After winning the English league for the first time in 44 years, Abu Dhabi-owned Manchester City must build on their success while reining in the lavish spending that has made it possible.
City, long the poor relations to local rivals Manchester United, have been transformed by an estimated 800 million pounds ($1.3 billion) pumped into the club since 2008 by owner Sheikh Mansour Bin Zayed Al Nahyan, one of Abu Dhabi’s ruling family.
City’s heart-stopping triumph may be the last hurrah for English soccer’s big-spending benefactors as new UEFA rules designed to move European clubs towards breaking even begin to bite.
“It may well be that we don’t see the like of Manchester City in the Premier League again for some time to come,” said Simon Chadwick, professor of sports business strategy and marketing at England’s Coventry University.
“UEFA Financial Fair Play Regulations are beginning to moderate club finances essentially by forcing them to build revenues or to cut costs.”
City lost an English record 197 million pounds in 2010-11, their last full financial year, but said that figure would be the peak.
They blamed the losses on spending in 2010 which brought in players including Ivorian Yaya Toure and Spaniard David Silva and helped them qualify for the Champions League for the first time.
“Man City are already playing catch-up in terms of financial fair play,” said Karish Andrews, a lawyer with London firm Lewis Silkin who works in the sports industry.
“The 2011/2012 season is the first that clubs will be monitored by UEFA and Man City cannot put it off any longer in terms of seeking to adhere to it.”
Back from the wilderness
City have agreed a series of significant deals in recent months to boost revenues and help cut their losses.
The club signed a 10-year sponsorship deal with Abu Dhabi’s state-owned airline Etihad Airways at the start of the season, worth a reported 35 million pounds a year.
Last week they agreed a new kit deal with Nike that will start from 2013-14 - replacing an agreement with Nike’s locally based Umbro brand and underling the club’s growing international appeal.
City also plan to build a new academy in east Manchester to ensure they develop more of their own players rather than having to buy in expensive talent.
City’s wilderness years - their FA Cup success last year was their first major trophy since 1976 - mean the club currently lags rivals in terms of international appeal.
“Man United, Arsenal and Chelsea have forged their reputation on what they have done in Europe,” said Joe McLean, a football industry expert at business services group Grant Thornton.
The need to improve on this season’s early exit from the Champions League will test City’s commitment to prudence.
“It may well be that the way forward is for the owner to say you can buy a couple of marquee signings but you have to fund it by getting some players off the squad list,” said McLean.
Summer transfer activity by top clubs will show whether any plan to call UEFA’S bluff over break-even rules that could exclude them from European competition from 2014-15.
“The big question is, when push comes to shove, whether UEFA are willing to turn down a major club,” said Professor Tom Cannon, a sports business expert at Liverpool University. ($1 = 0.6212 British pounds)