What it means for Man City to surpass Manchester United in terms of revenue for both clubs

As revealed this week, Manchester City posted record revenues for the 2020/21 season in a financial year that also saw them return to profit.

Not only was the £569.8 million they brought for the club, but it also saw them overtake Manchester United for the first time, with the Reds only managing to muster at £494 million.

However, if you were expecting some BYOB celebrations in the union in the news, you would be wrong. Instead, City insiders were keen to play down the news amid acceptance that there were exceptional circumstances behind the swing and expecting United to regain their advantage when normalcy resumes in the next financial year.

Much of City’s money coming from broadcasting revenue is thanks in large part to their reaching the Champions League final – which is far from a guarantee this season – as well as including matches in three competitions at the end of the 2019/20 season. The campaign delayed by the epidemic. What’s more, while matches played behind closed doors wiped out 98 per cent of City’s match-day revenue, this was far less than the loss at Old Trafford.

With some other issues back in United’s favour, City’s revenue leadership could quickly reverse.

“We are living in extraordinary times and we probably won’t get a full assessment of where individual clubs are until 2022/23,” explained football financial expert Kieran Maguire.

“I think it will be a challenge next year [for City] Because United could potentially have a £50-60m spread in terms of match day. United got TeamViewer [shirt sponsorship] The deal kicked in and they got a few more on the back of Ronaldo signing. City would realistically have to outpace United by more than £50-60m in broadcast revenue, so it depends on how both clubs progress in the Champions League. Next year will be much closer, regardless, and we have put Liverpool on the rails as well.

“United actually gave a discount to [previous shirt sponsor] Chevrolet when they extended the deal for six months and didn’t take any money, which is why United’s commercial income has gone down and I expect that to bounce back next season.

“I think City are right to be cautious and not create expectations. They played it smart to downplay the issue of revenue. Ultimately we have this saying: Revenue is vanity, profit is reason. By underestimating it, it means if the situation is reversed next season. They could say they weren’t excited when they overtook United, so they wouldn’t be excited if United overtaken them.

“It’s kind of a bragging rights for the fans in bars but from a business point of view it’s pretty much no problem because you’re looking at the other basic stuff. If you’re selling stuff that’s OK but if you’re not selling stuff at a profit you’re wasting your time.”

A sign that the revenue battle is important can be seen in the reaction from Old Trafford this week, as United’s numbers were alarmed by reports of City overtaking them.

In an effort to please everyone from identical fans deeply resentful of Glazer’s ownership to prospective shareholders only interested in the lowest dollar, United are keen to show off their accomplishments. With no awards to shout about for over four years, they had to find other things.

Incoming CEO Richard Arnold was widely mocked by fans in February 2020 when he bragged on an investor conference call about the panicked deadline of signing Odion Ighalo as the worldwide #1 trend on Twitter, seemingly unaware that much of the engagement was going on. Not positive. More recently, United wanted to know when they signed Jadon Sancho in the last transfer window that this gave them higher net spending over three years than any other big European club.

Not only did United spend more than their noisy neighbors in the transfer market but even worse money, with City having plenty of success on the pitch allowing their revenue to grow while United’s commercial revenue stagnated due to their team’s performance. dropped.

In this sense, surpassing City United in terms of revenue is indicative of the broader trend of travel for both clubs.

“It shows that Citi has made initial investments through parties linked to the owners, but once Citi has started producing trophies regularly, which is very attractive to sponsors because they want their product alongside the prizes,” Maguire said.

“They are willing to pay a premium for it and they will pay bonuses because Citi has delivered. This is a sign that Citi’s strategy has worked and they seem to have had a long-term strategy now for a reasonable amount of time.

“United’s net spending since Sir Alex’s retirement exceeds City’s, so those people who are accusing City of buying trophies don’t hold up to any significant analysis. Both clubs have invested heavily. I don’t think the City can be criticized: it’s an expensive industry and talent for talent. But City made fewer mistakes in the transfer market.

The city is attractive [to sponsors] Because they give prizes. You can’t underestimate how excited the sponsors are because suddenly the player is stepping up and smiling next to the product with a trophy, this adds credibility to your product because people want to be associated with success.

United’s business income is now flat for several years. [Outgoing CEO] Ed Woodward famously said that we don’t need to win prizes to be successful and he’s right at one point because they still get great levels of commercial revenue but if you want to increase your commercial revenue, you probably need to win prizes.

“It’s much more difficult to get someone as CEO to sign a sponsorship or partnership agreement because the CEO says what do we get from this?

“They’ve missed the Champions League on two occasions, and it’s probably nine years since they won the Premier League. People want something in return for their investment.”

City’s ability to attract new sponsorship deals has allowed them to take a lead on United for commercial revenue, even if only for now.

The nature of Citi’s deals has long been contested by rivals. In July 2020, the Court of Arbitration for Sport overturned a UEFA ruling that it was inflating the value of its sponsorship deals to circumvent Financial Fair Play (FFP) regulations, while a separate Premier League investigation into FFP remained open in March. 2019.

Recent partnership announcements with a hotel group owned by the Abu Dhabi government and a renewable energy company whose board of directors includes the owner of the city’s chief has called for more pessimism, especially in light of new regulations introduced in December 2021 that require clubs to stand before them. Any deals on the Premier League board with perceived links to owners worth more than £1m are considered fair market value.

Both deals were agreed before the new regulations came in, but they aren’t particularly lucrative deals either because they are following United’s lead and targeting a lot of small partnerships around the world in hopes of adding to significant business growth.

If they get more and more sponsors from all over the world, does the city need to make deals with Abu Dhabi companies?

“Yes, because they did nothing wrong!” Maguire said.

“Manchester United made a deal with Saudi Arabia, the current airline partner is [Russian company] Aeroflot, so if United have business partners around the world, there’s no reason why City shouldn’t do so either.

“I think what they’re doing – and here credit has to be given to United in that they started individual target markets, and now you have an official phone sponsor in Malaysia and another Indonesia and another in China – breaks things down geographically chosen by a series of smaller partnerships spread across the globe.

“I think there will be small deals but also a lot more than a million pounds because City will be able to say they have won the Premier League in three of the last four years.

“It also helps them to enjoy diversity in terms of trading partners. If you take a list in the City trading partner list, Nissan is not from the Middle East, Nexen and some are not. So the claim that some people have made in other clubs is that everything is from the East. Middle does not stand up to scrutiny.”

.

Leave a Comment