We have really got to them

[Didsbury Dave]

Prior to buying, City Sheikh Mansour name was known to a few thousand people outside of the UAE, today even my postman here in Norwich has heard of him "Oh, yes, he's the guy who owns Manchester City"....

What price on that?

Probably about a billion and counting.

Great post.

 

[give & go]

Working down burnham on sea this week , went to wether spoons for breakfast the other day.
Typical rag in there shirt on , getting coffees , as he walked past our table had to give him the full " aguerooooooo" twat nearly dropped his coffees

 

[salfordpaul]

Utd is a cash cow for the Glazers, the model they operate is to invest the minimum amount of money required to maintain the club at optimum performance, while squeezing as much money out to service their debts, a model all companies aspire to, though profit ideally would go to investors rather than debt servicing.

Why spend more money than you need to be the best? Well, suddenly to be the best costs more money, courtesy of City.

This fight between City and Utd is not just a conflict between two teams or even two managers, it is first a contest between Sheikh Mansour and the Glazers. In a straight fight it is no contest, the Sheikh can outspend the Glazers without breaking a sweat, but Utd's vast fan base and the immense income that flows from it, coupled with "Financial Fair Play", hamper City big time.

The story I'd love to know is not the infamous "trajectory of results" that saw Hughes go, but the trajectory of income. I know a little about this, with the emphasis on "little" but I'd love to know what's going on behind Khaldoons icy cool exterior, what is the real plan? On the surface it is almost impossible to imagine a business model that can control our current deficit. There is no doubt that City are doing all the things one would expect of a club trying to nurture a growing worldwide fan base and the income that will eventually flow from it, but questions remain.

Put simply, what is the "Critical Path Analysis"?..... What are the tasks which must be completed on time for the whole project to be completed on time, what is the minimum length of time needed to complete the project, and on a more basic level, when you strip out all the rhetoric, what is the project? Where will we be in five years time? What targets have we set ourselves for income generation? How are we going to get our deficit down? And if we can't get it down will it matter? Given that FFP is untested and has no "validity", as far as corporate governance is concerned.

I search high and low amongst the sea of bollocks about City to find this stuff out, but answers there are none. Truth is we know more about the Chinese space programme than we do about the "City Project".

That's actually a great post and asks many questions which are essentially unanswered. Everyone's become so focussed on fudging through FFP that noone's paying much attention to the real issues: what do ADUG want from Manchester City?

There's no way, of course, they have invested for profit. Only an idiot invests in football for profit - there are much easier ways to make money. I think, like many, they are investing the money to raise the profile of Abu Dhabi around the world. To make them look like brilliant people to do business with. And there can be no doubt that they're getting payback on that already.

We've heard it before as well, it's something of a "pet project" for the family, too. I bet the Glazers fucking hate ADUG.

The exciting news is that if they fall out of the top 3/4 for a year or two, they are in deep shit.

You're right, the question is what do ADUG want from Manchester City? And you're right again when you say a quick return on their investment is not the answer.
You're also right when you say much of the rationale stems from reshaping the image of Abu Dhabi, changing peoples perceptions through association, in this case through association with a successful and exciting Premiership football club with a global footprint. Some might have difficulty grasping this, but it is akin to self made men from humble beginnings trying to buy their way in to the upper classes. I've worked for many years in the oil rich Middle East, they got super wealthy, super fast, but they have a massive inferiority complex.

Truth be told beyond the glittering skyscrapers, fast cars, gleaming shopping malls, they've got bugger all. This might sound trite, but when you've got everything, what you want is class, prestige, history, the soft power that comes from who you are, not what you have, and to get it you need to redefine who you are to the world.

A few years back I read an article about Thaksin's family at a City game, they were simply in awe of the atmosphere and spectacle of a particularly great day at Eastlands, those moments we as football fans experience something infinitely greater than the sum of its parts (the last five minutes against QPR being the finest example) the emotions, the drama, the villains and heroes, the every changing plot line that the beautiful game produces and the finest example of that heady brew is in the English Premier League. When you see football in those terms, what price a slice?

I have no doubt that ADUG has in its portfolio some nice little earners, we are not amongst them, I doubt, however, that any other ADUG investment gives more pleasure to its owners than City.

Prior to buying City, Sheikh Mansour's name was known to a few thousand people outside of the UAE, today even my postman here in Norwich has heard of him "Oh, yes, he's the guy who owns Manchester City"....

What price on that?

that really is a great post fumble !

 

[The perfect fumble]

Utd is a cash cow for the Glazers, the model they operate is to invest the minimum amount of money required to maintain the club at optimum performance, while squeezing as much money out to service their debts, a model all companies aspire to, though profit ideally would go to investors rather than debt servicing.

