Club finances - Annual Report - £31.6m loss

Discussion in 'The Hornets' Nest - Watford Chat' started by hornetboy1, Feb 14, 2019.

  1. The undeniable truth

    The undeniable truth Squad Player

    Interesting data.
    The fact that our income was the second lowest revenue of non-relegated clubs (£22m below CP, £24m below Soton, £47m below WHU) explains in part why these clubs are able to outspend us in fees and wages. That's before any bank-rolling by wealthy owners.
     
  2. Burnsy

    Burnsy Squad Player

    Can certainly see why the club are keen to make changes to raise our profile overseas and in territories where investment may come from.

    And why they are keen to continue the increase in stadium capacity.
     
  3. BusheyOrn

    BusheyOrn First Year Pro

  4. Steve Leo Beleck

    Steve Leo Beleck Squad Player

    miked2006 and UEA_Hornet like this.
  5. wfc4ever

    wfc4ever First Team Captain

    Well least this cup run will be boosting the coffers unless we get Millwall next in which case the whole budget will go on security!
     
  6. Teide1

    Teide1 Squad Player

    Just goes to show what a haphazard world football finances are, buy too many Oulares and you make a loss, buy the Lukelakio (spelling) and Doucoures of this world and you turn a profit!
     
  7. hornetboy1

    hornetboy1 First Team

    [​IMG]

    This table has really surprised me, but tells the story as to why Watford and Newcastle didn't do too much business in the summer window. We all know that it's a little misleading as it does not included the Richarlison transfer, but it's a little worrying to see we do need to sell a high ticket player every season just to keep the books balanced.

    We made that loss without heavily investing in new players and there were no stadium developments of note either.

    Two clubs who I feel are comparable to us have made profits. There is a £59m trading difference between Watford and Burnley, and £47m difference between Watford and Bournemouth. Bournemouth have also invested a lot in their playing staff, but only have gates of around 11,000!! The trading difference between us and them is significant.

    Leicester are probably that high on the back of their League win and Champions League campaign. Man City and United are surprisingly low.
     
  8. UEA_Hornet

    UEA_Hornet First Team Captain

    Burnley and Bournemouth's figures are from the previous financial year though, so we'll have to wait until they publish their updated version to make any useful comparisons.
     
  9. The undeniable truth

    The undeniable truth Squad Player

    Amazing that NUFC made such a loss when Benitez is constantly complaining about the lack of investment in players and they have huge gates ? Where's the money gone ??
     
  10. hornetboy1

    hornetboy1 First Team

    Yes I know that. These figures do not included this season's summer transfer window, but I would like to know how Bournemouth have made such a healthy profit. For season 17/18 their transfer dealings saw them spend £34.3m but sold no one!!. This season their net spend has gone through the roof. They have a net spend of £73m!!

    Burnley is far more understandable, as they made a profit of £12m in the transfer window of season 17/18.

    Something is not quite right with Bournemouth's figures. Yes, they got a bit more money from their league placing but their gates are only half of ours!!

    During the same period we made a net loss of £49m on transfer trading, which is around £15m between the two clubs. We have since clawed back around £20m in transfer trading, although this would not be reflected in this table.

    Bournemouth's revenue was £8m more than ours, so that sets a difference of around £23m. That still makes an unaccounted discrepancy of £22m in the figures. If we are -£32m then I would expect Bournemouth to be around -£9m. The fact they've made a £15m profit, just doesn't sound right to me.
     
    Last edited: Feb 18, 2019
  11. hornetboy1

    hornetboy1 First Team

    You got to hand it to Daniel Levy. What an owner. He has Spurs competitive on just £127m. You could double that figure and they still would be spending less than United, Liverpool and City.

    Consider United spend £296m, Liverpool £264m, City, £260m, Chelsea £244m and Arsenal £223m. These clubs are in a different stratosphere.

    Even Everton spend more on salary than Spurs. It's quite incredible that Spurs are up there in 3rd and challenging the top two.

