Analysis of the clubs finances

[Tim]

with 2 possible scenarios for the financial year ending July 2006.

 

Right had a look at the accounts and the first thing I noticed was that the board have not depreciated anfield this year, although they do put a note in that states

 

The Directors consider the useful economic life of the existing stadium to be 4 years including the current

year. The difference between the current carrying value and the expected residual value as at 31 July 2008 will be fully provided

for over this period.

 

They've extended the date of residual value by a year and not put through a depreciation, possibly because it was put through last year.

 

There were also additions of £1m in charges over the year relating to the new stadium. There have been £7m of costs incurred to date and have yet to be depreciated (this will happen once the new stadium is built and opened).

 

Transfers

 

The value of transfers added in the year were £46m, original cost of sales of players was £18.5m. (so net £27.5m spent in the year)

 

Amortisation of players transfers was £22.8m (up by £5.5m from last year). There was also an impairment on a players registration within the year of £1.4m. This was an exceptional item (not sure who it related to though).

 

During the year £26.2m was paid out on players transfers, with £8.1m being received. Leaving a net spend of £18m. The club were still due to receive money from, probably, the owen transfer.

 

There are contingent liabilities of £6.214m on transfer fees if certain conditions are met (I suspect that £2.5m of this has now been paid after Alonso's 60th match)

 

We are potentially owed £1.7m in transfer fees if birmingham stay up this season. We received an extra £1.6m for the heskey transfer through last year.

 

Fees still to pay on transfers are as such:

 

Within the current financial year upto £18.7m. Note that this figure may include things other than transfers as it is trade creditors.

 

Fees due greater than 1 year are £18m. These will be fees that will be spread over the life of the contracts. So Cisse's transfer will have some in this. Possibly Crouch, Reina and Sissoko's too. For the same players part of their fees will be included in the above figure for due within the year.

 

Sponsorship Issues

 

The club have made a provision of £2.5m relating to potential costs because of the delay to complete shirt sponsorship deal. This will be under review as they argue who is right and who is wrong.

 

The amount owed by reebok looks to be upto £10m, although some of the £10m increase in debtors maybe due to transfer fees owed.

 

Wage bill

 

The wage bill of £64.2m DOES include bonuses for the european cup win. If we win it again this season the wage bill will remain at a similar level. If we don't win it again we will see it reduced by approx £10m. These bonuses will be paid over the current financial year as part of players salaries, this has resulted in Accruals and Other tax and social security to remain at relatively high levels. Assuming we don't win the european cup again this year creditors should decrease by approx £10m.

 

The wage bill was 53% of turnover, however if you strip out bonuses due to the european cup win the ratio is closer to 45%. The club are on target to have a 50% wage to turnover ratio.

 

Debt

 

Long term borrowing has fallen to £9.8m from £11.7m. It has been the overdraft facility that has increased net debt. The overdraft stands at £7.5m (increase of £4.5m) which is likely to be as a result of the reebok stuff. £6m of loans were repaid over the year but the club took out a further £5m loan to help fund player transfers in october. This would have been to bring forward money owed by UEFA/Premier League.

 

The debt is repayable as such

 

£4.467m due within the financial year.

 

£4.467m is due between 1 and two years time.

 

The overdraft is generally on demand, however this will always get cleared down from time to time as the club sells tickets and brings in cash receipts.

 

.tv

 

The online profit (before rights amortisation) increased by a factor 11,000 to £658k.

 

There are now over 36,000 e-season ticket holders.

 

 

Prospects for FY2006

 

There are a number of factors that will effect this. I will try to cover a best case scenario (well when I say best case I mean we win the european cup again but don't win the league due to the current points gap) and a "worst case" scenario (ie finishing 4th and going out to benfica)

 

Winning the european cup and finishing 2nd.

 

Premier League television revenue - £30m. (extra £1.5m for finishing 3 places higher)

 

Premiership match related turnover - £24m (increase in ticket prices)

 

Cup competitions - £33m (similar to last season, although a run in the FA Cup could add to this. We have also earned about an extra £0.5m from win bonuses in the group stage of the european cup)

 

Sponsorship - £20m similar to last season.

 

Retail merchandise - £15m (due to the new away shirt falling in this financial year, the increased merchandise sales due to the cup win and the european shirt sales)

 

Museum and Supporters club - £1.3m (I've used a modest increase although this could be alot higher)

 

Japan Trip - £3m from match fees etc (using an estimate as I can't remember what the total prize fund was)

 

Turnover - around the £127m

 

Wages - £64m (these would remain similar to last season, these include bonuses for winning the cup)

 

Other admin charges - £16m (these seem to remain relatively static.

