Price Of Football .. DCFC

[ramblur]

As far as the suggestion that revenues alone from the new companies might be finding their way into the club's figures, I did wonder about this myself initially, until I found that if I added the total admin + direct operating costs for 16/17 (£47,265,301) and compared it to 15/16 (£46,611,578), which meant a rise of c £600k. Now if the club's accounts had reflected the 3 new companies' income, but not expenditure, then the 16/17 figure would have been many millions lower. The reconciliation I did later merely confirmed to me that the club's figures must have reflected the new companies' figures in total.

[rsmini]

Thanks @ramblur for clearing it up. Most appreciated. Interesting that a lot of clubs seem to set up different companies. I was just curious what people thought as I first found the link via the #dcfc hashtag on Twitter

[G STAR RAM]

Well it took me ages to read that...time I won't get back.

My conclusion is that this is one persons interpretation of a complex structure of accounts, unfortunately they appear to be passing their suppositions off as fact.

There a few basic errors in their guessing that lead me to conclude that they aren't really as knowledgeable on the subject as they appear to be passing themselves off to be.

No doubt @ramblur will be along at some point in time to clear this up!

[ramblur]

Just to try and clear things up, the Sevco 5112 consolidated loss would include its own loss of c£3.6m, the club loss of £7.9m, a relatively small loss from Global Derby (purely admin expenses) and might have included the 3 new companies ( before I did my research, which showed me their results were incorporated into the club accounts)

Just to show that you can't suggest (with credibility) the simplistic straight extrapolation from the 10 month Sevco figures, if you applied an extra 20% to the consolidated loss, it would make it £24m+. Because , apart from the expenses making up the Sevco (Company) and GD losses, the rest of it must have related to either the club(including the 3 new companies), or the club and the 3 new companies. I concluded that if you adjusted the consolidated loss for all of the differences between the various income and expenditure heads in the club's accounts and the consolidated accounts, and that if the adjusted figure gave a loss of £7.9m, then it would show that the club's accounts must reflect the results of the 3 new companies......and this turned out to be the case. Much of the reduction derived from the hefty transfer profits that occurred in the missing 2 months of the consolidated accounts, but this in itself wouldn't have brought the figure down to the £7.9m, which means that several of the other figures couldn't just be simple extrapolations either.

If Sevco Consolidated had reported on the full year, then the loss would have been the club loss of £7.9m +The Sevco Company loss of c£3.6m (to which you would have to add a 'missing' 2 months from Sevco +a small loss in GD, which brings you a loss way below the 10 month loss given (I can't possibly know the missing Sevco figure,so I can't give a precise figure for a 12 month consolidated loss)

The author of the article could (and should) have done the same reconciliation that I did, rather than leaving bits of innuendo dangling in the air, which has led to some members talking about ' creative accounting', and that worries me. Is it all the graphics that impress people?

[Gritty]

2 hours ago, G STAR RAM said:

Well it took me ages to read that...time I won't get back.

My conclusion is that this is one persons interpretation of a complex structure of accounts, unfortunately they appear to be passing their suppositions off as fact.

There a few basic errors in their guessing that lead me to conclude that they aren't really as knowledgeable on the subject as they appear to be passing themselves off to be.

No doubt @ramblur will be along at some point in time to clear this up!

I think these comments attacking the author are uncalled for.  The bloke has done a very interesting analysis of Derby's results. It may be that in the complex labyrinth of financial accounts across various companies (which let's face it, 99% of us aren't able to do ourselves) he has made assumptions that can be improved upon or corrected.  (To my mind, the point that we are taking a different approach to others which has some risks to it, still stands). But rather than criticise the bloke, why not thank him for his analysis and then help improve on it or correct it. Why the need to attack the author?

 

[ramblur]

3 minutes ago, feisty said:

I think these comments attacking the author are uncalled for.  The bloke has done a very interesting analysis of Derby's results. It may be that in the complex labyrinth of financial accounts across various companies (which let's face it, 99% of us aren't able to do ourselves) he has made assumptions that can be improved upon or corrected.  (To my mind, the point that we are taking a different approach to others which has some risks to it, still stands). But rather than criticise the bloke, why not thank him for his analysis and then help improve on it or correct it. Why the need to attack the author?

 

I challenge the author because there's damaging innuendo in there, which might have been avoided if he/she had done the job thoroughly. Simplistic extrapolations are dangerous, as I've shown, and surely he/she should have known that if he/she were a professional in the accountancy field?

