City release accounts - Ouch!

[Davefevs]

46 minutes ago, HappyClapper said:

 

Lot’s of financial illiteracy around the football world myself included. For those of us with absolutely no experience of reading/understanding balance sheets could one of the enlightened posters please correct me? Looking at the data from Swiss ramble due to potential Covid allowances etc our FFP position actually looks relatively healthy. A rolling 3 year figure of £4M against an allowable allowance of £39M.

Doesn’t seem correct. Have I completely misunderstood the analysis? I suspect the answer to that is yes.

 

6 minutes ago, Hxj said:

The adjusted FFP figure is wrong.  Takes no account of the four year period and the averaging.

And it’s when this seasons accounts get added on and we move into next season’s cycle when we drop off the 18/19 profit that it gets much tighter.

We are fine for now though. Still cautious times ahead. 

[spudski]

5 minutes ago, Fordy62 said:

I get your point, but it is much easier with the money than without. It doesn’t guarantee things, but when the purse strings aren’t so tight it isn’t as hard. 

And therefore aiming for top six when essentially two of the top six are already taken, you’re now only aiming for four spots, not 6. 

Top 2 on an even playing field would take a miracle imo.

Recruitment and coaching throughout the Club is more important imo.

Wasting wages on journeymen pros, who go from club to club is more damaging. 

 

[lenred]

30 minutes ago, Antman said:

i would agree, but given the febrile nature of news and information in this day and age, i suspect we will be cast in the role of villain by other fans of clubs in more trouble than us - and i suspect this is just the start of more revaltions.

it's easier to see the headline numbers without understanding the make up so the hard of thinking get all frothy and irate and just repeat the bit of news that suits their agenda  (some BCFC fans have done just that with Derby et al) .

Assuming we avoid FFP penalties and others don't, then expect to be a bit of a pariah for a while yet.

If Derby / QPR / whichever teams fans want to treat us pariahs to try and soothe their own upset at the way their club has been shambolically run then that’s their look out. We won’t get any special favours - they know that as well as anyone else - and will be treated by the authorities accordingly.  They’re just clutching at very bitter straws. 

[Waconda]

11 minutes ago, spudski said:

Top 2 on an even playing field would take a miracle imo.

Recruitment and coaching throughout the Club is more important imo.

Wasting wages on journeymen pros, who go from club to club is more damaging. 

 

Sadly many fans love the lure of a Ex Prem journey men.

[Olé]

28 minutes ago, spudski said:

Does anyone else think the excuse of not being able to compete against teams in this division with parachute payments exaggerated?

No. I think parachute payments warrant a separate thread but in short I believe they're created with the right intentions but implemented in the worst possible way that does distort competition.

There are more effective ways to make clubs promoted to the Premiership less conservative during their time in the Premiership and more financially sustainable in the event they don't survive.

But the method chosen at present is anti-competitive and I would love to see a long term analysis on the diversity of relegated/promoted teams to the Prem versus all 3 football league divisions.

I believe you'd see a difference in trend indicating that parachute payments distort competition. Don't forget a parachute side being re-promoted releases additional TV money back to the Prem.

So there is literally an incentive even for the league organisers to reduce the playing field and repatriate the same teams over and over.

[Lanterne Rouge]

6 minutes ago, lenred said:

If Derby / QPR / whichever teams fans want to treat us pariahs to try and soothe their own upset at the way their club has been shambolically run then that’s their look out. We won’t get any special favours - they know that as well as anyone else - and will be treated by the authorities accordingly.  They’re just clutching at very bitter straws. 

They don`t like it because we`re open and honest about it rather than try and game the system and then attempt to cover up their wrongdoing or bluster their way out of any punishment.

No-one likes being told they`re not as clever as they think they are.

[Waconda]

2 hours ago, ChrisAllen80 said:

Don't think this has been posted already. Good analysis here:

 

Puts it in perspective and perhaps not as terrifying as the headline figure suggests.

Even after this significant growth in the past few years, #BristolCity £35m wage bill is still only mid-table in the Championship,

The transfer market crash severely hurt #BristolCity, as profit on player sales (“upon which we have been heavily reliant”) fell to just £6m in 2020/21, against impressive £64m in previous 2 seasons

Edited December 30, 2021 by VT05763

[Lrrr]

1 hour ago, spudski said:

Does anyone else think the excuse of not being able to compete against teams in this division with parachute payments exaggerated?

