Manchester City owner writes off club’s £305 debt

Manchester City owner Sheikh Mansour has written off the club's £305m debt in one fell swoop, by turning loans he gave to the club into equity. It has also been revealed that he has now invested £395m since buying the club in August 2008.

The move reaffirmed the owner's commitment to City as new manager Roberto Mancini pledged to end the gloating of their rivals Manchester United.

Mancini had hoped to cross swords with Alex Ferguson for the first time tonight, but the Carling Cup semi final between the two Manchester clubs has been called off because of bad weather.

Instead the Italian turned his sights on a banner displayed at Old Trafford that gleefully chronicles City's 36 years without a trophy. "When we go to Old Trafford, we will take that banner down," said Mancini. "This is the last year [it will be there] because we will win."

The financial situation at City was revealed in their yearly figures, released last night. When Mansour's Abu Dhabi United Group took over at City in 2008 it lent the club money to cover its existing debts, bring in new players like Robinho, Emmanuel Adebayor and Carlos Tevez, and help run the club. Those loans, worth more than £300m have now been cancelled in return for shares.

Mansour has also given the club a further £90m in return for more shares, and that money will secure the club's future spending plans. In effect the deal means that if Mansour was to sell up and leave, City would not owe him anything.

Chelsea owner Roman Abramovich pulled a similar trick last month, converting £340 million of interest-free loans into equity to leave the club technically debt-free.

However, there was some bad news for City. Last season the club made a net loss of £92.6m, and that was before Mark Hughes' £117.5m summer spending spree.

However the likes of Manchester United and Liverpool will be casting envious glances towards Eastlands. Both of City's more illustrious American-owned rivals are attempting to restructure huge debts.

The situation is even worse for lowly Portsmouth who yesterday failed to pay their players on time for the third time this season, as new owners struggle to keep it afloat. Pompey have even had to forgo their share of Premier League TV money for the season in order to pay off debts. ·