The £400m figure i would assume included interest on the PIK notes which hasn't actually cost the club a penny.
The £350m net-debt figure is calculated by deducting our bank balance from the senior debt.
Easy, huh?
ALL issues relating to the bond issue and club finances
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The £400m figure i would assume included interest on the PIK notes which hasn't actually cost the club a penny.
The £350m net-debt figure is calculated by deducting our bank balance from the senior debt.
Easy, huh?
I'm interested in the Glazers plans to sell and lease back Carrington, Crerand. Can you explain a bit more about that?
I get the feeling these accounts are going to be a bit boring.
The figure I am most interested in seeing is our revenue.
GCQH thinks a slight increase to £280-285million or something in that region (up from £278million last year), I was hoping to see little more than that - towards the £300million mark.
Damn those pesky boycotters!
The figure I am most interested in seeing is our revenue.
GCQH thinks a slight increase to £280-285million or something in that region (up from £278million last year), I was hoping to see little more than that - towards the £300million mark.
Damn those pesky boycotters!
Crerand Legend said:
This is the kind of ignorant thinking that we're trying to guide the fanbase away from, Crerand, please don't say thing like this; think before you post, stupid remarks like that will help no-one.
I get the feeling these accounts are going to be a bit boring.
The figure I am most interested in seeing is our revenue.
GCQH thinks a slight increase to £280-285million or something in that region (up from £278million last year), I was hoping to see little more than that - towards the £300million mark.
Damn those pesky boycotters!
I think the general feeling is that we wont see any significant rises in revenue until next year, TMRD, when the telecoms deals etc. really start to bear fruit.
TheMancRedDevil; said:I get the feeling these accounts are going to be a bit boring.
The figure I am most interested in seeing is our revenue.
GCQH thinks a slight increase to £280-285million or something in that region (up from £278million last year), I was hoping to see little more than that - towards the £300million mark.
Damn those pesky boycotters!
The effect of the boycott would only be seen the in next set of financials.
Must admit, just after I posted, I was trying to think when tickets went on sale. Before end of June or after...
Oh well, whatever. Let's hope there's something even slightly meaty about them one way or the other.
I get the feeling these accounts are going to be a bit boring.
The figure I am most interested in seeing is our revenue.
GCQH thinks a slight increase to £280-285million or something in that region (up from £278million last year), I was hoping to see little more than that - towards the £300million mark.
Damn those pesky boycotters!
What you've got to remember about the turnover number is that the club's first team results in 2009/10 didn't match those of the previous year. In 2008/09 we won the Premier League, reached the final of the Champions League, won the Carling Cup, reached the semi-finals of the FA Cup, won the Club World Cup and appeared in the final of the European Super Cup.
There were also two less home games played in the 2009/10 year compared to the previous period so in the circumstances a slight increase in revenue and EBITDA is actually good news.
TheMancRedDevil; said:
Even if they were sold in June (I can't remember either) the revenue would be unaffected as they would be adjusted out as they are prepayments.
The main effect in these accounts would be a reduced expected bank balance as many delayed renewing until the last day in addition to the boycotters.
Actually, when you put it like that, it would be fantastic news!
Thanks, GCHQ. I'll lower my expectations, now!
The season ticket renewal deadline was June 13th so people leaving it until the last day to renew wouldn't have had an impact. Obviously the slightly reduced number of season tickets sold will have an impact on the bank balance, but we're talking about a million pounds or two at the most.
I still expect the cash balance to have been in the region of £160m on June 30 2010, which would represent an increase of £10m on the previous period. The people who make a big song and dance about the c.£80m accounting loss will have to explain how the cash balance has actually increased despite that very significant ''loss''. I look forward to their explanations.
Right. No wonder I can't follow accounts. Money comes in but you don't count it yet, you "adjust it out". Wtf?
I'll just be looking for a few key areas on there (wages, the bottom line - that kind of thing) and I'll leave the technicalities for those who know what they're doing.
TheMancRedDevil; said:Right. No wonder I can't follow accounts. Money comes in but you don't count it yet, you "adjust it out". Wtf?
I'll just be looking for a few key areas on there (wages, the bottom line - that kind of thing) and I'll leave the technicalities for those who know what they're doing.
