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Accountants Summary of AVFC Accounts

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%.

Forum Thread Read More: Click Here



Click here to join in the debate on the club forum.

Writer:HeathfieldRoad1874
Date:Sunday March 4 2012
Time: 10:52AM

Comments

0
Thanks Heath I can't pretend I fully understand accounts but you make it so much clearer.
villan57
04/03/2012 11:04:00
0
Don't tell him that 57, he might want paying!
The Fear
04/03/2012 11:06:00
0
A fine and brave contribution, sir! Thank you!! :o)
the_lergy
04/03/2012 11:10:00
0
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
04/03/2012 11:32:00
0
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
04/03/2012 12:10:00
0
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.
KerryVillian
04/03/2012 13:08:00
0
Funny...Doug Ellis used to use Amortisation as well and we all cained him for it!
murph
04/03/2012 13:13:00
0
not me murph, i still haven't got a scooby what Amortisation is. I just disliked Dougs' Stubborness
Kuffit
04/03/2012 14:05:00
0
Sorry, i got as far as your pathetic little dig at the fans at the beginning and stopped reading.
villawill
04/03/2012 14:09:00
0
Thanks Heath - great breakdown and especially given what's happening with you at the moment. This will make me sleep slightly easier!
cheshire villan
04/03/2012 14:18:00
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