Let's talk money and why our transfer business has been so poor

[yumtum]

I think the fact that relegation teams get almost 100m is wrong, I know spreading the wealth is honourable and encourages competition, but the fact that it only encourages teams from different leagues hiking up the process for their players from English clubs.

It's like giving every kid at sports day a trophy, it's a competition for a reason, get yourself higher up the table to get more money, the league winners should be earning more than 50m more than a team finishing bottom.

 

[Revan]

I think the fact that relegation teams get almost 100m is wrong, I know spreading the wealth is honourable and encourages competition, but the fact that it only encourages teams from different leagues hiking up the process for their players from English clubs.

It's like giving every kid at sports day a trophy, it's a competition for a reason, get yourself higher up the table to get more money, the league winners should be earning more than 50m more than a team finishing bottom.

Hard to criticize a model that is working well. There are leagues when the winner gets much more than relegated clubs (La Liga for example) and financial wise, it hasn't been working well for them. Say what you want for EPL, but its financial model is second to none, and I think that a big reason for it is the way how the money is spread.

Clubs that finish high in the table (usually big clubs) make much more money than midtable/relegated clubs when it comes to money coming from outside of TV deal (mostly sponsorship). For example, compared to Stoke we had a revenue of 676m euros while they had a revenue of 158m euros, so a ratio of 4.21, but because the money is so fairly spread, it still allows 'small' clubs to be relatively competitive. Take that brick from the wall, and EPL becomes just an another La Liga (but without the homegrown quality).

 

[scottw]

What absolute nonsense. The top 6 is so volatile and with other teams pushing forward with new investors you could never gamble on investing an amount just to come 2nd-4th. You're also ignoring all other forms of income (CL money, advertising & sponsorship, match day revenue, player sales) which would still have us making a solid profit even if we paid out £250 mil.

Hit the nail on the head, we make so more more money from outside factors beyond EPL money. He Ibra paid for himself in Jersey sales, same with Pogba, and that is just jersey sales! We have to play to win the league, not place 2nd, you think Sir Alex ever went to the board and said, gents we are playing for 2nd this season, I only need $40m pounds this window, heck no, they would have fired him after his first couple rocky seasons.

Cite coach is spending gobs of money, and with FFP being the joke it is, they don't care, its oil money, spend, spend, spend.

We are a few players away from winning the league, unless a mircile happens, we will finish 3rd maybe 4th, b/c Cite and Liverstool just about have a wrap on 1 and 2, again injuries aside.

We need a CB in the worst way, we have to get Pogba playing attacking, roaming football like he did in the WC, or he will never work for us. Toby could solidify that CB role, as long as he stays healthy and allow Fred to hold and allow Pogba to just run around and put in crosses for sideshow bob and Luk.

We have to spend the money, we are the most valuable club in the world, they have the cash to spend, Woodward is the worst person ever for our club outside of making money, he is a genius at that. But, if we continue to suck we won't make the money we do now, people like winners!

Just my .02

 

[Davs]

Winning the league definitely has it's pro's financially. You're looking simply at the cash received from the FA for the league position and television rights.

You also need to consider the effect winning the league and comfortably challenging for the league year on year has on your club. For example, as a football player who wants to win everything that he competes in, would you want to join the league winners the previous season or just join a club that can religiously finish top 4 but not really mount a threat for the title?

It's a simple answer.

The reality is, winning the league, or at least challenging for it will have it's financial benefits in other aspects such as the TOP players you can attract to your club, the shirt sales they generate, increased advertising payments due to the quality of your players and winning the league, etc etc etc.

There's simply more to it than;

source

@sunama

 

[FujiVice]

Is there another manager in the world who has been handed players like Lukaku, Matic, Pogba and Sanchez within 18 months and the question is "why haven't they backed him?"

If I started a thread the night we won the FA Cup in 2016 and it read "we'll sign these players, who do you think we'll do?" You'd be thinking we'd be in with a shout of winning the Champions League.

