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The club's finances

I had WAY too much time on my hands today so I had a go at comparing the major items from the club's last few seasons and seeing how they could map on to this season and the next few (until the parachute money runs out). It would probably be better if DDWT uploaded this as a spreadsheet in the articles section but for now, I'd be grateful for your thoughts and corrections of any obvious howlers I've made. This in no way replaces Martyn's excellent work on the cumulative finances - this just takes it a season at a time. First, income.

£ (m)

2021-22

2020-21

2019-20

2018-19

2017-18

2016-17

Match Day

 

 

 

6.66

7.4

7.4

Broadcasting (inc parachute payments)

3

18

37

45.6

104.7

109.4

Commercial income and player loans

 

 

 

 

29.2

22.6

Turnover

 

 

 

 

126.8

127.8


Assuming that commercial income will be down through reduced merchandise sales etc, but probably not by all that much unless sponsors have a relegation clause in their contract, this is where Pearlman's £60m drop in income comes from - almost all of it from the loss of TV money (mitigated to an extent by parachute payment number 1).

Loan fees may be payable for Carter-Vickers, Wilmot, and loan income due for J Ayew, Bony, Carroll, Montero. No idea how much.

Maybe bear with me while I post the next couple of budget lines?

Comments

  • Second, wages and salaries. I haven't even tried to estimate how much player wages have fallen last season and this. Maybe Martyn could fill in some of the blanks. It will be substantially down on the £42.5m+ we paid in 2017-18, that's for sure.

    £ (m)

    2021-22

    2020-21

    2019-20

    2018-19

    2017-18

    2016-17

    Wages and salaries

    Other expenses

     

     

     

     

    (89)

    (30.8)

    (98.7)

    (26.5)

    Expenses

     

     

     

     

    (119.8)

    (125.2)


















  • Next, player amortisation etc. This is interesting. I've been able to calculate amortisation through to the current season because we know who we still have on our books, how long their currents have left to run and how much we paid for them. Really significant decrease as you would expect from shipping out many of our most expensive players.

    £ (m)

    2021-22

    2020-21

    2019-20

    2018-19

    2017-18

    2016-17

    Player Amortisation

     

     

    (13.66)

    (24.66)

    (37.1)

    (24.2)

    Player Impairment

     

     

     

     

    (14.8)

    0

    Depreciation

     

     

     

     

    (1.7)

    (1.4)

    Non Cash Flow Expenses

     

     

     

     

    (53.6)

    (25.6)


  • Finally - and thanks for bearing with me - profit/loss and profit on player sales. That last figure is quite significant. Because of the timing of when we bought and sold players in the last two financial years, we made quite a hefty profit in 2018-19, hopefully offsetting a lot of the potential loss we'd have made otherwise from the fall in income and the continuing amortisation costs attached to Bony, the Ayews, Baston and some other surprisingly expensive players we still have on our books. Happy to share the detailed workings out if anyone is interested. I am sure I have made mistakes - be good to get your thoughts.

    £ (m)

    2021-22

    2020-21

    2019-20

    2018-19

    2017-18

    2016-17

    Operating Profit/(Loss)

     

     

     

     

    (48.3)

    (23)

     

     

    Profit on player sales

     

     

     

    44.74

    46.1

    36.9


  • Cad I fit smart meters that’s way above my pay grade lol
  • Worth noting that the biggest factor in the wage difference between 16/17 and 17/18 is the payment/non-payment of bonuses for avoiding relegation. You see similar drops in most relegated teams reported figures. The basic wage total was likely similar for both seasons, if not higher in the failed campaign given the number of disastrous big-money signings we took on.
  • My assumptions on amortisation are based on the following:
    1 These players contribute £0 in either 2018-19 or 2019-20 because we obtained them on a free or on a loan, or they renewed their contract before the start of the 2018-19 season (so no transfer fee to pay off) -
    Baker-Richardson, Benda, Byers, Carter-Vickers, Dhanda, Dyer, Fulton, Grimes, James, McBurnie, Montero, Mulder, Naughton, Nordfeldt, Roberts, Rodon, Routledge

    2 These players will feature in the amortisation section of the accounts for 2018-19 -
    Bony (signed for £12m in 2018 on a two year contract), £6m in 2018-19; A Ayew (£18m in 2018, 3.5 yr contract)        £5.14m; Baston (£16.2m in 2016, 4 yrs) £4m; Fer (£5m in 2016, 3 yrs), £1.66m; Narsingh (£4m in 2017, 2.5 yrs), £1.6m; J Ayew (undisclosed fee but worth up to £5m, signed in 2017, 3.5 yrs), >£1.4m; Olsson (£4m in 2016, 3 yrs),  £1.3m; Carroll (£4.5m in 2017, 3.5 yrs),  £1.28m; Celina (£3m in 2018, 4 yrs), £0.75m; VdH (£2m in 2016, 3 yrs),  £0.6m; Asoro  (£2m in 2018, 4 yrs), £0.5m; John (£800k in 2018, 3 yrs), £0.266m; McKay (£0.5m in 2018, 3 yrs), £0.16m

