Accounts are out for 2017/18 - revenues over £500m, profit of £10.4m

[Prestwich_Blue]

I enjoyed the pod as always PB. Nice one.
I presume you've seen SwissRamble's latest take on the new Champions League distribution for 18/19. 5 wins and a loss in the group stages and a quarter final exit leads to us earning €96.2million distribution. He is basing his estimate assuming Liverpool did as well as last year. If not and we went on to win it we are looking at another €27million prize money + potential €4.5 million for Super Cup + increase in the TV Pool. Literally could be heading for €130million which is huge.

I'd seen it in passing but hadn't read it properly. Based on that I reckon we should show a small profit this year, rather than a loss but in 2020, with the Puma deal kicking in and UEFA revenue that was higher than I'd originally estimated, I reckon we could be breaking or at least pushing the £600m barrier.

 

[City Raider]

Anyone know what percentage of revenue is from related parties?

 

[YaYa's Left Peg]

Anyone know what percentage of revenue is from related parties?

100%. My Scouse mate told me.

 

[richards30]

I'd seen it in passing but hadn't read it properly. Based on that I reckon we should show a small profit this year, rather than a loss but in 2020, with the Puma deal kicking in and UEFA revenue that was higher than I'd originally estimated, I reckon we could be breaking or at least pushing the £600m barrier.

Any idea why we would only post a small profit mate? Revenue huge, extra sponsorship etc but the model doesn’t make big profits?

 

[Centurions]

Anyone know what percentage of revenue is from related parties?

I think the Etihad deal is now at £55m a year, which I'd guess is something like £40m for the shirt, £10m for the stadium & £5m for the Campus naming rights. None of those deals are out of line with the market and even if Etihad decided not to sponsor us, someone else would step up for the same sort of money. In fact there was a study by Duff & Phelps that reckoned we could potentially get nearly £20m for stadium naming rights in theory. https://www.duffandphelps.com/about...premier-league-stadium-naming-rights-increase

Then, as well as Etihad, we've 3 other Abu Dhabi-based sponsors out of the other 19 Global & Regional partners we have. I'd be staggered if these three paid us more than £15m a year in total, meaning £70m a year maximum is coming from Abu Dhabi (out of total revenue of £500m) £50m of which we would easily replace. Doing the maths on that means that we're getting maybe £20m a year that we might not get if we weren't owned by ADUG.

But as the whole point of ADUG owning us is to promote the country then it's hardly surprising that we're being sponsored by Abu Dhabi countries.

If PB's figures are in the ballpark (and I'm certainly not disputing them) then it's a maximum of 14% although the term "related party" would be open to interpretation anyway.

 

[Jalfraag]

If PB's figures are in the ballpark (and I'm certainly not disputing them) then it's a maximum of 14% although the term "related party" would be open to interpretation anyway.

None of them are related parties according to our auditors and UEFA.

 

[Marvin]

Any idea why we would only post a small profit mate? Revenue huge, extra sponsorship etc but the model doesn’t make big profits?

Because we have operating expenses of £525m - the legacy of expensive team building.

 

[SilverFox2]

What's the point making high profits? It's not like our owner needs to prop up failing strip malls. Investing and growing the value of an asset is the better long-term strategy.

From just City perspective we are still in investment phase courtesy of our owners including the Chinese.

 

[OB1]

Because we have operating expenses of £525m - the legacy of expensive team building.

Being picky, I wouldn't call it a legacy; it is the ongoing product of having an expensively assembled, well paid squad and support staff.

Half that £525m is wages and £134m is amortisation of player registrations (i.e. writing transfer fees and associated costs over the lives of players' contracts).

Also, there is no need to make large profits. The owner doesn't need dividends: his investment is growing in value but he does not need to extract cash from the business (technically speaking the club is so far away from being able to pay dividends it's not worth thinking about).

To be as competitive as possible, the club is likely to spend most of what it earns for the foreseeable. Growth in revenue will probably be used to buy and pay even better players. If the club's academy started to provide most of the first team squad, huge profits could accrue if those players keep the team at the top but to manage that would be almost unbelievable.

I wouldn't expect to see anything more than modest profits designed to keep UEFA happy but also enough to cover operating expenses (as PB refers to earlier) i.e. enough for the club to be self-sustaining.

 

[cleavers]

Being picky, I wouldn't call it a legacy; it is the ongoing product of having an expensively assembled, well paid squad and support staff.

Half that £525m is wages and £134m is amortisation of player registrations (i.e. writing transfer fees and associated costs over the lives of players' contracts).

Also, there is no need to make large profits. The owner doesn't need dividends: his investment is growing in value but he does not need to extract cash from the business (technically speaking the club is so far away from being able to pay dividends it's not worth thinking about).

To be as competitive as possible, the club is likely to spend most of what it earns for the foreseeable. Growth in revenue will probably be used to buy and pay even better players. If the club's academy started to provide most of the first team squad, huge profits could accrue if those players keep the team at the top but to manage that would be almost unbelievable.

I wouldn't expect to see anything more than modest profits designed to keep UEFA happy but also enough to cover operating expenses (as PB refers to earlier) i.e. enough for the club to be self-sustaining.

Good post, I don't think some really grasp that most of te shares are owned by 1 person, so there is no real need to make profits, I suspect he'd be happy with £0.01 profit. The key as you point out is to get better and better players for the squad, and watching some of the football yesterday (its hard to see who can be improved on), we're doing exactly that, and players of a certain type too, people who will be club players, that have a work ethic that is "team" aligned rather than ego built.