Football Clubs & Debt

[LeazesMag 0]

Another quick question...

 

I'm trying to get my head around how we made so much after transfer dealings as it doesn't add up when you include the players bought, now looking at the SMB in their financial results thread someone has said that transfers fee's when you buy a player don't go through as one hit and will be fed through over the length of the players contract, unlike when you sell a player and it all goes at once. Is that correct?

 

Here's the thread if anyone is interested.

 

http://www.readytogo...ad.php?t=686290

 

It can get quite complicated.

 

But here's a simple example.

 

We sign Fred Bloggs for £10m. He is on a 5 year contract, so we add his transfer fee to the books at £10m (as an intangible asset), and account for £2m of it each season.

 

If we sell him when he's 4 years into his contract, he will be "valued" at £2m. If we sell for more than £2m, the excess will be profit. If we sell for less than £2m, we make a loss.

 

Additionally, if we work out after a year that he's actually Xisco in disguise, we might have grounds for writing off his entire contract in one go, taking the hit straight away (I believe we've already done this with Xisco and Alan Smith).

 

http://en.wikipedia.org/wiki/Depreciation

 

Sadly, this doesn't change the fact that if you want success in football, you back your manager and a big club like NUFC with the 14th biggest revenues in the game ought to be able to hand the entire cash from a sale to its manager and back him in this way.

[ChezGiven 0]

It's good to at least see the proof that no cash has been pocketed too.

 

did you reply to the post from HF where he pointed out to you that the club kept its best players and added a good player to the team in January, hence it consolidated its position rather than go downwards ?

?

 

The sun rose this morning, not sure I'd reply to a post stating that either.

 

HF pointed out we kept out best players did he? Did he just want to tell me I'd been right all along or something?

 

He then pointed out that we had added a good player to the team? That's great of him to do that but everyone can see Cissé is good.

 

We've consolidated our position now? Great, things are moving in the right direction. Seems like we're all aligned in our positive outlooks then.

[BigWalrus 0]

Do they give details about how much is in the club account?

 

 

This bit has always seemed confusing.

 

MA is owed £140m - easy.

In the creditors note, we show a £140m balance under term loans - fine.

 

We have a positive cash balance of £9.5m - easy

Yet in the creditors note, we show a £2m overdraft. And no positive cash balance on the balance sheet.

 

Need to have a better look at the numbers elsewhere, but they don't appear to reconcile very easily.

[LeazesMag 0]

It's good to at least see the proof that no cash has been pocketed too.

 

did you reply to the post from HF where he pointed out to you that the club kept its best players and added a good player to the team in January, hence it consolidated its position rather than go downwards ?

?

 

The sun rose this morning, not sure I'd reply to a post stating that either.

 

HF pointed out we kept out best players did he? Did he just want to tell me I'd been right all along or something?

 

He then pointed out that we had added a good player to the team? That's great of him to do that but everyone can see Cissé is good.

 

We've consolidated our position now? Great, things are moving in the right direction. Seems like we're all aligned in our positive outlooks then.

 

indeed he did, for the first time in 9? [can't be bothered to count] transfer windows. Will this forward progressive policy continue in the summer, especially with lots of the Carroll money left ? As you didn't answer HF, you can answer me instead, and I know where my money would go.

Edited March 28, 2012 by LeazesMag

[Kevin Carr's Gloves 3860]

I know I shouldn't but. Perhaps In MA's world (not saying he is right) if you owe £140,000,000 and someone gives you £35,000,000 then that means you now just owe £105,000,000. Obviously I am simplifying and paraphrasing but perhaps that is how he looks at the situation.

[BigWalrus 0]

Another quick question...

 

I'm trying to get my head around how we made so much after transfer dealings as it doesn't add up when you include the players bought, now looking at the SMB in their financial results thread someone has said that transfers fee's when you buy a player don't go through as one hit and will be fed through over the length of the players contract, unlike when you sell a player and it all goes at once. Is that correct?

 

Here's the thread if anyone is interested.

 

http://www.readytogo...ad.php?t=686290

 

It can get quite complicated.

 

But here's a simple example.

 

We sign Fred Bloggs for £10m. He is on a 5 year contract, so we add his transfer fee to the books at £10m (as an intangible asset), and account for £2m of it each season.

 

If we sell him when he's 4 years into his contract, he will be "valued" at £2m. If we sell for more than £2m, the excess will be profit. If we sell for less than £2m, we make a loss.

 

Additionally, if we work out after a year that he's actually Xisco in disguise, we might have grounds for writing off his entire contract in one go, taking the hit straight away (I believe we've already done this with Xisco and Alan Smith).

