An in-depth look at City's finances

One thing that I have noticed during the current Premier League off-season is the number of excellent non-club specific football blogs there are out there.

In particular, Run of Play has been getting plenty of deserved praise (check out the Pro Vercelli series) but one blog that I have only recently stumbled across is Swiss Ramble, which primarily concerns itself with the finance and business of football.

I was waiting for him to turn his attention to City and this week there was finally a post up there that has an in-depth look at City's finances. Whilst there has been plenty written about this subject post-takeover, this is the first time I have seen a real look at all aspects of the clubs finances - and a very balanced one at that.

I'm not going to quote too much from it because I recommend you go over to the blog to take a look for yourself, but there were a couple of interesting areas that were raised that I wanted to touch on.

Firstly, an interesting point regarding ADUG's investment:

In any other business (and football is now surely a business), there would be no problem with investors using vast amounts of their personal wealth to fund ventures. Would anyone have said anything if the owners had spent £1 billion+ to acquire United? The investment in City, which has largely been spent on buying new players, may actually end up costing less than purchasing a ready made club.

Much has been written about the vast sums on transfer fees and wages that has/is being laid out (with some commentators pedalling the 'City are ruining football' line), but what the post highlights is that in real terms - and likely one of the main reasons for purchasing City - is that the overall outlay is not the excessive given the (relatively) small sum that they acquired the club for.

This has then allowed ADUG to perhaps spend more on transfers and wages to achieve Champions League qualification (the obvious aim) as opposed to buying a more 'ready made' club, that comes with a higher price tag, and of course, higher debts. That's you Liverpool.

Another topic of much debate is UEFA's plans to ensure clubs break even - ie, do not spend more than they are accumulating. At first glance it appears that City would fall well short in this regard given their lack of revenue generation (something being worked on of course, but still falling well short of the likes of United and other competitors).

However, there may well be an answer to this: there is a section in the new guidelines that may well allow them to pass UEFA’s break-even test with flying colours.

As a rule, revenue from non-football operations is excluded from the break-even calculation, but clause B. (k) in Annex X allows you to included revenue from “Operations based at, or in close proximity to, a club’s stadium and training facilities such as a hotel, restaurant, conference centre, business premises (for rental), health-care centre, other sports teams.”

That sounds almost exactly like the £1 billion development that City are planning for the area around Eastlands stadium. Described as a world class sports and leisure complex, it will include a training facility, luxury hotel and restaurant and should provide a very healthy revenue stream.

There are also other areas around revenue generation that it appears the club could exploit to ensure they pass UEFA's test, more of which is discussed in the article.

As I said earlier, I've only touched on a couple of points but I do recommend putting some time aside to read the whole post.

Very interesting stuff indeed.

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