 

[TheRedHearted]

This is one of the most ridiculous false narratives that needs to go. Yes, Mourinho has wanted to buy some players approaching the dreaded 30 years of age like Sanchez, Matic, Willian and Perisic. He has also targeted a number of much younger players like Pogba, Bailly, Lukaku, Lindelof, Dalot, Mkhitaryan and Fred.

Youth needs to be balanced with experience to challenge for titles. I'm confident most managers feel that way.

Was Pogba really him of was it the board?

 

[AR87]

Was Pogba really him of was it the board?

Pretty sure he was fine with it since he tried to sign him when he was at Chelsea as well.

http://www.skysports.com/football/n...ba-for-chelsea-in-2015-says-agent-mino-raiola

 

[wolvored]

This is exactly the point that OP is missing, and why Glazers will invest a lot of money in the club. If we don't get back on tract and win trophies, eventually it will catch up with the number of fans, sponsor deals and most importantly, the valuation of the club. Even a 5% drop on stocks will make Glazers lose more money than what they spent on Pogba. And unlike in Pogba's case where you actually get that money back (in performances, sponsorships and possible resale) you don't get the money back from stocks unless stocks go up.

Exactly. You dont cook the goose who lays the golden eggs

 

[wolvored]

Another way to look at it as well. If you are a Bale or any other top player playing in an entertaining team, why would you leave a successful team to sign to play for Mourinho and the dire shit hes mainly serves up style wise

 

[Cassidy]

Jose has been backed quite heavily since he has been at the club tbh.
Pogba Sanchez Lukaku Matic thats quite significant investment, pretty sure if Bale was available this summer we would have completed that too.

To me it seems that Jose wants a CB and the club want him to sell one first which to me seems fair since we have signed him 2 CBs already.

The fact we keep buying players for the same position CB and CM, maybe the club are wanting better direction

 

[Klean]

Who honestly cares? The team last year finished on 81 points and second. If it weren't for a freak spell from city (62 pts from 22G) which will never be replicated, we would have been right there until the end. This notion that this team needs sweeping changes is crazy, and is only made worse by the media.

Manchester City's form the last 16 games of the season saw them get 38 pts (2.375 pts per game). You can say that the team wasn't playing, ect; but most every week they fielded some sort of regular lineup. United's form was 2.13 pts per game. Over a 38 game season that amounts to 9 points.

Bottom line is there aren't many players who will drastically improve this team who either a) the manager wants or b) are attainable due to the amount of money each team has these days. When West Ham has spend 90 million in one summer shows you what the market is doing. Assuming there isn't any meltdown from the manager, this team should continue to compete for the title and we will continue to see more young players (such as Andreas Pereria / Fosu-Mensah) continue to get more first team minutes.

 

[Vilev]

For my own sanity, please, somebody convince me using sensible logic, that this is not what is planned for MUFC.

Sorry, but you are completely out of touch with any financial sense. First of all, you compare investment with revenue. And nobody does that, that's just stupid. Just so you know any transfer is an investment, they are regarded as such by reporting standards. Which means that they are amortized, basically split over a period of time, that correspond to a economic viability of an asset, in football's case a length on the contract. So when you spend 50m on a player for 5 year contract, that's actually a 10m expenses in an yearly accounts. So you can't compare unamortized sum of a transfer against a yearly revenue, they are etirely different things.
That was first major thing. The second is obviously that prize TV money from domestic league hardly cover 50% of revenue for a club like United. For United exactly 150m is less than a third of revenue. The most important thing is to be prominent on a commercial side of things. Like sponsorships and stuff. So for that to work you do need top signing and winning. So from a simply business point of view Glazers are very interested in investing in "pogbas", because ultimately that's what keep the business model going. For example there is Arsenal and us. Arsenal was in top-4, they were earning to much less in PL prize money in 2010-2015 or about, i specifically ignore Arsenal recent struggles. Lets compare clubs, when Arsenal finished in top-4. During that time though difference in prize money was small, the overall gap in revenue kept getting bigger.

