Post by Macmoish on Oct 26, 2010 6:24:26 GMT
Digger/The Guardian - Matt Scott
Sheikh Mansour takes spending at Manchester City past half-billion mark• Owner injects another £80m into Eastlands club
• Funding raises fears over City's ability to meet Uefa rules
Manchester City's owners have injected another £80m into the club, taking Sheikh Mansour bin Zayed al-Nahyan's investment since buying City in 2009 to more than £573m.
According to documents released to Companies House last Monday, Mansour purchased 37,547,169 new shares in the Eastlands club on 30 September, each costing him £2.12. It amounted to £79.6m of fresh investment. The sum is small change for the Abu Dhabi billionaire, but it raises fresh questions about City's capacity to meet new regulations coming in to force from next season.
Uefa's financial fair-play rules require that no club should make an aggregate loss of more than €45m (about £39m) over the three seasons from 2011-12, or it will face being excluded from European competition. City are taking steps now apparently in an attempt not to fall foul.
"Clearly our intention is to comply," says Garry Cook, the City chief executive, in an interview with the Guardian. "Our two-year plan was to take a budget and build a competency to compete at the highest level, not forgetting the need for succession planning in every position. We are pleased with how that worked, and will not be signing players to the same level of intensity in the next transfer windows. Financial fair play is on our conscience, we talk about it at every board meeting, and it's part of our long-term plan."
Those who believe City will escape the rule's effect by having spent extravagantly before it comes in to force misunderstand simple accounting mechanisms. The exact dates when cash changes hands on transfer fees are not relevant; instead there is a balance-sheet instrument known as amortisation by which the total value of the fee is written down according to the length of the contract, causing a natural lag in the financial impact of transfer activity.
When David Silva joined City for £26m on a four-year contract in June, it added £6.5m a year to City's amortisation charge. By the end of last season the total charge had already reached £71m — almost 57% of the club's £125m turnover. Between them the additions of Jérôme Boateng, Yaya Touré, Mario Balotelli and James Milner added close to £17m, which the departure of Robinho and his £8.125m a year in amortisation charges could only partially offset.
Unless more of City's expensively acquired superstars join Robinho in going through the exit door, it is safe to say that their 2011-12 amortisation charge will be close to £90m. Wages, the drain demanding so much cash support from Mansour, further compound City's difficulties.
That bill reached £133.3m last season, with Touré alone having added another £10m in the meantime. Given the summer arrivals, even conservative estimates would assume the club's basic wage bill is now beyond £150m.
The 2009-10 season at Eastlands brought no trophies, or even great success in the Premier League, and this meant no significant bonuses were payable. But if City transform their early-season form into something more tangible this term, it is more than possible their wage bill will hit more than £165m by the time the next accounts are released.
That would mean expenditure and accounting fees on players of £250m a year, against total incomes last year of £125m. Even the £25m that Champions League participation might yield would not dent that significantly, and City are likely to face a £100m-a-year deficit come 2011-12.
If the club remain that far in the red for even that season alone, it would seriously threaten future participation in Europe unless they can transform their current player-related losses into a £30m-a-year profit from football operations. That means raising the current £125m Eastlands turnover to the same level as Manchester United's has been in recent seasons — £280m and more — within two years.
Sheikh Mansour's billions cannot help here either – Uefa has placed restrictions on what "related companies" — such as the Abu Dhabi-owned Emirates airlines, whose name appears on City's shirts — may offer in sponsorships to "market rates".
The realities of the financial situation at Eastlands appear to have been overlooked by their rivals across Manchester. The Old Trafford hierarchy's decision to capitulate and commit at least £9m a year to Wayne Rooney upon renewing the England striker's contract last week had all the hallmarks of the fear that their best player could soon be turning out in a sky-blue shirt, as Sir Alex Ferguson's rather strange soliloquy about cows in fields suggested.United seemed to be fixating on concerns about the apparently close relationship between Brian Marwood, Manchester City's chief football administration officer, and Rooney's agent, Paul Stretford.
Yet as City attempt to demonstrate to Uefa that they will ultimately comply with the financial fair-play rules, they could never have gone through with an acquisition that would comfortably have amounted to £100m in transfer fees and wages.