 

http://en.wikipedia....ki/Depreciation

 

Sadly, this doesn't change the fact that if you want success in football, you back your manager and a big club like NUFC with the 14th biggest revenues in the game ought to be able to hand the entire cash from a sale to its manager and back him in this way.

 

The cash doesn't just go on the transfer fee though - it's on the wages too.

 

So, we sell Carroll for £35m, also saving £40k per week in wages. Over the four years of his contract remaining, this gives us around £43m net benefit.

 

We then pay £6m in fees for Ba, plus around £50k per week (after bonuses, ish). £50k per week on 3 year deal is £7.5m

 

We then pay £10m for Cisse, plus around £50k per week (after bonuses, ish). £50k per week on 5 year deal is £12.5m

 

Already we have spunked £36m on those two players, when you take the wages into account. And I've not even considered Cabaye, the permanent Ben Arfa signing, Tiote's new deal, Coloccini's new deal, Krul's new deal...

 

Liverpool worked it in the same way. They got £50m for Torres, so spent £35m on transfer fee and allowed £15m on Carroll's wages.

 

 

Financial prudence is the way to go now.

[BigWalrus 0]

I know I shouldn't but. Perhaps In MA's world (not saying he is right) if you owe £140,000,000 and someone gives you £35,000,000 then that means you now just owe £105,000,000. Obviously I am simplifying and paraphrasing but perhaps that is how he looks at the situation.

 

MA doesn't even treat it as a loan. He treats it as part of his purchase price for the club. The only way it will disappear will be if the club is sold and the loan written off.

[Gemmill 44556]

Do they give details about how much is in the club account?

 

 

This bit has always seemed confusing.

 

MA is owed £140m - easy.

In the creditors note, we show a £140m balance under term loans - fine.

 

We have a positive cash balance of £9.5m - easy

Yet in the creditors note, we show a £2m overdraft. And no positive cash balance on the balance sheet.

 

Need to have a better look at the numbers elsewhere, but they don't appear to reconcile very easily.

 

You're not allowed to offset cash and overdraft, so it's normal that they would be reported separately. I haven't seen the balance sheet, but the note certainly suggests a cash balance of 10m, and that's what the Swiss Ramble site shows.

[ChezGiven 0]

 

indeed he did, for the first time in 9? [can't be bothered to count] transfer windows. Will this forward progressive policy continue in the summer, especially with lots of the Carroll money left ? As you didn't answer HF, you can answer me instead, and I know where my money would go.

So it was a post asking me whether we would continue making progress? Ok, then let's go back to this time last year where I said in my boldest of predictions that the first team would be stronger this season than last season. it's in the prediction thread, is referred to everywhere on here and formed a significant part of my toontastic oeuvre at the end of last season.

 

I repeat the same prediction and this time, having seen how fucking spot on I got it last time, maybe people will pay a bit more attention. The continued improvement in finances and the set up of the club will see a stronger first team next year. It won't have 5 new superstar signings, it may even not include a face or two from this year's first team picture but we're going to look better next year, we're going to address significant weaknesses and, here I am out in a bit of a limb, we're going to bring in some fucking class young players from France.

 

We might lose Tiote and you might come on here and say exactly the same things you said when we lost Nolan but none of that will matter because firstly, I've seen a player called Perch doing a reasonable impression of a defensive midfielder and secondly, there are some fucking superb DM's plying their trade over in France, not guaranteed to be as good but let's face it, the team who identify and bring in transfers are currently the highest performing team in England.

[LeazesMag 0]

 

 

It can get quite complicated.

 

But here's a simple example.

 

We sign Fred Bloggs for £10m. He is on a 5 year contract, so we add his transfer fee to the books at £10m (as an intangible asset), and account for £2m of it each season.

 

If we sell him when he's 4 years into his contract, he will be "valued" at £2m. If we sell for more than £2m, the excess will be profit. If we sell for less than £2m, we make a loss.

 

Additionally, if we work out after a year that he's actually Xisco in disguise, we might have grounds for writing off his entire contract in one go, taking the hit straight away (I believe we've already done this with Xisco and Alan Smith).

 

http://en.wikipedia....ki/Depreciation

 

Sadly, this doesn't change the fact that if you want success in football, you back your manager and a big club like NUFC with the 14th biggest revenues in the game ought to be able to hand the entire cash from a sale to its manager and back him in this way.

 

The cash doesn't just go on the transfer fee though - it's on the wages too.

 

So, we sell Carroll for £35m, also saving £40k per week in wages. Over the four years of his contract remaining, this gives us around £43m net benefit.