    3 With Bony, Fer, J Ayew and Narsingh gone, and VdH's initial contract period over, that leaves  A Ayew (£5.14m), Baston (£4m), Carroll £1.28m), Celina (£0.75m), Asoro  (£0.5m), John (£0.266m) and McKay (£0.16m) in the amortisation column for 2019-20, plus Peterson (another £0.16m, signed in 2019 for 3 years at a fee of £0.5m). Total comes to £12.26m (not the £13.66m I posted yesterday - I think I included J Ayew in the 2019-20 calculation by mistake).
  • My assumptions on profits on player sales in 2018-19 (sorry the columns don't match up) are based on us completing the following deals between 1 August 2018 and 31 July 2019:
    In - John £800k (rumoured), Bidwell (free)
    Out - Mawson £15m, James £15m, Clucas £6m, Fernandez £6m, J Ayew £2.5m, Amat £1m.

    I haven't put a figure on profits on player sales for 2019-20 because the international transfer window is still open and we still have the mid-season window to go through, but for what it is worth here is where we are currently at for this financial year:
    In - Peterson £500k
    Out - McBurnie c£15m
    Balance - profit of £14.5m
  • I am not sure if you have included in your financial assessments the stage payments from a transfer fee owing to the Swans in later years. These fees were sold to a bank for a cash sum and would not have arrived as income to the Swans in the second and third years after a transfer. In years 2019 and 2020.

    In the company accounts, dated 24 August 2018, item 034.
    One notable transfer was Fabianski to WHU when two future instalments in July 2019 and July 2020, payments of £1,462,500 each year were due to the Swans but were sold to Macquarie Bank.

    In the same company accounts dated 24 August 2018, item 037.
    Macquarie Bank were involved in another transfer, this time with Mesa's transfer to Seville when future payments of £1,425,000 in January 2019 and January 2020 were sold.

  • Thanks Colin. I've taken Swiss Ramble's summary of the accounts and copied that across so all staged payments will be there under one heading or another. The way I understand it (I may be wrong about this) is that clubs count all income from sales in the accounts for the financial year the sale is made (even if the money is coming later) and all the cost of a player purchase in the same year too (even if they end up paying in installments), which is how the player profit/loss figure is calculated. If they have had to borrow the money to buy the player (on the strength of TV payments, parachute payments etc due at the end of the season) that will show up in the debt figures and also that's what amortisation is about. So if some of the payments for Fabianski (or anyone else) came in a later season than the one when we bought him, but we borrowed against that income in the season he arrived, that will show up as an expense in the accounts when we pay the money back to the bank.

    In a second I'll post the full breakdown as per Swiss Ramble. (It's too large to post with any commentary.) I've adjusted the amortisation figure for 2018-19 to remove J Ayew and I've added in the £5m solidarity figure we'll get when the parachute money ends.

  • edited August 13

    £ (m)

    2021-22

    2020-21

    2019-20

    2018-19

    2017-18

    2016-17

    Match Day

     

     

     

    6.66

    7.4

    7.4

    Broadcasting (inc parachute payments)

    8

    18

    37

    45.6

    104.7

    109.4

    Commercial income and player loans

     

     

     

     

    29.2

    22.6

    Turnover

     

     

     

     

    126.8

    127.8

    Wages and salaries

    Other expenses

     

     

     

     

    (89)

    (30.8)

    (98.7)

    (26.5)

    Expenses

     

     

     

     

    (119.8)

    (125.2)

    EBITDA

     

     

     

     

    7.0

    2.5

    Exceptional items

     

     

     

     

    (1.7)

    0

    Player Amortisation

     

     

    (12.26)

    (24.66)

    (37.1)

    (24.2)

    Player Impairment

     

     

     

     

    (14.8)

    0

    Depreciation

     

     

     

     

    (1.7)

    (1.4)

    Non Cash Flow Expenses

     

     

     

     

    (53.6)

    (25.6)

    Operating Profit/(Loss)

     

     

     

     

    (48.3)

    (23)

    Profit on player sales

     

     

     

    44.74

    46.1

    36.9

    Profit before interest and tax

     

     

     

     

    (2.2)

    13.9

    Net interest receivable/(payable)

     

     

     

     

    (1)

    (0.5)

    Profit/(loss) before tax

     

     

     

     

    (3.2)

    13.4

    Tax credit/(charge)

     

     

     

     

    0.3

    (0.4)

    Profit/(loss) after tax

     

     

     

     

    (2.9)

    13

    Wages to turnover

     

     

     

     

    70%

    77%

    Gross debt

    Cash

     

     

     

     

    16.4

    0.5

    10.3

    7.5

    Net debt/(funds)

     

     

     

     

    15.9

    2.8

    Average league attendance

     

     

     

    18.4

    20.6k

    20.6k


  • Well done for doing this Cadleigh.
    I haven't had the time to review and absorb it yet but well done nonetheless.
    :+1:
  • For those like myself who are puzzled over what amortisation in football actually means, here is an example.