Rooney's rumoured £250,000-a-week wages at City would have amounted to a £62.5m liability over five years. And United would surely not have been persuaded to relinquish a player with even only 12 months on his contract to their biggest and richest rivals for less than half the £80m for which Cristiano Ronaldo was sold to Real Madrid last year. In the new regulatory environment, these sums were beyond even City's reach.
So now United must find more than £4.5m a year just to stand still. Their chief executive, David Gill, says United have £150m in the bank, but projections by analysts at the club's banker, JP Morgan, suggest they must retain £70m in a restricted-cash account in line with the terms of their bond borrowings
www.guardian.co.uk/football/2010/oct/26/sheikh-mansour-manchester-city
David Conn/The Guardian
Manchester City aim for the elite across the board, says Garry Cook
Despite all the money spent on players the club's chief executive says they are investing in their fans too
For the executive heart of the half a billion pound Abu Dhabi campaign to reshape Manchester football's balance of power, Garry Cook's office in the low-rise block on the Eastlands forecourt is remarkably unremarkable. Small, grey, functional, a partition wall between him and his shirt-sleeved troops, this is a world away from the marble floors and golden chandeliers of the Emirates Palace Hotel, where Cook's ultimate boss, Sheikh Mansour bin Zayed Al Nahyan, meets the family to chat about City's progress.
From Cook, some of whose public appearances have not produced notable PR triumphs since he was appointed as City's chief executive by the previous owner, Thaksin Shinawatra, in 2007, there is, up close, palpable enthusiasm for the club's rebuilding. City watched United's turmoil over Wayne Rooney last week with some satisfaction, as a measure of the progress made since Mansour bought the club from Thaksin in August 2008 and began to pour in money and resources.
Beyond Roberto Mancini's holding remarks, suggesting City might be interested in Rooney, neither Cook nor anybody from the club commented and they deny that any offer was made. But they were pleased that, rather than chasing world- class players like Kaká and not landing them, City were cited without question as the other club most likely to sign Rooney. While Sir Alex Ferguson strives to argue that hisodd, frugal collection of signings over the past two years has nothing to do with the mountainous cost of servicing the Glazers' £769m debts, Mansour is investing huge money into City. He has assembled for Mancini a muscular squad with which the manager now says he is happy, notwithstanding Sunday's 3-0 home defeat by Arsenal. The fans, generally, are along for the ride, Cook and the Abu Dhabi regime making consistent efforts to reassure them their support is valued. At Sunday's pre-match memorial to the former City manager Malcolm Allison, Cook's speech was noted by fans as a respectful homage to the club's golden age.
"Is there an overarching philosophy?" Cook asks. "We want to be properly successful and among the European elite but we must remember our roots and we must remember our supporters. The history and heritage of this football club are dear to us."
Discussing City and the annual report for 2009-10, which showed income up to £125m but exceeded by the stellar wage bill, £133m, and a £121m loss, bankrolled by Mansour, Cook is as keen to emphasise the all-round work as he is the lavish accumulation of players. They have, he says, spent £255 per paying fan on improving and humanising the Eastlands concrete bowl; they have a designated "head of supporter experience", Danny Wilson, leading a department to nurture fans' loyalty. They built City Square, the first decent area to eat, drink and gather, and one of Cook's touches was to move the ticket office inside so that fans, in one of the world's wettest cities, no longer have to queue in the rain.
"Yes, the annual report shows income growth and the loss, which people are asking questions about," says Cook. "But when you look from a broader perspective, there are investments not only for the team but for the fans. The aim is to enhance the experience of this football club for all those that touch it."
This, not just the money-no-object signing of players, explains why City fans from the Bluemoon website clubbed together to produce the banner opposite the directors' box, from which the owner has watched one match: Manchester Thanks You, Sheikh Mansour. For some it is embarrassingly craven, from a once great industrial city to an absentee owner, but the gratitude is another wholesale contrast to United, whose supporters are in open rebellion against the Glazers.
