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Swans Finance Situation on 10:29 - Dec 30 by Borojack
Why did we need Fairwood and Landore not knocking it but curious why we need both. Have to agree with Perch though the playing squad should always take priority.
I think the Fairwood project is a joint initiative with the University. That may assist with running costs
It's just the internet, init.
0
Swans Finance Situation on 12:32 - Dec 30 with 3228 views
Swans Finance Situation on 11:30 - Dec 30 by Clinton
Interested why we need both Fairwood and Landore. What happens at these two locations? Why are we split across two sites ? Not criticising, just asking if anyone knows.
Fairwood is the clubs main training facilities. The RTB is for the academy alone and nothing to do with the first team squad. So I believe anyway
0
Swans Finance Situation on 12:32 - Dec 30 with 3227 views
You often find when the total cost of the team is low there are a few big signing on fees and loan payments to other clubs that don't get included so the team is not always as cheap as it looks.
For Example our first year in the premiership we had Caulker and Siggy on loan and they both probably cost a loan fee but would have shown as zero in the cost of putting the team together.
Leicester are paying us for Dyer at the moment.
0
Swans Finance Situation on 09:27 - Jan 1 with 2730 views
Swans Finance Situation on 09:41 - Jan 1 by Starsky
Haha, My sister lives in Stockton and we borrowed her house (she was away) for a week. We had a great time. Went to see Boro v Everton too.
Yes thats where we live Stockton friendly folk the Northerners. Must admit I find it a bit baffling when some come on here slagging off Newcastle Sunderland after away trips.
I don’t know how Swissramble got early sight of the financial statements, but the club accounts are now filed at Companies House. I took a quick look and there isn’t a huge amount to add to his excellent, in depth analysis.
I would only add that these results show yet again what a tight spot the club are now in, financially. I remember posting on here when the 2014 results were published that the balance sheet was creaking. It’s now gone way beyond creaking.
As variously reported above, the accounts were extended to a 14 month period to align with the PL reporting season, so the year end is now July. This would have made the P&L look a bit more terrifying than it otherwise would have done, as we would have seen virtually zero revenue in June & July, but would have continued to incur monthly outgoings.
But it is not good reading. Revenues were £102.9m (excluding player trading/amortisation releases), and operating expenses were £102.4m. After some incidentals, that leaves a gross profit of just £455k. There is not much activity below the gross profit line, leaving a net profit of £493k.
Things look a bit better when player trading gets added in. Although gross profit turns into a whacking £16.9m loss, that is turned back into a net profit of £1.8m once the sale of Bony is added back in. Looking at the cash flow statement, you can’t reconcile transfer fee and profit on disposal with the cash inflows per the cash flow statement, suggesting the funds are still being paid in instalments. You can’t reconcile precisely, but I would guess we were still owed over £10m from Man City at the start of this season. The balance sheet shows debts to the club of over £11.5m that are due more than 12 months from the balance sheet date, suggesting some payments are structured over quite a long time. Don’t be banking on much of the Bony money being available this January.
It’s clear that wages and salaries have run away this year. Even allowing for a 14 month period, wages are up at £72.9m, against £56.1m the year before. I’m sure there are a few signing on fees in that, but add in social security costs (ie National insurance contributions) and we spent over £80m on wages in the period. Buried in note 26 of the accounts is part of the reason why. As at 31 July 2015, we were committed to pay signing-on fees of over £19m (compared with just £2.1m at the end of May 2014). I’ll repeat for the avoidance of doubt: £19m!
Wage costs of £80m virtually wipes out the entire TV income (£85.1m) which leaves only the (relatively paltry) commercial income of £10m and match day income of £7.7m to fund everything else that the club wants to do.
And you wonder why the stadium expansion hasn’t happened.