Accounts are produced on an matching basis ie if you purchase a player the cost isn't taken all upfront in the accounts, it is amortised over the length of their contract. The same with tickets, the 10/11 season ticket income will be accounted for as a prepayment in the 09/10 account and as revenue in the 10/11 accounts.
GCHQ; said:
The accounting loss is still relevant for discussion as I've said before. The accounting concepts are there to reflect the true nature of the performance of a business. Looking at performance solely on a cash basis is ultimately misleading.
Hmm. You know what. That is the most understandable explanation for player amortisation that I have ever read.
So, let me get this straight. If we buy a player for £30million (yes, I know, don't laugh) on a four year contract then that is a £7.5million/year expense and is recorded on the accounts as such?
You've lost me with the ticket income though. If, for example, £40million worth of tickets were purchased prior to 13th June 2010, how is that recorded on the accounts that we're about to see and how can it be recorded again in the 10/11 accounts?
How does the £35m of goodwill amortisation help to reflect the true nature of the performance of the business? How does the £22m of unrealised foreign exchange losses on dollar denominated bonds not due for repayment until 2017, reflect the true nature of the performance of the business? How does the £40m of exceptional refinancing costs reflect the true nature of the performance of the business going forward?
The reality is that those accounting items don't help to reflect the true nature of the performance of the business.
The accounting concepts that do help to reflect the true nature of the company's performance are items such as amortisation of player registrations and depreciation of fixed assets. I've stated that these items certainly shouldn't be excluded and are perfectly relevant to a discussion about the performance of the business. There's a crucial difference which must be appreciated.
TheMancRedDevil; said:
1) Yes.
2) You will have the £40m in the bank and creditor for income received in advance on the balance sheet in 09/10. In 10/11 that creditor will be released to the P&l as revenue.
GCHQ; said:
We've discussed it before and couldn't come to an agreement so its futile rehashing it all again.
Ahh i wasn't aware of that, cheers. I've looked up amortisation before and read a few pages about it and still been none the wiser; i think i get it though now; money can appear to have left the club in a year's accounts, money which actually was paid-out years previous and had no effect on the tangible income/outgoings of the following years despite it appearing to do so? This is what GCHQ calls an 'irrelevent non cash expense then'? This sounds to me less like an accounting 'trick' to play down losses, as it has been described, and more like a generally accepted and important mechanic of accountency. No wonder anders and GCHQ were both in agreement that we suffered no real losses; it's just a shame that MUST and the press couldn't have been as thorough and honest in their analysis.
And I don't remember you answering those questions then either. I'm sorry but if you think the first two items are in any way relevant in reflecting the true nature of the company's performance then you're wrong. Simple as that. The exceptional refinancing costs are relevant for the year in which they were incurred but not to the company's performance going forward.
I'm not sure why you can't appreciate this. Do you think the investors who bought the bonds were concerned about the £35m annual goodwill write off?
1) Ok. Thank you. I've got that now.
2) I'll probably have to bear this in mind when I look at the accounts and see if I can make sense of it from a real example. My brain's just blown a fuse with what you've written there. Why does it have to be so bloody complicated? Money comes into the bank, that is income and should surely be recorded as income (revenue) during that accounting period.
Thanks anyway.
No, you just need to get away from viewing things from a purely cash perspective for the reasons I said.
TheMancRedDevil; said:
You just need to get away from looking at everything on a cash basis. The matching concept is fairly simple and makes sense when you think about it. If accounts were produced on a cash/receipts basis they would be extremely easy to manipulate and would fluctuate wildly year on year and hence be of minimal use for any analysis of a company's performance.
No!
I've always stated that the amortisation of player registrations is a relevant non cash expense. It's relevant in so much as it reflects the ongoing investment in the playing squad in the P/L account. It doesn't reflect cash outflows in any given year but it's still very much relevant because ultimately it reflects the level of investment in purchasing players over a period of time.
Myself and Anders were in agreement about the irrelevance of the £35m annual goodwill amortisation expense which meant that we wouldn't have suffered any real losses in the 2008/09 year even without the £80m profit from the sale of Ronaldo. In the 2009/10 year you've also got another £30m of irrelevant non cash costs relating to the foreign exchange losses and the debt issue amortisation costs, as well as the £40m of exceptional refinancing costs (the hedge loss). When you add all that up it means that the £80m accounting loss grossly distorts the true performance of the company in the 2009/10 financial period.