    This is a universal accounting practice called player amortisation, and it is fundamental to how clubs calculate player costs. Rather than recording the entire purchase when it was made, the club will spread the transfer fee over the length of the player’s contract.

    Naturally, wages must also be included in the calculation of player costs. Ideally, agent fees and image rights payments will be included as well, but to keep things simple, we’ll focus on the two big expenditures: amortisation and wages.

    With Mkhitaryan costing Manchester United £8.75m per year in amortisation and £9.36m in wages (£180,000 per week multiplied by 52 weeks), his overall cost to the club is just over £18.1m per year. That £18.1m per year is what clubs look at with regards to player costs, not just the transfer fees coming in and out.

  • Well done for doing this Cadleigh.
    I haven't had the time to review and absorb it yet but well done nonetheless.
    :+1:
    Thanks Jeff :)
  • For those like myself who are puzzled over what amortisation in football actually means, here is an example.

    This is a universal accounting practice called player amortisation, and it is fundamental to how clubs calculate player costs. Rather than recording the entire purchase when it was made, the club will spread the transfer fee over the length of the player’s contract.

    Naturally, wages must also be included in the calculation of player costs. Ideally, agent fees and image rights payments will be included as well, but to keep things simple, we’ll focus on the two big expenditures: amortisation and wages.

    With Mkhitaryan costing Manchester United £8.75m per year in amortisation and £9.36m in wages (£180,000 per week multiplied by 52 weeks), his overall cost to the club is just over £18.1m per year. That £18.1m per year is what clubs look at with regards to player costs, not just the transfer fees coming in and out.

    The part that confuses me is that amortisation counts towards the operating profit/loss figure, but then profit/loss from player sales - which seems to include 100% of income and expenditure on players that financial year regardless of when payments are due - is added in to arrive at the total taxable income/loss. Seems like double counting to me but maybe there are some accountants on here who can explain?
  • Amortisation writes of the cost to you of the player over the contract life.

    However when you sell a player you can still sell the player for more (or less) money that the player cost you when you bought him.

    That different gives you a profit or loss on sale.

    Always best to exclude the profit and loss from the underlying financial position as there is no guarantee of it reoccurring year on year.
  • Also is you sell part way through a contract you compare the selling price to the written down value

    £16m cost 4 year contract, £4m amortisationper year

    Sell after 2 years for £20m gives a profit of £20m less the £8m still to be written off, profit of £12m
  • edited August 13
    So during the 2017-18 financial year we sold Barrow for £1.5m (cost us 1.7m), Sigurðsson for £45m (£10m), Kingsley for £3m (180k?), Llorente for £13.6m (5.3), Fabiański for £7m (free), Mesa for £5.4m (11.25) and Bartley for £4m (1.17) - a combined profit of £49.8m, but we'd need to remove the outstanding amortisation on their contracts to get to the real profit? Only Llorente and Mesa had amortisation left on their contracts (£2.65m and £8.44 respectively) so that knocks £11.1m off the £49.8m = £38.7m. I know some of these transfer fees are guesstimates but that doesn't look close to the actual player sales profits we made that season.

    Or are you saying the profit/loss is derived by adding together all the income from player sales and deducting outstanding amortisation only (ie no reference to the price you paid in the first place other than what's left in amortisation)? That's even worse - gives us a profit of £68m...
  • edited August 13
    Got it!!! (Thanks to Swiss Ramble for this explanation.)

    Some clubs calculate players sales profit/loss like this:

    1 Add up all the income from player sales (in this case, c£80m)

    2 Deduct the original cost of those players (c£30m) - gives balance of c£50m

    3 Deduct the amortisation already accounted for for those players (in this case, one season each for Llorente and Mesa, £2.65m and £2.8m = £5.4m)

    4 £50m - £5.4m - £45.6m, near as damn it what the accounts said for that year.

    I'll recalculate the profit/loss for 2018-19 on this basis later today.

    Thanks, SHJ, that helped a lot.
  • No problem, I was going to post about some of the complications, if you still need them let me know.
  • In that case, our player sales profit from 2018-19 was actually c£5.75m not £44m, as we made profits on James (£15m) and Mawson (£8.7m, accounting for the £1.5m to Barnsley) but made losses on Clucas (£12.4m), Fernandez (£2.7m), J Ayew (£1.25m, assuming that none of the additional fees were triggered), and Amat (£1.6m).

    Let's hope the club managed to control costs off the pitch or they could be in danger of breaching FFP, athough I imagine we'd have heard about it by now if they had - the audits take place in March.
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