The impact of those rising costs is then shown on the increasingly strained balance sheet. The days of referring to the club as debt free are gone. Total creditors now exceed £65m, of which £30m is merely categorised as “other creditors” which is not particularly helpful. Would need management accounts to unpick that! However, we have a £15m overdraft (which presumably would be cleared in early August when £20m+ is received from Sky in their upfront facility payment). However, there is also an £8m “other loan” to an undefined third party (not a related party, so not funds from one of the directors or shareholders). I’m guessing this might be a loan to pay for Landore/Fairwood — as its clear this “investment” can no longer be paid for out of free cash flow (as there isn’t any!).
There are also the usual related party transactions with directors and shareholders. Usual stuff, pored over in great detail in previous years, but nothing particularly new or significant. Huw J took a slight paycut :)
The cash flow statement is what concerns me. Just £6m of cash flow was generated from operating activities in the year (compared to £19.2m last year). Some of that decrease is due to the longer accounting period, but not all of it. Big increases in signing on fees, player wages, an increase in overall headcount (over 300 people are now on the payroll of the club!) and general running costs.
It’s clear we will have some significant challenges if relegated. I hope we have solid relegation clauses and thought carefully about the timing of cashflows from parachute payments. These accounts are littered with red flags for companies that are "overtrading", and therefore at much higher risk of going into default.
Now, I accept football clubs are different to other private companies, as you have much greater certainty over cash flow. That at least is a positive by-product of our dependency on media rights.
The new manager choice is a very big call for Huw. Very.
3
Swans Finance Situation on 16:50 - Jan 4 with 2511 views
Swans Finance Situation on 13:59 - Dec 30 by Starsky
I had my honeymoon in Middlesboro
May the Lord have Mercy upon your soul...!
I used to live in Stockton... as well as Darlington (hence the name)... living down near Redcar now. It's ok, as long as you don't mind freezing to death in winter.
Swans Finance Situation on 16:46 - Jan 4 by jackonicko
I don’t know how Swissramble got early sight of the financial statements, but the club accounts are now filed at Companies House. I took a quick look and there isn’t a huge amount to add to his excellent, in depth analysis.
I would only add that these results show yet again what a tight spot the club are now in, financially. I remember posting on here when the 2014 results were published that the balance sheet was creaking. It’s now gone way beyond creaking.
As variously reported above, the accounts were extended to a 14 month period to align with the PL reporting season, so the year end is now July. This would have made the P&L look a bit more terrifying than it otherwise would have done, as we would have seen virtually zero revenue in June & July, but would have continued to incur monthly outgoings.
But it is not good reading. Revenues were £102.9m (excluding player trading/amortisation releases), and operating expenses were £102.4m. After some incidentals, that leaves a gross profit of just £455k. There is not much activity below the gross profit line, leaving a net profit of £493k.
Things look a bit better when player trading gets added in. Although gross profit turns into a whacking £16.9m loss, that is turned back into a net profit of £1.8m once the sale of Bony is added back in. Looking at the cash flow statement, you can’t reconcile transfer fee and profit on disposal with the cash inflows per the cash flow statement, suggesting the funds are still being paid in instalments. You can’t reconcile precisely, but I would guess we were still owed over £10m from Man City at the start of this season. The balance sheet shows debts to the club of over £11.5m that are due more than 12 months from the balance sheet date, suggesting some payments are structured over quite a long time. Don’t be banking on much of the Bony money being available this January.
It’s clear that wages and salaries have run away this year. Even allowing for a 14 month period, wages are up at £72.9m, against £56.1m the year before. I’m sure there are a few signing on fees in that, but add in social security costs (ie National insurance contributions) and we spent over £80m on wages in the period. Buried in note 26 of the accounts is part of the reason why. As at 31 July 2015, we were committed to pay signing-on fees of over £19m (compared with just £2.1m at the end of May 2014). I’ll repeat for the avoidance of doubt: £19m!
Wage costs of £80m virtually wipes out the entire TV income (£85.1m) which leaves only the (relatively paltry) commercial income of £10m and match day income of £7.7m to fund everything else that the club wants to do.
And you wonder why the stadium expansion hasn’t happened.
