MANCHESTER, United Kingdom, Dec 6, 2019 (BSS/AFP) – The balance of football
power in Manchester has swung comprehensively to City from United on the
field and the Premier League champions are now on the verge of toppling their
neighbours in the financial stakes as well.
Despite failing to hit the heights of their past two title-winning
campaigns, City host United on Saturday already 11 points ahead of their
local rivals just 15 games into the league season.
The Red Devils sit sixth, eight points adrift of the Champions League
places, and facing a huge fight to get back into that highly lucrative
competition next season.
As City try and win the Champions League for the first time, having already
booked their place in the last 16 for a seventh consecutive season, United’s
finances are suffering as they play Europa League football for the second
time in four years.
United posted record revenues of œ627 million ($818 million) for last
season as they reached the Champions League quarter-finals and finished sixth
in the Premier League.
That was nearly œ100 million more than City’s œ535 million for the 2018/19
campaign despite the blue half of Manchester winning an unprecedented
domestic treble of Premier League, FA Cup and League Cup.
However, United predict their revenue will fall to between œ560 million and
œ580 million this season due to the drastically smaller broadcasting deals
and prize money on offer in the Europa League.
City’s figures for this season will also be boosted by a œ650 million kit
sponsorship deal between parent company, the City Football Group (CFG), and
Puma for the next 10 seasons.
That deal is still lower than United’s œ750 million 10-year deal signed
with Adidas in 2014, but it signals the shrinking difference in the
commercial value of the two clubs.
“I think the gap will narrow substantially,” football finance expert Kieran
Maguire told AFP. “From just under œ100 million this year between the two
clubs, that gap will be narrowed to œ10-20 million for 2019/2020.”
City’s success over the past decade has been bankrolled by the club’s Abu
Dhabi owners, who have at times fallen foul of UEFA’s financial fair play
rules with sponsorship deemed above market value such as shirt and stadium
deals with Etihad Airways, which is owned by the Abu Dhabi government.
However, the Puma contract shows that City’s success on the field means
they are no longer reliant on their commercial deals coming from the Middle
East.
“They have also got sponsorship deals with the likes of Nissan and Nexen
Tire,” added Maguire. “On the back of winning the Premier League four times
in the decade and having a global profile, they are not as dependant on the
Middle East for sponsorship deals as they were compared to the initial Etihad
deal.”
City’s rise was reflected when US equity firm Silver Lake acquired just
over a 10 percent stake of CFG for $500 million last week.
That gave CFG a global record valuation for a sports franchise of $4.8
billion.
By comparison, United’s market capitalisation is just over $3 billion, but
also jumped on the news of the investment in City.
“In the 24 hours following the Silver Lake investment, United’s market
capitalisation itself went up by 11 percent, so perhaps the markets are
saying we have undervalued United’s valuation and potential,” said Maguire.
Days after the Silver Lake investment, CFG announced that Mumbai City would
become the eighth club in a global empire that already contains New York City
FC, Melbourne City, Yokohama Marinos in Japan, Sichuan Jiuniu in China,
Spanish second division side Girona and Club Atletico Torque in Uruguay.
“They see growth in the overseas markets,” added Maguire. “Silver Lake
would not have put the money in unless they thought there was greater growth
potential in the City Group.”
United were the club that pioneered the commercialisation of football on
the back of their success under Alex Ferguson in the 1990s.
But since Ferguson’s retirement in 2013, United have finished below their
local rivals every season.
Now it is City, with their web of clubs around the globe and trophy-laden
years under Pep Guardiola, who are leaving Manchester’s traditional giant
trailing on and off the field.