That's just two major business points, there are also like a dozen more specific ones. Like the fact, that money is cheap, so it makes more sense investing in assets, rather than keeping cash. Or the fact that player prices soar due to rise in revenue, so it's more expensive to under-invest, than it is to over-invest.

 

[Fosu-Mens]

Exactly. You dont cook the goose who lays the golden eggs

You appoint Woodward as a cattle herder and invest enough for the cow that it continues to produce cash.

 

[cyril C]

Hit the nail on the head, we make so more more money from outside factors beyond EPL money. He Ibra paid for himself in Jersey sales, same with Pogba, and that is just jersey sales! We have to play to win the league, not place 2nd, you think Sir Alex ever went to the board and said, gents we are playing for 2nd this season, I only need $40m pounds this window, heck no, they would have fired him after his first couple rocky seasons.

Cite coach is spending gobs of money, and with FFP being the joke it is, they don't care, its oil money, spend, spend, spend.

We are a few players away from winning the league, unless a mircile happens, we will finish 3rd maybe 4th, b/c Cite and Liverstool just about have a wrap on 1 and 2, again injuries aside.

We need a CB in the worst way, we have to get Pogba playing attacking, roaming football like he did in the WC, or he will never work for us. Toby could solidify that CB role, as long as he stays healthy and allow Fred to hold and allow Pogba to just run around and put in crosses for sideshow bob and Luk.

We have to spend the money, we are the most valuable club in the world, they have the cash to spend, Woodward is the worst person ever for our club outside of making money, he is a genius at that. But, if we continue to suck we won't make the money we do now, people like winners!

Just my .02

All this myth about jersey sales will cover the cost. Majority of the shirt revenue go to the shirt sponsor. The club will only get around 20%. Take CR's 500K sale as example, 20% is 10m, not even 1 week his wage.

 

[Halftrack]

Hit the nail on the head, we make so more more money from outside factors beyond EPL money. He Ibra paid for himself in Jersey sales, same with Pogba, and that is just jersey sales! We have to play to win the league, not place 2nd, you think Sir Alex ever went to the board and said, gents we are playing for 2nd this season, I only need $40m pounds this window, heck no, they would have fired him after his first couple rocky seasons.

No. Clubs get 10-15% of the revenue the manufacturer make from shirt sales. A shirt goes for £70, of which half goes to the store selling it (I'm just going to ignore any sales tax). Then you have to factor in the cost of materials, manufacturing and shipping. I don't know how much that is, but it's safe to say that manufacturers do not rake in £35 on every shirt sold. I'd be surprised if it was more than £20. But let's say £20, and assume the club gets 15% of the revenue. That's £3 per shirt, meaning we'd have to sell at least 29,7m shirts to cover Pogba's fee.

We sold 2.85m shirts in 2016. Yeah. If we're lucky, a player will generate enough shirt sales to cover a couple of months of his wages. If we're lucky.

All this myth about jersey sales will cover the cost. Majority of the shirt revenue go to the shirt sponsor. The club will only get around 20%. Take CR's 500K sale as example, 20% is 10m, not even 1 week his wage.

Worse than that, even.

 

[ship50]

Don't really know much about finance but think this team is good enough to win some silverware, even the league. Maybe we need defenders and a winger but not many good ones are available out there and those who are, seem reluctant to come here. This is what bothers me.

Team is good, only they've lost the fun part of playing and enjoying the game. I see players like Salah and Sane and they seem to enjoy their time on the pitch. Maybe if Mourinho can get that element back, this very team will look a changed one. Also, marketing and finance is all well and good but for how long can a club remain 'the most valuable' if they don't win anything? I hope the owners, the board and Mourinho realise this as well.

Have a nice day, everyone.

