A week in the life of Watford - Jason Burt

In terms of player depreciation shouldn’t that mean we should have made a stonking profit year 1 in premier? 50 million spent but only amortise 25% to accounts and then 100 mill TV money?

 

Does it show salary breakdown for owners?

 

First season tv money was £80m within total income of £94m but wages were £58m, operating expenses were £24m and player depreciation was £13m , result a small profit after limited player trading, we spent £64m on players that year and dependent on the length of contracts the depreciation charge would vary,

Pozzo takes £30k salary and no dividend out of either company, duxbury earnt £553k last year ,

My post was really to show that we have debt and a lot of it and rely on player trading to make a profit as tv money and gate receipts are swallowed up in wages and running costs

In cash flow terms as depreciation is not a cash outflow we seem to rely on that debt to meet ground upgrades and player purchases so we haven’t got £40m sitting on deposit to spend after the Richarlison sale

Of course we have value in the some of the players we have- probably above their booked value ( after depreciation) in the accounts

 

Ah okay. TV money lower than I expected and player depreciation in line.

 

Interesting figures in any case. The premier league model is hard to make money from (for everyone). The wages are brutal even with us in 15th in terms of size.

 

The increase in the personal allowance announced in the budget is a welcome boon for Gino.

 

Question - what happens to someone like Britos in the accounts. Fully depreciated then signs a new contract. Does he have book value zero and then you get a windfall if you sell him?

 

I used to follow the financial situation when we had BBB in charge, but I must admit to have not bothered following it since the arrival of Gino Pozzo. I trust the owner we have now totally.

However, I am surprised to see that we still have large debts. It's probably easier to follow the money coming in, as that's well publicised.

For example, last season our income from the Premier League was as follows:-
TV Income: £12.3m
Prize Money: £9.7m
Equal Share: £80.4m
Commercial & Other Income (non-player sales): £8m
Transfers fees received (summer 2018): £55.2m in total, but trading profit was £28.7m (approx.)

So, a quick totting up, sees incoming cash of around £140m. That's a huge amount of money.

Take into consideration our wages are the 5th lowest in the league and there has been very little development in terms of stadium development, I'm at odds as to where all that money is actually going.

 

Excellent.

This gives fantastic insight into our circs. The extra profile given to players through Prem exposure is the key. This shop window effect attracts players from smaller leagues at reasonable wages & boosts their value (provided they perform).

The same Richarlison is worth more at WFC than Fluminense.

Are such arbitrage models truly sustainable?

Would this model be punctured by a European Super League?

Is there any intrinsic value for WFC beyond being a trophy? If the Chinese & Russians start investing elsewhere, won’t its value dwindle?

 

The £30m wonder striker looks further away than ever.

 

Still have to pay the chap.

Would he be on £20-25k?

A couple of years of that would eat into any transfer fee.

 

Yes but offset by the medical advances made with him in the treatment room, as our doctors learn all about the lifespan, development and healing of the common bruise. Almost priceless.

 

What goes into Operating Expenses?

Mgmt & staff salaries? Interest payments? Refurbishments?

 

The Nobel Prize award is £900k.

 

I think the link to Swiss ramble is worth reading but we must differentiate between profit and cash flow as the two don’t follow each other in any one year , we have spent £137m in two seasons on players and have made some profits yes but in our second season as the accounts only cover the period to 30/6/17 not the season just finished, we were the 9th highest spender at £73m , we have also spent c £15m on the ground and London Conley in last 2 years

If you follow the cash on published figures for our first 2 seasons we were negative £79m in total funded by loans

 

Only certain information is divulged but we have 62 players earning £62m between them and 140 other full time staff earning £13m which is an average of nearly £100 k each

 

So yes his salary would go under operating costs and he will be carried at no value as his new signing cost to us is zero. When we sell him to Everton for £35m that will all drop to the bottom line .

Haven't looked at these accounts yet as no time but it shows capital markets at work perfectly. Prem income goes through the roof, so every club wants a piece, so are prepared far more in fees and wages to achieve it, until costs are back in line with revenues as they are now. There are no great profits to be made here unless you chance your arm and refuse to invest and hope to stay up or for a top 6 club. For a club like us, cashflow is probably more relevant that profits. The artifical depreciation of transfer fees over the contract means that the ins and and outs of transfer instalment payments and receipts is what Gino and Duxbury have to keep track of. Clubs go out of business due to cashflow issues not lack of profits, though the 2 are clearly related.