The impact of those rising costs is then shown on the increasingly strained balance sheet. The days of referring to the club as debt free are gone. Total creditors now exceed £65m, of which £30m is merely categorised as “other creditors” which is not particularly helpful. Would need management accounts to unpick that! However, we have a £15m overdraft (which presumably would be cleared in early August when £20m+ is received from Sky in their upfront facility payment). However, there is also an £8m “other loan” to an undefined third party (not a related party, so not funds from one of the directors or shareholders). I’m guessing this might be a loan to pay for Landore/Fairwood — as its clear this “investment” can no longer be paid for out of free cash flow (as there isn’t any!).
There are also the usual related party transactions with directors and shareholders. Usual stuff, pored over in great detail in previous years, but nothing particularly new or significant. Huw J took a slight paycut :)
The cash flow statement is what concerns me. Just £6m of cash flow was generated from operating activities in the year (compared to £19.2m last year). Some of that decrease is due to the longer accounting period, but not all of it. Big increases in signing on fees, player wages, an increase in overall headcount (over 300 people are now on the payroll of the club!) and general running costs.
It’s clear we will have some significant challenges if relegated. I hope we have solid relegation clauses and thought carefully about the timing of cashflows from parachute payments. These accounts are littered with red flags for companies that are "overtrading", and therefore at much higher risk of going into default.
Now, I accept football clubs are different to other private companies, as you have much greater certainty over cash flow. That at least is a positive by-product of our dependency on media rights.
The new manager choice is a very big call for Huw. Very.
So if the books roughly balance, how did the club accrue a £65M debt?
0
Swans Finance Situation on 17:01 - Jan 4 with 2482 views
Swans Finance Situation on 16:46 - Jan 4 by jackonicko
I don’t know how Swissramble got early sight of the financial statements, but the club accounts are now filed at Companies House. I took a quick look and there isn’t a huge amount to add to his excellent, in depth analysis.
I would only add that these results show yet again what a tight spot the club are now in, financially. I remember posting on here when the 2014 results were published that the balance sheet was creaking. It’s now gone way beyond creaking.
As variously reported above, the accounts were extended to a 14 month period to align with the PL reporting season, so the year end is now July. This would have made the P&L look a bit more terrifying than it otherwise would have done, as we would have seen virtually zero revenue in June & July, but would have continued to incur monthly outgoings.
But it is not good reading. Revenues were £102.9m (excluding player trading/amortisation releases), and operating expenses were £102.4m. After some incidentals, that leaves a gross profit of just £455k. There is not much activity below the gross profit line, leaving a net profit of £493k.
Things look a bit better when player trading gets added in. Although gross profit turns into a whacking £16.9m loss, that is turned back into a net profit of £1.8m once the sale of Bony is added back in. Looking at the cash flow statement, you can’t reconcile transfer fee and profit on disposal with the cash inflows per the cash flow statement, suggesting the funds are still being paid in instalments. You can’t reconcile precisely, but I would guess we were still owed over £10m from Man City at the start of this season. The balance sheet shows debts to the club of over £11.5m that are due more than 12 months from the balance sheet date, suggesting some payments are structured over quite a long time. Don’t be banking on much of the Bony money being available this January.
It’s clear that wages and salaries have run away this year. Even allowing for a 14 month period, wages are up at £72.9m, against £56.1m the year before. I’m sure there are a few signing on fees in that, but add in social security costs (ie National insurance contributions) and we spent over £80m on wages in the period. Buried in note 26 of the accounts is part of the reason why. As at 31 July 2015, we were committed to pay signing-on fees of over £19m (compared with just £2.1m at the end of May 2014). I’ll repeat for the avoidance of doubt: £19m!
Wage costs of £80m virtually wipes out the entire TV income (£85.1m) which leaves only the (relatively paltry) commercial income of £10m and match day income of £7.7m to fund everything else that the club wants to do.
And you wonder why the stadium expansion hasn’t happened.