 

[ravelston]

Would a little basic finance help?

FY2017 our EBITDA was about £200m. (think of that as the cash we generate from operations before any finance related stuff happens). If FY2018 was the same (it's likely to be a bit better for a number of reasons) then we'd have £200m this year as well. Off the top of that comes the finance charges - £20m interest and £25m dividends - which leaves £155m. We still owe a lot from previous years' transfers so that comes next. For FY 2018 we were on the hook for around £68m (net - we were owed a lot as well). (There's also another £68m owed for FY2019 but that's next years' story.) So, for FY2018 we're left with £87m to spend. Fred and Dalout cost us a total of £72m (according to Transfermarkt.com) which leaves us with £15m. I guess that CB had better come cheap, unless we want to go further in the hole for next year. (Of course, if the FY2018 EBITDA is bigger than FY2017, we'll have a bit more than £15m but ,the point is, it's not a bottomless pit.)

The Glazers have never put money into the operations of the club. They spent a total of around £520m buying us and, despite all the rhetoric on the Caf over the years, took very little out until we started paying dividends a couple of years ago. Now they get roughly 80% of the dividend stream. Gives them a 4% return on their investment - not counting the increase in the value of their equity, which has been astronomic.

 

[ravelston]

No. Clubs get 10-15% of the revenue the manufacturer make from shirt sales. A shirt goes for £70, of which half goes to the store selling it (I'm just going to ignore any sales tax). Then you have to factor in the cost of materials, manufacturing and shipping. I don't know how much that is, but it's safe to say that manufacturers do not rake in £35 on every shirt sold. I'd be surprised if it was more than £20. But let's say £20, and assume the club gets 15% of the revenue. That's £3 per shirt, meaning we'd have to sell at least 29,7m shirts to cover Pogba's fee.

We sold 2.85m shirts in 2016. Yeah. If we're lucky, a player will generate enough shirt sales to cover a couple of months of his wages. If we're lucky.

Worse than that, even.

The year we moved from Nike to Adidas our merchandising revenue went up £60m. Previously Nike had been managing our merchandising and paying us a percentage, now we run it ourselves. So the half that goes to the store that sells the shirt - that's us.

 

[Fosu-Mens]

The Glazers have never put money into the operations of the club. They spent a total of around £520m buying us and, despite all the rhetoric on the Caf over the years, took very little out until we started paying dividends a couple of years ago. Now they get roughly 80% of the dividend stream. Gives them a 4% return on their investment - not counting the increase in the value of their equity, which has been astronomic.

And the £60m per year on average in interestpayments until the restructuring in 2010, and around £40m per year since that.

 

[ravelston]

And the £60m per year on average in interestpayments until the restructuring in 2010, and around £40m per year since that.

The interest doesn't go anywhere near the Glazers. We pay it as a result of their buyout but they don't get any of it. And it's down to £20m now - which is why they started paying dividends (which they do get).

 

[Fosu-Mens]

The interest doesn't go anywhere near the Glazers. We pay it as a result of their buyout but they don't get any of it. And it's down to £20m now - which is why they started paying dividends (which they do get).

The interest payments are still going out of the club. Eventhough they are not going into the pockets of the Glazers, they are the reason we are paying it.

200-2010 - £60m paid in interest per year.
2011-2015 - £40m
2016 --- £20m After the refinancing spring 2015.

 

[ravelston]

And the £60m per year on average in interestpayments until the restructuring in 2010, and around £40m per year since that.

I suppose if we wanted to be accurate, the interest costs averaged £46m a year from 2006-10, £47m a year from 2011-15, and a bit less than £20m a year since then. (That's the cash costs without considering the impact on our tax position.)

 

[Fosu-Mens]

I suppose if we wanted to be accurate, the interest costs averaged £46m a year from 2006-10, £47m a year from 2011-15, and a bit less than £20m a year since then. (That's the cash costs without considering the impact on our tax position.)