[Gritty]

8 minutes ago, ramblur said:

I challenge the author because there's damaging innuendo in there, which might have been avoided if he/she had done the job thoroughly. Simplistic extrapolations are dangerous, as I've shown, and surely he/she should have known that if he/she were a professional in the accountancy field?

I have no idea if they are an accountancy professional or not. But it's possible to attack the analysis without attacking the person is my point.

On the substance, I do think this approach to valuing players has risks to it.  I guess we thought Russell wold sign a new deal so our residual value for him could be wrong at the end of last year leading to a bigger than expected loss? There must be the possibility of an optimism bias if the club signing the players then values them.  Now it may be that this accounting rule does recommend this as an approach. I'm just saying I worry about the accuracy of the valuations leading to a sudden realised loss when a player leaves for less than we expected

[Carnero]

4 hours ago, ramblur said:

I've not read FRS 102, but I do remember @Diag Ram saying something like we should be doing this, after FRS 102.

"Depreciable amount"

The depreciable amount of an asset is calculated as cost less residual value.  The balance is then depreciated over the asset’s useful economic life.

Under previous UK GAAP, residual values were based on historic prices (i.e. the expected value that would be fetched by disposing of the asset at the date the asset is acquired).  However, under FRS 102, residual values are based on the price which an entity would currently obtain if it were to dispose of the asset less the estimated costs of disposal.  This means that depreciation charges could fluctuate from one period to the next because the depreciable amount could go up or down depending on what happens with the residual value.

[ramblur]

22 minutes ago, feisty said:

I have no idea if they are an accountancy professional or not. But it's possible to attack the analysis without attacking the person is my point.

On the substance, I do think this approach to valuing players has risks to it.  I guess we thought Russell wold sign a new deal so our residual value for him could be wrong at the end of last year leading to a bigger than expected loss? There must be the possibility of an optimism bias if the club signing the players then values them.  Now it may be that this accounting rule does recommend this as an approach. I'm just saying I worry about the accuracy of the valuations leading to a sudden realised loss when a player leaves for less than we expected

I'd attack the analysis if there were simple mistakes there. But the author is totally responsible for allegations of creative accounting, based purely on supposition and an amateurish application of simple extrapolation, and that's why I attack the author.

I've said before that I've grave misgivings about these residual values, but as @Carnero has now backed up something said last year (by a member who is quite clearly a qualified accountant), then it seems we're following Financial Regs. As regards JR, his value would have 'suffered' a fair bit of amortization (probably most of it) before the new arrangements came in. You can't assign an RV that is greater than the book value, so I'd be fairly confident that the JR transfer would have generated a profit.

[Gritty]

3 minutes ago, ramblur said:

I'd attack the analysis if there were simple mistakes there. But the author is totally responsible for allegations of creative accounting, based purely on supposition and an amateurish application of simple extrapolation, and that's why I attack the author.

I've said before that I've grave misgivings about these residual values, but as @Carnero has now backed up something said last year (by a member who is quite clearly a qualified accountant), then it seems we're following Financial Regs. As regards JR, his value would have 'suffered' a fair bit of amortization (probably most of it) before the new arrangements came in. You can't assign an RV that is greater than the book value, so I'd be fairly confident that the JR transfer would have generated a profit.

Thanks for explanation 're Russell. Yes, not saying we're doing anything illegal. Just that I, like you, have misgivings about approach. I wonder what RV has been placed on Butterfield etc

[G STAR RAM]

1 hour ago, feisty said:

I think these comments attacking the author are uncalled for.  The bloke has done a very interesting analysis of Derby's results. It may be that in the complex labyrinth of financial accounts across various companies (which let's face it, 99% of us aren't able to do ourselves) he has made assumptions that can be improved upon or corrected.  (To my mind, the point that we are taking a different approach to others which has some risks to it, still stands). But rather than criticise the bloke, why not thank him for his analysis and then help improve on it or correct it. Why the need to attack the author?

Because he's passing off completely unsubstantiated rubbish as fact. 

[ramblur]

27 minutes ago, feisty said:

Thanks for explanation 're Russell. Yes, not saying we're doing anything illegal. Just that I, like you, have misgivings about approach. I wonder what RV has been placed on Butterfield etc

I suspect Butters's  RV may be pretty high, although there could be an element of swings and roundabouts here, as we would probably be able to get an amount well in excess of Vyd's RV (even if the RV were 100% of total transfer fee).