    [​IMG]
     
  12. Since63

    Since63 Reservist

    Reading the full list of comments in the SwissRamble tweet, the most worrying aspect of the figures is that we owe over £80 million in transfer instalments still to be paid to other clubs. Don't think we should expect any "marquee" signings any time soon.
     
  13. hornetboy1

    hornetboy1 First Team

    It's worse than that. We owe £101m in transfer fees and have a club debt of £83.9m in top of that. In total, we owe £184.9m as a club!! Astonishing.

    You can offset some of that with the Richarlison sale. This summer's trading made the club a £20m profit, plus there is £13.3m owed to us in transfer fees, but there's still a massive debt to fund. By my rough calculations, we are still around £150m in debt even after the Richalison sale etc is added to the accounts.
     
    Last edited: Feb 18, 2019
  14. I think you have to balance that against the player value that we have. Richarlison+Doucoure+Lukebakio/Cucho more than wipes it out. And we only actually have one of that trio playing!
     
  15. Knight GT

    Knight GT Predictor extraordinaire 2013/14

    We were always still going to be a club that needs to sell to balance the books. All the TV money just goes on players transfer fees or wages. I don't understand the Bournemouth figures though and I know they are from the previous year but how on earth do they make a profit? Could really do with extra capacity on the ground as although if we got to 25k capacity is not a lot for match days, it gets more people interested who will buy merchandise etc and it all adds up.
    The article by Swiss Ramble is excellent as it also explains a lot of the figures for those of us not in finance
     
  16. davisp2

    davisp2 Reservist

    I wouldn’t worry. The owners have shown time and again they know what they are doing. We have a big squad with two players decent players in every position, and a pipeline of players like Lukebakio that can either be used or sold. We don’t need to spend a lot in transfers going forward. We may have to balance incoming transfers with outgoings, and will probably struggle to improve on the squad we have without an injection of cash, but still have enough to survive.
     
  17. Extra 5000 x 25 games* x £40 (ticket + food/merch) =£5m.
    Just for info.
    *assuming cup runs not all away!
     
  18. RookeryDad

    RookeryDad Squad Player

    How realistic is the Player Amortisation figure?

    Unlike many amortised assets, most WFC players will have specific value: the money Pozzo gets when they are sold.

    How well does the number in the accounts reflect this value? Is a set formula which has limited relevance to real values?

    If the former, looks like we do need to sell a Richie or Doucs to balance the books. If the latter, rather more relaxed.

    This naturally has a major impact on our chances of survival.

    We won't always be able to replace the midfield dynamo or best attacker given budgets. Replacing the right back much easier.
     
  19. RookeryDad

    RookeryDad Squad Player

    You're assuming some pretty healthy cup runs.

    Looking forward to them.
     
  20. Knight GT

    Knight GT Predictor extraordinaire 2013/14

    £5m certainly not to be sniffed at. Add in possible shirt sales to this as well and it makes it a decent amount of money.
     
  21. We hate 48

    We hate 48 Reservist

    You can only compare the same financial years for both clubs. In FY17 BMuff finished 9th and earnt £124m from TV-we finished 17th and got £105m. Even their gate receipts of £5m were not far short of ours at £7.5m. So total revenue for them was £136m and £124m for us but their wages were £5m lower and player amortisation was £9m lower than ours-net result-before player trading was therefore £26m different in their favour.

    Moving on to our FY18 their results will be out soon. The total spend on players for them in 2016 and 2017 was £80m-ours was £112m.

    This year ours was another £51m hence the increase in player amortisation costs for us this year.

