The Long Awaited Accounts....

[ChicagoLion]

Am I understanding that right, we managed to lose £80m in a single year despite being in the Premier League?

And how does that square with Steve Wyness saying there was £30m of debt that needed to be wiped when Tony Xia took over?

I think that means there were some immediate payments that needed to be made.
I think there was an overdraft.

[dave.woodhall]

From memory of what was said, there's a standard £5 million overdraft facility.

[Ad@m]

First things first, what this announcement tells us is that for the year before we got relegated we finally got a handle on the wages - ie the operating loss had been eliminated.  Assuming the figure the club are quoting is before player trading in 2015 this figure was a £6.5m loss.

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

It's hard to say what the specifics are in here as the full accounts haven't appeared on Companies House yet but even when they do there's no guarantee we'll get any more clarity.  It's unusual though to see this level of impairment as it's difficult to say with certainty (unless it's Gabby) that a player is truly worthless!

The tangible write off is even more unusual and a bit more concerning.  This is bricks and mortar largely.  How we determined that the value of these had fell by £45m is pretty worrying - given how unusual that is we should get more detail in the accounts.

[Gerrin]

First things first, what this announcement tells us is that for the year before we got relegated we finally got a handle on the wages - ie the operating loss had been eliminated.  Assuming the figure the club are quoting is before player trading in 2015 this figure was a £6.5m loss.

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

It's hard to say what the specifics are in here as the full accounts haven't appeared on Companies House yet but even when they do there's no guarantee we'll get any more clarity.  It's unusual though to see this level of impairment as it's difficult to say with certainty (unless it's Gabby) that a player is truly worthless!

The tangible write off is even more unusual and a bit more concerning.  This is bricks and mortar largely.  How we determined that the value of these had fell by £45m is pretty worrying - given how unusual that is we should get more detail in the accounts.

So, it doesn't mean we're £80 million in debt? Seriously worrying anyhow.

[Mr Diggles]

Key thing to bear in mind - a loss in the accounts does not mean we're in financial trouble.

Without having seen any of the detail... the huge loss of £80-odd million seems largely to do with accounting adjustments - impairments to the value of assets in the books. These are not cash losses. Actually, from a cash point of view the accounts aren't that bad - £1m operating loss.

I think the headlines numbers perhaps create a sense of financial panic that isn't justified. As noted above, so long as we have the cash to pay our debts and liabilities, there is no problem really. It just underlines how overvalued our 'assets' were in the books initially.

[paul_e]

Could the £45m in tangible assets be due to a revaluing of the facilities as part of the sale?  That bit does seem really odd otherwise.  The 'extras' in the intangibles are probably due to the triggering of relegation release clauses and the general lowering of value due to relegation.

[themossman]

The economics of football is baffling. If I read that correctly (big if) we made a single year loss bigger than our market cap and its not even a big deal.

[themossman]

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

Is that amortisation as applied to  players? I've never really understood that. Does it mean it's assumed players have no value at the end of their contract? If so, accurate in the case of our players.

[dave.woodhall]

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

Is that amortisation as applied to  players? I've never really understood that. Does it mean it's assumed players have no value at the end of their contract? If so, accurate in the case of our players.

All players have no value at the end of their contract as they can then leave on a free. 

[Mr Diggles]

The economics of football is baffling. If I read that correctly (big if) we made a single year loss bigger than our market cap and its not even a big deal.

The impairment is an adjustment to the value of the assets at the time of the accounts - either the assets were overvalued in prior years, or, more likely the case, a change in circumstances, accounting methodology or a change in the accounting rules outside of the control or influence of the club meant that the value of the assets was overstated at that time.

Market caps are based on loads of different things, sometimes asset values, but in football it's more likely to be income streams. This loss has little effect, I think, on the value of the club. Of course, that depends on what caused the impairment.

[PeterWithe]

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

Is that amortisation as applied to  players? I've never really understood that. Does it mean it's assumed players have no value at the end of their contract? If so, accurate in the case of our players.

And how do they account for players signing new contracts when there was no transfer fee paid, i.e. Jack Grealish ?

[Mr Diggles]

Of the exceptional items, the £35m attributed to 'intangible items' is the amount of transfer fees the club considered we'd never get back, taking in to account the length of the contract left for the players.  It's best explained with an example - if we signed a player for £10m on a four year contract, at the point we signed him he'd be shown as a £10m intangible asset, after 1 year a £7.5m intangible asset, after 2 years a £5m intangible asset, etc until he was valued at zero when his contract ran out.

Is that amortisation as applied to  players? I've never really understood that. Does it mean it's assumed players have no value at the end of their contract? If so, accurate in the case of our players.

All players have no value at the end of their contract as they can then leave on a free. 

No FINANCIAL value. Not valueless in terms of humanity. Although in some cases.....

[themossman]

Yes true. Maybe more accurate to say our players should be amortised to zero on the day they are unveiled then. Basically I'm trying to say our players are shit whilst effecting some knowledge of the world of accounting. 

[CT Villan]

Is that amortisation as applied to  players? I've never really understood that. Does it mean it's assumed players have no value at the end of their contract? If so, accurate in the case of our players.

Isn't it just a form of depreciation that allows a business to right off the cost of the player over the lifetime of the contract rather taking a big hit all in one go at the time of purchase.

[themossman]

How about a player that's bought on a free? Do they have any value in the accounts?