Dave Wallace, sixty-something editor of King of the Kippax and the embodiment of grandfather-as-fanzine-editor, reflects: "I will always believe supporter-ownership is the ideal model for football clubs. But if we can't practically have that, you want owners who invest in clubs and show some understanding of fans. I think City fans do appreciate the care this regime is taking and their efforts to engage with us."
That, of course, is not what the rest of football primarily sees when contemplating City. They see players on eyewatering wages bought with £500m by Mansour, whose family claim the oil wealth in an Arab emirate run on clan politics not democracy. City, led by the chairman, Mansour's trusted executive Khaldoon Al-Mubarak, Cook and Brian Marwood, the chief football administration officer, have serially outbid other clubs for players, made Aston Villa the £26m offer they could not refuse for James Milner and paid whatever wages it takes, nudging £200,000 a week for Yaya Touré.
Fans alienated by the Premier League's commercialisation complain that such buying of success by club owners is not football, not in the English game's tradition until Jack Walker at Blackburn in 1995 and Roman Abramovich at Chelsea since 2003. Other clubs argue the spending is seriously inflating wages generally, as witnessed in Rooney's restlessness. Mansour's funding of City has also, critics say, fuelled an unhealthy, previously alien culture, in which fans yearn for a rich saviour to throw money in. As Portsmouth fans can lament, such genuine gold-plated, benefactor-style billionaires are few in the world.
When this is put to Cook, the former Nike brand manager seems genuinely bemused. Watching from Abu Dhabi, Mansour saw English clubs available to buy, Abramovich spending £700m building Chelsea, the clubs with the most money always dominating. His lieutenants can barely understand criticism of Mansour, for investing money and spending it professionally, while the Glazers suck cash and goodwill from United.
'Critics only have their own perspective," Cook argues. "They're not at the football club, they haven't been part of the planning or the long-term financial strategies. People think we choose players from the fantasy football league but there was a clear plan for who Roberto wanted to sign. One of the perceptions was that we only buy foreign players, then suddenly people saw that six of the England team who finished against Switzerland were City players.
"When people see the good things we are actually doing, they seem to be enlightened." Yet while the Premier League still has no regulations to prevent Glazer-style "leveraged" buy-outs, City must negotiate Uefa's "financial fair play" rules, designed to prevent overspending pumped up by rich owners. Last year's £121m loss, with this year's certain to be higher, vastly exceeds Uefa's permitted limit of €45m over the three years between 2011 and 2014, so City risk exclusion from the European competitions Mansour demands.
Cook recites the plan to break even: gain success on the field and commercially, invest in the academy to produce young players, who will gradually replace the better paid stars. That, though, takes time that City do not appear to have.
"Clearly our intention is to comply," Cook says. "Our two-year plan was to take a budget and build a competency to compete at the highest level, not forgetting the need for succession planning in every position. We are pleased with how that worked and will not be signing players to the same level of intensity in the next transfer windows.
"Financial fair play is on our conscience, we talk about it at every board meeting and it's part of our long-term plan."
Cook, though, is keen to communicate that the buying of players, and how to make the books balance, is far from all they talk about. There is an intimate connection with Abu Dhabi, via multiple sponsorships, which some argue represent further Al Nahyan patronage but Cook says are genuine commercial deals. Mansour is intensely aware that what happens at City reflects directly on Abu Dhabi's image, which is also marketed on the theme of embracing progress while respecting tradition.
Cook points to 155 new staff taken on in all departments, thorough investment in what was a run-down club and now the plans to develop land around the stadium in partnership with a grateful, cash-strapped city council.
Sir Howard Bernstein, the council's chief executive, who has met Mansour and Khaldoon, in Manchester and Abu Dhabi, came away encouraged. Of the discussions he says wryly: "They're very sophisticated, always discussing what they can put in, rather than get out – which separates them from any other Manchester City owners I've spoken to."
Cook stresses City's community work, too, as evidence of a commitment to be good citizens. He is researching City's foundation, in industrial Gorton in 1894, by the family of Arthur Connell, vicar of St Mark's Church, to provide a wholesome activity for deprived local lads.
"Every organisation has to understand what it is at its core," Cook says. "City began as a social good and that purpose must inform everything we do."
Which, presumably, was what he was preparing to tell Paul Stretford, if City's interest in gazumping United had solidified into serious discussions, about wages of £200,000 a week.
