Village Idiot Posted March 8, 2012 Share Posted March 8, 2012 Amortisation seems stupid. If I sign £10m in cash for £10m on a four year deal it'll only be worth £5m after two years. We should get players for nothing then cos a £10m player will cost us £20m over four years not including wages. 2 years into a 4 year deal Cabaye is only worth £2.5m according to this weird accountant voodoo? He'd be worth more than that if he only had one leg. Or maybe I just dont get it Amortisation is based on the value at the end of an intangible asset's life. In the case of a player's registration, that is worth zero because the player can leave on a free. If you take a physical asset costing £10m which could be scrapped for £2m and had a life of 4 years- then you would count £2m depreciation (more or less same thing, but for tangible assets) per year until it was worth its scrap value at the end of its life. It is simply a way of allocating costs over long periods. If a company spent £100m on new kit that would bring them huge revenues over 10 years- why should they suffer a huge loss in the year they bought it? This method ensures that costs and benefits are fairly allocated. This is also not what a player is worth- its just what is on the books. We're at liberty to sell a player for more or less- it's purely an accounting methodology. Fair enough if we're talking about equipment and vehicles etc but it barely relates to the value of a footballer if at all. The idea is that this is an objective accounting methodology, which also allows to spread costs predictably. If you are going to adjust your books according to an estimation of a footballer transfer value, how do you decide what value to put in? Footballer market value varies VILDLY throughout time and depends on so many unpredictable and non-objectivable factors, it wouldn't be a good way to run a business. Predictability and reliability is key in accounting. Again, Messi has a value of 0 in our books, too. Link to post Share on other sites More sharing options...
Heron Posted March 8, 2012 Share Posted March 8, 2012 I don't really understand it all to be fair. I have to take the article as the 100% truth due to this lack of knowledge. What would be nice though, is that the players, coaching staff and fans were thanked for their loyalty and hard effort. We made 40,000+ attanednaces throughout the Championship and obviously the Premiership, in the not so distant past, an also bought into they're f***ing merchandise and hot-dogs. Obviously, this was done so more willingly due to the squads performance. Maybe it sounds petty, but it would be nice. It's not like he hasn't done whatever he possibly could to get us f***ed off in the process. From what I read from nufc.c.uk, it still doesn't quite add up to me, but I don't understand anyways so I'm probably wrong. Link to post Share on other sites More sharing options...
80 Posted March 8, 2012 Share Posted March 8, 2012 Amortisation seems stupid. If I sign £10m in cash for £10m on a four year deal it'll only be worth £5m after two years. We should get players for nothing then cos a £10m player will cost us £20m over four years not including wages. 2 years into a 4 year deal Cabaye is only worth £2.5m according to this weird accountant voodoo? He'd be worth more than that if he only had one leg. Or maybe I just dont get it Amortisation is based on the value at the end of an intangible asset's life. In the case of a player's registration, that is worth zero because the player can leave on a free. If you take a physical asset costing £10m which could be scrapped for £2m and had a life of 4 years- then you would count £2m depreciation (more or less same thing, but for tangible assets) per year until it was worth its scrap value at the end of its life. It is simply a way of allocating costs over long periods. If a company spent £100m on new kit that would bring them huge revenues over 10 years- why should they suffer a huge loss in the year they bought it? This method ensures that costs and benefits are fairly allocated. This is also not what a player is worth- its just what is on the books. We're at liberty to sell a player for more or less- it's purely an accounting methodology. Fair enough if we're talking about equipment and vehicles etc but it barely relates to the value of a footballer if at all. The idea is that this is an objective accounting methodology, which also allows to spread costs predictably. If you are going to adjust your books according to an estimation of a footballer transfer value, how do you decide what value to put in? Footballer market value varies VILDLY throughout time and depends on so many unpredictable and non-objectivable factors, it wouldn't be a good way to run a business. Predictability and reliability is key in accounting. Yes, but it remains open to being predictably and reliably divorced from reality. Not disputing its commonality, or potential purpose in certain spheres (such as classification of business activities), but in truth we all know it only really serves to obscure the view of someone trying to seriously analyse a set of accounts. Going back to that business with the £100m machine that will (supposedly) boost long term income beyond that figure, it's only the immature who would really need that outlay artificially broken down and spread out so that they could 'understand' the affairs and prospects of the business. It's more sensible to understand that it's currently (relatively) cash poor due to infrastructural investments which it's hoped will pay of well in the long run, instead of pretending it's not really got a ready-money problem at the present time. It would only not be a good way to run a business if you weren't very good at running a business. (probably why the old Board completely hamstrung themselves, incidentally...) Again, returning to the scrap value idea, the assumptions in amortising such an investment leave the business open to all kinds of problems if, for example, metal prices plunge at around the end of the item's life due to completely unrelated political issues in Asia, and there's suddenly a £1.8m hole in the company's books that had been hidden by the 'helpful' accounting procedure. I do like the way amortisation has been seized upon to suggest that we're still making an operating loss by Llambias. Link to post Share on other sites More sharing options...