Thanks.
That's the cash costs without considering the impact on our tax position: Same as on interest paid on houseloans? You can deduct a certain percentage of the interest paid from the tax?
Where did you find the numbers from before 2010?

 

[ravelston]

Thanks.
That's the cash costs without considering the impact on our tax position: Same as on interest paid on houseloans? You can deduct a certain percentage of the interest paid from the tax?
Where did you find the numbers from before 2010?

There are accounts accessible for 2005 and 2006 (although not particularly complete). Then the prospectus for the 2010 refinancing has complete accounts for 2007-9.

The interest paid is deductible against taxable income as is imputed interest (as from the PIKs) and a bunch of other things like amortised issue discounts. Overall, without the debt, our tax bill might have been in the order of £230m higher - although the reality is that, without the buyout we probably wouldn't have generated the level of income we have, and so would have been liable to less tax. It's probably more reasonable to put it in the order of £180m. That and a probable unpaid £130m in dividends by the PLC softens the blow a little.

 

[Mr PG]

I was looking at the following numbers, which state that even though we finished 2nd in the league, we earned the same amount of money as MCFC (1st place team), last season.
And LFC, who finished 4th, earned only £3.5M less than the league winners.

source

Let's assume that Jose told the board that to win the league we need to (net) spend £250M.
And to get top 4, we need to (net) spend £60M.
This gives a difference of £190M.
So, for us to mount a challenge, we need to spend an extra £190M.

From a business stand-point, why would the Glazers sanction the spending of £190M extra, given that the income from getting 1st place, is only £3.5M extra and won't cover that extra investment?

In other words,
invest £250M to earn £149M - loss of £101M
invest £60M to earn £146M - profit of £86M

Given these numbers, above, this would explain why the Glazers are not spending big.

Worryingly, are we set to become the new Arsenal? Wenger helped make the owners of AFC, huge amounts of money - spending very little, to maintain 4th place and was removed, only when the fans started boycotting games (reduced gate receipts). My suspicion is that this is what the Glazers have been targeting and in Jose, they finally have a manager who can consistently achieve this (Moyes/LVG, previously failed).

So, top 4, CL qualification, with an FA Cup, here and there, could be what Glazers have in mind for MUFC, for the next few years.

For my own sanity, please, somebody convince me using sensible logic, that this is not what is planned for MUFC.

It's not about the Glazers not wanting to invest but the feeling that a lot of money was wasted. We bought lots of deadwood over the years due to us hiring different managers with different philosophies or none..in the case of Moyes.

Bebe, Obertan, Diouf, Kagawa, Zaha, Berbatov ($32m) , Hargreaves, Sweinsteiger etc..etc

 

[Laurentiu amt]

If you don't win trophies, big players won't join => club doesn't make money on them possible big players
If you don't win trophies you lose bonuses from sponsors => club doesn't make them moneys
If you don't win trophies your good players might be forced to leave the club => you need to buy more players => club doesn't make the moneys

Winning trophies is what stabilizes a football club as a business, that's how people come and invest and that's how they see the business as a safe one.

So no, the OP logic is flawed and too sentimental atm, like 97% of the posts on this forum this summer.

 

[reddevil702]

United set a bad precedent the last 2-3 summer windows by overpaying for players. Add to that the money of the PL and teams know that once we come calling for a player they can add an extra 20 - 25 mil to the fee. The same has happened to City and it seems as if both clubs are now trying to get away from that and show teams they rather walk away from a deal than overpay.

