Chapter 810: You Don’t Owe Anyone

After returning to Cheshire from Reading, Gao Shen took a day to rest before diving straight back into his intense work schedule.

During this time, while Huawei engineers were in Leeds for integration work, he made a personal trip there, called Yu to thank him for his support, and arranged to meet again when they had time.

"As long as we're not talking about football, if you call, I'll definitely come if I'm free!"

…

For Gao Shen, the two-week international break was truly nerve-wracking.

Manchester City were in excellent form, and the only real threat to their momentum was injuries.

The other Premier League teams could do nothing against City.

They couldn't beat them, couldn't poach their players, so they could only hope for divine intervention.

During this time, the Daily Mail did something particularly nasty by once again calling for a full investigation into Manchester City's finances. They helped Sheikh Mansour do the math and concluded he had invested over one billion pounds into Manchester City over the past few years.

Once the Daily Mail lit the fire, outlets like The Sun jumped in, creating the impression that if they couldn't beat Manchester City on the pitch, they'd try to win off it.

Manchester City had indeed been operating at a loss, and a significant one at that, but their results had been undeniably impressive.

With multiple media outlets stirring up the issue, Manchester City was forced to respond.

CEO Gary Cook came forward to clarify that the club was indeed spending more than it was earning, but he emphasized that Manchester City's revenue had been growing at an astonishing rate every year.

So why had the losses grown?

Because of contract renewals.

Put simply, when a team performs well and players earn new contracts with higher wages, club expenses go up, and so do the losses. Isn't that normal?

Gary Cook repeatedly stressed that the media had exaggerated Manchester City's debt.

"Sheikh Mansour isn't in this for the short term. He's committed to long-term development."

"If you carefully study the companies Sheikh Mansour owns, you'll see he's never had a failed business. He doesn't pursue massive profits, but seeks stability. That's why, since acquiring Manchester City, he has managed the club step by step, steadily."

"Yes, we've made rapid progress in terms of results, thanks to the coaching staff led by Gao Shen and our players. They've brought us glory on the pitch and have driven the club's rapid growth financially as well."

"I believe the club will achieve financial independence in a few years. It's absolutely possible, and it's the direction we're heading in!"

Gary Cook's response was reasonable, but no one really cared about reason.

Manchester City said they could turn things around in the future and asked for a few more years. But who can predict the future?

When Chelsea lured Peter Kenyon and Gourlay away from Manchester United, they also made bold promises of becoming profitable within a few years. Did that happen?

Peter Kenyon left. Chelsea still weren't making a profit and were surviving on cash injections from their owner.

Would Manchester City face the same fate?

What's that? Chelsea are also in debt?

That's Chelsea's problem. Right now, we're talking about you, Manchester City!

Besides, they're not violating Financial Fair Play rules.

Speaking of which, that's a whole other discussion.

…

Gao Shen was completely lost when it came to financial matters. He never paid much attention to the club's finances.

Left with no choice, he went home to ask his wife.

Su Qing pulled up some documents on the computer and handed Gao Shen a copy of Arsenal's audited annual financial report from last season, prepared by Deloitte.

Gao Shen took a look and it was all gibberish to him. It might as well have been ants crawling on the page.

Su Qing had no choice but to patiently explain.

It turned out that capital operations weren't just about taking out loans or doing business.

The devil was in the details of the financial statements.

The Daily Mail and The Sun simply added up all of Manchester City's transfer spending over the years and claimed the club had lost a fortune, saying City had invested £1 billion and had massive losses after subtracting revenue.

But Gary Cook said they were exaggerating.

In truth, both sides had a point.

For example, if Manchester City signed a player for £100 million on a five-year contract, how would that appear in the books?

The answer: amortization.

It's similar to the depreciation of fixed assets.

One hundred million pounds would be divided over five years—£20 million per year—counted as an annual cost.

Now here's the twist. If Manchester City sold that player for £30 million at the end of the fourth year, was that a loss or a gain?

To the media and fans, it looked like a loss.

How could it not be?

They spent £100 million and only got back £30 million, a loss of £70 million. That's huge.

But the reality?

They made money.

Because over the previous four years, £20 million was amortized each year—£80 million in total.

That meant the remaining unamortized amount was £20 million. Financially, the player's book value was now £20 million. Selling him for £30 million meant a £10 million profit.