Why spend more money than you need to be the best? Well, suddenly to be the best costs more money, courtesy of City.

This fight between City and Utd is not just a conflict between two teams or even two managers, it is first a contest between Sheikh Mansour and the Glazers. In a straight fight it is no contest, the Sheikh can outspend the Glazers without breaking a sweat, but Utd's vast fan base and the immense income that flows from it, coupled with "Financial Fair Play", hamper City big time.

The story I'd love to know is not the infamous "trajectory of results" that saw Hughes go, but the trajectory of income. I know a little about this, with the emphasis on "little" but I'd love to know what's going on behind Khaldoons icy cool exterior, what is the real plan? On the surface it is almost impossible to imagine a business model that can control our current deficit. There is no doubt that City are doing all the things one would expect of a club trying to nurture a growing worldwide fan base and the income that will eventually flow from it, but questions remain.

Put simply, what is the "Critical Path Analysis"?..... What are the tasks which must be completed on time for the whole project to be completed on time, what is the minimum length of time needed to complete the project, and on a more basic level, when you strip out all the rhetoric, what is the project? Where will we be in five years time? What targets have we set ourselves for income generation? How are we going to get our deficit down? And if we can't get it down will it matter? Given that FFP is untested and has no "validity", as far as corporate governance is concerned.

I search high and low amongst the sea of bollocks about City to find this stuff out, but answers there are none. Truth is we know more about the Chinese space programme than we do about the "City Project".

Interesting post which is worthy of comment.

The Glazers' business model is a classic LBO (leveraged buy out) which involves minimal cash investment and taking on huge debt, secured on the assets of the target company. The aim is usually to strip out costs and generate sufficient cashflow to service the debt, then sell it on or float it, usually with the debt mostly intact. This happened with the deal announed today for Walgreen to buy Boots. The original investors multiply their original stake but Walgreen take on the debt.

The problem the Glazers have is that you can't aggressively reduce costs at a football club (unless you're happy for the club to fail on the field) so their model involved increasing revenue. They believed that the rags were under-exploited commercially and that's proved to be the case. They've squeezed fans via ticket prices, to the point where they just about sell out games. Economically, that's the optimum pricing strategy where demand just about equals supply. They generate something like £4m a game compared to our £1m. Even allowing for the different capacities that's very good business. They've also hugely increased commercial revenues but I think you overestimate the impact that foreign fans have directly financially. I doubt it's that significant. I do agree that their global popularity and brand recognition is a big factor in their commercial revenue but I doubt fans contribute to that directly. They also didn't count on the rags' tight wage structure getting ripped apart by Rooney.

We've gone the opposite route where the owner has invested cash to build up an unsuccessful business. That takes time of course but our route to financial success is fairly clear I think.

Step 1 was to achieve top 4 and CL qualification. CL revenues are very significant and 8 or 9 games in Europe can bring in the same revenue as 38 games in the domestic season. We've achieved that.

Step 2 was to win the title. This has two benefits in that it increases our global profile and qualifying for the CL as champions increases our share of the substantial market pool. We've now achieved that.

Step 3 (and the next one to tick off) is to do well in the CL. Not necessarily winning it but getting to at least the last 8 regularly and preferably beyond that. The further we go, the more money we get.

Step 4 is to convert the higher profile into commercial revenue by attracting more and better sponsors and increasing our premium seating/hospitality offering. There is potentially an awful lot of money in that latter approach and the former is now showing results, with the Etihad deal, the new Nike kit deal and other significant deals apparently in the pipepline. Being owned by ADUG helps enormously as it's now understood that a commercial arrangment with City is a key requirement to do significant business in Abu Dhabi.

So how does that translate into money? Well it's generally reckoned that with the CL revenue and Etihad deal leading the way, we'll report something like a 50% revenue increase for the financial year just ended, to about £220m. This will still leave us with a loss around the £100m level (possibly a little less). For the current year, assuming we do better in the CL and with the Nike deal in place, plus others to be announced, we should be looking at around £275m revenue and a small loss (around £20m?).

The following year (2013/14) the new TV deal comes in and I'd expect a revenue figure of something like £330m. More importantly, we should be well in profit and self-sustaining.

Great post, thanks for this, best analysis I've read. So good in fact I'm saving it and memorising it, though I'll have to condense much of it for when I get into heated conversation with drunken Rags, something along the lines of....... "We're rich, your poor, fuck off" !!

 

[Wiggum22]

Amazingly cocksure posts in here !

 

[Prestwich_Blue]

Amazingly cocksure posts in here !