 

[Vilev]

FY2017 our EBITDA was about £200m. (think of that as the cash we generate from operations before any finance related stuff happens). If FY2018 was the same (it's likely to be a bit better for a number of reasons) then we'd have £200m this year as well. Off the top of that comes the finance charges - £20m interest and £25m dividends - which leaves £155m. We still owe a lot from previous years' transfers so that comes next. For FY 2018 we were on the hook for around £68m (net - we were owed a lot as well). (There's also another £68m owed for FY2019 but that's next years' story.) So, for FY2018 we're left with £87m to spend. Fred and Dalout cost us a total of £72m (according to Transfermarkt.com) which leaves us with £15m. I guess that CB had better come cheap, unless we want to go further in the hole for next year. (Of course, if the FY2018 EBITDA is bigger than FY2017, we'll have a bit more than £15m but ,the point is, it's not a bottomless pit.)

And how it is you are not amortizing cost of Fred and Dalot?

Anyway, you need to decide what do you want to mean. In a sense do you want to talk about general business performance & strategy, then we need to use income account, profit statement with EBITDA and the rest of them. Or do you want to talk about financing, so the money available to us. Because you are dancing between the two, and they are different things.
The stuff you write about, our transfer debt, looks like you've got it from balance sheet (reflects assets/liabilities), but to measure it up against EBITDA makes no sense. If you want to gauge how much money United actually have for transfer spending you need to look at cash reserves plus cash from operations minus payments for the next period (transfer debts) and also minus some other stuff, lets call it general non-player related payments. It's not only interest, but also investment in hard assets.
And if you want to see how much of transfer activity could our EBITDA 'swallow' you need to amortize the transfers properly and not worry about staged payments, because they all should be reflected in amortization in a proper way.

 

[Vilev]

Winning trophies is what stabilizes a football club as a business

A top club. There dozens football club that are quite stable yet have not won anything for decades.
And that's the majority.

It also possible that a top-ish club that has not anything major for many years would be actually more financially stable than the club who did regularly but still very dependent on outside financing via shareholder equity.

 

[Vilev]

The fact we keep buying players for the same position CB and CM, maybe the club are wanting better direction

And LW as well. We have like 3-4 player for one position and then hardly anyone for another.

 

[ravelston]

And how it is you are not amortizing cost of Fred and Dalot?

Anyway, you need to decide what do you want to mean. In a sense do you want to talk about general business performance & strategy, then we need to use income account, profit statement with EBITDA and the rest of them. Or do you want to talk about financing, so the money available to us. Because you are dancing between the two, and they are different things.
The stuff you write about, our transfer debt, looks like you've got it from balance sheet (reflects assets/liabilities), but to measure it up against EBITDA makes no sense. If you want to gauge how much money United actually have for transfer spending you need to look at cash reserves plus cash from operations minus payments for the next period (transfer debts) and also minus some other stuff, lets call it general non-player related payments. It's not only interest, but also investment in hard£ assets.
And if you want to see how much of transfer activity could our EBITDA 'swallow' you need to amortize the transfers properly and not worry about staged payments, because they all should be reflected in amortization in a proper way.

Amortisation is an accounting concept. Player purchases are a cash transaction (albeit sometimes spread over one or two subsequent years). When analyzing a business on a cash flow basis it is important not to confuse the two.

I'm unclear where to start in addressing your other points. Cash reserves could be spent but, because they are necessary to carry a company through it's cash cycle, must subsequently be replenished - and the source of that replenishment is the cash earned by the company. Expenditures on "hard assets" are somewhat episodic averaging £11m a year since 2005 but only £6m for the last few years. Transfer related payables appear on the balance sheet, like many other things, but that does not make them any less real. They represent future payments that must be made in cash at specific times. As such they reduce the cash available for spending on other things (current transfers for example).

That's about as far as I can go without teaching a class in forensic accounting (and I retired from teaching a while ago). I probably haven't clarified things for you very much but at least it's good to see someone make an attempt to bring finance to bear.

 

[Giant Midget]

Would a little basic finance help?