This is why Gary Cook said Manchester City's losses were exaggerated.

Looking at the financial statements, the club wasn't losing as much as the media claimed.

Since many transfer fees were spread over several years, the reported losses were much lower.

At least, that's how it looked on paper.

…

After Su Qing's explanation, Gao Shen finally understood the situation.

The reason companies go bankrupt isn't necessarily because of losses. It's usually because of cash flow problems.

Once cash flow is cut off, the business collapses.

So, in theory, with capitalized operations like this, as long as cash flow is steady, the team can keep operating.

For clubs like Manchester City and Chelsea, backed by deep-pocketed owners like Mansour and Abramovich, the cash flow was practically unlimited. So the game could go on indefinitely.

"Clubs like Manchester United and Arsenal haven't dared to make big signings in recent years because of cash flow pressure. Even Real Madrid and Barcelona, with their membership models, face similar limitations. But teams like Chelsea, Manchester City, and Paris Saint-Germain don't have that problem. As long as the owners are willing to spend, they can keep going."

Gao Shen realized that UEFA's financial regulations weren't as restrictive as they appeared.

"Financial games are always financial games. Money doesn't appear or vanish out of nowhere. It might move through transfers, but clubs don't actually benefit from that. It's all about dressing up the books."

"That's why clubs like Manchester United, Arsenal, and Bayern Munich keep demanding financial audits of Manchester City. Their business models are completely different. How can they compete on the same playing field?"

Su Qing's words made Gao Shen feel enlightened.

But realistically, financial audits were hard to enforce.

More importantly, even more capital would pour into football in the future. Clubs would start playing the capital game, like Chelsea, Manchester City, and Paris Saint-Germain.

They would aim to rise quickly, close the gap with the top teams, and build their own brand. That would come at a steep cost.

As the market hyped up, transfer fees would naturally rise, and player salaries would follow.

Before, Gao Shen only saw the outcomes of the capital game. Now, after Su Qing's analysis, he understood the mechanics—and that made him uneasy.

Could the capital game really go on like this?

Even with a booming economy and soaring international broadcasting rights, club revenues had limits. The market couldn't sustain it forever. How many clubs still had real value?

"Do you know how grateful Manchester City is to you right now?" Su Qing said to Gao Shen.

She knew he'd been concerned lately, worried about whether he should stay at Manchester City, and she used this moment to comfort him.

"You must have noticed by now that in this capital game, real value is what matters most, but it's the hardest to quantify. And you've made every penny Manchester City spent return equal, double, triple, or even ten times the actual value."

"Manchester City has treated you well, but you don't owe them anything. You don't owe anyone anything," Su Qing concluded.

Gao Shen felt much better after hearing that.

It seemed like Manchester City was still operating at a loss, but that wasn't because the club had no value. It was because their revenue hadn't caught up with their spending.

Purely in terms of value, Manchester City was now one of the most valuable clubs in world football. Only Real Madrid and Barcelona could compete.

And that value had been built by Gao Shen over the past three years.

Gao Shen nodded firmly.

"Ever since I was little, my father taught me to live within my means. When I grew up, I learned to seek truth from facts. That's why Leeds United cannot, and should not, follow this kind of capital-intensive path."

Su Qing smiled and nodded. "Don't worry. You still have me, don't you?"

She knew him better than anyone. She understood what he wanted and how to help him achieve it.

…

Manchester City's financial issues had become a recurring media topic, getting "criticized" every so often.

Gao Shen didn't need to concern himself with any of that. He just focused on preparing his team for the upcoming Premier League matches and Champions League group stage games.

In the twelfth round of the Premier League, Manchester City hosted Newcastle. Gao Shen sent out all non-South American internationals and secured a convincing 3-0 home win.

The Magpies were ranked fifth in the league at the time but were dismantled by Manchester City without a fight, showing the Blue Moon's overwhelming strength.

Three days later, Manchester City flew to Madrid to face Real Madrid at the Bernabéu.

For Real Madrid, it was a do-or-die match. For Manchester City, qualification had already been secured.

Gao Shen rotated the squad and went with a defensive counterattack strategy—a decision any sensible head coach would make in this situation.

As for whether Real Madrid could win, that was Mourinho's problem.

(To be continued.)

***

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