City & FFP | 2020/21 Accounts released | Revenues of £569.8m, £2.4m profit (p 2395)

[Jazzman]

Reading in Kicker I can see that Nike is about to conclude a deal to provide kits for Wolfsburg. It is supposedly a deal for the next 10 years, and it is said to be substantially bigger than the 50 million Euro which Dortmund is becoming for 8 years.
How much is it we are getting from Nike? Should this deal be revised soon?

 

[FanchesterCity]

Depends what you call a 'return on investment'.

If you develop a very high end car and it costs 100m to develop it, then you only produce 10 of them (sold for 1m each) then superficially, it's a loss making project.
However, by having that 'supercar', the sales in your other more mundane models are boosted, to the point where it brings in 150m, then it's paid for itself.
If you're an accountant, you'd probably question the value of the 100m loss making project, but if you're a marketing person, you'll be arguing that it's a PR coup that boosts your image.

In the same way, MCFC needn't be a profit making business (although I accept that ideally the Sheik would like it to be). The bigger factor is how people are now viewing Abu Dhabi's way of working and their business acumen. Whilst your average bunch of blokes down the pub are saying 'they've done a fantastic job with the stadium and academy', there are probably some serious business partners also discussing the same in the boardroom - e.g. 'These guys seem to get things done in a very professional manner'. That's only going to result in better business relationships and ultimately profitability in other Abu Dhabi based ventures.

Of course there's a 'return' for the Sheik. He's not bought City as a pure vanity project. It's just that his 'return' doesn't have to be very simplistic one directly from the club.

I believe City need to show continued success (trophies) though. Of course we can't win everything, but we need to be winning fairly regularly in order to keep the image up. Otherwise we're a failed project (in most people's eyes). If we're in CL every year, doing pretty decently (Quarter finals+), and winning a trophy per season (average) we'll be doing fine.

 

[SilverFox2]

We were only at -£7 million last financial year, we will be in profit this one coming. The housing investment and the rest of it will pay for itself, I suspect the Sheikh is bang on where he expected to be when he first decided on investing in Manchester and City.

City standing still or even going backwards will do him no favours, hence the CFA to secure our future.

I agree, the commercial side of the City name is assisting ADUG's profile as much as Etihad Airways (or any other sponsor for that matter).
My question does not involve going backwards but the possibility that the last 5% may be much more costly without any guarantees of eventually achieving and maintaining this in Europe.

Will the extra cost gain more commercial revenue and commercial partnerships for both City and ADUG than the current success story you mention ?
Don't get me wrong I hope they throw more and more money at the dream but they are an investment company who act for our shrewd owner not sugar daddy owners who gamble without reference to a Business Plan.

 

[FanchesterCity]

I think we've already been catapulted into the top earning clubs league, and so the sheik's 'top ups' don't need to be anywhere near what they were initially. We can now afford top class players based on our new revenues - which means we should be competitive (but not dominating). If our revenues continue to grow, then we might start to become dominant.

I think the next test for City will be to avoid complacency and keep working on a) sustaining the revenues and b) working harder still to increase them. There is also the on field challenge of being competitive and winning, which is not easy. There are some superb teams in Europe who've really got their act together on the pitch. Competing with (and winning against) them is (arguably) our biggest challenge.

 

[aguero93:20]

Reading in Kicker I can see that Nike is about to conclude a deal to provide kits for Wolfsburg. It is supposedly a deal for the next 10 years, and it is said to be substantially bigger than the 50 million Euro which Dortmund is becoming for 8 years.
How much is it we are getting from Nike? Should this deal be revised soon?

50 million over 8 years is €6.25m per season for Dortmund, we're currently getting £12m(€16.3m) per season from Nike. Over a 10 year deal our payments with Nike would total £120m (€163m). I'd be very surprised if Wolfsburg got even half of that tbh.

 

[SilverFox2]

I think we've already been catapulted into the top earning clubs league, and so the sheiks 'top ups' don't need to be anywhere near what they were initially.
We can now afford top class players based on our new revenues - which means we should be competitive (but not dominating). If our revenues continue to grow, then we might start to become dominant.

I think the next test for City will be to avoid complacency and keep working on a) sustaining the revenues and b) working harder still to increase them. There is also the on field challenge of being competitive and winning, which is not easy. There are some superb teams in Europe who've really got their act together on the pitch. Competing with (and winning against) them is (arguably) our biggest challenge.

Good points FC, coupled with the probability of a World Class manager along the line together with the promise that our Academy will start to produce part of our team of the future perhaps indicates the timeline stretches well into the future for the CL dream ?
CFG in the meantime will hopefully extend the City charisma and allow commercial opportunities for ADUG similar to the ones enjoyed in Manchester together with increasing our fanbase globally.

The Business Plan seems to be in no hurry, but can be accelerated effectively to allow for inevitable change but as the FFP rule changes showed this is merely a 'pinch'.

 

[mrtwiceaseason]

We were only at -£7 million last financial year, we will be in profit this one coming. The housing investment and the rest of it will pay for itself, I suspect the Sheikh is bang on where he expected to be when he first decided on investing in Manchester and City.

City standing still or even going backwards will do him no favours, hence the CFA to secure our future.

Daft question will the rent from the housing project be able to be counted as city income ?

 

[aguero93:20]

Daft question will the rent from the housing project be able to be counted as city income ?

Do the houses have a city crest on them? :)

Unless it's a mcfc/cfg funded housing project we won't be able to and I'm pretty sure that it was funded by ADUG.

 

[BlueAnorak]

Daft question will the rent from the housing project be able to be counted as city income ?

Any income for Manchester City earned from property would come under the FFP category of "other operating income". It would have to be local to the ground or training ground. I seem to remember that the limit is within 1.5 miles but at this time I can't confirm this.
The income would also have to raised by Manchester City OR a subsidiary, not an umbrella company.

Abu Dhabi United Group (ADUG) owns City Football Group (CFG) which owns Manchester City (MCFC). As currently structured the property is being built by ADUG - for City to benefit, the ownership would have to be transferred to MCFC - Which the boards of ADUG and CFG could do.

Of course the anti-City press would go ballistic, forgetting that other European clubs earn income in this way. Arsenal for example earn £15m from rent and Real Madrid earn €50m+ from office property around the Bernard Bowl.

 

[Centurions]

Daft question will the rent from the housing project be able to be counted as city income ?

Definitely not, I'd have thought. I only mentioned them in relation to the Sheikhs investment in Manchester rather than just MCFC (or the CFG if you will).