FY2017 our EBITDA was about £200m. (think of that as the cash we generate from operations before any finance related stuff happens). If FY2018 was the same (it's likely to be a bit better for a number of reasons) then we'd have £200m this year as well. Off the top of that comes the finance charges - £20m interest and £25m dividends - which leaves £155m. We still owe a lot from previous years' transfers so that comes next. For FY 2018 we were on the hook for around £68m (net - we were owed a lot as well). (There's also another £68m owed for FY2019 but that's next years' story.) So, for FY2018 we're left with £87m to spend. Fred and Dalout cost us a total of £72m (according to Transfermarkt.com) which leaves us with £15m. I guess that CB had better come cheap, unless we want to go further in the hole for next year. (Of course, if the FY2018 EBITDA is bigger than FY2017, we'll have a bit more than £15m but ,the point is, it's not a bottomless pit.)

The Glazers have never put money into the operations of the club. They spent a total of around £520m buying us and, despite all the rhetoric on the Caf over the years, took very little out until we started paying dividends a couple of years ago. Now they get roughly 80% of the dividend stream. Gives them a 4% return on their investment - not counting the increase in the value of their equity, which has been astronomic.

That doesn’t make sense... if we’re paying in installments for previous years transfers, we’d do the same for this year. So we’d have a lot more than 15M to spend left.

I also don’t know if your taking into account the 17M from Blind. We also might be getting ~30M for Rojo and another 8-12 for Darmian.

In addition, we have to look at wages as well. Zlatan leaving takes a big burden off wages as he was the highest paid player at the club.

 

[ravelston]

That doesn’t make sense... if we’re paying in installments for previous years transfers, we’d do the same for this year. So we’d have a lot more than 15M to spend left.

I also don’t know if your taking into account the 17M from Blind. We also might be getting ~30M for Rojo and another 8-12 for Darmian.

In addition, we have to look at wages as well. Zlatan leaving takes a big burden off wages as he was the highest paid player at the club.

Player sales are indeed an additional source of funds. And, if we sell Rojo and Darmian, there will be more. Haven't sold them yet though. As far as wages are concerned, Sanchez seems likely to have sucked up anything Zlatan let go. (Q3 player costs were up £5.5m from Q2 - 2 months of Sanchez?)

 

[Vilev]

Amortisation is an accounting concept. Player purchases are a cash transaction (albeit sometimes spread over one or two subsequent years). When analyzing a business on a cash flow basis it is important not to confuse the two.

It's a concept that allows properly account for investment. My problem with your post is that you take EBITDA, an artificial concept as well as amortization and from PL account, and then try to portrait ii as money available for transfers, which is wrong.
If you want to analyze MU cash flow, then you need to consider cash flow statement. For example, United made 250m in 2017, that is the number you need to use for all your cash calculations going forward.
Then you write yourself transfers are spread over the years in a cash sense, that is why deduct full price for Fred&RB is also wrong.

Cash reserves could be spent but, because they are necessary to carry a company through it's cash cycle, must subsequently be replenished - and the source of that replenishment is the cash earned by the company.

I am not suggesting we take MU to cleaners. Spent all the reserves.
But these reserves are for transfers including, you simply ignore that for some strange reasons. If you want to calculate money available for transfers, you must consider not only cash earned and spent, but also these reserves. Also United has almost 300m in reserves, that's excessive.

Given that we are a high cash positive business now and everything else, if we spent another 70-80m this summer on transfers, United as a business would not even feel it at all. So your assessment about £15m left to spare is somewhat silly.

 

[Halftrack]

The year we moved from Nike to Adidas our merchandising revenue went up £60m. Previously Nike had been managing our merchandising and paying us a percentage, now we run it ourselves. So the half that goes to the store that sells the shirt - that's us.

It's not like we raked in £60m more in shirt sales. Most of that is down to the fact that the Nike deal was £19,7m per year, plus £10-12m in profit share, while the Adidas deal is £75m per year. And we only get the store's half from the shirts that are actually sold through our stores, and some of that obviously has to cover the running of said stores.

And you point out, we now handle licensing and mono-branded merchandise ourselves, which also explains some of the increase in merchandising revenue.