Issue is so many teams in the division now have them whether it’s 1st year of them, 2nd or 3rd then 3 or 4 of them are going to get it right even if a few get it horribly wrong. So the chances of making it without them are minimal unless you’re extremely well run ie Brentford. 

[Hxj]

51 minutes ago, Davefevs said:

And it’s when this seasons accounts get added on and we move into next season’s cycle when we drop off the 18/19 profit that it gets much tighter.

I've corrected SRs figures below and added some estimates for later years - reductions in wages and amortisation in 2021/22, and increases in income, and very limited amortisation in 2022/23.  A lean couple of years are clearly ahead. 

[Waconda]

3 minutes ago, billywedlock said:

I have visions of Terry Cooper fielding what were then the YTS boys in the old 4th coming back to me. 

Loved going to watch us then.

[cidered abroad]

I don't know if my thoughts are accurate or valid.

Ashton Gate stadium is "owned" by Bristol City Holdings. Thus any income from the stadium such as hospitality, sales of refreshments at all matches, City and Bears, and events like concerts belongs to BCFC Holdings.

I suspect that, as the only financial restraint on Bears, is a maximum spend on players wages, any losses not covered by gate receipts and match hospitality are legally funded by SL.

Apart from a rental payment for the use of concourse for Covid Vaccinations, we have had almost zero income from stadium usage. I vaguely remember a while back, seeing a figure of around £12 million per annum. So that would count as Covid losses in full for City? As BCFC Holdings own the stadium.

Edited December 30, 2021 by cidered abroad

[Mr Popodopolous]

1 hour ago, lenred said:

If Derby / QPR / whichever teams fans want to treat us pariahs to try and soothe their own upset at the way their club has been shambolically run then that’s their look out. We won’t get any special favours - they know that as well as anyone else - and will be treated by the authorities accordingly.  They’re just clutching at very bitter straws. 

 

1 hour ago, Lanterne Rouge said:

They don`t like it because we`re open and honest about it rather than try and game the system and then attempt to cover up their wrongdoing or bluster their way out of any punishment.

No-one likes being told they`re not as clever as they think they are.

The two are different IMO. QPR seem to have learnt the hard way and started mending their ways in fairness, but Derby fans throwing mud is both pretty funny and pretty astonishing in equal measure.

They haven't even submitted any accounts to Companies House since Spring 2019 for one!! (Relating to the 2017/18 season). The EFL might also be waiting for the full and restated versions of the accounts to June 2019 onwards.

Unlike a mere FFP breach, their actions have been so bad that they have had imposed/had to agree to a string of conditions moving forward- albeit the FFP position is settled.

Special measures or what!? Talking about basic compliance not merely overspending and a budget to right that wrong.

Edited December 30, 2021 by Mr Popodopolous

[Guest]

As Chelsea (and no doubt others will post greater losses) today posts losses of £145 MILLION thats with 416m turnover, maybe there is no urgent desire for our leader to take us and him there sometime soon ?

Edited December 30, 2021 by gl2

[Davefevs]

2 hours ago, Hxj said:

I've corrected SRs figures below and added some estimates for later years - reductions in wages and amortisation in 2021/22, and increases in income, and very limited amortisation in 2022/23.  A lean couple of years are clearly ahead. 

Here is the amortisation profile of our squad, going forward.  Totals in red at the top of each column.

As it stands, by 23/24 amortisation is less than £1m.  We could do with selling or smoothing Kalas’s!!!

I hope we smooth Massengo’s by virtue of an extended contract.  Ultimately I hope we remove Wells and Palmer’s, but I fear an impairment like Nagy on these!

[Bristol Rob]

2 hours ago, cidered abroad said:

I don't know if my thoughts are accurate or valid.

Ashton Gate stadium is "owned" by Bristol City Holdings. Thus any income from the stadium such as hospitality, sales of refreshments at all matches, City and Bears, and events like concerts belongs to BCFC Holdings.

I suspect that, as the only financial restraint on Bears, is a maximum spend on players wages, any losses not covered by gate receipts and match hospitality are legally funded by SL.

Apart from a rental payment for the use of concourse for Covid Vaccinations, we have had almost zero income from stadium usage. I vaguely remember a while back, seeing a figure of around £12 million per annum. So that would count as Covid losses in full for City? As BCFC Holdings own the stadium.

