Fair play rules forcing City to tighten belts as wage bill hits £200m
Manchester City have become the first Premier League club to disclose an annual wage bill in excess of £200m after posting a net loss of £97.9m for the year ending May 31, 2012.
The annual report also reveals a payment of £500,000 "compensation for loss of office" to former chief executive Garry Cook, who left in September last year following an unsavoury email exchange relating to the cancer-stricken mother of former City defender Nedum Onuoha.
The club increased turnover to £231.1m, from £153.2m. However, the price of winning the Premier League title last season came at a cost of £201.7m in wages – a rise of £27.8m in 12 months.
City's rapidly growing commercial income rose to £112.1m from £57.8m, with the £40m a year deal with Etihad Airways and the club's first Champions League earnings sending the figure through the £100m barrier.
And City have also relied on owner Sheikh Mansour strengthening the "capital base of the club through the issuing of £169m in new equity" during the year.
However, senior figures at City point to the £99.6m reduction in losses as proof of the club's "positive loss trend" and evidence of accelerated movement towards compliance with UEFA's financial fair play regulations, despite FFP strictures allowing total losses of €45m (£36.3m) between 2011 and 2013.
City's Abu Dhabi hierarchy believe that the huge losses will not impact on the club's ability to comply with FFP because of a £15m exemption due for their infrastructure and youth development costs.
However, with City relying on those detailed exemptions to come close to complying with FFP, the club faces a challenge in order to avoid falling foul of UEFA's measures. Their European failure could potentially cost City around £20m in lost revenue.
With City's wage bill unlikely to drop substantially in the next 12 months, however, the club faces a challenge in terms of generating the substantial commercial income required to continue the drive towards FFP compliance.
The 10-year Etihad deal is just 18 months old, while the kit deal with Nike is understood to be worth just £12m a year to the club – substantially less than Premier League rivals United, Chelsea, Liverpool and Arsenal.
Manager Roberto Mancini has been told that new signings in January are highly unlikely and it is understood that next summer's transfer window will also follow a prudent blueprint to help the club to meet UEFA's FFP targets. (© Daily Telegraph, London)