I like his  "snappily named" Sevco bit. There are loads of different Sevco companies, just as there were loads of Gellaw companies. Why wasn't Gellaw snappily named?

'The Baron' ( and I'll now assume he's a male) says " What seems strange, why is the football club taking credit for the revenue from such sources?". The football club is also taking 'credit' for all the expenses as well, which blasts his suggestion of 'hidden wages' out of the water.

He also says that ".......£12m of income from some kind of accounting sleight of hand in 2016, that we expect will be disallowed for FFP purposes". The 15/16 accounts would have been scrutinized by the EFL ages ago. Has anyone read of any disallowed elements? The linesman's flag's been up for an awfully long time, but the ref seems to be ignoring it.

"Sevco have other loans of about £45 on top of Mel Morris's generosity" News to me. Just to explain these 'loans', as they're nothing to do with the club. Mel puts huge amounts into Sevco which in the main (some goes to other companies within the group) goes to the club in the form of new capital (shares, not loans). In accounting double entry there has to be an equal and opposite entry to the mountain of cash he's put in, hence the 'loan' - a liability to match up with the asset of cash. If it had been termed 'investment' instead of loan, we wouldn't have had this excitement.

His eyebrows were 'raised' over the merchandising income figure being the same as the previous year. Merchandising was farmed out, and we now seem to get an annual 'fee', so he can drop his eyebrows.

Has anyone seen any club release a full set of accounts in it's press release, or is this just another bit of mischief?

I could say a lot more, but I don't want to upset @feisty any more ,and I'm sick of it now anyway.

[ramblur]

As a rider to the above, the £45m quoted is very close to the figure Mel paid to buy out other parties in the takeover. Perhaps this wasn't considered to be part of Mel's generosity?

[angieram]

3 hours ago, ramblur said:

 

The author of the article could (and should) have done the same reconciliation that I did, rather than leaving bits of innuendo dangling in the air, which has led to some members talking about ' creative accounting', and that worries me. Is it all the graphics that impress people?

Not the graphics, but it was well laid out and easy to understand.  Shame if it wasn't accurate.

[RamNut]

10 hours ago, ramblur said:

If he'd taken the time to read the club's account notes, he might have found that we assign residual values to players,which means that we don't fully write off the asset, which makes nonsense of his 9 year comment. 

Eh?

He did mention residual values.

[ramblur]

3 minutes ago, RamNut said:

Eh?

He did mention residual values.

Yes, my mistake, but we still don't write down values over 9 years. Do we have any players with 9 year contracts? It's a nonsense, we write down players' values over the lengths of their contracts, but down to their RVs, which is a completely different matter.

[RamNut]

The things i took from it was the escalation of wages to an unsustainable amount - based on current income.

for 2016-16 if we hadn't raised 23m from sales we would have racked up a £30m annual loss.

jeeze.

the headlines are surely what matter.

 

[ramblur]

10 hours ago, Angry Ram said:

Reading have some big numbers on there.. They dont get parachute payments do they? Matchday income, more than us. Hardly anyone there ffs.

This might help:-https://thetilehurstend.sbnation.com/reading-fc-history/2016/6/27/12038158/reading-fc-finances-2012-2016

They did have their last chute payment in 16/17, and I suspect (though I don't know) that this may include the 'lucky' £12m windfall talked of. Their accounts show a rise in Media & Broadcasting revenues to £20.9m in 16/17, from £14.1m in 15/16, which rather endorses my suspicion. I think 1 or 2 clubs may be in the final year of chute payments. Be interesting to see what happens to Cardiff should they fail to go up. I've a feeling that the pressure on their manager has started to rub off on their players.

 

[ramblur]

23 hours ago, Parsnip said:

Can anyone summarise? I can't read all that, I wouldn't understand it anyway.

Are we rich or poor or criminals?

Well, as @Boycie seems to like layman's terms,try this:-

There is a great club called Derby,

Whose accounts were said to be garby,

I looked at the 'Counts,

Paying note to amounts,

And now think the Baron's a Barbie.

 

(said in fun)

[Boycie]

1 minute ago, ramblur said:

Well, as @Boycie seems to like layman's terms,try this:-

There is a great club called Derby,

Whose accounts were said to be garby,

I looked at the 'Counts,

Paying note to amounts,

And now think the Baron's a Barbie.

 

(said in fun)

I don’t understand?