The impact of those rising costs is then shown on the increasingly strained balance sheet. The days of referring to the club as debt free are gone. Total creditors now exceed £65m, of which £30m is merely categorised as “other creditors” which is not particularly helpful. Would need management accounts to unpick that! However, we have a £15m overdraft (which presumably would be cleared in early August when £20m+ is received from Sky in their upfront facility payment). However, there is also an £8m “other loan” to an undefined third party (not a related party, so not funds from one of the directors or shareholders). I’m guessing this might be a loan to pay for Landore/Fairwood — as its clear this “investment” can no longer be paid for out of free cash flow (as there isn’t any!).
There are also the usual related party transactions with directors and shareholders. Usual stuff, pored over in great detail in previous years, but nothing particularly new or significant. Huw J took a slight paycut :)
The cash flow statement is what concerns me. Just £6m of cash flow was generated from operating activities in the year (compared to £19.2m last year). Some of that decrease is due to the longer accounting period, but not all of it. Big increases in signing on fees, player wages, an increase in overall headcount (over 300 people are now on the payroll of the club!) and general running costs.
It’s clear we will have some significant challenges if relegated. I hope we have solid relegation clauses and thought carefully about the timing of cashflows from parachute payments. These accounts are littered with red flags for companies that are "overtrading", and therefore at much higher risk of going into default.
Now, I accept football clubs are different to other private companies, as you have much greater certainty over cash flow. That at least is a positive by-product of our dependency on media rights.
The new manager choice is a very big call for Huw. Very.
Thanks for that, was an interesting read.
0
Swans Finance Situation on 17:17 - Jan 4 with 2430 views
Swans Finance Situation on 16:46 - Jan 4 by jackonicko
I don’t know how Swissramble got early sight of the financial statements, but the club accounts are now filed at Companies House. I took a quick look and there isn’t a huge amount to add to his excellent, in depth analysis.
I would only add that these results show yet again what a tight spot the club are now in, financially. I remember posting on here when the 2014 results were published that the balance sheet was creaking. It’s now gone way beyond creaking.
As variously reported above, the accounts were extended to a 14 month period to align with the PL reporting season, so the year end is now July. This would have made the P&L look a bit more terrifying than it otherwise would have done, as we would have seen virtually zero revenue in June & July, but would have continued to incur monthly outgoings.
But it is not good reading. Revenues were £102.9m (excluding player trading/amortisation releases), and operating expenses were £102.4m. After some incidentals, that leaves a gross profit of just £455k. There is not much activity below the gross profit line, leaving a net profit of £493k.
Things look a bit better when player trading gets added in. Although gross profit turns into a whacking £16.9m loss, that is turned back into a net profit of £1.8m once the sale of Bony is added back in. Looking at the cash flow statement, you can’t reconcile transfer fee and profit on disposal with the cash inflows per the cash flow statement, suggesting the funds are still being paid in instalments. You can’t reconcile precisely, but I would guess we were still owed over £10m from Man City at the start of this season. The balance sheet shows debts to the club of over £11.5m that are due more than 12 months from the balance sheet date, suggesting some payments are structured over quite a long time. Don’t be banking on much of the Bony money being available this January.
It’s clear that wages and salaries have run away this year. Even allowing for a 14 month period, wages are up at £72.9m, against £56.1m the year before. I’m sure there are a few signing on fees in that, but add in social security costs (ie National insurance contributions) and we spent over £80m on wages in the period. Buried in note 26 of the accounts is part of the reason why. As at 31 July 2015, we were committed to pay signing-on fees of over £19m (compared with just £2.1m at the end of May 2014). I’ll repeat for the avoidance of doubt: £19m!
Wage costs of £80m virtually wipes out the entire TV income (£85.1m) which leaves only the (relatively paltry) commercial income of £10m and match day income of £7.7m to fund everything else that the club wants to do.
And you wonder why the stadium expansion hasn’t happened.