Sheikh Mansour takes spending at Manchester City past half-billion mark• Owner injects another £80m into Eastlands club
• Funding raises fears over City's ability to meet Uefa rules
Manchester City's owners have injected another £80m into the club, taking Sheikh Mansour bin Zayed al-Nahyan's investment since buying City in 2009 to more than £573m.
According to documents released to Companies House last Monday, Mansour purchased 37,547,169 new shares in the Eastlands club on 30 September, each costing him £2.12. It amounted to £79.6m of fresh investment. The sum is small change for the Abu Dhabi billionaire, but it raises fresh questions about City's capacity to meet new regulations coming in to force from next season.
Uefa's financial fair-play rules require that no club should make an aggregate loss of more than €45m (about £39m) over the three seasons from 2011-12, or it will face being excluded from European competition. City are taking steps now apparently in an attempt not to fall foul.
"Clearly our intention is to comply," says Garry Cook, the City chief executive, in an interview with the Guardian. "Our two-year plan was to take a budget and build a competency to compete at the highest level, not forgetting the need for succession planning in every position. We are pleased with how that worked, and will not be signing players to the same level of intensity in the next transfer windows. Financial fair play is on our conscience, we talk about it at every board meeting, and it's part of our long-term plan."
Those who believe City will escape the rule's effect by having spent extravagantly before it comes in to force misunderstand simple accounting mechanisms. The exact dates when cash changes hands on transfer fees are not relevant; instead there is a balance-sheet instrument known as amortisation by which the total value of the fee is written down according to the length of the contract, causing a natural lag in the financial impact of transfer activity.
When David Silva joined City for £26m on a four-year contract in June, it added £6.5m a year to City's amortisation charge. By the end of last season the total charge had already reached £71m — almost 57% of the club's £125m turnover. Between them the additions of Jérôme Boateng, Yaya Touré, Mario Balotelli and James Milner added close to £17m, which the departure of Robinho and his £8.125m a year in amortisation charges could only partially offset.
Unless more of City's expensively acquired superstars join Robinho in going through the exit door, it is safe to say that their 2011-12 amortisation charge will be close to £90m. Wages, the drain demanding so much cash support from Mansour, further compound City's difficulties.
That bill reached £133.3m last season, with Touré alone having added another £10m in the meantime. Given the summer arrivals, even conservative estimates would assume the club's basic wage bill is now beyond £150m.
The 2009-10 season at Eastlands brought no trophies, or even great success in the Premier League, and this meant no significant bonuses were payable. But if City transform their early-season form into something more tangible this term, it is more than possible their wage bill will hit more than £165m by the time the next accounts are released.
That would mean expenditure and accounting fees on players of £250m a year, against total incomes last year of £125m. Even the £25m that Champions League participation might yield would not dent that significantly, and City are likely to face a £100m-a-year deficit come 2011-12.
If the club remain that far in the red for even that season alone, it would seriously threaten future participation in Europe unless they can transform their current player-related losses into a £30m-a-year profit from football operations. That means raising the current £125m Eastlands turnover to the same level as Manchester United's has been in recent seasons — £280m and more — within two years.
Sheikh Mansour's billions cannot help here either – Uefa has placed restrictions on what "related companies" — such as the Abu Dhabi-owned Emirates airlines, whose name appears on City's shirts — may offer in sponsorships to "market rates".
The realities of the financial situation at Eastlands appear to have been overlooked by their rivals across Manchester. The Old Trafford hierarchy's decision to capitulate and commit at least £9m a year to Wayne Rooney upon renewing the England striker's contract last week had all the hallmarks of the fear that their best player could soon be turning out in a sky-blue shirt, as Sir Alex Ferguson's rather strange soliloquy about cows in fields suggested.United seemed to be fixating on concerns about the apparently close relationship between Brian Marwood, Manchester City's chief football administration officer, and Rooney's agent, Paul Stretford.
Yet as City attempt to demonstrate to Uefa that they will ultimately comply with the financial fair-play rules, they could never have gone through with an acquisition that would comfortably have amounted to £100m in transfer fees and wages.