Wouldn't be surprised if the terms of the lease made both clubs who play there beneficiaries in some way of the revenue generated.

[ExiledAjax]

15 minutes ago, Davefevs said:

Here is the amortisation profile of our squad, going forward.  Totals in red at the top of each column.

As it stands, by 23/24 amortisation is less than £1m.  We could do with selling or smoothing Kalas’s!!!

I hope we smooth Massengo’s by virtue of an extended contract.  Ultimately I hope we remove Wells and Palmer’s, but I fear an impairment like Nagy on these!

It really shows how even a fairly average (by our last 5 years standard) signing of a player for £1.5m on a 3 year contract is going to be tough to justify. Would add £0.5m to the amortisation costs. Suspect we might see something akin to a Tanner signing, but anything more than that and we have to be sure of somehow dealing with the costs of Kalas, Palmer, HNM and even Bentley.

Could you kindly explain what is meant by 'impairment' in this context. I'm familiar with it being used to describe some sort of drastic depreciation in value of an asset, but I am not sure I understand how you're using it when referring to something like Nagy leaving.

[Loco Rojo]

Chelsea have announced annual losses of £145m. Thank funk for that. We're not tye worst. 

Football. What a sustainable industry.  Can't wait for City to get to the Premier League. 

Edited December 30, 2021 by Loco Rojo

[Davefevs]

1 minute ago, ExiledAjax said:

It really shows how even a fairly average (by our last 5 years standard) signing of a player for £1.5m on a 3 year contract is going to be tough to justify. Would add £0.5m to the amortisation costs. Suspect we might see something akin to a Tanner signing, but anything more than that and we have to be sure of somehow dealing with the costs of Kalas, Palmer, HNM and even Bentley.

Could you kindly explain what is meant by 'impairment' in this context. I'm familiar with it being used to describe some sort of drastic depreciation in value of an asset, but I am not sure I understand how you're using it when referring to something like Nagy leaving.

Re Nagy, he still had £750k left on his value as an asset going into this season (21/22), so City impaired it in 20/21 by bringing it to nil (a cost of £750k).

Im sure there’s a better explanation, but I’m not an accountant….as you know!

So for Palmer, if he let him go on a free, we’d have to bring next season’s amortisation (£875k) as a cost into this year’s accounts.  That’s the impairment.  You could argue that at the point of sale we still have half of this season’s amortisation to worry about too, but I’m not sure accounting-wise whether you’d reduce the amortisation cost by £435k and increase impairment by the same amount, or not.

Hope that makes sense.

[ExiledAjax]

10 minutes ago, Davefevs said:

Re Nagy, he still had £750k left on his value as an asset going into this season (21/22), so City impaired it in 20/21 by bringing it to nil (a cost of £750k).

Im sure there’s a better explanation, but I’m not an accountant….as you know!

So for Palmer, if he let him go on a free, we’d have to bring next season’s amortisation (£875k) as a cost into this year’s accounts.  That’s the impairment.  You could argue that at the point of sale we still have half of this season’s amortisation to worry about too, but I’m not sure accounting-wise whether you’d reduce the amortisation cost by £435k and increase impairment by the same amount, or not.

Hope that makes sense.

Yeh I think so. So the 'value' of the 'asset' is essentially fixed when you sign them. Say you sign Jon for £4m on a 4 year contract. Jon is worth a total of £4m, which is accounted for at a rate of £1m a year in amortisation. So he is worth £4m in year one, then £3m, then £2m, then £1m. At any point if we sell Jon for less than he is worth at the time of sale, we have to account for the difference as 'impairment'.

We sell him in year 3 for £1m. That is a £1m loss, as he was worth £2m at that point, so £1m goes into the 'impairment' column.

I guess this creates a balancing act between letting a player's contract run down, paying wages and absorbing the amortisation, versus letting him go cheap and instead accounting for the hit as 'impairment'. We did the former with Diedhiou, and the latter with Nagy right? Essentially this is the decision we now have to make around the likes of Palmer and Dasilva (assuming we cannot sell them for more than their book costs). The other option is a loan where we get another club to pay some of these costs.

Is that correct? You know I am no accountant either!