OzzieMandias Posted March 8, 2012 Share Posted March 8, 2012 I do like the way amortisation has been seized upon to suggest that we're still making an operating loss by Llambias. Aye, they were trying so fiendishly hard to conceal the fact that the club made a small profit that they announced in advance of the accounts being released that the club had made a small profit. Link to post Share on other sites More sharing options...
80 Posted March 8, 2012 Share Posted March 8, 2012 I do like the way amortisation has been seized upon to suggest that we're still making an operating loss by Llambias. Aye, they were trying so fiendishly hard to conceal the fact that the club made a small profit that they announced in advance of the accounts being released that the club had made a small profit. It's true enough. That's why I find it odd/interesting he's chosen to contradict himself. Link to post Share on other sites More sharing options...
Heron Posted March 8, 2012 Share Posted March 8, 2012 What I kind of drew from it is that we're doing a lot better than before, which they want to show us, but they also want to con us into thinking things like stadium renaming and selling key players could still be seen as necessary. Is that right, as I'm retarded in a business sense. Link to post Share on other sites More sharing options...
80 Posted March 8, 2012 Share Posted March 8, 2012 What I kind of drew from it is that we're doing a lot better than before, which they want to show us, but they also want to con us into thinking things like stadium renaming and selling key players could still be seen as necessary. Is that right, as I'm retarded in a business sense. No one can tell you you're right or wrong for sure at the moment. Ultimately it's about belief. Only time will help tell. Doesn't look too retarded to me, for what it's worth. Link to post Share on other sites More sharing options...
Heron Posted March 8, 2012 Share Posted March 8, 2012 So essentially this means fuck all to us, but the media will wank over it to make us look stupid thawe're pissed off with Mike still? Link to post Share on other sites More sharing options...
80 Posted March 8, 2012 Share Posted March 8, 2012 You definitely underestimate yourself. Link to post Share on other sites More sharing options...
Heron Posted March 8, 2012 Share Posted March 8, 2012 Link to post Share on other sites More sharing options...
Matt Posted March 8, 2012 Share Posted March 8, 2012 it's only the immature who would really need that outlay artificially broken down and spread out so that they could 'understand' the affairs and prospects of the business. It's more sensible to understand that it's currently (relatively) cash poor due to infrastructural investments which it's hoped will pay of well in the long run, instead of pretending it's not really got a ready-money problem at the present time. It would only not be a good way to run a business if you weren't very good at running a business. (probably why the old Board completely hamstrung themselves, incidentally...) Again, returning to the scrap value idea, the assumptions in amortising such an investment leave the business open to all kinds of problems if, for example, metal prices plunge at around the end of the item's life due to completely unrelated political issues in Asia, and there's suddenly a £1.8m hole in the company's books that had been hidden by the 'helpful' accounting procedure. To your first point- there is a cash flow statement to that effect. The idea of financial statements is that they tell you different things. The first and most important is the cashflow statement, but you can't judge a business solely on its cash. That can be manipulated as well. As to the second- yes, depreciation models are not perfect and are open to manipulation like other accounting methods- cash included. That's what the auditors are paid to check. Link to post Share on other sites More sharing options...