 

We then pay £6m in fees for Ba, plus around £50k per week (after bonuses, ish). £50k per week on 3 year deal is £7.5m

 

We then pay £10m for Cisse, plus around £50k per week (after bonuses, ish). £50k per week on 5 year deal is £12.5m

 

Already we have spunked £36m on those two players, when you take the wages into account. And I've not even considered Cabaye, the permanent Ben Arfa signing, Tiote's new deal, Coloccini's new deal, Krul's new deal...

 

Liverpool worked it in the same way. They got £50m for Torres, so spent £35m on transfer fee and allowed £15m on Carroll's wages.

 

Financial prudence is the way to go now.

 

the way you describe that, suggests that everybody bar the 2 sugar daddy clubs and Manu because of their globab appeal, are selling their best players to the sugar daddy clubs and using the money towards normal operating costs. NUFC are one of the biggest clubs in europe not just the UK. And did Liverpool get Suarez for free ? How many premiership clubs, and top european clubs, make profits ? Are you saying nobody should be spending anything other than clear profits ? What if your profit is say, 1m quid, what if - like the vast majority of clubs - you make losses ? Football is a loss making industry. This is the reality.

 

You don't add up like that in football, football is different business, if you sell your best players consistently, you go backwards. Which does absolutely nothing for your accounts and that is patently obvious.

[BigWalrus 0]

You're not allowed to offset cash and overdraft, so it's normal that they would be reported separately. I haven't seen the balance sheet, but the note certainly suggests a cash balance of 10m, and that's what the Swiss Ramble site shows.

 

You can offset them if they're with the same bank, but I don't know whether they are or not.

 

Just downloaded the accounts - there isn't a cash note (which is normal) and there definitely isn't a £10m balance shown on the face of the balance sheet.

[LeazesMag 0]

indeed he did, for the first time in 9? [can't be bothered to count] transfer windows. Will this forward progressive policy continue in the summer, especially with lots of the Carroll money left ? As you didn't answer HF, you can answer me instead, and I know where my money would go.

So it was a post asking me whether we would continue making progress? Ok, then let's go back to this time last year where I said in my boldest of predictions that the first team would be stronger this season than last season. it's in the prediction thread, is referred to everywhere on here and formed a significant part of my toontastic oeuvre at the end of last season.

 

I repeat the same prediction and this time, having seen how fucking spot on I got it last time, maybe people will pay a bit more attention. The continued improvement in finances and the set up of the club will see a stronger first team next year. It won't have 5 new superstar signings, it may even not include a face or two from this year's first team picture but we're going to look better next year, we're going to address significant weaknesses and, here I am out in a bit of a limb, we're going to bring in some fucking class young players from France.

 

We might lose Tiote and you might come on here and say exactly the same things you said when we lost Nolan but none of that will matter because firstly, I've seen a player called Perch doing a reasonable impression of a defensive midfielder and secondly, there are some fucking superb DM's plying their trade over in France, not guaranteed to be as good but let's face it, the team who identify and bring in transfers are currently the highest performing team in England.

 

I stand by what I've said for years and has been rubbished by some, and I'm not typing it out again. I did it again a few weeks ago and nobody responded. Everybody who knows anything about football knows that you do not succeed if you sell your best players consistently and witthold cash from your manager and in effect don't back him.

 

One transfer window and one decent season in 5 years changes nothing, especially the policies of the club which are the same as always and are not going to change. They will go back to selling players if they don't make profits, in fact they will sell players even if they do, and this summer is going to prove that they will still sell if the offer is acceptable and the money will not be given to the manager.

 

They bought Cisse in January, but the only reason they didn't make a sale is because nobody came in and bid for one of our top players, or they would have gone, don't kid yourself.

[BigWalrus 0]

the way you describe that, suggests that everybody bar the 2 sugar daddy clubs and Manu because of their globab appeal, are selling their best players to the sugar daddy clubs and using the money towards normal operating costs. NUFC are one of the biggest clubs in europe not just the UK. And did Liverpool get Suarez for free ? How many premiership clubs, and top european clubs, make profits ? Are you saying nobody should be spending anything other than clear profits ? What if your profit is say, 1m quid, what if - like the vast majority of clubs - you make losses ? Football is a loss making industry. This is the reality.

 

You don't add up like that in football, football is different business, if you sell your best players consistently, you go backwards. Which does absolutely nothing for your accounts and that is patently obvious.

 

It's not "normal operating costs though" - it's replacing our star striker with TWO star strikers!

 

And yes, clubs should only spend their profits. Why should one club be allowed to be sustained like a plaything by a rich Arab, whilst others have to live within their means, despite bringing in similar levels of revenue?

