Manchester City have overtaken Manchester United as the Premier League’s most valuable club, according to research by the University of Liverpool.
With higher wages and lower profits weighing on the Red Devils, City – once dismissed as ‘noisy neighbours’ by former United boss Sir Alex Ferguson – are now top of the pile, worth £2.4billion, up £400million on a year before.
United have slipped from £2.5billion to £2.1billion and are now second in the university’s list, ahead of Spurs, whose value increased from £1.4billion to £1.8billion, Chelsea, Liverpool and Arsenal.
The latter were third in last year’s report but saw their value fall by almost a quarter after failing to qualify for the Champions League and they now trail their north London rivals by £500million.
The report’s author is Kieran Maguire, a lecturer of football finance at the university’s Centre for Sports Business Group, and the valuations are based on club accounts for the 2017/18 season.
Maguire, who also runs the priceoffootball.com website, uses a valuation model created by Dr Tom Markham, a senior executive for Sports Interactive, the creators of video game Football Manager.
The model takes into account revenue, profits, non-recurring costs, average profits on player trading over three years, net assets, wage control and the proportion of seats sold.
United are still the league’s highest earners with revenues of £590million but Maguire marks them down because that figure only rose by one per cent while the wage bill climbed 13 per cent.
The Old Trafford club also paid out £18million to service the debt placed on them by the Glazer family when they bought the club in 2005 and £22milllion in shareholder dividends.
City, on the other hand, grew turnover to £500million but managed to reduce the wage bill despite winning the Premier League. This was achieved by moving on several high earners, which also produced a £39million profit on player trading.
They are also debt-free and pay no dividends.
But the biggest factor behind their valuation is the fact they are owned by Sheikh Mansour, a member of Abu Dhabi’s royal family.
As the report puts it: “Critics will point out that Manchester City are part of a multi-club ownership model and that there are commercial deals with related parties which might not apply should the club be sold.”
This is a reference to City’s main sponsors being companies from the United Arab Emirates, such as Etihad Airways, Etisalat, Aabar and Visit Abu Dhabi, and the ‘fair value’ of these deals is currently being investigated by the football authorities.
Overall, the report says the total value of Premier League clubs fell last year by 1.6 per cent to £14.7billion, with the ‘big six’ making up three quarters of the total, whereas they accounted for two thirds in 2017.
Another indication of the gap between the rich and the rest is sixth-placed Arsenal being worth almost £1billion more than seventh-placed Burnley.
Looking ahead, Spurs can expect to see their value rise after the move to their new £1billion stadium, a venue which should increase their matchday revenue from £40-45million to £100million.
They also have the best wage cost control in the league, with just £39 spent on salaries for every £100 of income.
By contrast, Chelsea saw their value grow by £500million last year – thanks to a new kit deal and a big profit on transfers – but will struggle to hold that after a season without Champions League football. Their ability to compete with their peers will also be affected by the relatively cramped confines of Stamford Bridge.
2018 Premier League club valuations: 1. Manchester City, £2.36bn; 2. Manchester United, £2.09bn; 3. Spurs, £1.84bn; 4. Liverpool, £1.62bn; 5. Chelsea, £1.62bn; 6. Arsenal, £1.37bn; 7. Burnley, £400m; 8. Newcastle, £380m; 9. Leicester, £380m; 10. Southampton, £370m; 11. Everton, £360m; 12. West Ham, £290m; 13. Stoke, £240m; 14. Huddersfield, £230m; 15. Brighton, £220m; 16. West Brom, £220m; 17. Watford, £210m; 18. Crystal Palace, £200m; 19. Bournemouth, £180m; 20. Swansea, £170m.
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