 

Our Groundsman Willie must drive a Ferrari.

It amazes me how much football CEOs get paid. Turnover is distinctly medium sized & there is little complexity.

 

The mists begin to clear.

Specifically, is it CL that creates the profit opportunity?

Not much money in the Europa League. In fact, I recall analysis showing you probably lose money, esp if drawn against Kamchatka Academicals or some such.

Could there be an M&A opportunity?

We could take over the Bedfordshire rabble & rebrand them Watford Gap.

 

I agree, before this season transfer fees paid exceeded transfer fees received. Our starting point when Pozzo took over had debt, although not massive (in football terms). We had the bond issue which was the main liability, there were a few "hidden" extras that Bas left behind.

However, just on EPL financing alone, we've raked in over £400m in the past 4 seasons. It's a lot of money. (I except around £100m of that will not be actually received until this season is over, but it is a guaranteed sum)

The spending of £15m on the training ground is something of an eyebrow raiser, seeing as we are only renting the land. I know they were going to upgrade the building, but decided against it as the players felt comfortable in the surroundings.

It just goes to show, the running costs of a Premier League football club is massive, even if you run it on a budget. The biggest cost is clearly player salary, but we've done very well in keeping this cost down.

I can understand that we are breaking even, or a little in the red, but I find it quite hard to grasp that we have quite large debts in terms of a loan to the owner. £55m? Not sure why that is quite so high, unless it's just for cash flow reasons.

 

I've not looked at the accounts in detail yet but the debt to the owner may include taking over the debt owned to BBB plus bank-rolling the club before we got to the prem.
If I was the Pozzos I would just realise the investment value now (£350m valuation was it that the US company was using?) and get the hell out. There are no mega profits to be made here, not enough to justify that sort of value anyway. Then invest in WFC Mark II and do it all again. That's where the money is to be made. Relegation in the next 2-3 seasons and they can kiss gooodbye to £350m !!! But then again I'm an accountant without an emotional, subjective bone in my body

 

The debt only relates to money spent whilst in PL, there was the bond but it was nothing like the sums owed now -it was maybe £5m

Why would any savvy purchaser not see what you highlight that we are maxed out in terms of potential bar the famous Pozzo model of player trading that is maybe unique to them and not a new owner

 

Yes but that US company that wanted to buy a minority stake had effectively valued the company at $350m based on their offer. I've no idea why they were prepared to pay that much. I wouldn't .

 

Problem was that nobody had ever heard of Prolific Media Holdings and there was nothing on the internet to suggest they had done anything with anyone

They say they are a global trans media company which sounds great but there was nothing to substantiate their credentials - who knows what the background was but those that have bought into PL clubs had some info about them - s9me good and a lot bad- anyway to coin a phrase we go again

 

The media co sounds flakey but the broader answer is 'Because I can'.

A classic trophy asset with social kudos & money laundering opportunities bundled in.

Finite supply underscores the whole deal.

 

Very unfair. Their Chairman and principle shareholder, Helmut Laurent Bersini, apparently has great experience of funding football clubs and helping them realise their dreams.

 

Blo0dy accountants, their favourite word is ‘no’.

‘No, you shouldn’t invest in that player it will knock this years bottom line.
No, don’t expand anymore it will have a negative impact on cash flow.
No, don’t increase costs, in fact reduce them to maximise profits.’

It’s people like you who take the fun out of life and will take our club down.
It’ll be your fault our club won’t be worth £350m.
Hope you’re proud of yourself.

 

Couldn't be prouder

 

Interesting that neither their web "presence" nor their linkedin page (yes, really) mention the word "sport" - plus their 5 listed employees didn't exactly have me gasping "No! Not the..."

 

Is that the second one in the linked in list

that I'm, amusingly, blocked from?

 

All that fannying about during the week only to lose 0-1 to a winless side.

Uffff.

 

New picture!

Rebooting with a 'Javi is Fab' platform?

 

I’m with you undeniable truth!

 

Gianluca Bassett was an accuntant.

 

Think the word you were looking for was prudent, prouder, bloody auto correct. Plan on finishing 17th, anything better will be used to offset Javi's improved contract.