 

If you sell your best players but replace them with more players and better players, that isn't going backwards. I take it you'd like to see us ditch Cabaye, Ba, Cisse et al and re-sign Barton, Nolan and Carroll - all of whom are playing for clubs below us in the league table.

[Gemmill 44556]

I'd have to have a look. And I'm not that fussed, I hate accountancy.

[Gemmill 44556]

Chez, I promise you you're wasting your time here. Save it and leave work 5 minutes earlier.

[Happy Face 29]

Another quick question...

 

I'm trying to get my head around how we made so much after transfer dealings as it doesn't add up when you include the players bought, now looking at the SMB in their financial results thread someone has said that transfers fee's when you buy a player don't go through as one hit and will be fed through over the length of the players contract, unlike when you sell a player and it all goes at once. Is that correct?

 

Is this covered in the debtors....what we're owed....

 

 

...and creditors (section 14 posted earlier) for what we owe.

Edited March 28, 2012 by Happy Face

[LeazesMag 0]

the way you describe that, suggests that everybody bar the 2 sugar daddy clubs and Manu because of their globab appeal, are selling their best players to the sugar daddy clubs and using the money towards normal operating costs. NUFC are one of the biggest clubs in europe not just the UK. And did Liverpool get Suarez for free ? How many premiership clubs, and top european clubs, make profits ? Are you saying nobody should be spending anything other than clear profits ? What if your profit is say, 1m quid, what if - like the vast majority of clubs - you make losses ? Football is a loss making industry. This is the reality.

 

You don't add up like that in football, football is different business, if you sell your best players consistently, you go backwards. Which does absolutely nothing for your accounts and that is patently obvious.

 

It's not "normal operating costs though" - it's replacing our star striker with TWO star strikers!

 

And yes, clubs should only spend their profits. Why should one club be allowed to be sustained like a plaything by a rich Arab, whilst others have to live within their means, despite bringing in similar levels of revenue?

 

If you sell your best players but replace them with more players and better players, that isn't going backwards. I take it you'd like to see us ditch Cabaye, Ba, Cisse et al and re-sign Barton, Nolan and Carroll - all of whom are playing for clubs below us in the league table.

 

 

It's not "normal operating costs though" - it's replacing our star striker with TWO star strikers!

 

And yes, clubs should only spend their profits. Why should one club be allowed to be sustained like a plaything by a rich Arab, whilst others have to live within their means, despite bringing in similar levels of revenue?

 

If you sell your best players but replace them with more players and better players, that isn't going backwards. I take it you'd like to see us ditch Cabaye, Ba, Cisse et al and re-sign Barton, Nolan and Carroll - all of whom are playing for clubs below us in the league table.

 

"Why should one club be allowed to be sustained like a plaything" ............. too idealistic. It's the same as saying "why should the rich get a 5% income tax cut while pensioners get fuck all". Its just the way it is. You've got to get on with it. The reality, the absolute reality, is do you want success or not ? Why not have Ba, Cisse and Carroll on the books ? As Cisse only cost 10m quid, why not sell Best and Ameobi to fund it ?

 

Sorry mate, I'm not explaining again what history shows happens when you consistently sell your best players and witthold the cash from your manager, I've tried doing that enough times and got thrown in the sin bin for it because too many people "disagree".

[BigWalrus 0]

Another quick question...

 

I'm trying to get my head around how we made so much after transfer dealings as it doesn't add up when you include the players bought, now looking at the SMB in their financial results thread someone has said that transfers fee's when you buy a player don't go through as one hit and will be fed through over the length of the players contract, unlike when you sell a player and it all goes at once. Is that correct?

 

Is this covered in the debtors....what we're owed....

 

 

The amount within debtors relates to the transfer fees on players sold, which we are still owed.

 

The timing of receipt of the cash has no bearing on the profit or loss on the transfer.

[BigWalrus 0]

 

"Why should one club be allowed to be sustained like a plaything" ............. too idealistic. It's the same as saying "why should the rich get a 5% income tax cut while pensioners get fuck all". Its just the way it is. You've got to get on with it. The reality, the absolute reality, is do you want success or not ? Why not have Ba, Cisse and Carroll on the books ? As Cisse only cost 10m quid, why not sell Best and Ameobi to fund it ?

 

Sorry mate, I'm not explaining again what history shows happens when you consistently sell your best players and witthold the cash from your manager, I've tried doing that enough times and got thrown in the sin bin for it because too many people "disagree".

 

The income tax / pensioner argument has absolutely nothing to do with the football industry! Usually, rich people invest in companies because they want to make money out of them. Rich people don't like to waste money. And eventually, they'll want to make money from football. Spending £250k a week on the wages of one player and failing to win a single trophy (just like Man City may manage this season) looks like a waste of money to me, and the rich Arabs will take their toys home.

