Manchester City And The City Football Group: How Does This Football Empire Operate?

Manchester City 1

Manchester City has easily been the most dominant English football team in recent memory. In the last 10 years, they have won the Barclays Premier League six times, and have finished runners up on three occasions. They are the football club with the highest revenue in the world and with the arrival of Erling Haaland during the 2022 transfer window, the club looks all set to achieve that one elusive goal, the UEFA Champions League. But how did a club which wasn’t known as much more than “Manchester’s other team” suddenly become so successful? What role has the City Football Group played in its success and is it the future of football? Let’s find out.

Manchester City And The City Football Group: All You Need To Know

The representatives of the City Football Group meet at least three times a year to share knowledge and design common strategies in different areas: sports, financial, communicative, and commercial avenues.

They call them ‘meeting weeks’ and are organized by Manchester City to stimulate relations with the clubs that are part of the largest football ‘holding’ in the world, created in its image and likeness, with a double objective: to expand its commercial brand in strategic markets and generate a wide international network for the recruitment and training of talents.

The City Football Group is fueled by capital from the United Arab Emirates and chiseled by a Spaniard, Ferran Soriano, CEO of City and former right-hand man of Joan Laporta during his first spell as president of FC Barcelona.

Soriano took up his current role in 2012, four years after Sheikh Mansour bin Zayed Al Nahyan acquired ownership of Manchester City. At a sporting level, his mission was to replicate the successful model of Pep Guardiola’s Barcelona, and at a commercial level to expand the club’s ‘citizen’ brand throughout the world to boost the entity’s income generation.

Which are the clubs in the City Football Group?

The CFG’s first decision was to attack the US market, which was in full expansion mode as it pertains to football (called ‘soccer’ in America) with the creation of New York City. The next target was Australia, purchasing the Melbourne Heart and renaming it Melbourne City. In Japan, CFG allied with Nissan to acquire a stake in Yokohama Marinos and in Spain, CFG did it with Pep Guardiola to acquire a majority shareholding in Girona Futbol Club.

With the passing of the years, the CFG also disembarked, with different percentages of participation in Uruguay (Montevideo City Torque), India (Mumbai City Club), China (Sichuan Jiuniu), France (Troyes AC), Belgium (Lommel SK) and soon it will do so officially in the Netherlands (NAC Breda). And there are intense rumors of the purchase of 51% of the Brazilian Atletico Mineiro for around 200 million euros.

The twelfth team of the CFG is Club Bolívar, owned by businessman Marcelo Claure. The City Group is not part of the capital of the Bolivian entity, but it does have a collaboration agreement with it.

Manchester City have given a gigantic new dimension to international football holdings, but they have by no means invented them. There is the popular La Liga club Atletico de Madrid, born as a Madrid branch of Athletic Club 118 years ago and majority shareholder of the Mexican Atletico San Luis since 2017.

More recent examples, and already with a greater business and global vocation, appear in the clubs of the Pozzo family (Udinese, Watford and, until a few years ago, Granada) and above all the network of clubs of Red Bull energy drink brand, with franchises in Salzburg, Leipzig, New York and Sao Paulo.

How are clubs in the City Football Group interconnected?

Formally, Manchester City is just one more club in the entire conglomerate, but in practice, it acts as the parent of all the others, with which it develops a vertical relationship of resource and knowledge exchange that goes from the most obvious, such as transfers of footballers, to commercial agreements that cover the entire group.

A clear example is the sponsorship of Puma, which in 2019 reached a global agreement for ten years to be the kit supplier of the City Football Group clubs for 700 million euros. Nissan, the majority shareholder of Yokohama Marinos, also extended its business relationship to the clubs that are part of the ‘holding’. Agreements, in both cases, have a positive impact on the results of the ‘satellite clubs’ due to the commercial traction of the Manchester club.

In terms of football, Manchester City has developed a network of scouts around the world that other clubs take advantage of, as well as the knowledge acquired in ‘big data’ over the years. The new regulations derived from Brexit and the ban on international transfers for children under 18 multiply the potential usefulness of the other ten clubs as a granary for kids who legally cannot yet join the ‘citizen’ youth academy.

Is the City Football Group Profitable?

The pending task of the ‘holding’ is to become an economically profitable business, an objective that the City Group places in the long term. The accounts of the company, deposited in the Companies House of the United Kingdom, show that the group has never closed a financial year with profits, chaining losses ranging from 84 million pounds (2018-19) to 20.5 million pounds (2019-20).

The turnover, however, has not stopped growing, thanks to the acquisitions that have been made. With the exception of the first year of the pandemic, revenues have experienced a constantly growing revenue volume, reaching 634 million pounds (the most for any football club in the world) in the last financial year, corresponding to the 2020-21 season.

The need to increase their capital led the owners of Manchester City to go looking for partners for the City Football Group. Abu Dhabi United Group (currently 77% owner of the ‘holding’), sold 13% of the shareholding to China Media Capital Consortium for $400 million in 2015 and another 10% to the Silver Lake fund in 2019, to a change of 500 million dollars. The group’s valuation at that time, therefore, amounted to $4.8 billion.

In the same way, the group is carrying out capital increases in the subsidiaries that need it. A clear example is that of Girona, which last September received an injection of 20 million euros after two failed attempts to return to the First Division, in a context of a general drop in income due to the pandemic, to consolidate an ambitious project.

Because the sporting strength of the teams is also an objective of the City Group. In fact, four of the 11 clubs won their league last year, another three made the top five, and one was promoted to the top flight. The City Football Group is a successful model that only has to achieve its economic equilibrium. This is definitely a way in which many clubs will eventually operate in the future.

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