 

[ravelston]

It's not like we raked in £60m more in shirt sales. Most of that is down to the fact that the Nike deal was £19,7m per year, plus £10-12m in profit share, while the Adidas deal is £75m per year. And we only get the store's half from the shirts that are actually sold through our stores, and some of that obviously has to cover the running of said stores.

And you point out, we now handle licensing and mono-branded merchandise ourselves, which also explains some of the increase in merchandising revenue.

True enough.

 

[AllezLesDiables]

It's a concept that allows properly account for investment. My problem with your post is that you take EBITDA, an artificial concept as well as amortization and from PL account, and then try to portrait ii as money available for transfers, which is wrong.
If you want to analyze MU cash flow, then you need to consider cash flow statement. For example, United made 250m in 2017, that is the number you need to use for all your cash calculations going forward.
Then you write yourself transfers are spread over the years in a cash sense, that is why deduct full price for Fred&RB is also wrong.
I am not suggesting we take MU to cleaners. Spent all the reserves.
But these reserves are for transfers including, you simply ignore that for some strange reasons. If you want to calculate money available for transfers, you must consider not only cash earned and spent, but also these reserves. Also United has almost 300m in reserves, that's excessive.

Given that we are a high cash positive business now and everything else, if we spent another 70-80m this summer on transfers, United as a business would not even feel it at all. So your assessment about £15m left to spare is somewhat silly.

Except you aren’t figuring tax considerations amongst several other accounting related issues, which include meeting the obligations for the common stock amongst other things.

The cash reserve can’t just be spent. There are underlying obligations as well as potential obligations that money needs to be available for if there is an emergency.

 

[Vilev]

Except you aren’t figuring tax considerations amongst several other accounting related issues, which include meeting the obligations for the common stock amongst other things.

Yep, i just call it "other stuff" and consider them together with all the rest non-player expenses. It's not like it matters if what we want to do is determine how much money United has for new transfers.

The cash reserve can’t just be spent.

It can. You just think that the cash reserve is some kind of financial shroedinger's cat. It's either alive or dead. It either almost 300m or it's spent. No there are literally millions of options in-between.

There are underlying obligations as well as potential obligations that money needs to be available for if there is an emergency.

You don't need 290m for that. Without even a single calculation i can tell you that 100m would be more than enough. Given our cash positive business that included Jose's previous spending, it a safe bet than even if we dig in and spent 200m of our reserves they would be replenished in no time. Of course we will lose ability to pay massively over the odds next year and maybe have some restrictions a year after. But i don;t suggest we spent 200m on garbage. It should be on a great player, that somehow became available, Ronaldo-Juve style.
But with 290m "in the bank" and with around 250m "operating cash" a year obviously a 150m a season spending (so another 70-80m this season) is well within our budget. Even a conservative one, and i do include all this financial obligations we have whether it's tax, interest or trade payables. And 200m spending should be okay as long as we don't mind spending some (some) of our reserves.
It should be noted that with 190m investment in players in FY2017 (new and deferred payments) we still managed to break-even without any additional income. There was actually a 50m increase in cash, but that was how much money we've got from selling assets.

 

[Bestietom]

The more we win the bigger the price the Glazers will get when selling the club. I am sure they would be looking at this also.

You have got to invest to get to the top and stay there.

 

[Offsideagain]

The owners still borrow money to fund transfers. They personally keep any profit and dividends and burden the club with the debt. That is how most businesses work, the owners are are in it for the money and if spending needs to be done they use other people’s.

City are a charity. Sheik into them personally for £1bn which he has covered by an elaborate i.o.u., the rest is from ‘sponsorship’ deal from companies based, mostly , in Abu Dhabi which is obviously just a coincidence .

I reckon they have spent in excess of £3bn since the buy out. £400m to Taksin, the rest in transfers, salaries, agents fees, council tax and rent and planning applications. Ten years at £300m a year so £3bn may be conservative.