Financial results for year ending 30 June 2013

[Turkish]

Originally Posted by Turkish

So when Hans says 'we've inherited a difficult situation financially" what he really meant was "the finances were great under Cortese and we wish he was still here" yes?

 

you did, the above sentence infers that you believe what Hans is saying, now you're saying you didnt't mean that? Make up your mind..

 

In reply to Les's post about Kat really meaning she wanted Cortese to stay.

[Noodles34]

All that's missing is your, "this is a pointless thread with nothing worth commenting on"

 

 

 

plenty to comment on, its a viable and worthwhile thread, unlike 'do you remember when we were in administration'....

 

Not obsessed with you, wouldnt neccessarily call you a troll or WUM (unlike GS), but you seem to be just obstinate on anything remotely good about SFC, and then when things dont turn out like someone said they should, Cortese, Top 4.... you can bang on about how much you were right, and you do, all the time.

Point me in the direction of when you said anything positive about the club?

[Noodles34]

In reply to Les's post about Kat really meaning she wanted Cortese to stay.

 

so what are you saying then, cause i cant really see your opinion, just a number of posts suggestively replying or commenting on others.

 

Are our finances in a mess down to Cortese, or do you think he has done what all other PL CEO's do?

[Turkish]

so what are you saying then, cause i cant really see your opinion, just a number of posts suggestively replying or commenting on others.

 

Are our finances in a mess down to Cortese, or do you think he has done what all other PL CEO's do?

 

They aren't in a mess but it's pretty evident that the powers that be aren't satisfied that our commerical renvues are lower than Watfords and Cortese managed to deliver a training ground double to price and in double to time.

[farawaysaint]

They aren't in a mess but it's pretty evident that the powers that be aren't satisfied that our commerical renvues are lower than Watfords and Cortese managed to deliver a training ground double to price and in double to time.

 

This is a fair comment, finances fine but potential wasted. Shut the thread.

[Deano6]

It's a big number, certainly, but £2m out of £80m isn't anything to really get hot under the collar about, IMO. What was particularly excessive was his salary of £1.1m when the club was in League One only generating £14m for itself.

 

 

While the operating profit figure is calculated before amortisation of player contracts (i.e. the portion of transfer fees being evenly deducted over the course of the year), it would be very foolish to ignore the figure after said amortisation was applied. It is still something that affects the profitability.

 

Not necessarily, in fact I don't really think it does - other than in a pure accounting sense detached from real-world.

 

Profitability is about how much money you expect to make in the future. Enumerating a player's true market value is very hard, not to mention open to abuse, and so the method of amortisation of the transfer value over the period of the contract is used as a flawed but at least transparent method of valuation. It also has the benefit of being consistent with other accounting standards, such as how you would value a piece of machinery that has an expected lifetime of 10 years.

 

But it is not really true to say that a player's value decreases linearly as the contract runs out. We bought Gaston, a bright young prospect, for 12 million last year on a 4 year contract. Does that mean he is worth 9 million last summer and 6 million this? No, he has still retained much of his value and we would expect to recoup much more than 6 million if we sold him this summer. And that's just a real-life local example. What if Gaston had been a massive hit and we had Real Madrid and Barca fighting over him to the tune of 30 million? Still a loss of 3 million in the year goes on the books.

 

And what about the likes of Adam Lallana and Luke Shaw, signed for nothing but could both easily go for 25 million plus if we wanted to sell. Is there any accounting profit recorded for their increase in value? No, they are still recorded as zero worth as there was no transfer fee to amortise.

 

Finally, even for those who do want to argue the point that a player's value does take a discount as the contract nears expiry (it's definitely true, but not in a linear fashion - market value holds up incredibly well until into the final year of the contract), there is absolutely nothing stopping a club offering the player a brand new contract which, if accepted, restores the player back up to its full market value. This is where the analogy of the piece of machinery - for which this accounting concept was designed - falls down. You can't sign a piece of paper which restores the photocopier to it's same level of usefulness as the day you first purchased it.

 

All in all, it is often better to ignore the amortisation distortions and just look at recognised profits and losses on player trading as they emerge.