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Accountants Summary of AVFC Accounts

Summary from: HeathfieldRoad1874 (with thanks, as he's just had an operation but agreed to do this for us!)

Ok, time for a summary. The full Accounts are out now, so let`s have a look at them in a bit more detail.

The good news is the increase in turnover in a difficult economic climate, especially an increase in the Commercial. From all indications, with new Sponsorship deals this figure should be even higher next year. Matchday income is down, and that is a disappointment. We all know why, but I still find fans that don`t attend moaning about losses on the Business accept no blame themselves.

Wages are still high, at a total of £83m. However, we know that around £10m of this is for the 1,500 people other than Players, Coaches and Managers on the staff. That leaves £73m for football related wages. I fully expect this to be lower in 11/12, with a number of significant departures, and by 12/13 this should be even lower, with a number of Contracts coming to an end.

The headline news is obviously the £53.9m Operating loss, so let`s begin by looking how this is arrived at. There are the normal income and outgoings involved in running any business, but here I want to highlight two things that helped create this loss.

First, we had a net spend of £13.5m on players in the period used. That is before the Young or Downing money, so basically covers Darren Bent and Makoun signings with a few sales. We already know that this will be a positive for the 11/12 year, so nothing to worry about here.

Next, and this is the one I do dislike, there is the Exceptional items for Termination costs. At £12m they represent 13% of our total income. These are unacceptable, and all I can hope is that we don`t have anything similar in future years.

So, if we take off these 2 figures, the operating loss is just £28.4m. Still a significant amount, I hear you all cry, until you take into account Player Contract Amortisation.

This is the biggy, and the one area fans do need to understand. This is not a physical, actual loss. This is a depreciation of the value of player contracts, similar to how you would devalue a Company Car each year in your accounts for any business. This year this totalled £32.3m. IT DOES NOT MEAN WE PAID OUT £32.3m to anybody.

So, take out the exceptional expenditure, ignore the Player Amortisation for now, and actually there is a profit of £3.9m. Add in wage cuts, transfer fees we know were paid and increased Commercial income expected in the current year, and you can see that all is not as gloomy as the headlines would have you think.

If we ever announce a profit I will be the first one to complain. It would mean we are not maximising the available wages and transfer funds. Ideally we should announce a loss equal to the Amortisation figure, as that would mean we are spending every penny we bring in, without relying on Randy to subsidise us.

I in no way support the appointment of McLeish, but I can support the Board on the finances of the Club, and the direction they are moving in. I think that McLeish has influenced these, downwards, and this needs fixing, but to criticise Randy for everything at Villa these days is extremely unfair. It`s not all bad news.

This has been done quickly, and after an Operation under General Anaesthetic yesterday, so if there are any errors, please excuse me. I`m not exactly feeling 100%.

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The Journalist

Writer: HeathfieldRoad1874 Mail feedback, articles or suggestions

Date:Sunday March 4 2012

Time: 10:52AM

Your Comments (oldest first)

Change to most recent first
Thanks Heath I can't pretend I fully understand accounts but you make it so much clearer.
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04/03/2012 11:04:00

Don't tell him that 57, he might want paying!
The Fear
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04/03/2012 11:06:00

A fine and brave contribution, sir! Thank you!! :o)
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04/03/2012 11:10:00

I'm really hope we have to pay out one more exceptional cost item in 12/13 and that's paying up Alex McLeish, Peter Grant et al!
Matt B
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04/03/2012 11:32:00

HeathfiedlRoad1874 can I ask a couple of probably dumb questions please!? For those of you who are not accounting train spotters it's probably best to look away now! I'd always understood that the transfer fee was taken onto the balance sheet and an amortisation charge made to the P&L each year over the life of the contract. So that 13m loss on player transactions in the accounts will consist of a "bit" of Bent and Makoun but there's also likely to be a charge for them in 11/12 and 12/13 unless of course they are sold. Doesn't that also mean that 13m could include people like Carlos Cueller, Emile Heskey and basically any MON signing that hasn't yet been sold ? I guess it also means that if the Bent deal cost us 24m + signing on feesthen he's going to be hitting the P&L at about 6m per year ? Thanks for a really good analysis though. Completely on board with what need to happen. I think it's perfectly clear what Lerner need's to do financially although I'm less sure of his state of mind when he appointed McLeish!!
Matt B
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04/03/2012 12:10:00

Wow the club should hire you mate cause thats how you put a possitive spin on things lol really well explained and does show Randy is doing a good job business wise and I do agree it is needed, but we need a real football man on the board because he would never have let Randy hire McIdiot, we have everything in place to be a decent side we just need a manager that doesn't alienate the fans and bring so much negativity.
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04/03/2012 13:08:00

Funny...Doug Ellis used to use Amortisation as well and we all cained him for it!
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04/03/2012 13:13:00

not me murph, i still haven't got a scooby what Amortisation is. I just disliked Dougs' Stubborness
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04/03/2012 14:05:00

Sorry, i got as far as your pathetic little dig at the fans at the beginning and stopped reading.
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04/03/2012 14:09:00

