For Man City, money doesn't always talk

Bobby McMahon is the lead analyst for FOX Soccer Report, airing nightly at 10:00 p.m. ET on FOX Soccer Channel.

More than a decade ago, the then-Federal Reserve Board Chairman Alan Greenspan coined the phrase "irrational exuberance." He was talking of an overvaluation of the technology sector of the stock market.

It was a time when dot-coms would churn out multi-million dollar losses and rather than see their valuations drop, they would instead rise.

Common sense became a blooded-victim as investors poured hundreds of millions of dollars into companies that had little more than a name and a few ideas.

Eventually the dot-com bubble burst, as all bubbles do.

When Manchester City announced a record loss of $305 million a few weeks ago, I was struck by the size of the loss, but more conspicuous was how easily it was explained away by fans and the media.

During Garry Cook's time at Manchester City we had grown used to the hyperbole and super-sales presentations. But even with him gone, his "optimistic" vision seems to have struck a recurring note with fans and media.

The magnitude of the loss has been dismissed with comments like "you have to spend money to make money," "the cost of catching-up," "the cost of developing the brand" and "money will follow success."

Of course none of this would matter if we didn't have the reality of UEFA Financial Fair Play. But we do, and that means that clubs are required to operate within their means (during the start up phase there is some additional wiggle room) or risk being barred from playing in the Champions League when the regulations take full effect.

And it isn't as if Manchester City is unaware of the need to balance the books.

After the 2011 financial results were released Graham Wallace, City's Chief Operating Officer, acknowledged that “[t]hese financial results represent the bottoming out of financial losses at Manchester City before the club is able to move towards a more sustainable position in all aspects of its operations in the years ahead.”

So why have many been so quick to downplay the size of City's task? Some of it could be down to City being the "flavor of the month" - new players, rapid climb up the table, a trophy after over three decades of nothing, all feed a more buoyant attitude.

It might be the complexities of the financial results and the sheer magnitude of the losses, but it is no longer good enough to know who scored. Now we have to understand "EBITDA" and "Player Amortization" as well.

Then again, maybe we don't. Perhaps what we have to do is step back and ask a common sense question - "how successful does Manchester City have to be in order to be sustainable?"

If you strip down to the bare financial essentials by excluding extraordinary-type charges and financing, City's loss amounts to around $242 million - that includes transfer fees amortized over multiple years. (City's revenue and wage bill for 2011 was $242 million & $273 million - and yes these numbers are in the right order!)

Comparable stripped down figures for other Premier League teams (before financing charges) include:

With no disrespect to Manchester City, success and the team have been estranged for most of the last half century, particularly during the Premier League era.

The global fan base for City is nowhere close to these other clubs, and the idea that a massive following can appear like magic without on-field success of unprecedented proportions is delusional.

City supporters may quickly point to recent revenue growth and an increase in their fan-base as signs of what can be achieved with simply "progress".

Others who have not partaken of the Kool Aid might point to the old maxim that "no tree grows to the sky" as a counter to those projecting recent growth as a predictor of future trends.

So, we return to the basic premise of how successful does City have to be the drive the growth they need.

Is it Chelsea successful? Manchester United? Barcelona or Real Madrid even?

Matching Chelsea sets the bar at the lowest point. It has been 8 years since Roman Abramovich bought Chelsea. In that time Chelsea have won the Premier League three times and four times they have finished runners-up.

The FA Cup has been won three times and the Carling Cup twice. In Champions League, Chelsea have made it to the knock-out stage each season - twice they have gone out in the last 16; once in last 8; beaten semi-finalists 4 times; once runners up in 2008. That is a pretty impressive record.

But for all the on-field success Chelsea still generate significant losses each year. So it seems that City needs to not only exceed Chelsea's record but to do so in far less time.

On the face of it, that seems quite the task.

Wednesday's elimination at the group stage from the Champions League was also a reminder that things don't always work out the way that they are planned.

No doubt the City PR machine will shift into high-gear over the next little while and tell us that this set-back will not impact on the club's drive to sustainability in time to meet the UEFA requirements. Manchester United's exit at the same stage also offers some extra cover on the basis that misery enjoys company. But after spending as much money as City have and with proclaimed ambition to move into top echelons of European football, the failure to qualify is a major blow to the club.

It also reminds us that although money talks, sometimes it's with a stammer and a lisp.