Edited December 30, 2021 by ExiledAjax

[Mr Popodopolous]

6 minutes ago, ExiledAjax said:

Yeh I think so. So the 'value' of the 'asset' is essentially fixed when you sign them. Say you sign Jon for £4m on a 4 year contract. Jon is worth a total of £4m, which is accounted for at a rate of £1m a year in amortisation. So he is worth £4m in year one, then £3m, then £2m, then £1m. At any point if we sell Jon for less than he is worth at the time of sale, we have to account for the difference as 'impairment'.

We sell him in year 3 for £1m. That is a £1m loss, as he was worth £2m at that point, so £1m goes into the 'impairment' column.

I guess this creates a balancing act between letting a payer's contract run down, paying wages and absorbing the amortisation, versus letting him go cheap and instead accounting for the hit as 'impairment'. We did the former with Diedhiou, and the latter with Nagy right? Essentially this is the decision we now have to make around the likes of Palmer and Dasilva (assuming we cannot sell them for more than their book costs). The other option is a loan where we get another club to pay some of these costs.

Is that correct? You know I am no accountant either!

Roughly. Although Derby took a very different approach but I believe our one to be straight line.

Sell in Year 3 for £1m and yes that's a £1m loss on disposal but also knocks that 1 year amortisation off the cost base- so the net effect is 0 plus it removes £1m from Year 4 moving forward- as well as whatever wage savings.

Rounding for simplicity purposes, clearly if you sell halfway through Year 3, that's £2.5m amortised, loss on disposal £0.5m but amortisation saved in the remaining 6 months equal to that.

Edited December 30, 2021 by Mr Popodopolous

[ExiledAjax]

2 minutes ago, Mr Popodopolous said:

Sell in Year 3 for £1m and yes that's a £1m loss on disposal but also knocks that 1 year amortisation off the cost base- so the net effect is 0 plus it removes £1m from Year 4 moving forward- as well as whatever wage savings.

I think this is what I wasn't understanding. Fevs was suggesting that selling at a 'loss' (ie letting Nagy go for £0 when he still had a book value of £750K) was bad, but I thought this - that it would wipe out your future amortisation, so as you say is net £0. Is the issue very particularly limited to players leaving for £0?

[Davefevs]

5 minutes ago, ExiledAjax said:

Yeh I think so. So the 'value' of the 'asset' is essentially fixed when you sign them. Say you sign Jon for £4m on a 4 year contract. Jon is worth a total of £4m, which is accounted for at a rate of £1m a year in amortisation. So he is worth £4m in year one, then £3m, then £2m, then £1m. At any point if we sell Jon for less than he is worth at the time of sale, we have to account for the difference as 'impairment'.

We sell him in year 3 for £1m. That is a £1m loss, as he was worth £2m at that point, so £1m goes into the 'impairment' column.

I guess this creates a balancing act between letting a payer's contract run down, paying wages and absorbing the amortisation, versus letting him go cheap and instead accounting for the hit as 'impairment'. We did the former with Diedhiou, and the latter with Nagy right? Essentially this is the decision we now have to make around the likes of Palmer and Dasilva (assuming we cannot sell them for more than their book costs). The other option is a loan where we get another club to pay some of these costs.

Is that correct? You know I am no accountant either!

Yep, pretty much.  If you sell a player for more than their value, that’s where transfer profit is shown (the opposite of impairment). With Nagy we saved this season’s salary!  With Diedhiou we didn’t, although luckily (cough, cough, tongue firmly in cheek) we got to see him “value on the pitch” (more coughs)!

With Palmer and Wells, if we can get someone to pick up their wages (or as high a chunk as possible) than that helps offset some of the impairment should we let them go on a free.

Palmer - asset value £1.3m(ish) - wages left til end of contract £1.6m(ish)

Wells - asset value £1.2m(ish) - wages left til end of contract £2.0m(ish)

Come on suckers, roll-up, roll-up.

 

[ExiledAjax]

Just now, Davefevs said:

Yep, pretty much.  If you sell a player for more than their value, that’s where transfer profit is shown (the opposite of impairment). With Nagy we saved this season’s salary!  With Diedhiou we didn’t, although luckily (cough, cough, tongue firmly in cheek) we got to see him “value on the pitch” (more coughs)!

With Palmer and Wells, if we can get someone to pick up their wages (or as high a chunk as possible) than that helps offset some of the impairment should we let them go on a free.

Palmer - asset value £1.3m(ish) - wages left til end of contract £1.6m(ish)

Wells - asset value £1.2m(ish) - wages left til end of contract £2.0m(ish)

Come on suckers, roll-up, roll-up.