Thanks Heath - great breakdown and especially given what's happening with you at the moment. This will make me sleep slightly easier!
cheshire villan
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04/03/2012 14:18:00

Thanks for adding the detail so that it hopefully stops all the morons calling for Lerner, Faulkner and more or less everyone to leave.
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04/03/2012 15:25:00

hate to say it but steadying the ship is good idea, just need to stop defending one nil leads
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04/03/2012 15:40:00

The financial situation is of Randy's own doing Yorks. The record of 2nd most amount of draws in the entire football league (achieved in a mind numbing fashion) and the anti-football on display has nothing to do with money.
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04/03/2012 16:54:00

Hope all went ok with your operation Heath, i think next season will be a lot different to this season now the wages are being brought down plus a summer clearout to make way for jimmy milner to comeback ;)
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04/03/2012 17:12:00

just like to know why learner had to pump 25 mil in last year and 10mil sofar this year and does it count to the loss
one match ban
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04/03/2012 17:40:00

Thanks for all the nice comments. Still feel a little off colour, so it's good to know it was worthwhile. One match ban - the 24m was effectively the Bent money. Take his purchase out of the equation and we would basically have broken even.
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04/03/2012 17:46:00

444, we should be thankful for the draws given the fact we have a threadbare squad plus kids to fill the gaps. MONs fault, or was it Lerner for backing him? If we get away with this, think us lucky cos nobody decent wanted our managers job, they knew they were on a hiding to nothing and a thankless task. I agree. The football is poor but I'm no more convinced it is mcleish over the 'party is over' scenario that unfolded when MON dropped us in the Sh't
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04/03/2012 17:50:00

VillainYorks - Lerner knows about running a business, as does Fat Paul. But nothing about running the Villa, so carefull who you're calling a moron, buddy. It was Lerner and PF who hired McLoser - are you happy with their choice? Or are u a Bluenose enjoying every minute of this?
Report Abuse
04/03/2012 17:52:00

Wouldn't our amoertisation/depriciation be less if we had a manager who could increase our players value as MON did with Young, Milly, Judas...?
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04/03/2012 17:58:00

Randy employed MON and is entirely to blame Yorks. He's the one paying compensation to our last 2 managers and the bloose for Eck FFS. You really are a loser if your attitude is to be thankful for draws. Anyone can put 11 men behind the ball. Most of the draws were winnable but we literally tried to draw which is Randy's fault for employing the ginger mafia!!
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04/03/2012 18:15:00

Ljkal, what is different about running the villa? Why are we so special that the MBNA directors can't fathom. Mind you they were a breath of fresh air when they were challenging for top 4 after a 120m investment, but now they're b*llocks? Fickle. Mcleish possibly not my first choice but Jol can't do it ANC neither can Hughes and we wanted them. The arguments go round and round, this does not all rest on mcleish, hence why I bring it up under the financial pages to highlight other factors and why we are where we are.
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04/03/2012 18:35:00

The back four isn't good enough 444, that is why we are protecting them. Houllier spotted that but he favoured attack, but he was Sh*te too if I recall your comments under his tenure. When you sell the England midfield expect to be weaker. All draws are winnable :)
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04/03/2012 18:40:00

Do we know how much player wages was last year? or was it roughly the same?
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04/03/2012 18:43:00

Heath - I don't think that's right is it? That 24m wouldn't go to the P&L straight away would it but only a year's amortisation charge ?
Matt B
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04/03/2012 18:57:00

LOL Yorks, back 4 not good enough. Same back 4 that conceded third least amount of goals in MON's last season, that's including the 7 in 1 game vs Chelsea and with Carlos as a RB, not the Eck purchase, Mutton. Also MON didn't needlessly protect them and sit so deep thus inviting pressure and only leaving a hopeful long ball to an isolated poor headerer of the ball like Bent. You have bought into Eck's negative thinking I see. If they aren't trusted, then their confidence will be brought down also. The only thing that you're correct about is my appraisal of GH although this was due to him being in a rush to do things. His ethos was good but not his timing. No draws are winnable with Eck's feeble tactics and encompassing shroud of negativity around the team. Randy let MON spend all the money, you can't blame MON for this. Just because he's finally correcting his mistakes in over expenditure doesn't mean that he's allowed to employ someone who doesn't try to win games!! He made these mistakes and now we're paying for them by suffering unwatchable football. Doubt that he watches us. He has some fooled that he is a knight in shining armour though.
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04/03/2012 19:06:00

lol the love affair goes on......
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04/03/2012 20:14:00

Interesting thought process 444, the same back 4 that when under MON had an England midfield in front of it? Most villans think this back 4 is weak and that it will get shipped out in the summer. I however have no argument for why we sit so deep. I still can't agree on the axis of Lerner being a tool for letting mon spend the dosh, when he was a hero at the time. Their has to be some consistency in fans opinion. Other than the 'we want it now at all costs' which then leads to irrational opinion making.
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04/03/2012 20:24:00

Care to elaborate, AVbornandbred?

