Finances

[Cooperman]

Spent many a night in Waxy's!
The Counting House around the corner gets a bit lively on Derby day too Coops!

It was a toss up between those two but all the seats outside of The Counting House were taken.

 

[Jackareme]

Sorry to put a downer on things, but is it just me that's concerned about our Finances? We only escaped breaching P & S regulations this season thanks to the allowable deductions of the academy, women's team and infrastructure costs. We posted a modest profit on player trading of about £4.5 million if my memory serves and yet still posted a hefty loss of over £15 million. The way things are looking at the moment it's hard to see how we can avoid making a loss on player trading, unless there's an unexpected windfall.

With the sell-on fees for Piroe, Whittaker and Joseph added to the fee for Grimes' sale we've made in the region of around £7 million. You can probably deduct a couple of million from this for compensation to Williams and his assistants, plus a likely sizeable loan fee for O'Brien. So we have about £5 million to play with. I'm guessing that Inoussa's £5 million fee is probably around £3 million up front. So that leaves just about £2 million to play with for multiple acquisitions, just to break even.

We may get a million, perhaps a million and a half for Yates, but apart from that who else might we sell? There's been rumours about Vipotnik attracting interest, and he may leave for around £3 million. The only possible big money sale to an established Premier League side would be Eom, and who knows, Inoussa's arrival may be connected to Eom's impending departure. If he went to an established PL side we'd be looking at at least £10 million.

Realistically, if we're to make even a modest profit on player trading this summer we will need at least one big ticket sale. Apart from Eom (and I don't think that's likely) I can't see any other departures generating significant revenue. But the owners are well aware of the P & S constraints - so this has to figure heavily in their thinking. One hopes.

Hey mate - I HOPE that part of the answer is in the salary savings of the dearly departed. - Darling O'Brien Naughton Allen Pederson McLaughlin Christie Tjoe A On (maybe add in Yates Kuharevych Bianchini and others) this might be (Totally a fracking guess) around 80-90 grand a week - or a million every 2-3 months..
Need to fill our squad up with academy products buddy and save our cash for some real difference makers

 

[Nice to Michu]

uh thats what i said 1/2m

Sorry I read it as 1-2m

 

[Ringwood]

I'm surprised we couldn't do any better commercially than a coffee chain as our main sponsor.

Surely with the Modric effect we could attract a higher profile sponsor with more incoming investment

 

[Derwydd]

Apparently the total cost of Widell, Inoussa and Wales so far is 1.2m assuming a 300k tribunal award for Walsh

So Inoussa 500k now, Widell 400k in January and Wales tribunal fee.

Not sure when our financial year ends but that's the hit from the first 3.

Obviously the hit in next years finances will be higher e.g. installment payment on Inoussa probably 1m/year plus Widell and any other signings.

All are being brought in on low wages.

The next financial year will have savings on the wage bill by shipping out, sold, or loaned out, players that were in jackarame's post amounting to savings of approx 6m/year. Plus any transfer fees

We also have 3 or 5m, depending on who you believe from Modric's investment. Which gives us that more room too

That appears to be the way this is being made to work

 

[Dr. Winston]

It's basically the Chelsea method. Spread the cost of the signings over a longer contract period. Hence the five year deal for Inoussa.

Smart for PSR purposes, risky in that you'll end up carrying a lot of debt on the books, and have a player who might not work out on a long contract.

 

[bytholwyn]

Apparently the total cost of Widell, Inoussa and Wales so far is 1.2m assuming a 300k tribunal award for Walsh

So Inoussa 500k now, Widell 400k in January and Wales tribunal fee.

Not sure when our financial year ends but that's the hit from the first 3.

Obviously the hit in next years finances will be higher e.g. installment payment on Inoussa probably 1m/year plus Widell and any other signings.

All are being brought in on low wages.

The next financial year will have savings on the wage bill by shipping out, sold, or loaned out, players that were in jackarame's post amounting to savings of approx 6m/year. Plus any transfer fees

We also have 3 or 5m, depending on who you believe from Modric's investment. Which gives us that more room too

That appears to be the way this is being made to work

Any investment from Modric has no bearing on the issue of P & S calculations.

 

[Molbys_pie]

The addition of Modric is a really interesting one, and there are apparently some commercial deals on the horizon. That is a real area of opportunity for us, and it follows the likes of Brum and Wrexham with their big name associations.

It's probably been shared already but one of the Birmingham owners recently said:

“If our revenue progresses as we expect into next season, which is basically a certainty, we will be the highest revenue-generating club in the Championship ever not receiving parachute payments — and we will be on a par with those receiving parachute payments.

“If we then progress one year further, and we’re fortunate enough to end up in the Premier League, we’ll be a mid-table club or better in total revenue, first year in"

Look at the types of companies they and Wrexham get sponsorship from (Amazon, Tik Tok etc) - huge global companies that other teams couldn't even dream of. I guess that's a route we might benefit from if everything pays off and falls into place.