 

Cost of sales - £15.4m (using a similar increase to what occured between the last two financial years)

 

Amortisation of players registrations - £26m (these will increase due to investment in playing squad, but also no exceptional charge of impairment of a players registration)

 

Profit on disposal of players transfers - £12m

 

Interest Payable - £1.7m

 

Profit before tax - £15.9m

 

Tax - £3.8m

 

Profit after tax - £12.1m

 

This will leave net assets of about £53m

 

Cashflow from operating activities (assuming we get all money on time and in full, plus the money owed to us by reebok, I'll assume £5m since I don't know the actual figure) - £38.6m

 

Finishing 4th and out to Benfica

 

Premier League television revenue - £29m. (extra £0.5m for finishing 1 place higher)

 

Premiership match related turnover - £24m (increase in ticket prices)

 

Cup competitions - £23m (There is an approx £10m drop in revenue for going out at the last 16)

 

Sponsorship - £17m

 

Retail merchandise - £15m (due to the new away shirt falling in this financial year, the increased merchandise sales due to the cup win and the european shirt sales)

 

Museum and Supporters club - £1.3m (I've used a modest increase although this could be alot higher)

 

Japan Trip - £3m from match fees etc (using an estimate as I can't remember what the total prize fund was)

 

Turnover - around the £112.3m

 

Wages - £54m (there would be no bonus payments)

 

Other admin charges - £16m (these seem to remain relatively static.

 

Cost of sales - £15.4m (using a similar increase to what occured between the last two financial years)

 

Amortisation of players registrations - £26m (these will increase due to investment in playing squad, but also no exceptional charge of impairment of a players registration)

 

Profit on disposal of players transfers - £12m

 

Interest Payable - £1.7m

 

Profit before tax - £11.2m

 

Tax - £2m

 

Profit after tax - £9.2m

 

This will leave net assets of about £51m

 

Cashflow from operating activities (assuming we get all money on time and in full, plus the money owed to us by reebok) - £25.7m

 

 

I won't try and forecast net debt and the detail of the balance sheet as they all depend on too many variables I have no easy access of.

 

Once again this financial year we are looking towards having a profit. We also managed to make a profit, technically, on Josemi of around £3m since it was a straight swap. Due to the requirements of the accounts both Krompkamp and Josemi had to be valued so I guess they used the value of krompkamps transfer to villareal.

 

----------------------------------

 

Now here is something that may interest you a little. Financially we could be better off by finishing 2nd in the league and losing the european cup final. This is because the losers get about £1.7m less than the winners, while sponsorship revenues will be down by about £2.5m. However there would not be bonuses to be paid out to players and management for winning the cup, thus saving the club upto £10m.

 

So if you look at it that way Rafa's half time team talk and tactical changes cost the club potentially £5m :tease: :whistle:

[Rashid]

However, any club with a half decent marketing department would recoup the £10M and some from spin off's from the win. I also find the NET ASSETS figure disturbing.

 

Cheers for that Tim, class as ever and I well appreciate it.

[Tim]

I also find the NET ASSETS figure disturbing.

 

 

Why?

[Rashid]

Why?

 

Just seems very low, do you remember Chelsea's when Roman bought them? Even with their debt it was over £80M I think. Taking into account the differences in Kings Road and Anfield Road real estate, it is still shocking.

[Captain]

Now I'm just waiting for Red Nick's astute assessment of our state of affairs.

[LiverpoolFreak]

Where did you guys get these figures from?

[Rashid]

Where did you guys get these figures from?

 

The Annual Report from the Official Site.

[RoboRiise]

I don't consider myself any kind of expert (although I work for HMRC) but especially by the standards of Premiership football clubs, that looks like a sensibly managed business to me.

[Dermot]

One thing that you haven't factored in Tim is the impending VAT tribunal case on whether VAT is reclaimable on agents fees. HMRC have deliberately chosen the tribunal and reckon that they have a good chance at winning.

[Tim]

One thing that you haven't factored in Tim is the impending VAT tribunal case on whether VAT is reclaimable on agents fees. HMRC have deliberately chosen the tribunal and reckon that they have a good chance at winning.

 

 

Didn't know about that, but I can't see it making too much difference. I doubt the HMRC will be able to claim back tax on it.

[Guest Gazmo25]

That is superb Tim, well impressed my friend. Although everything isn't rosey in the garden, we are hardly having jumble sales outside Anfield either.

[Dermot]

Didn't know about that, but I can't see it making too much difference. I doubt the HMRC will be able to claim back tax on it.

 

They originally brought a case against Rangers, and withdrew it as they feared the Scotish tribunal would side with the tax payer, they are now taking it against Newcastle United. Rangers reckon that it will cost them £250,000 - £500,000 a year, so that will be at least doubled for us.

 

If they win HMRC will attempt to reclaim 3 years worth of overclaimed VAT from all football clubs as in essence the decision is clarifying the rules, if the tribunal decides that they were incorrectly followed then every club that reclaimed VAT on agents fees will have to pay the tax back, and agents will become more expensive.