MattB, unfortunately the value of the player an the value of the player's contract are two entirely different things. Capital expenditure, such as transfer fee is processed in full, whereas a contract depreciates over time. Hope that helps.
Report Abuse
04/03/2012 20:31:00

AVBornAnInbred thinks that I'm having a relationship with MON Heathfield. He never got over MON leaving and still stays up all night crying but blames me for some reason?!?! Think that the article that he submitted has very little traffic aswell so he's more down in the dumps than normal...;-)..................The midfield was obviously better in those days Yorks but we've still got ball carriers like Marc and Zogbia. But no we hoof to the lone attacker isolated on the halfway line. Randy is the one who wanted it all at once rather than building slowly and you can't blame the fans for his mistakes. Nothing excuses Eck's continued employment. Money spent on his compensation would be gained in ticket sales and league placing. It's over 500k per position????
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04/03/2012 21:19:00

Thanks Heathfield for coming back on that point! I was working on the basis of the notes in the accounts for RAL (page 14) that refers to Intangible Fixed Assets refer to "costs associated with player acquisition" being capitalised over the length of the players contract? Wouldn't this include the transfer fee ? If not I can't see where they list the full transfer fees coming out of the P&L? Sorry to labour the point but it's something that's been bugging me? Happy if it's just not listed in the published accounts but you maybe have some inside knowledge ?
Matt B
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04/03/2012 22:40:00

I find the publishing of accounts kind of strange, Inst Villa A privite company (owner by Randy) and hence don't have to publish them? I see some kind of slight of hand trick here
Report Abuse
05/03/2012 01:25:00

It's a Ltd Private Company so they have to log accounts with Companies House every year. Every Ltd company has to do this and you can get a copy by going onto the Companies House website. If you're a PLC then there's different level's of disclosure and they have to publish their accounts faster.
Matt B
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05/03/2012 07:19:00

Villainyorks & Villa444 your both right the back 4 are past there sell by date including Hutton, and Mcleish regardless of that should be booted out for playing some of the worst crap whe have seen played by a Villa team in years and single handedley turning Villa park into a morgue with the loudest sound being "you dont know what your doing" .Heathfield road thank you for your summary, would be interested in what the capital investment colum read as this would show how much Mr Lerner put into the club
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05/03/2012 10:15:00

Just from my understanding of accounts etc. I have been specifically told by one of my lecturers this year that if I were to start my own company I should do whatever is necessary to make my books make a loss... because then you dont pay so much tax... thats randy is doing too because its not a public company he can alter the books...
Report Abuse
05/03/2012 12:18:00

villan444,lol, the only time I thik of MON is when I read gash by planks worshipping him despite his obvious faults and the way he dumped all over the Villa, by the way nice of you to put your IQ at the end of your user name but once would have been enough you didn't need to put it three times....
Report Abuse
05/03/2012 15:51:00

For those saying the back four were great under MON. Everyone who watched that last season knows that we spent virtually every game playing counter attack football (home and away) with everyone defending and springing forward through the wings often only leaving one up. Despite that we also had more than our fair share of luck with balls bouncing around the box, hitting the woodwork and last ditch clearances etc. Of course the stats don't show that they only show the goals stats so its easy to be mislead. Houlier is a vastly experienced manager, and Mcleish (despite his obvious failings) managed to create a mean defence at small heath but neither man has been able to create a good defence out of the players available, coincidence?
Report Abuse
05/03/2012 16:02:00

InBred, you really did get tricked by a Leprechaun when you were younger to hate MON so much. Eck's alleged (by yourself ) mean defence at Bloose was 7th worst in the league + they were the worst scorers at the same time. 6 short of every other team and less than a goal a game FFS. I didn't watch them through taste but you could probably guess that he had 10 men behind the ball most of the time. Does that sound familiar. At least MON was capable of playing on the break and not just sitting back aimlessly soaking up pressure to do nothing with atall!!!!! You should see a psychiatrist (if you aren't already ((which I strongly suspect))) about your hatred for our most successful manager in recent times. Did you like any of our managers or do you just like moaning??? MON's defence-to-counter-attack was a proven success with excitement every week. Won't see any excitement around VP with Eck in charge. GH just wanted the back 4 to pass round 100 times before they went forward. Total opposite from MON and pointless and boring although obviously not as boring as the not so special one Eck.
Report Abuse
05/03/2012 17:09:00

Sorry Matt - painkillers had an adverse effect. I hope you get to see this. Yes, you are right. However, Sunderland still wanted their 18m for Bent up front, however we have to account for it. It's purely cashflow, and Randy stepped up to the plate - again.
Report Abuse
07/03/2012 17:30:00

Hi Heath. Thanks for answering. Wasn't trying to be picky just genuinely interested from a business and a Villa point of view. I'm not a professional accountant so I really appreciate you clarifying the point.
Matt B
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14/03/2012 21:08:00

Thanks Heath for your hard work.
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15/03/2012 17:47:00

Fantastic article Heath, thank you - best of luck for a speedy recovery, sir!
Report Abuse
23/03/2012 13:42:00


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