What people really should be looking at is the EBITDA number in the P/L account of c.£95m (or cash inflow from operating activities) and the cash interest expense of £44m going forward. From that you've got c.£50m for capital expenditure on players/facilities as well as the possibility of some of the cash being paid out in dividends.
There's a reason why I didn't become an accountant and it is becoming clearer by the minute.
I know cash-flow is a basic way of looking at things but it's all I understand.
£x comes in - £x goes out. I don't really understand how that is easy to manipulate. You can't invent monies coming in, nor can you invent expenses going out.
What's in the bank at the end of the day will either tally or it won't.
I know cash-flow is a basic way of looking at things but it's all I understand.
£x comes in - £x goes out. I don't really understand how that is easy to manipulate. You can't invent monies coming in, nor can you invent expenses going out.
What's in the bank at the end of the day will either tally or it won't.
I don't understand how amortisation reflects an on-going investment if it's simply the accounting result of a previous cash investment divided over the length of a player's contract. It seems to me that the investment was made upon purchase, and unless payment is made in installments then how can that investment be considered on-going? What am i missing?
Exactly. Why not just put it in as £30million at the time of purchase instead of £7.5million a year for four years? It makes no goddamn sense you accountancy idiots!
EDIT: Unless is IS paid in installments... hmmm... perhaps performance related parts of the deal or whatever but surely these should be accounted for as they are incurred?
There's a reason why I didn't become an accountant and it is becoming clearer by the minute.
I know cash-flow is a basic way of looking at things but it's all I understand.
£x comes in - £x goes out. I don't really understand how that is easy to manipulate. You can't invent monies coming in, nor can you invent expenses going out.
What's in the bank at the end of the day will either tally or it won't.
It's simply to do with how that cash is recorded in the Profit and loss account.
Cashflow is extremely important it's just that if you've received cash up front which relates to activities in the following financial year (as football clubs do with season ticket income), then it would distort the financial results for the period which that cash doesn't relate to if you included it, so you therefore leave it out of the P/L account. What happens is that the cash is treated as deferred income on the balance sheet before being distributed to the following year's profit and loss as and when the activities (home games) take place. The cash relating to the following financial year's activities is also recorded in the cash flow statement and a comparison of end of year cash balances is absolutely justified because the same process happens year on year.
Fair enough. I can follow that but surely as we're talking about something that runs from year to year anyway, it doesn't matter that much?
I realise I am arguing against the accountancy world now so I'll just leave it there. It's bloody stupid though. Just because something is being purchased for next year, is irrelevant to my mind. The money came in LAST year.
Nevermind, I think I can vaguely understand what is being said here. Accountants are paid a lot of money to do this stuff (I should know, I pay one) and so it is in their best interests to make sure that mere mortals can't follow what is going on, I suppose, or we'd just do it all ourselves with an Excel spreadsheet, a calculator and a pen.
I take your point to some extent but what I mean by ongoing is that it can be assumed that the annual amortisation expense in any given year is roughly what will be required for expenditure in future periods. So it's ongoing in the sense that the company continually needs to invest in new players in order to meet its operating activities. It's essentially giving a broad picture of investment in new players over a period of time.
Fair enough. I can follow that but surely as we're talking about something that runs from year to year anyway, it doesn't matter that much?
I realise I am arguing against the accountancy world now so I'll just leave it there. It's bloody stupid though. Just because something is being purchased for next year, is irrelevant to my mind. The money came in LAST year.
Nevermind, I think I can vaguely understand what is being said here. Accountants are paid a lot of money to do this stuff (I should know, I pay one) and so it is in their best interests to make sure that mere mortals can't follow what is going on, I suppose, or we'd just do it all ourselves with an Excel spreadsheet, a calculator and a pen.
Well it does matter because that cash doesn't refer/relate to the activities that took place in the financial year under review!
Hmm... that does seem a bit hit and miss, to be honest. It's no wonder people keep banging on about the cost to replace Giggs, Scholes, VDS and Neville.
These are exceptional players and their replacements will cost exceptional amounts so it is no wonder people will say that the figures shown from the last few years are not a true reflection of costs going forward.
(By the way. I think Giggs and Neville have been replaced already.)
I think what puzzles people like me is how two people (yourself and Anders) can look at the same figures and disagree about what they mean.
I realise I am naive to the ways of accountancy but I'm not too shabby when it comes to mathematics. I can add stuff up and take things away as well as the next person.
