Why Manchester City Can 'Quite Easily' Afford To Sign Jack Grealish And Harry Kane

MANCHESTER (ENGLAND) - AUGUST 05 - Manchester City announces Jack Grealish as a new signing.... [+] Football Academy August 05, 2021, Manchester, England. (Photo by Matt McNulty, Manchester City/Manchester City FC via Getty Images). Manchester City FC via Getty ImagesManchester City spent around $300 million to buy two players.The outlay seems possible, however, with Jack Grealish negotiating the first $145million deal and Harry Kane pushing for a similar move of equal value,The question everyones lips is: how?The financial impact of a soccer season that was played behind closed doors can have a devastating effect on the bottom line of every club.People were unsure how City could finance such an extravagant spending spree while still adhering to the Financial Fair Play regulations.Pep Guardiola, manager of the team, said so himself when he was asked about possible signings.He explained that there is a high chance that we won't sign a striker because of the current economic climate."With these prices we are not going buy any striker. It is impossible. We cannot afford it.Every club has financial difficulties, and we are no exception.According to Kieran Maguire from University of Liverpool Football Finance, Manchester City could easily break the British transfer record two times in one summer.He tells me that they can afford it.First, cash-wise, the owners have enough money in the equity side to finance any deal they want.These days, transfers are usually made on an instalment basis. It is possible that the initial deposit could have been 50%, but we don't know.Financial fair play implications. He has signed a six year contract. The accounting rules allow you to spread the cost over six years. This works out at [$20,000,000] per year.For a club like City, where total revenues are in the range of [$690 millions], the hit to your profit & loss account isn't too heavy.He says that winning the Premier League and reaching a Champions League Final last year boosted the club's revenue. The departure of Sergio Aguero, the legendary striker, has significantly reduced costs.[$300 Million] is indeed a large sum. Maguire says that it is not too difficult for them.Cash is the kingPORTO, PORTUGAL – MAY 29: An overview of fireworks going off before kickoff during the UEFA...[+] Champions League Finale between Manchester City FC and Chelsea FC at Estadio do Dragao in Porto, Portugal on May 29, 2021. (Photo by Matthew Ashton – AMA/Getty Images). Getty ImagesIt is common for a sport to be focused on the long-term, and not just the gross wages.However, financial experts such as Maguire know that this can distort the picture.You need to assess the business's long-term profit or loss performance, and most importantly, its cash position, in order to accurately evaluate it.Like Chelseas, Manchester City's ownership model relies on the owner's deep pockets as well as continued generosity to keep money flowing through their business.The club's losses of $172 million in 2019-20 can be covered without having to borrow money from banks.To see the dangers of Real Madrid and Barcelona's financial situations, you only need to look.After significant earnings drops, both clubs have to significantly reduce their costs.The owner-financing model City and Chelsea, on the other hand, has made them stronger over the last decade.Maguire says that it is not surprising that these two clubs were in the Champions League Final earlier in the year.I have looked through all records for the Premier League and found that those two clubs have suffered the greatest financial losses since inception of the Premier League. They are worth approximately [$2.7 billion].Manchester City and Chelsea are coping with coronavirus-related losses in clubs around the world.The sustainable sideLEEDS, ENGLAND – NOVEMBER 02: Jack Harrison, Leeds United, celebrates scoring his side's... [+] second goal in the Sky Bet Championship match at Elland Road between Leeds United, Queens Park Rangers, on November 02, 2019, Leeds, England. (Photo by George Wood/Getty Images). Getty ImagesWhile Chelsea and Liverpool have been praised for their ability to sell large to balance the books, little is said about City's transfer market savvy.Maguire notes that the club's profit/loss performance was positive before the COVID-19 big loss.He continues that although Manchester City's long term spending has been substantial, they were still breaking even financially for quite some time [before] they suffered huge losses in 2020.City is a great financial company, selling players on a regular base.This is important because soccer clubs can record player transfers in their accounts. A few good deals each season can really improve the bottom line.Maguire explains that while you may take the entire profit when you sell a player in a given year, you can spread that cost over many years if you purchase a player.This summer, City was able to raise $50 million by selling fringe players Jack Harrison, Angelino, and Luka Nmecha. This is more than the $20 million Jack Grealish cost.Add the $75 million from the sale of Leroy Sane last year-which did not make the 2019/20 numbers-and you have enough money to pay for Harry Kane's $150 million move to England.