Rooney's rumoured £250,000-a-week wages at City would have amounted to a £62.5m liability over five years. And United would surely not have been persuaded to relinquish a player with even only 12 months on his contract to their biggest and richest rivals for less than half the £80m for which Cristiano Ronaldo was sold to Real Madrid last year. In the new regulatory environment, these sums were beyond even City's reach.
So now United must find more than £4.5m a year just to stand still. Their chief executive, David Gill, says United have £150m in the bank, but projections by analysts at the club's banker, JP Morgan, suggest they must retain £70m in a restricted-cash account in line with the terms of their bond borrowings
www.guardian.co.uk/football/2010/oct/26/sheikh-mansour-manchester-city
David Conn/The Guardian
Manchester City aim for the elite across the board, says Garry Cook
Despite all the money spent on players the club's chief executive says they are investing in their fans too
For the executive heart of the half a billion pound Abu Dhabi campaign to reshape Manchester football's balance of power, Garry Cook's office in the low-rise block on the Eastlands forecourt is remarkably unremarkable. Small, grey, functional, a partition wall between him and his shirt-sleeved troops, this is a world away from the marble floors and golden chandeliers of the Emirates Palace Hotel, where Cook's ultimate boss, Sheikh Mansour bin Zayed Al Nahyan, meets the family to chat about City's progress.
From Cook, some of whose public appearances have not produced notable PR triumphs since he was appointed as City's chief executive by the previous owner, Thaksin Shinawatra, in 2007, there is, up close, palpable enthusiasm for the club's rebuilding. City watched United's turmoil over Wayne Rooney last week with some satisfaction, as a measure of the progress made since Mansour bought the club from Thaksin in August 2008 and began to pour in money and resources.
Beyond Roberto Mancini's holding remarks, suggesting City might be interested in Rooney, neither Cook nor anybody from the club commented and they deny that any offer was made. But they were pleased that, rather than chasing world- class players like Kaká and not landing them, City were cited without question as the other club most likely to sign Rooney. While Sir Alex Ferguson strives to argue that hisodd, frugal collection of signings over the past two years has nothing to do with the mountainous cost of servicing the Glazers' £769m debts, Mansour is investing huge money into City. He has assembled for Mancini a muscular squad with which the manager now says he is happy, notwithstanding Sunday's 3-0 home defeat by Arsenal. The fans, generally, are along for the ride, Cook and the Abu Dhabi regime making consistent efforts to reassure them their support is valued. At Sunday's pre-match memorial to the former City manager Malcolm Allison, Cook's speech was noted by fans as a respectful homage to the club's golden age.
"Is there an overarching philosophy?" Cook asks. "We want to be properly successful and among the European elite but we must remember our roots and we must remember our supporters. The history and heritage of this football club are dear to us."
Discussing City and the annual report for 2009-10, which showed income up to £125m but exceeded by the stellar wage bill, £133m, and a £121m loss, bankrolled by Mansour, Cook is as keen to emphasise the all-round work as he is the lavish accumulation of players. They have, he says, spent £255 per paying fan on improving and humanising the Eastlands concrete bowl; they have a designated "head of supporter experience", Danny Wilson, leading a department to nurture fans' loyalty. They built City Square, the first decent area to eat, drink and gather, and one of Cook's touches was to move the ticket office inside so that fans, in one of the world's wettest cities, no longer have to queue in the rain.
"Yes, the annual report shows income growth and the loss, which people are asking questions about," says Cook. "But when you look from a broader perspective, there are investments not only for the team but for the fans. The aim is to enhance the experience of this football club for all those that touch it."
This, not just the money-no-object signing of players, explains why City fans from the Bluemoon website clubbed together to produce the banner opposite the directors' box, from which the owner has watched one match: Manchester Thanks You, Sheikh Mansour. For some it is embarrassingly craven, from a once great industrial city to an absentee owner, but the gratitude is another wholesale contrast to United, whose supporters are in open rebellion against the Glazers.
Dave Wallace, sixty-something editor of King of the Kippax and the embodiment of grandfather-as-fanzine-editor, reflects: "I will always believe supporter-ownership is the ideal model for football clubs. But if we can't practically have that, you want owners who invest in clubs and show some understanding of fans. I think City fans do appreciate the care this regime is taking and their efforts to engage with us."