The impact of those rising costs is then shown on the increasingly strained balance sheet. The days of referring to the club as debt free are gone. Total creditors now exceed £65m, of which £30m is merely categorised as “other creditors” which is not particularly helpful. Would need management accounts to unpick that! However, we have a £15m overdraft (which presumably would be cleared in early August when £20m+ is received from Sky in their upfront facility payment). However, there is also an £8m “other loan” to an undefined third party (not a related party, so not funds from one of the directors or shareholders). I’m guessing this might be a loan to pay for Landore/Fairwood — as its clear this “investment” can no longer be paid for out of free cash flow (as there isn’t any!).
There are also the usual related party transactions with directors and shareholders. Usual stuff, pored over in great detail in previous years, but nothing particularly new or significant. Huw J took a slight paycut :)
The cash flow statement is what concerns me. Just £6m of cash flow was generated from operating activities in the year (compared to £19.2m last year). Some of that decrease is due to the longer accounting period, but not all of it. Big increases in signing on fees, player wages, an increase in overall headcount (over 300 people are now on the payroll of the club!) and general running costs.
It’s clear we will have some significant challenges if relegated. I hope we have solid relegation clauses and thought carefully about the timing of cashflows from parachute payments. These accounts are littered with red flags for companies that are "overtrading", and therefore at much higher risk of going into default.
Now, I accept football clubs are different to other private companies, as you have much greater certainty over cash flow. That at least is a positive by-product of our dependency on media rights.
The new manager choice is a very big call for Huw. Very.
I don't disagree but comparing ourselves to other clubs we are still doing well off the field, I think the club expected to kick on this season with Gomis, Ayew, Shelvey, Fernandez, Williams, Siggy etc spending accordingly, with bigger tv money coming in next season not a bad time to try and kick on either but it hasn't happened.
Need a good loan striker in January and hope we stay up, if so we probably would not start the new season as one of the 3 teams fancied to go down as we have under achieved so far this season, if we go down Monk and his staff and the players will have a lot to answer for.
Continually being banned by Planet Swans for Porthcawl and then being reinstated.
Swans Finance Situation on 17:00 - Jan 4 by A_Fans_Dad
So if the books roughly balance, how did the club accrue a £65M debt?
Because accounting profit does not equal cash. And where you don't have the cash, you need to borrow it.
For example, in the year to 2015, we spent in *cash* terms £26.9m more on tangible fixed assets (eg cost of building Landore/Fairwood) and on intangible fixed assets (eg buying new players) than we generated from the sale of players, or the sale of assets. But we only generated £6m cash flow from operating activities, due to the high increase in wages/signing on fees. That money has to come from somewhere.
The reason why the P&L shows an accounting profit, despite the cash shortfall, is because when we spend money on assets (buildings, players) those assets are initially recorded on the balance sheet, and the cost doesn't hit the profit and loss account. They are an asset, not an expense.
However, the cost of that asset is broken up into chunks and spread through the profit and loss account over a period of years. Therefore, that net £26.9m we spent in the year to July 2015 will be split up into smaller chunks, and reported as an expense in the P&L account over (potentially many) years.
This is called amortisation/depreciation and is intended to match the "cost" of the asset against the period you can earn revenues from that asset (eg the length of a player contract, the life of a training facility, etc).
However, you still need to spend that money to buy the asset, build the asset, buy the player, pay the signing on fee. If you don't have the cash, you have to borrow it.
Also, as I noted above, when you sell a player, you don't necessarily see all that money at once either. From the accounts, we will not see over £11m of money from player sales until at least next season. Even though we may have recognised a "profit" on their sale in the year from an accounting perspective (ie Bony).
Similarly, we will not be paying up front all of our transfer fees either. Some of those £65m creditors (buried in the other creditors balance, I imagine) will be transfer instalments we still owe to other clubs for players we signed.
0
Swans Finance Situation on 17:46 - Jan 4 with 2357 views
Not a lot to add to Jackos excellent analysis. Money is tight, some things can be explained by cash flow but ultimately it shows the importance of staying in this league for the new deal. Relegation, whilst not catastrophic, makes things much more difficult. I'd worry much more if the club splashed the cash in January without any outgoings.
