Is money more important to City than fans?

The club have announced ticket prices for the forthcoming Champions League quarter-final against PSG and it’s fair to say that the natives are a bit restless. The top price standard ticket will be £60, down to £45 in the cheapest seats. Season ticket holders get £5 off those prices. My seat in EL1 will cost me £50 on that basis except it won’t cost me anything as I’m not paying it and will be watching on TV. It seems many others who would normally attend will be doing the same, some even withdrawing from the Champions League scheme in protest before the money was taken from their accounts. I think it’s a very poor, short-sighted decision by the club but I’m not going to bring down fire and brimstone on them, as others have already done that. I’m going to take what I hope is a less emotional and more dispassionate look at the issue from a financial perspective.

In the old days, before football was invented by Sky, ticket income was the main source of revenue. In 1978, it was around £800k for City out of a total revenue of just over £1m (with most of the rest coming from the Social Club). In 2014/15 City’s match-day income was £43.3m out of a total income of £352.6m. That was the season when the new third tier of the South Stand was being built and there was a reduced capacity generally. Now the capacity is around 10,000 higher so, on a pro-rata basis, I’d expect match-day income to be around the £55m mark for this season, split maybe £30m from non-premium seating and £25m from premium seating.

As a proportion of our total turnover, matchday revenue will represent around 14% this year and 12% next so taking hospitality out of that probably means that around 7-8% of our total turnover will derived from us plebs in the cheap seats this year and 6-7% next.

This year’s profit will possibly be around the £20m mark and more than 1.25m people will have attended our games in all so if that figure of £30m is correct you could probably charge all the non-premium fans just £10, and still break-even or show a small profit. Next year, the new Sky/BT deal kicks in for the domestic league TV rights and the top clubs should be £50m better off than they will be this year from that alone. So from match-day representing 80% or more of a club’s revenue, it’s now a relatively minor part of the revenue stream for a club like City, when set against the huge revenue streams from TV and Commercial sources that now make up well over 80% of our total income.

Hopefully that kills the myth that prices need to keep on escalating beyond inflation to be able to meet FFP and compete with other big clubs. In terms of revenue generation, we’re about where we should be, given the size of the stadium and the fan-base. Based on that figure of £30m for non-premium seats, the club could reduce prices by 10% across the board and it would cost just £3m, when set against a net profit that will be over 20 times higher.

For the game against Dynamo Kiev, despite it being a first chance to see us advance into the last 8, we only attracted 43,000, which is 80% of capacity. I felt at the time the prices were too high considering the state of the tie, the opposition and the fact that we really don’t love the Champions League. Yet despite this, City decided to put up prices significantly for the PSG game, regardless of the impact. Equally as bad, if not worse, they’ve priced 16-21 and over-65 year olds at just under the adult price.

This generated a furious reaction on social media and fan forums and the club statement just poured oil onto the flames but, more importantly, showed up the short-term, revenue-based thinking of the club. They said ‘Pricing for each match is reviewed on an individual basis, based on factors such as the opposition and stage of competition. As this match is the quarter-final of Europe’s biggest cup competition and the first time the club has progressed to this stage, we believe the ticket prices are a fair reflection of the profile of the game.’

One thing is conspicuously missing from that statement; any mention of us – the fans.

Football has, in the Sky era, been seen as what economist call “price inelastic”. That’s a fancy way of saying that those fans will pay more and more without a significant drop in demand. But the worm has turned recently, with the (partial) success of the FSF’s ‘Twenty’s Plenty’ campaign, which has seen away tickets capped at £30 for the next three seasons and the walk-out of Liverpool fans protesting about their club’s plan to introduce tickets priced at £77. Pricing has become an issue, after years of increases that take our loyalty for granted and which are against a back-drop of real-wage stagnation or even falls. Fans are now actively questioning the prices they’re being asked to pay.

But putting that to one side, there’s still a huge problem with City’s thinking. While some are prepared to pay those prices, claiming they’re fair or reasonable (which is their right) no one at City seemingly thought to ask the question “How can we fill the stadium for this one?”. When we played the UEFA Cup quarter-final against Hamburg, in the first season of our Abu Dhabi ownership, Garry Cook wanted the ground full at any price. Tickets were a fiver and there was a full house and tremendous atmosphere as the team tried to overcome a 3-1 deficit from the first leg. I’m convinced that support gave the players a boost and they came close to achieving a win. Tickets were snapped up in no time and there would have been a good crowd even if the first leg result had been worse.

Yet this time they appear to have accepted the prospect of a significant number of empty seats in return for maximising the potential revenue. The numbers aren’t even all that great either. Let’s say we’d get 40,000 paying an average of £45 (taking all prices and concessions into account) against 53,000 paying an average of £27. That latter figure supposed a top price of £45 instead of £60 with similar reductions in the other areas of the ground. That’s total ticket revenue of £1.8m from the lower crowd against an income of £1.43m from the higher numbers and represents a difference of £370,000. But if those extra fans pay an average of £8 for food, drink, merchandise and programmes, then this brings in something like an additional £100,000 to offset that. So we might be sacrificing a potential £270,000 on the night but with the benefit of a full stadium and, one would imagine, a better atmosphere.

But that figure fades completely into insignificance when you consider the financial rewards on offer from UEFA for this game. We get €6m just for being in this round. In addition, we will receive extra money from the Champions League Market Pool, by dint of playing most games of all the four English clubs. It’s hard to put an exact number on that at this stage but I’d guess it will be at least the same as the prize money, so another €6m (and it might be more).

That means we’ll get €12m or more (call it a round £10m) just for being in the quarter final, before taking into account any revenue on the night. That’s guaranteed before we even kick a ball or sell a ticket. So setting lower ticket prices and potentially giving up £270,000, which is just 2% of that total revenue, would probably enable City to get a full house. You have to wonder which is more important to them.

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  1. Pingback: We’re in the money! – City Watch

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