    The P+L for both clubs do not reflect player purchases as that is revenue less costs whereas spend on assets is a cashflow entry hence (before player sales) we have spent £163m on players in our first three seasons in PL and that near enough is represented by the debt and the money still owed on some of those players. Sure the profit on Richarlison will improve the results in the current FY as will a high placed finish hence the Deeney comments at At Your Place
     
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  22. hornetboy1

    hornetboy1 First Team

  23. The undeniable truth

    The undeniable truth Squad Player

    I don't know but I would guess that you write the purchase price off over the contract term to zero as it would be impossible to "revalue the assets" each year to what you could sell for and no guarantee that you will sell before the contract expires. If you then happen to sell say 2 years into a 5 year contract you probably recognise a profit on disposal at that point in time. I don't see any other way of doing it.
     
  24. Robert Peel

    Robert Peel Reservist

    Trouble is, we're not filling the ground at the moment. Where do 5,000 with £40 each to spend come from unless we have a massive away end - and who wants 4,000 away fans taking over the ground and town for every home game?

    We should drop the prices to fill the place but it's not going to generate much revenue.
     
  25. RookeryDad

    RookeryDad Squad Player

    Agreed.

    It just strikes me that this approach could give an unduly pessimistic view of the business if one wasn't itk on the selling strategy. Pozzo will be acutely aware of who can be sold for what. Not many see out their 5 year contracts. I would think it likely that we would beat the written down value.
     
  26. UEA_Hornet

    UEA_Hornet First Team Captain

    Season tickets have sold out with an oversubscribed waiting lost for the last 4 seasons. Suggests there's demand there which the few single seats left for sale hanging off the edge of the Rookery each match can't fulfil. That a fair few ST holders don't turn up is a different issue.
     
  27. Burnsy

    Burnsy Squad Player

    The club really need to be far more vocal to ST holders that if you aren’t coming, then they will sell your seat and give the proceeds to charity. That’s what they claim happens but they really don’t mention it unless you enquire.
     
  28. We hate 48

    We hate 48 Reservist

    The treatment of amortisation is as follows-per club accounts

    "Amortisation is charged to the profit and loss account on a straight-line basis over the length of each
    player's contract"

    The club also have to test for

    a) any impairment on the players purchase price exceeding its value after any amortisation-ie Oulare -presumably no value
    b) whether deferred consideration will be payable which if so has to be capitalised and then amortised

    There is nothing about upward revaluation annually-that is reflected when we sell a player for more than the written down value as you say.

    Does the value of the squad exceed the book value of £123m (after adding on any sell on fee payable or additional deferred consideration falling due) ?-who knows but that has to be the acid test
     
  29. Jumbolina

    Jumbolina First Team

    I fear Prodl, Okaka, Zeegelaar will be unshiftable at any price. Probably nobody will ever pay Gray what he earns here either so we have to make the best of him. Edit: mind you Prodl was free so presumably he has no amortisation impact?
     
  30. Deeney - £15m
    Gray - £12m
    Hughes - £12m
    Doucoure - £40m
    Pereyra - £25m
    Deulefeo - £20m
    Quina - £8m
    Feminia - £6m
    Sema - £2m
    Lukebakio - £20m
    Hernandez - £10m?
    Penaranda - £15m?
    Kabasele - £10m
    Chalobah £10m?
    Dahlberg £5m?
    Bachman £2m?

    I think those are not outrageous, comes to £212m
     
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  31. RookeryDad

    RookeryDad Squad Player

    We see the fruits of the Pozzo model.

    Revs 212 minus costs 123 = happiness.
     
  32. RookeryDad

    RookeryDad Squad Player

    Outstanding financial & technical analysis in the forum today.

    Like standing next to Brian Clough in the Price Waterhouse boardroom (albeit with some ghastly Croydon oiks gurning in whilst cleaning the windows).
     
  33. I Blame Bassett

    I Blame Bassett Squad Player

    Rookery Macawber?
     
  34. Jumbolina

    Jumbolina First Team

    Peneranda 15m!?? Rest seem fair. Sema obviously valueless mind.
     
  35. RookeryDad

    RookeryDad Squad Player

    If he’s on a free, buy him.
     

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