Cocksure? I've been analysing and commenting on City's finances for a few years and was saying we couldn't manage our debts when the CEO was saying we could. I was right about that. I was telling people that Shinawatra was taking money out not putting it in and I was right about that too.

We turned over £153m last year and Etihad & CL alone will add another £60m to that probably. Nike and the new PL TV deal will add another £45-50m the year after. Do the math (as the Yanks say).

And while I'm not as expert on your team's finances as someone like Andy Green (andersred) again I've been taking an interest in them for a few years. I read the Bond prospectus from cover to cover. The simple fact is that money that should be going on players and players' wages is going to pay the bondholders and the Glazers. Your debt is costing £1.7m a weeks which is the equivalent of ten Wayne Rooney's or Yaya Toure's. These are facts. The cracks in your team are already beginning to show and there is simply no way anyone but Ferguson could have got you to where you finished last season. How much longer has he got? One more season I reckon?

The Glazers have done an exceptional job increasing the club's revenues to the level they have, in the same way that Ferguson has done an exceptional job on the field. But the bond prospectus has some interesting clauses and one is that you admit you couldn't survive more than two seasons out of the CL. And if you do spend two seasons out of the CL then the bond-holders can demand early repayment of the £500m they put in.

 

[Slicker than Sommeil]

Amazingly cocksure posts in here !

Cocksure? I've been analysing and commenting on City's finances for a few years and was saying we couldn't manage our debts when the CEO was saying we could. I was right about that. I was telling people that Shinawatra was taking money out not putting it in and I was right about that too.

We turned over £153m last year and Etihad & CL alone will add another £60m to that probably. Nike and the new PL TV deal will add another £45-50m the year after. Do the math (as the Yanks say).

And while I'm not as expert on your team's finances as someone like Andy Green (andersred) again I've been taking an interest in them for a few years. I read the Bond prospectus from cover to cover. The simple fact is that money that should be going on players and players' wages is going to pay the bondholders and the Glazers. Your debt is costing £1.7m a weeks which is the equivalent of ten Wayne Rooney's or Yaya Toure's. These are facts. The cracks in your team are already beginning to show and there is simply no way anyone but Ferguson could have got you to where you finished last season. How much longer has he got? One more season I reckon?

The Glazers have done an exceptional job increasing the club's revenues to the level they have, in the same way that Ferguson has done an exceptional job on the field. But the bond prospectus has some interesting clauses and one is that you admit you couldn't survive more than two seasons out of the CL. And if you do spend two seasons out of the CL then the bond-holders can demand early repayment of the £500m they put in.

Essentially, Tick tock mother fucker.

 

[VOOMER]

Amazingly cocksure posts in here !

Cocksure? I've been analysing and commenting on City's finances for a few years and was saying we couldn't manage our debts when the CEO was saying we could. I was right about that. I was telling people that Shinawatra was taking money out not putting it in and I was right about that too.

We turned over £153m last year and Etihad & CL alone will add another £60m to that probably. Nike and the new PL TV deal will add another £45-50m the year after. Do the math (as the Yanks say).

And while I'm not as expert on your team's finances as someone like Andy Green (andersred) again I've been taking an interest in them for a few years. I read the Bond prospectus from cover to cover. The simple fact is that money that should be going on players and players' wages is going to pay the bondholders and the Glazers. Your debt is costing £1.7m a weeks which is the equivalent of ten Wayne Rooney's or Yaya Toure's. These are facts. The cracks in your team are already beginning to show and there is simply no way anyone but Ferguson could have got you to where you finished last season. How much longer has he got? One more season I reckon?

The Glazers have done an exceptional job increasing the club's revenues to the level they have, in the same way that Ferguson has done an exceptional job on the field. But the bond prospectus has some interesting clauses and one is that you admit you couldn't survive more than two seasons out of the CL. And if you do spend two seasons out of the CL then the bond-holders can demand early repayment of the £500m they put in.

PB, at times, your most are worthy of publication, excellent piece.

 

[samharris]

Utd is a cash cow for the Glazers, the model they operate is to invest the minimum amount of money required to maintain the club at optimum performance, while squeezing as much money out to service their debts, a model all companies aspire to, though profit ideally would go to investors rather than debt servicing.

Why spend more money than you need to be the best? Well, suddenly to be the best costs more money, courtesy of City.

This fight between City and Utd is not just a conflict between two teams or even two managers, it is first a contest between Sheikh Mansour and the Glazers. In a straight fight it is no contest, the Sheikh can outspend the Glazers without breaking a sweat, but Utd's vast fan base and the immense income that flows from it, coupled with "Financial Fair Play", hamper City big time.

