets all have a disco]

To be honest this a fraction to him,peanuts.

[Goaters 103]

From my understanding it means that Sheikh Mansour has not loaded all the debt onto the club, a la Steptoe and Sons (Glazers), but rather by purchasing more equity in the form of shares this allows the Sheikh to invest the money as a gift thus meaning no debt outstanding.

[john@staustell]

Sorry if this is a stupid question, but does this

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Mean that we are not in debt to Sheikh Mansour?

At the risk of being contradicted by one of our finance chappies, it seems that he has just put in money in exchange for shares. each time he does that the shares will be devalued, but that is irrelevant and can go on indefinitely. It looks like in May he put in an extra 89M as a sort of advance capital on our summer purchases and operating costs for this season. So I would think our only debt to him at this current moment is what we have spent above that. But I'm sure he will put in another load in May!

[Wooders]

Sorry if this is a stupid question, but does this

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Mean that we are not in debt to Sheikh Mansour?

from what I understand - the money he has put in is added to the value of the club rather than the club paying it back directly to sheik mansour in a loan format

for example if you buy a car for 500 quid, then do 500 quids worth of additional work to it - its your car but you can still sell it for 500 quid rather than saying that the car owes you 500 quid for the additional work done if you see what I mean

[King Kev]

They have just said on SkySports News that we are debt-free.

Nice.

[ant london]

Not far away are we?

or am I oversimplifying it?

One one hand, no you are not oversimplifying it too much. If you were valuing the clubs you would look at their sustainable/routine income levels and that would certainly mean that you would eliminate the exceptional item which is the C Ron transfer fee.

HOWEVER, what you have excluded from the two calculations is the amortisation of player transfer costs (and salaries).

We have spent a sh*tload more than United have in the last couple of our seasons so the write off costs of our player recruitment fees will be HUGE

And I would imagine that our wage bill is probably larger than (or certainly not much less than) theirs at the moment

BUT what the recent figures won't factor in (I don't think but I haven't looked at the accounts but I think these are the financial statements for the year to 31 May 2009....so do not include arrangements signed/taking effect subsequently) is the incremental revenues we have secured by virtue of improved sponsorship arrangements with the likes of Etihad and Ferrostaal (and maybe even Umbro). These are numbers that will counteract the amounts I mention above by boosting our top line. Sure we are still a good way behind United in terms of revenues but they have long had more lucrative sponsorship deals with the likes of AIG, Nike, Audi etc as well as the Champions League cash.

We now have the more heavyweight commercial partnerships, we lack the financing burden and we are not far off parity (even discounting any further injections from the Sheikh). If you push in CL cash to our business model then we certainly look more healthy than them on a financial basis.

[john@staustell]

This financial expert now on SSN says that it is extremely stable and sound, and the way to go (same with Chelsea). Top class order. They're not in it for profit, more for the fun and 'the buzz'. Abu Dhabi is the soundest country in the gulf financially. Both Mansoor and Abramovich are very, very sensible and know how it all works. The old chestnut about 'what happens when they get fed up and pull out?' is dismissed. Because no-one will buy it with the huge capital now necessary.

Please compare all this with the mob over the road - in it for profit and very, very unstable. Going to the markets and supporters for bonds, like Valencia! Huge, huge debts and the only way is down from the top. JP Morgan etc have told them to get their house in order.

Fucked basically.

Excellent.

[Socrates]

Sorry if this is a stupid question, but does this

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Mean that we are not in debt to Sheikh Mansour?

At the risk of being contradicted by one of our finance chappies, it seems that he has just put in money in exchange for shares. each time he does that the shares will be devalued, but that is irrelevant and can go on indefinitely. It looks like in May he put in an extra 89M as a sort of advance capital on our summer purchases and operating costs for this season. So I would think our only debt to him at this current moment is what we have spent above that. But I'm sure he will put in another load in May!

Yes but the money he is spending is increasing the value of the company anyway, just means that it is funded through equity not debt. It's nice to have confirmation of what we knew (or thought we knew) and also commend the club on their openness on these matters, way beyond their obligations as a private company.

It does however highlight the huge gulf between income and expenditure,one which will not be narrowing much either as the new summer contracts will pretty much cancel out the improvements in turnover from new commercial deals though there will be improved TV money and expected improvements in prize money as well. Highlights the need to have Champions League money ASAP if we are to have any hope of retaining our UEFA accreditation once the new rules come in.

[Ted Hughes]

Sorry if this is a stupid question, but does this

Manchester City also confirmed today that subsequent to the end of the financial year, it has restructured its Balance Sheet with owner Sheikh Mansour converting all of his existing £304.9m shareholder loans made to the Club into equity. Sheikh Mansour has also purchased further shares to a value of £89.6m as a measure of his long term commitment to the Club.

Mean that we are not in debt to Sheikh Mansour?

At the risk of being contradicted by one of our finance chappies, it seems that he has just put in money in exchange for shares. each time he does that the shares will be devalued, but that is irrelevant and can go on indefinitely. It looks like in May he put in an extra 89M as a sort of advance capital on our summer purchases and operating costs for this season. So I would think our only debt to him at this current moment is what we have spent above that. But I'm sure he will put in another load in May!

Yes but the money he is spending is increasing the value of the company anyway, just means that it is funded through equity not debt. It's nice to have confirmation of what we knew (or thought we knew) and also commend the club on their openness on these matters, way beyond their obligations as a private company.

It does however highlight the huge gulf between income and expenditure,one which will not be narrowing much either as the new summer contracts will pretty much cancel out the improvements in turnover from new commercial deals though there will be improved TV money and expected improvements in prize money as well. Highlights the need to have Champions League money ASAP if we are to have any hope of retaining our UEFA accreditation once the new rules come in.

I can't see us getting anywhere near that for a decade as we'll probably spend a fortune in the summer & would need about 3 times as many supporters to buy shirts etc just to generate the wage bill. I recon they're just going to pay lip service to the regulations to allow Platini to save face but continue to invest & see what he does to stop them. Will have already taken legal advice.

[Socrates]

I can't see us getting anywhere near that for a decade as we'll probably spend a fortune in the summer & would need about 3 times as many supporters to buy shirts etc just to generate the wage bill. I recon they're just going to pay lip service to the regulations to allow Platini to save face but continue to invest & see what he does to stop them. Will have already taken legal advice.

Which will have told them there is nothing they can do if it comes in, which is why they spent so much last summer, why they are redirected half a billion pounds in spending to the Academy and why they sacked Hughes when they did.