[Red Nick]

Tim great read and a great job but Red Nick Leeson analysis is far better ;)

[Red Nick]

the 15m figure on Merchandising is quite poor considering we are champions of Europe.

 

Anyone know how it compares with Manutd who won nothing

[Jari37]

with 2 possible scenarios for the financial year ending July 2006.

 

Right had a look at the accounts and the first thing I noticed was that the board have not depreciated anfield this year, although they do put a note in that states

 

 

 

They've extended the date of residual value by a year and not put through a depreciation, possibly because it was put through last year.

 

There were also additions of £1m in charges over the year relating to the new stadium. There have been £7m of costs incurred to date and have yet to be depreciated (this will happen once the new stadium is built and opened).

 

Transfers

 

The value of transfers added in the year were £46m, original cost of sales of players was £18.5m. (so net £27.5m spent in the year)

 

Amortisation of players transfers was £22.8m (up by £5.5m from last year). There was also an impairment on a players registration within the year of £1.4m. This was an exceptional item (not sure who it related to though).

 

During the year £26.2m was paid out on players transfers, with £8.1m being received. Leaving a net spend of £18m. The club were still due to receive money from, probably, the owen transfer.

 

There are contingent liabilities of £6.214m on transfer fees if certain conditions are met (I suspect that £2.5m of this has now been paid after Alonso's 60th match)

 

We are potentially owed £1.7m in transfer fees if birmingham stay up this season. We received an extra £1.6m for the heskey transfer through last year.

 

Fees still to pay on transfers are as such:

 

Within the current financial year upto £18.7m. Note that this figure may include things other than transfers as it is trade creditors.

 

Fees due greater than 1 year are £18m. These will be fees that will be spread over the life of the contracts. So Cisse's transfer will have some in this. Possibly Crouch, Reina and Sissoko's too. For the same players part of their fees will be included in the above figure for due within the year.

 

Sponsorship Issues

 

The club have made a provision of £2.5m relating to potential costs because of the delay to complete shirt sponsorship deal. This will be under review as they argue who is right and who is wrong.

 

The amount owed by reebok looks to be upto £10m, although some of the £10m increase in debtors maybe due to transfer fees owed.

 

Wage bill

 

The wage bill of £64.2m DOES include bonuses for the european cup win. If we win it again this season the wage bill will remain at a similar level. If we don't win it again we will see it reduced by approx £10m. These bonuses will be paid over the current financial year as part of players salaries, this has resulted in Accruals and Other tax and social security to remain at relatively high levels. Assuming we don't win the european cup again this year creditors should decrease by approx £10m.

 

The wage bill was 53% of turnover, however if you strip out bonuses due to the european cup win the ratio is closer to 45%. The club are on target to have a 50% wage to turnover ratio.

 

Debt

 

Long term borrowing has fallen to £9.8m from £11.7m. It has been the overdraft facility that has increased net debt. The overdraft stands at £7.5m (increase of £4.5m) which is likely to be as a result of the reebok stuff. £6m of loans were repaid over the year but the club took out a further £5m loan to help fund player transfers in october. This would have been to bring forward money owed by UEFA/Premier League.

 

The debt is repayable as such

 

£4.467m due within the financial year.

 

£4.467m is due between 1 and two years time.

 

The overdraft is generally on demand, however this will always get cleared down from time to time as the club sells tickets and brings in cash receipts.

 

.tv

 

The online profit (before rights amortisation) increased by a factor 11,000 to £658k.

 

There are now over 36,000 e-season ticket holders.

 

 

Prospects for FY2006

 

There are a number of factors that will effect this. I will try to cover a best case scenario (well when I say best case I mean we win the european cup again but don't win the league due to the current points gap) and a "worst case" scenario (ie finishing 4th and going out to benfica)

 

Winning the european cup and finishing 2nd.

 

Premier League television revenue - £30m. (extra £1.5m for finishing 3 places higher)

 

Premiership match related turnover - £24m (increase in ticket prices)

 

Cup competitions - £33m (similar to last season, although a run in the FA Cup could add to this. We have also earned about an extra £0.5m from win bonuses in the group stage of the european cup)

 

Sponsorship - £20m similar to last season.

 

Retail merchandise - £15m (due to the new away shirt falling in this financial year, the increased merchandise sales due to the cup win and the european shirt sales)

 

Museum and Supporters club - £1.3m (I've used a modest increase although this could be alot higher)

 

Japan Trip - £3m from match fees etc (using an estimate as I can't remember what the total prize fund was)

 

Turnover - around the £127m

 

Wages - £64m (these would remain similar to last season, these include bonuses for winning the cup)

 

Other admin charges - £16m (these seem to remain relatively static.