The story I'd love to know is not the infamous "trajectory of results" that saw Hughes go, but the trajectory of income. I know a little about this, with the emphasis on "little" but I'd love to know what's going on behind Khaldoons icy cool exterior, what is the real plan? On the surface it is almost impossible to imagine a business model that can control our current deficit. There is no doubt that City are doing all the things one would expect of a club trying to nurture a growing worldwide fan base and the income that will eventually flow from it, but questions remain.

Put simply, what is the "Critical Path Analysis"?..... What are the tasks which must be completed on time for the whole project to be completed on time, what is the minimum length of time needed to complete the project, and on a more basic level, when you strip out all the rhetoric, what is the project? Where will we be in five years time? What targets have we set ourselves for income generation? How are we going to get our deficit down? And if we can't get it down will it matter? Given that FFP is untested and has no "validity", as far as corporate governance is concerned.

I search high and low amongst the sea of bollocks about City to find this stuff out, but answers there are none. Truth is we know more about the Chinese space programme than we do about the "City Project".

Interesting post which is worthy of comment.

The Glazers' business model is a classic LBO (leveraged buy out) which involves minimal cash investment and taking on huge debt, secured on the assets of the target company. The aim is usually to strip out costs and generate sufficient cashflow to service the debt, then sell it on or float it, usually with the debt mostly intact. This happened with the deal announed today for Walgreen to buy Boots. The original investors multiply their original stake but Walgreen take on the debt.

The problem the Glazers have is that you can't aggressively reduce costs at a football club (unless you're happy for the club to fail on the field) so their model involved increasing revenue. They believed that the rags were under-exploited commercially and that's proved to be the case. They've squeezed fans via ticket prices, to the point where they just about sell out games. Economically, that's the optimum pricing strategy where demand just about equals supply. They generate something like £4m a game compared to our £1m. Even allowing for the different capacities that's very good business. They've also hugely increased commercial revenues but I think you overestimate the impact that foreign fans have directly financially. I doubt it's that significant. I do agree that their global popularity and brand recognition is a big factor in their commercial revenue but I doubt fans contribute to that directly. They also didn't count on the rags' tight wage structure getting ripped apart by Rooney.

We've gone the opposite route where the owner has invested cash to build up an unsuccessful business. That takes time of course but our route to financial success is fairly clear I think.

Step 1 was to achieve top 4 and CL qualification. CL revenues are very significant and 8 or 9 games in Europe can bring in the same revenue as 38 games in the domestic season. We've achieved that.

Step 2 was to win the title. This has two benefits in that it increases our global profile and qualifying for the CL as champions increases our share of the substantial market pool. We've now achieved that.

Step 3 (and the next one to tick off) is to do well in the CL. Not necessarily winning it but getting to at least the last 8 regularly and preferably beyond that. The further we go, the more money we get.

Step 4 is to convert the higher profile into commercial revenue by attracting more and better sponsors and increasing our premium seating/hospitality offering. There is potentially an awful lot of money in that latter approach and the former is now showing results, with the Etihad deal, the new Nike kit deal and other significant deals apparently in the pipepline. Being owned by ADUG helps enormously as it's now understood that a commercial arrangment with City is a key requirement to do significant business in Abu Dhabi.

So how does that translate into money? Well it's generally reckoned that with the CL revenue and Etihad deal leading the way, we'll report something like a 50% revenue increase for the financial year just ended, to about £220m. This will still leave us with a loss around the £100m level (possibly a little less). For the current year, assuming we do better in the CL and with the Nike deal in place, plus others to be announced, we should be looking at around £275m revenue and a small loss (around £20m?).

The following year (2013/14) the new TV deal comes in and I'd expect a revenue figure of something like £330m. More importantly, we should be well in profit and self-sustaining.

Great post, thanks for this, best analysis I've read. So good in fact I'm saving it and memorising it, though I'll have to condense much of it for when I get into heated conversation with drunken Rags, something along the lines of....... "We're rich, your poor, fuck off" !!

"We're rich, your poor, fuck off"

That about sums it up tbh.

 

[Rammyblues]

What superb posts up there. Thanks PB as always your insight is most welcome.

Wasn't the project to be in 5 phases over twenty years, but we are ahead already.

I don't know whether this has been posted in its own thread and it probably should but here is Swiss Rambles take on the new TV deal, i suspect PB has already read it digested it and number crunched it but if he hasn't maybe he will. Looks like a bumper pay day.

<a class="postlink" href="http://swissramble.blogspot.co.uk/" onclick="window.open(this.href);return false;">http://swissramble.blogspot.co.uk/</a>