 

[Derwydd]

Any investment from Modric has no bearing on the issue of P & S calculations.

I believe it does but I am no accountant.

"If a company sells shares (either its own shares or those of another company it holds as an investment), any gain or loss from that sale would be recognized on the P&L statement. For example, a gain on the sale of a marketable security would be reported on the P&L under a line item like "Gain on Trading Securities". "

 

[bytholwyn]

Profit and Loss isn't the same as Profitability and Sustainability. Hopefully Lisa can add clarity to the matter.

 

[monmouth]

I believe it does but I am no accountant.

"If a company sells shares (either its own shares or those of another company it holds as an investment), any gain or loss from that sale would be recognized on the P&L statement. For example, a gain on the sale of a marketable security would be reported on the P&L under a line item like "Gain on Trading Securities". "

No, that relates to shares held as investments. Share issues are simply SoFP (balance sheet) items (increase equity, increase cash), doesn’t touch the P&L. Also, if they weren’t new shares and it was simply a transfer of existing shares to Modric, it has no effect whatsoever on the club.

 

[Londonlisa2001]

I believe it does but I am no accountant.

"If a company sells shares (either its own shares or those of another company it holds as an investment), any gain or loss from that sale would be recognized on the P&L statement. For example, a gain on the sale of a marketable security would be reported on the P&L under a line item like "Gain on Trading Securities". "

A company selling its own shares doesn’t affect the profit and loss account nor does it affect PSR rules.

Even if Modric has bought shares (which I doubt he has to be honest but he may have done), there are two options:

1. He has bought them from the holding company (Swansea Football LLC) either new or from an existing shareholder - neither option would hit the football club’s accounts at all

2. He has bought shares from the club itself (this is v.v. Unlikely) and they would be reported as a balance sheet item not profit and loss.

PSR is ONLY affected by the owners in one way - clubs are allowed to lose an average of £13m per year if the losses are covered by owners and only £5m per year if not.

It’s actually a three year rolling calculation and last year and next year, an additional £2.5m loss over the three year period (so £41.5m total 3 year loss) has been allowed for inflation.

Clubs are allowed to add back the costs of their academy and women’s team to their profit and loss figure in their annual accounts to get to the figure for PSR purposes.

Modric’s ‘value’ will be if his presence increases our ability to maximise commercial revenue (sponsorships etc) which increases profits (or reduces losses) for both company reporting and PSR purposes.

Oh, and the clubs financial period runs from 1 July.

 

[Londonlisa2001]

No, that relates to shares held as investments. Share issues are simply SoFP (balance sheet) items (increase equity, increase cash), doesn’t touch the P&L. Also, if they weren’t new shares and it was simply a transfer of existing shares to Modric, it has no effect whatsoever on the club.

Sorry Mon, I answered before I’d seen this. We obviously agreed…

 

[Derwydd]

A company selling its own shares doesn’t affect the profit and loss account nor does it affect PSR rules.

Even if Modric has bought shares (which I doubt he has to be honest but he may have done), there are two options:

1. He has bought them from the holding company (Swansea Football LLC) either new or from an existing shareholder - neither option would hit the football club’s accounts at all

2. He has bought shares from the club itself (this is v.v. Unlikely) and they would be reported as a balance sheet item not profit and loss.

PSR is ONLY affected by the owners in one way - clubs are allowed to lose an average of £13m per year if the losses are covered by owners and only £5m per year if not.

It’s actually a three year rolling calculation and last year and next year, an additional £2.5m loss over the three year period (so £41.5m total 3 year loss) has been allowed for inflation.

Clubs are allowed to add back the costs of their academy and women’s team to their profit and loss figure in their annual accounts to get to the figure for PSR purposes.

Modric’s ‘value’ will be if his presence increases our ability to maximise commercial revenue (sponsorships etc) which increases profits (or reduces losses) for both company reporting and PSR purposes.

Oh, and the clubs financial period runs from 1 July.

Appreciate the explanation Lisa.

I read the rules for league 1 after Cardiff's relegation and it said owners couldnt affect the rules by loaning the club money, but, if they put the money in as equity then that was Ok. From that I assumed it affected P/L

Thank you for clearing up how it really works

 

[Londonlisa2001]

Appreciate the explanation Lisa.

I read the rules for league 1 after Cardiff's relegation and it said owners couldnt affect the rules by loaning the club money, but, if they put the money in as equity then that was Ok. From that I assumed it affected P/L

Thank you for clearing up how it really works

The rules are different in league 1.

The championship uses rules that are almost identical to the premier league (owners can’t affect things) but the total loss allowed over three years (rolling) is different. It’s about £110m from memory for the premier league but that may well be different now.