 

Like I explained above, the cash hasn't been withheld - 75% of the Carroll sale and associated saving in wages has gone on paying for Ba and Cisse and associated wages. How can you disagree with logic?

[Happy Face 29]

Another quick question...

 

I'm trying to get my head around how we made so much after transfer dealings as it doesn't add up when you include the players bought, now looking at the SMB in their financial results thread someone has said that transfers fee's when you buy a player don't go through as one hit and will be fed through over the length of the players contract, unlike when you sell a player and it all goes at once. Is that correct?

 

Is this covered in the debtors....what we're owed....

 

 

The amount within debtors relates to the transfer fees on players sold, which we are still owed.

 

The timing of receipt of the cash has no bearing on the profit or loss on the transfer.

 

Gotcha. amortisation n'shit.

[ChezGiven 0]

Chez, I promise you you're wasting your time here. Save it and leave work 5 minutes earlier.

 

We'll get to next January, we'll be doing alright, probably top half and putting some decent performances in and we'll still be saying the same things

 

I won't reply to that last post as I basically said, you were saying this last year and you were wrong and his response is, this year I will be right. Perfectly entitled to the opinion but it's just that, opinion, our fortunes could go either way based on a whole set of compex issues and variables. We'll see but I reckon we'll keep pushing forward.

 

Working from home btw, when am not travelling I stay at home which has its decent points and has its drawbacks, like 'waking up 15 mins before meetings start on phone' and 'not washing or getting dressed' like a dole tramp.

[JawD 99]

Bottom line : We're in a better position today than we were this time last season on the pitch where it matters. Absolutely anything else is effectively a moot point.

 

As it stands I'd go with Chez here. From where we are today do I think we will have a stronger team this time next season? Yes. How that is achieved I dont care so long as that is the result.

[LeazesMag 0]

"Why should one club be allowed to be sustained like a plaything" ............. too idealistic. It's the same as saying "why should the rich get a 5% income tax cut while pensioners get fuck all". Its just the way it is. You've got to get on with it. The reality, the absolute reality, is do you want success or not ? Why not have Ba, Cisse and Carroll on the books ? As Cisse only cost 10m quid, why not sell Best and Ameobi to fund it ?

 

Sorry mate, I'm not explaining again what history shows happens when you consistently sell your best players and witthold the cash from your manager, I've tried doing that enough times and got thrown in the sin bin for it because too many people "disagree".

 

The income tax / pensioner argument has absolutely nothing to do with the football industry! Usually, rich people invest in companies because they want to make money out of them. Rich people don't like to waste money. And eventually, they'll want to make money from football. Spending £250k a week on the wages of one player and failing to win a single trophy (just like Man City may manage this season) looks like a waste of money to me, and the rich Arabs will take their toys home.

 

Like I explained above, the cash hasn't been withheld - 75% of the Carroll sale and associated saving in wages has gone on paying for Ba and Cisse and associated wages. How can you disagree with logic?

 

you can't guarantee anything in football though, simply spending money doesn't equal automatic success - if you take a shot at goal might not score but if you don't take a shot you won't do it anyway.

 

Man City may not win the league, in fact I've always thought ManU would win the league, but from a Man City perspective, finishing 2nd is a damn sight better than playing in the 3rd division like they were a decade or so ago.

[LeazesMag 0]

Chez, I promise you you're wasting your time here. Save it and leave work 5 minutes earlier.

 

We'll get to next January, we'll be doing alright, probably top half and putting some decent performances in and we'll still be saying the same things

 

I won't reply to that last post as I basically said, you were saying this last year and you were wrong and his response is, this year I will be right. Perfectly entitled to the opinion but it's just that, opinion, our fortunes could go either way based on a whole set of compex issues and variables. We'll see but I reckon we'll keep pushing forward.

 

Working from home btw, when am not travelling I stay at home which has its decent points and has its drawbacks, like 'waking up 15 mins before meetings start on phone' and 'not washing or getting dressed' like a dole tramp.

 

top half ?

[BigWalrus 0]

you can't guarantee anything in football though, simply spending money doesn't equal automatic success - if you take a shot at goal might not score but if you don't take a shot you won't do it anyway.

 

Man City may not win the league, in fact I've always thought ManU would win the league, but from a Man City perspective, finishing 2nd is a damn sight better than playing in the 3rd division like they were a decade or so ago.

 

Are you arguing against yourself?

 

Let's take Liverpool as an example. £150m spent, yet they're below us and are building their team around an ageing captain with dodgy groins and hamstrings. Would you like us to follow their approach?