 

Cost of sales - £15.4m (using a similar increase to what occured between the last two financial years)

 

Amortisation of players registrations - £26m (these will increase due to investment in playing squad, but also no exceptional charge of impairment of a players registration)

 

Profit on disposal of players transfers - £12m

 

Interest Payable - £1.7m

 

Profit before tax - £15.9m

 

Tax - £3.8m

 

Profit after tax - £12.1m

 

This will leave net assets of about £53m

 

Cashflow from operating activities (assuming we get all money on time and in full, plus the money owed to us by reebok, I'll assume £5m since I don't know the actual figure) - £38.6m

 

Finishing 4th and out to Benfica

 

Premier League television revenue - £29m. (extra £0.5m for finishing 1 place higher)

 

Premiership match related turnover - £24m (increase in ticket prices)

 

Cup competitions - £23m (There is an approx £10m drop in revenue for going out at the last 16)

 

Sponsorship - £17m

 

Retail merchandise - £15m (due to the new away shirt falling in this financial year, the increased merchandise sales due to the cup win and the european shirt sales)

 

Museum and Supporters club - £1.3m (I've used a modest increase although this could be alot higher)

 

Japan Trip - £3m from match fees etc (using an estimate as I can't remember what the total prize fund was)

 

Turnover - around the £112.3m

 

Wages - £54m (there would be no bonus payments)

 

Other admin charges - £16m (these seem to remain relatively static.

 

Cost of sales - £15.4m (using a similar increase to what occured between the last two financial years)

 

Amortisation of players registrations - £26m (these will increase due to investment in playing squad, but also no exceptional charge of impairment of a players registration)

 

Profit on disposal of players transfers - £12m

 

Interest Payable - £1.7m

 

Profit before tax - £11.2m

 

Tax - £2m

 

Profit after tax - £9.2m

 

This will leave net assets of about £51m

 

Cashflow from operating activities (assuming we get all money on time and in full, plus the money owed to us by reebok) - £25.7m

 

 

I won't try and forecast net debt and the detail of the balance sheet as they all depend on too many variables I have no easy access of.

 

Once again this financial year we are looking towards having a profit. We also managed to make a profit, technically, on Josemi of around £3m since it was a straight swap. Due to the requirements of the accounts both Krompkamp and Josemi had to be valued so I guess they used the value of krompkamps transfer to villareal.

 

----------------------------------

 

Now here is something that may interest you a little. Financially we could be better off by finishing 2nd in the league and losing the european cup final. This is because the losers get about £1.7m less than the winners, while sponsorship revenues will be down by about £2.5m. However there would not be bonuses to be paid out to players and management for winning the cup, thus saving the club upto £10m.

 

So if you look at it that way Rafa's half time team talk and tactical changes cost the club potentially £5m :tease: :whistle:

erm can one of you pretend for a moment that some of us have absolutely no idea what most of that means, and provide us with a quick 10 word summary of our financial position. obviously I know exactly what you're on about - it's just the others I worry about.

:whistle:

[RedKnight]

Tim, can you tell me what our dispute with Reebok is about? Thanks.

[RoboRiise]

the 15m figure on Merchandising is quite poor considering we are champions of Europe.

 

Anyone know how it compares with Manutd who won nothing

 

Well you clearly don't Nick, so what makes you think it's poor? ;)

[Red Nick]

Well you clearly don't Nick, so what makes you think it's poor? ;)

 

some time ago I remember reading that it was over 100m but I cant be sure of the figure hence why I was asking

 

Personally 15m revenue from merchandising for Champions of Europe is poor with our brand name etc, just my point of view like

[ali]

the 15m figure on Merchandising is quite poor considering we are champions of Europe.

 

Anyone know how it compares with Manutd who won nothing

 

http://football.guardian.co.uk/News_Story/0,,1699189,00.html

 

piece on them with figures

[7dalglish]

I'm sure this has been covered before on this forum but the figures only include about a month's worth of CL winning merchandise revenue due to the financial year ending in something like June 05

[Rushian]

some time ago I remember reading that it was over 100m but I cant be sure of the figure hence why I was asking

 

bwahahahahahahahaha 100m !!!!!!!!!

 

Keep it going Nick ;)

[Red Nick]

http://football.guardian.co.uk/News_Story/0,,1699189,00.html

 

piece on them with figures

 

THANKS

 

Only 43m from commerical activities, they are in deep shiete

[Red Nick]

bwahahahahahahahaha 100m !!!!!!!!!

 

Keep it going Nick ;)

 

Why dont you fuck off back to your own site to the posters who believe everything you have to say

[John101]

oo er, u two once boyfriends or something?

[Maldini]

Read somewhere that United have to post a £76m after tax profit for the 2006/2007 season or the hedge funds that the Glazers borrowed from can take over the club. Can anyone confirm this?