Brilliant. From now on, when someone asks me what an intangible asset is, I'm going to say 'Bafetimbi Gomis'. The big hapless intangible french jessie.
Oh no, that's an imaginary asset. Sorry, as you were.
Swans Finance Situation on 17:46 - Jan 4 by Uxbridge
Not a lot to add to Jackos excellent analysis. Money is tight, some things can be explained by cash flow but ultimately it shows the importance of staying in this league for the new deal. Relegation, whilst not catastrophic, makes things much more difficult. I'd worry much more if the club splashed the cash in January without any outgoings.
Definitely.
Even though I'm a fan of his, I'm happy for Shelvey to go now, somethings not right there and we need the funds to spend on a striker. English international, sell for an inflated price. It's imperative we stay up this year looking at these figures, scary if I'm honest.
0
Swans Finance Situation on 17:55 - Jan 4 with 2348 views
Swans Finance Situation on 17:49 - Jan 4 by blaine_scfc
Definitely.
Even though I'm a fan of his, I'm happy for Shelvey to go now, somethings not right there and we need the funds to spend on a striker. English international, sell for an inflated price. It's imperative we stay up this year looking at these figures, scary if I'm honest.
It's the obvious solution. Necessary I would argue.
Swans Finance Situation on 17:45 - Jan 4 by jackonicko
Because accounting profit does not equal cash. And where you don't have the cash, you need to borrow it.
For example, in the year to 2015, we spent in *cash* terms £26.9m more on tangible fixed assets (eg cost of building Landore/Fairwood) and on intangible fixed assets (eg buying new players) than we generated from the sale of players, or the sale of assets. But we only generated £6m cash flow from operating activities, due to the high increase in wages/signing on fees. That money has to come from somewhere.
The reason why the P&L shows an accounting profit, despite the cash shortfall, is because when we spend money on assets (buildings, players) those assets are initially recorded on the balance sheet, and the cost doesn't hit the profit and loss account. They are an asset, not an expense.
However, the cost of that asset is broken up into chunks and spread through the profit and loss account over a period of years. Therefore, that net £26.9m we spent in the year to July 2015 will be split up into smaller chunks, and reported as an expense in the P&L account over (potentially many) years.
This is called amortisation/depreciation and is intended to match the "cost" of the asset against the period you can earn revenues from that asset (eg the length of a player contract, the life of a training facility, etc).
However, you still need to spend that money to buy the asset, build the asset, buy the player, pay the signing on fee. If you don't have the cash, you have to borrow it.
Also, as I noted above, when you sell a player, you don't necessarily see all that money at once either. From the accounts, we will not see over £11m of money from player sales until at least next season. Even though we may have recognised a "profit" on their sale in the year from an accounting perspective (ie Bony).
Similarly, we will not be paying up front all of our transfer fees either. Some of those £65m creditors (buried in the other creditors balance, I imagine) will be transfer instalments we still owe to other clubs for players we signed.
Is there an assessment of the assets that are the players (i.e., their potential transfer fees) ? This is a key difference between a football business and other businesses in that the value of the key assets are quite fluid and difficult to assess until they are actually sold.
The sale of say Shelvey for approx. £10M and his non-replacement, thereby saving on his fees / wages, would add a few million to the P&L this year no doubt.
We probably need to cut our cloth a little differently to clubs that have a sugar daddy willing to write-off debts / provide long-term loans.
C'mon Bony shoot !!!!
1
Swans Finance Situation on 20:04 - Jan 4 with 2154 views
Swans Finance Situation on 17:48 - Jan 4 by monmouth
Brilliant. From now on, when someone asks me what an intangible asset is, I'm going to say 'Bafetimbi Gomis'. The big hapless intangible french jessie.
Oh no, that's an imaginary asset. Sorry, as you were.
God - I hope we didn't write off his cost over the period of his useful life.
That was an expensive three weeks!
0
Swans Finance Situation on 20:12 - Jan 4 with 2112 views
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