Cheers, and to Mr Pop, that helps.

Certainly I think our player outgoings are more interesting than incomings in January.

[Davefevs]

2 minutes ago, ExiledAjax said:

I think this is what I wasn't understanding. Fevs was suggesting that selling at a 'loss' (ie letting Nagy go for £0 when he still had a book value of £750K) was bad, but I thought this - that it would wipe out your future amortisation, so as you say is net £0. Is the issue very particularly limited to players leaving for £0?

Yes, it just brings that cost forward.

No, not limited to players leaving for zero.  At the point any player is sold, the asset value will be taken into account, some you make a profit on, some you make a loss!

[ExiledAjax]

2 minutes ago, Davefevs said:

Yes, it just brings that cost forward.

No, not limited to players leaving for zero.  At the point any player is sold, the asset value will be taken into account, some you make a profit on, some you make a loss!

Ok, not limited, but much worse when they go for £0 as there's no income to offset the cost. Got it.

Sell for more than the asset is worth. Wow, I reckon I could work for the treasury.

PS. Fam's on 8 in 18 (all comps) for Alyanspor. Maintaining his consistent career average of 1 in 3. Should have kept him happy here.

Edited December 30, 2021 by ExiledAjax

[cidered abroad]

39 minutes ago, Bristol Rob said:

Wouldn't be surprised if the terms of the lease made both clubs who play there beneficiaries in some way of the revenue generated.

Very probably but the point is that if we need more income to avoid FFP problems, and there is any revenue from stadium use and match day income, as stadium is owned by City Holding Ltd, it can be used solely for income to reduce losses. SL cannot just shovel cash into BCFC but he can to Bears. If its really a tight situation in a couple of years, a way to help us avoid any FFP penalties.

Edited December 30, 2021 by cidered abroad

[Hxj]

35 minutes ago, Davefevs said:

Here is the amortisation profile of our squad, going forward.

Thanks - I have a couple of questions if you don't mind.

1. As far as I can see the only player acquired for a fee in the 2020/21 period was Joe Williams, there is nothing else in the accounts that the £2 million additions refer to anything else, so is it more likely that the £750kk impairment refers to JW and his injury problems (rather than Nagy's departure).
2. Which leads on to - where the hell did the £6.2 million profit on player trading come from.  There's nothing in the accounts to indicate that there were significant contingent receipts receivable in 2020 or received in 2021.  Does that mean that we received £6.2 million for Smith and Eliasson?

 

[Ivorguy]

18 hours ago, REDOXO said:

Yep. I’m sure SL and the board are going to pay and cooperate with that un’

Well, he would if he wished to learn from his earlier mistakes.

I agree however that he won’t and it is for that reason he will go on failing…….hopefully not for another two decades though

‘ I tell you we are doomed, doomed I say’

[BRIAN WILSON]

47 minutes ago, ExiledAjax said:

Yeh I think so. So the 'value' of the 'asset' is essentially fixed when you sign them. Say you sign Jon for £4m on a 4 year contract. Jon is worth a total of £4m, which is accounted for at a rate of £1m a year in amortisation. So he is worth £4m in year one, then £3m, then £2m, then £1m. At any point if we sell Jon for less than he is worth at the time of sale, we have to account for the difference as 'impairment'.

We sell him in year 3 for £1m. That is a £1m loss, as he was worth £2m at that point, so £1m goes into the 'impairment' column.

I guess this creates a balancing act between letting a player's contract run down, paying wages and absorbing the amortisation, versus letting him go cheap and instead accounting for the hit as 'impairment'. We did the former with Diedhiou, and the latter with Nagy right? Essentially this is the decision we now have to make around the likes of Palmer and Dasilva (assuming we cannot sell them for more than their book costs). The other option is a loan where we get another club to pay some of these costs.

Is that correct? You know I am no accountant either!

Correct, as such 'Loss On Sale Of An Asset' - The Written Down Net Book Value Said Asset At Point Of Sell (Initial Cost Less YTD Depreciation). Less Proceed Of Sale 

[REDOXO]

13 minutes ago, Ivorguy said:

Well, he would if he wished to learn from his earlier mistakes.

I agree however that he won’t and it is for that reason he will go on failing…….hopefully not for another two decades though

‘ I tell you we are doomed, doomed I say’

Yes I agree. But some stuff he already knows. The playboy is never around and if he is he’s powerless under daddy.