That, of course, is not what the rest of football primarily sees when contemplating City. They see players on eyewatering wages bought with £500m by Mansour, whose family claim the oil wealth in an Arab emirate run on clan politics not democracy. City, led by the chairman, Mansour's trusted executive Khaldoon Al-Mubarak, Cook and Brian Marwood, the chief football administration officer, have serially outbid other clubs for players, made Aston Villa the £26m offer they could not refuse for James Milner and paid whatever wages it takes, nudging £200,000 a week for Yaya Touré.
Fans alienated by the Premier League's commercialisation complain that such buying of success by club owners is not football, not in the English game's tradition until Jack Walker at Blackburn in 1995 and Roman Abramovich at Chelsea since 2003. Other clubs argue the spending is seriously inflating wages generally, as witnessed in Rooney's restlessness. Mansour's funding of City has also, critics say, fuelled an unhealthy, previously alien culture, in which fans yearn for a rich saviour to throw money in. As Portsmouth fans can lament, such genuine gold-plated, benefactor-style billionaires are few in the world.
When this is put to Cook, the former Nike brand manager seems genuinely bemused. Watching from Abu Dhabi, Mansour saw English clubs available to buy, Abramovich spending £700m building Chelsea, the clubs with the most money always dominating. His lieutenants can barely understand criticism of Mansour, for investing money and spending it professionally, while the Glazers suck cash and goodwill from United.
'Critics only have their own perspective," Cook argues. "They're not at the football club, they haven't been part of the planning or the long-term financial strategies. People think we choose players from the fantasy football league but there was a clear plan for who Roberto wanted to sign. One of the perceptions was that we only buy foreign players, then suddenly people saw that six of the England team who finished against Switzerland were City players.
"When people see the good things we are actually doing, they seem to be enlightened." Yet while the Premier League still has no regulations to prevent Glazer-style "leveraged" buy-outs, City must negotiate Uefa's "financial fair play" rules, designed to prevent overspending pumped up by rich owners. Last year's £121m loss, with this year's certain to be higher, vastly exceeds Uefa's permitted limit of €45m over the three years between 2011 and 2014, so City risk exclusion from the European competitions Mansour demands.
Cook recites the plan to break even: gain success on the field and commercially, invest in the academy to produce young players, who will gradually replace the better paid stars. That, though, takes time that City do not appear to have.
"Clearly our intention is to comply," Cook says. "Our two-year plan was to take a budget and build a competency to compete at the highest level, not forgetting the need for succession planning in every position. We are pleased with how that worked and will not be signing players to the same level of intensity in the next transfer windows.
"Financial fair play is on our conscience, we talk about it at every board meeting and it's part of our long-term plan."
Cook, though, is keen to communicate that the buying of players, and how to make the books balance, is far from all they talk about. There is an intimate connection with Abu Dhabi, via multiple sponsorships, which some argue represent further Al Nahyan patronage but Cook says are genuine commercial deals. Mansour is intensely aware that what happens at City reflects directly on Abu Dhabi's image, which is also marketed on the theme of embracing progress while respecting tradition.
Cook points to 155 new staff taken on in all departments, thorough investment in what was a run-down club and now the plans to develop land around the stadium in partnership with a grateful, cash-strapped city council.
Sir Howard Bernstein, the council's chief executive, who has met Mansour and Khaldoon, in Manchester and Abu Dhabi, came away encouraged. Of the discussions he says wryly: "They're very sophisticated, always discussing what they can put in, rather than get out – which separates them from any other Manchester City owners I've spoken to."
Cook stresses City's community work, too, as evidence of a commitment to be good citizens. He is researching City's foundation, in industrial Gorton in 1894, by the family of Arthur Connell, vicar of St Mark's Church, to provide a wholesome activity for deprived local lads.
"Every organisation has to understand what it is at its core," Cook says. "City began as a social good and that purpose must inform everything we do."
Which, presumably, was what he was preparing to tell Paul Stretford, if City's interest in gazumping United had solidified into serious discussions, about wages of £200,000 a week.