How subjectivity can come into something as objective as mathematics remains a mystery to me.
1+1=2. Always has, always will and when someone says, "Ahh, but that 2 is actually 1.73 and so blah blah blah" I go into meltdown.
Well it does matter because that cash doesn't refer/relate to the activities that took place in the financial year under review!
It DOES though!
Tickets were put up for sale in the 2009/10 year and they were bought in the 2009/10 year. That is activity last year regardless of the fact that the matches these transactions took place for will actually take place next year. Aaarrgh! I can't take this anymore.As an afterthought, does this work the other way and is therefore good for tax liability purposes.
For example, if we take an £80million sponsorship deal over 4 years and take £40million in the first year then we can actually only record it as £20 million in that first year (therefore removing £20million from the clutches of tax liability for that financial year)?
For example, if we take an £80million sponsorship deal over 4 years and take £40million in the first year then we can actually only record it as £20 million in that first year (therefore removing £20million from the clutches of tax liability for that financial year)?
Hmm... that does seem a bit hit and miss, to be honest. It's no wonder people keep banging on about the cost to replace Giggs, Scholes, VDS and Neville.
These are exceptional players and their replacements will cost exceptional amounts so it is no wonder people will say that the figures shown from the last few years are not a true reflection of costs going forward.
(By the way. I think Giggs and Neville have been replaced already.)
I think what puzzles people like me is how two people (yourself and Anders) can look at the same figures and disagree about what they mean.
I realise I am naive to the ways of accountancy but I'm not too shabby when it comes to mathematics. I can add stuff up and take things away as well as the next person.
How subjectivity can come into something as objective as mathematics remains a mystery to me.
1+1=2. Always has, always will and when someone says, "Ahh, but that 2 is actually 1.73 and so blah blah blah" I go into meltdown.
Let's not forget that the annual amortisation expense is currently running at £40m. You could pick up a Rodwell and a Bale for not too much more than that I would have thought. There was a huge investment in players in 2007 and 2008 and I would expect to see a similarly large investment in the not too distant future.
The disagreement I have with Anders on a financial level is about the degree of risk involved and about the club's ability to continue to compete at the highest level under the current ownership and financial model. Clearly, those are subjective matters. I think the financial performance strongly suggests that the risk involved isn't really that great and that the club will continue to compete at the highest level. He doesn't share that confidence. The last five years supports what I'm saying, he believes the bond issue prospectus and its consequences support his point of view.
He accepts that the operating performance is very strong but believes that the combination of the cost of servicing the bonds (£44m pa) and the cost of stabilizing the PIK debt through payments to RFJV Ltd will signficantly impact negatively on the club's ability to continue to compete at the highest level.
The club isn't going bust. Nobody sensible, Anders included, thinks that. He's just worried that the trophies will dry up. The glory supporter that he is.
Yup, but that's not why the system works the way it does, it's just a consequence of it.
Let's not forget that the annual amortisation expense is currently running at £40m. You could pick up a Rodwell and a Bale for not too much more than that I would have thought. There was a huge investment in players in 2007 and 2008 and I would expect to see a similarly large investment in the not too distant future.
The disagreement I have with Anders is about the level of risk involved and about the club's ability to continue to compete at the highest level under the current ownership and financial model. Clearly, those are subjective matters. I think the financial performance strongly suggests that the risk involved isn't really that great and that the club will continue to compete at the highest level. He doesn't share that confidence. The last five years supports what I'm saying, he believes the bond issue prospectus and its consequences support his point of view.
He accepts that the operating performance is very strong but believes that the combination of the cost of servicing the bonds (£44m pa) and the cost of stabilizing the PIK debt through payments to RFJV Ltd will signficantly impact negatively on the club's ability to continue to compete at the highest level.
The club isn't going bust. Nobody sensible, Anders included, thinks that. He's just worried that the trophies will dry up. The glory supporter that he is.
Well, all of the above is largely why I find myself on the same side of the fence as you. I might not understand accountancy but I can see that around £280million in should be able to take care of a £45million bond interest payment and a £25million Glazer dividend and still leave us with £210million to play with which is more than most PL clubs bring in full stop.
Exactly.
You'll make an accountant of me yet, GCHQ.
No doubt I'll be posting spreadsheets on here next year.
At which point I'll shoot myself.
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