Manchester City lost more than $150 million last season as the club maintained its heavy spending on players before winning its first English title in 44 years.
Another 90 million pounds ($145 million) was spent bolstering the squad in the last financial year as transfer spending since the club entered Abu Dhabi ownership in 2008 went beyond 580 million pounds ($935 million).
Owner Sheikh Mansour bin Zayed bin Sultan Al Nahyan pumped another 169 million pounds ($272 million) of equity into the club, taking the total he has injected in four years to almost 1 billion pounds ($1.6 billion).
But the Premier League champions are starting to stem the tide of their losses and spending as they try to comply with UEFA's Financial Fair Play regulations, which were introduced to curtail spending sprees by the likes of Sheikh Mansour.
The losses of 97.9 million pounds ($158 million) in the 2011-12 financial year are around half those recorded the previous year.
And manager Roberto Mancini is having to spend less on the squad, with the transfer outlay dropping to 90 million pounds after exceeding 130 million pounds in each of the previous three years.
But City's wage bill rose 15 per cent to 178 million pounds ($287 million) on a turnover of 231 million pounds ($372 million).
That revenue generated by the club exceeded 200 million pounds for the first time as cash coming in from sponsorship doubled to 97 million pounds ($157 million), thanks largely to a new deal with Etihad Airways.
Attracting sponsors will be crucial if City is to avoid being barred from the Champions League from the 2014-15 season for not breaking even on its football-related business.
City said in its annual report that the results position the club "well for compliance with UEFA's Financial Fair Play regulations."
Despite its newfound success on the pitch, City is still living in the shadow of neighbour Manchester United, which it beat to the Premier League title on goal difference in May.
But United now holds a six-point lead over City at the top of the league and generated 320 million pounds ($516 million) in the last financial year.
"Manchester City has come a long way in a relatively short time," City chairman Khaldoon Al Mubarak said. "In the last two seasons we have tasted victory in the FA Cup, experienced the UEFA Champions League, won the Barclays Premier League and with two goals in added time, redefined what is typical of City for a generation of supporters.
"The responsibility lies with all of us to continue the hard work that will ensure that this is only the beginning of a long and successful era for Manchester City."