80 Posted March 8, 2012 Share Posted March 8, 2012 it's only the immature who would really need that outlay artificially broken down and spread out so that they could 'understand' the affairs and prospects of the business. It's more sensible to understand that it's currently (relatively) cash poor due to infrastructural investments which it's hoped will pay of well in the long run, instead of pretending it's not really got a ready-money problem at the present time. It would only not be a good way to run a business if you weren't very good at running a business. (probably why the old Board completely hamstrung themselves, incidentally...) Again, returning to the scrap value idea, the assumptions in amortising such an investment leave the business open to all kinds of problems if, for example, metal prices plunge at around the end of the item's life due to completely unrelated political issues in Asia, and there's suddenly a £1.8m hole in the company's books that had been hidden by the 'helpful' accounting procedure. To your first point- there is a cash flow statement to that effect. The idea of financial statements is that they tell you different things. The first and most important is the cashflow statement, but you can't judge a business solely on its cash. That can be manipulated as well. As to the second- yes, depreciation models are not perfect and are open to manipulation like other accounting methods- cash included. That's what the auditors are paid to check. Don't disagree. As I said in the earlier part of my quote, there is potentially some kind of purpose in using it to look at things. It's just that the contracts of career footballers are about as far removed as you can get from being one of those purposes. The de jure and de facto can end up laughably and dangerously far apart, like with Messi's paper value, or our squad's high value following our relegation against Villa (which effectively masked a lot of damage to the business). In fairness, I think VI was more just explaining the situation rather than arguing for it, but in the intrinsically variable and subjective valuations of football's commodities, amortisation just doesn't serve as a healthy gauge if your key criteria is reliability. Which is why it always gets trotted out as a figure and immediately denounced as not properly reflecting the situation by those same people who introduce it (I'm thinking of in the media, rather than on here), which only helps to confuse debates. As you say, auditors are paid to look at the underlying reality, unless you've got a volunteer army of them on an internet forum like here. Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 http://i42.tinypic.com/1zlu5bc.jpg Link to post Share on other sites More sharing options...
Dave Posted March 8, 2012 Share Posted March 8, 2012 Is that the actual breakdown? Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 Is that the actual breakdown? Matchday is actual, as reported. TV is based on what Villa got, which I've assumed to be similar Commercial is based on the difference between those and total turnover. Link to post Share on other sites More sharing options...
Dave Posted March 8, 2012 Share Posted March 8, 2012 Bit naughty posting that graph without a disclaimer that it's your guess then. Interesting though. Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 Bit naughty posting that graph without a disclaimer that it's your guess then. Interesting though. Sorry boss. Link to post Share on other sites More sharing options...
Mick Posted March 8, 2012 Share Posted March 8, 2012 Matchday is actual, as reported. TV is based on what Villa got, which I've assumed to be similar Commercial is based on the difference between those and total turnover. Did Villa and us have the same number of games televised? Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 Matchday is actual, as reported. TV is based on what Villa got, which I've assumed to be similar Commercial is based on the difference between those and total turnover. Did Villa and us have the same number of games televised? I've not one into that level of detail. This is the range of money... http://3.bp.blogspot.com/-jMaIu_-CI6U/T1dwRh1LOvI/AAAAAAAAFVw/pfe_qwsp3_M/s400/15%2BVilla%2BPL%2BDistribution.jpg Everton, Fulham, the mackems...they're all quite similar. Link to post Share on other sites More sharing options...
Guest neesy111 Posted March 8, 2012 Share Posted March 8, 2012 Commerical and Matchday income is still significantly smaller than what it used to be, so quite a bit of scope to improve that in next few seasons. Link to post Share on other sites More sharing options...
robm Posted March 8, 2012 Share Posted March 8, 2012 We got just over 47 mill. Do you not remember the screams from the mackems when we got more money despite them being top dogs. http://www.sportingintelligence.com/2011/05/24/where-the-money-went-premier-league-prize-and-tv-payments-for-2010-11-240503/ Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 We got just over 47 mill. Do you not remember the screams from the mackems when we got more money despite them being top dogs. http://www.sportingintelligence.com/2011/05/24/where-the-money-went-premier-league-prize-and-tv-payments-for-2010-11-240503/ We have income from media on top of the Premier League payments, it's a few million extra. So, still using villa as an example... PL Total/Media Total 07 - £22.4/£18.3 08 - £42.7/£46.1 09 - £44.5/£49.5 10 - £45.9/£52.1 11 - £49.1/£53.9 Link to post Share on other sites More sharing options...
Dokko Posted March 8, 2012 Share Posted March 8, 2012 Sticking around HF or just your annual financial visit? Link to post Share on other sites More sharing options...
Happy Face Posted March 8, 2012 Share Posted March 8, 2012 Sticking around HF or just your annual financial visit? Just interested in what the egg heads are making of the numbers. I hear people round these parts want Pardew replaced. Assume it's the same people who wanted Robson sacked for finishing 5th Link to post Share on other sites More sharing options...
Dave Posted March 8, 2012 Share Posted March 8, 2012 Just the usual shit-stirring tbh. Link to post Share on other sites More sharing options...
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