30 January 2014 -Manchester City seem set to narrowly pass Uefa’s Financial Fair Play test, with one technical aspect of the rules which discounting the wages of players signed four years ago proving vital to them avoiding a ban from the Champions League next season.

City reported losses of £51.6m for 2012/13, this afternoon, down from £97.9m in the previous year but still leaving the club with a total loss of £149.5 across the past two years – a full £112.5m more than the £37m losses which UEFA said it would allow in those two seasons, as clubs prepare for FFP. But, as The Independent reported two weeks ago, City will be a borderline FFP pass – by being able to bring the figure down towards the allowable losses through the subtraction of wages of wages paid out for players signed before June 2010. That figure, which would include the huge sums paid out for stars such as Emmanuel Adebayor, Carlos Tevez, Wayne Bridge and Robinho when previous manager Mark Hughes took City through the early development stage, might total £80m. It will be supplemented by another hefty figure for stadium inftrastructure work and youth development, which are also subtracted from the losses to reach the so-called ‘acceptable deviation’ figure of £37m which UEFA allows.

The governing body will rule in the next few months whether City have complied with FFP. Their judgement will also include an assessment of whether City’s Etihad  sponsorship deal - worth around £400m over 10 years and a significant part of City also reporting an annual turnover at £271m for 2012/13 - breaking the £250m threshold for the first time in the club’s history - is a means of the club's Abu Dhabi owners artificially injecting cash to reduce losses. The club deny that emphatically and insist the deal is in line with market rates.

Even if City do marginally fail to reach the £37m figure, their proximity to it, would suggest that a dramatic Champions League expulsion is unlikely.

Daniel Geey, the competition and football law specialist at the firm Field Fisher Waterhouse, who has advised clients and written extensively on FFP, said: “ With City confident that they will comply with FFP, although the £150m headline aggregate loss figure seems high this can be recalculated when UEFA reliefs like pre 2010 wages, infrastructure, community and youth development costs are removed. As such, the club for FFP purposes are then likely to be around the permitted €45m loss cut off point.”

The club said that it was operating with zero financial debt for the first time, having paid off all remaining borrowings. Though they will need to break even in this financial year, they will be able to account for the new TV deal and the removal of the wages of players who needed huge financial incentives to join City's “project”, yet were then surplus to requirements. Carlos Tevez's sale to Juventus last summer alone saved them £198,000 a week in wages, which would have added up to £17m across the remainder of his contract. The sales of Wayne Bridge, Kolo Touré and Roque Santa Cruz, weeks earlier, also allowed City to spend nearly £80m on Alvaro Negredo, Fernandinho and Stefan Jovetic. Progression to the Champions League knock-out stage will also increase revenues on 2012/13, when there was group stage elimination and not even Europa League football  for City

Chairman Khaldoon Al Mubarak said today there was a “renewed sense of confidence for the future”, and that that on and off field success has “generated significant commercial opportunities for the organisation and underpinned a strong momentum.”{jcomments on}

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