Villa lose £81M

[dsr-burnley]

Football club accounts usually show player purchases at the cost of purchase (including agents' fees) when they buy him, but then reduce it pro rata down to nil at the end of his contract. So sign a man for £7m on a 3.5 year contract in January 2017, and in June 17 he will be in the books at 6m, June 18 4m, June 19 £2m, June 20 £nil. You can choose to revalue him down if you don't think he's worth that any more; you can't revalue him up (until you sell him). So Harry Kane at Tottenham, for example, has no value in the balance sheet.

If Villa have written off £80m of player values on the grounds that the players aren't worth that, then there's a heck of a lot of overpaid players at the club. They must have written off something more than just player values. I suspect some FFP jiggery-pokery.

 

[Psychobilly freakout]

I'll be very interested in there accounts next season as they will still be in the Championship. They spent heavily in the summer hoping to bounce back straight away.

That worked out well for them then.....

 

[El Presidente]

Can't see any other thread on this but here I was thinking that TB could start to get some of his money back if we were to get promoted. I assume he still can but seeing Villa's immense loss was a bit of a shock.

Club statement has put it down to impairment of fixed and intangible assets, the second of those described as player registrations

Does that mean they have been over valuing their players and have been caught in an audit, or just revaluing after transfer activity? Are fixed assets the ground and training facilities which might have been equally overvalued or are these things they are just writing off as a clean up excericise - or even a tax dodge.

I'm interested in understanding a bit more ....... sure [MENTION=31]El Presidente[/MENTION] will have a good idea

What Villa have done is to accelerate and dump their losses in the PL accounts. Under PL rules they can get away with FFP losses of £105 million over 3 years. This equates to accounting losses of about £140 million over the same period.

By impairing losses in such a way there is a lower writedown in later years.

Quick example: Villa buy some players at start of 2015/16 for total of £60 million on four year contracts. This means they amortise the players at £15million a year, which reduces profits (or increases losses). The same would apply in 2016/17 when in the Championship and the maximum FFP loss is lower.

At the end of 2015/16 those players are in the balance sheet at a value of £45million. Villa have then 'assessed' the players and decided they are overvalued by (say) £35 million.

This is the impairment that is taken to the profit and loss account, reducing the player value to £10million.

This means that in 2016/17, instead of a £15 million impairment charge in the accounts it is only £3.33 million (£10m spread over the remaining 3 years of the contract), which gives Villa the capacity to run up higher losses elsewhere and still comply with FFP.

Villa have taken a similar approach to their tangible assets to reduce the annual depreciation charge from 2016/17. If you take a look at the figures (in the next post) this amounts to a massive writedown, but the auditors (PriceWaterhouseCoopers, who were the clowns who couldn't even get the Oscar winner envelopes correct) will sign off on most things if they are paid enough (£118,000 by Villa in 2015 for example).

If Villa had been as creative on the pitch as their accountant has been off it, they would not have been relegated.

 

[El Presidente]

 

[beorhthelm]

If Villa had been as creative on the pitch as their accountant has been off it, they would not have been relegated.

 

[Rugrat]

What Villa have done is to accelerate and dump their losses in the PL accounts. Under PL rules they can get away with FFP losses of £105 million over 3 years. This equates to accounting losses of about £140 million over the same period.

By impairing losses in such a way there is a lower writedown in later years.

Quick example: Villa buy some players at start of 2015/16 for total of £60 million on four year contracts. This means they amortise the players at £15million a year, which reduces profits (or increases losses). The same would apply in 2016/17 when in the Championship and the maximum FFP loss is lower.

At the end of 2015/16 those players are in the balance sheet at a value of £45million. Villa have then 'assessed' the players and decided they are overvalued by (say) £35 million.

This is the impairment that is taken to the profit and loss account, reducing the player value to £10million.

This means that in 2016/17, instead of a £15 million impairment charge in the accounts it is only £3.33 million (£10m spread over the remaining 3 years of the contract), which gives Villa the capacity to run up higher losses elsewhere and still comply with FFP.

Villa have taken a similar approach to their tangible assets to reduce the annual depreciation charge from 2016/17. If you take a look at the figures (in the next post) this amounts to a massive writedown, but the auditors (PriceWaterhouseCoopers, who were the clowns who couldn't even get the Oscar winner envelopes correct) will sign off on most things if they are paid enough (£118,000 by Villa in 2015 for example).

If Villa had been as creative on the pitch as their accountant has been off it, they would not have been relegated.

Thanks for that ... absolutely get the player writedown and why they's do that

Struggling a bit with the tangible assets, am I reading this right? How on earth could they have had £24M of asset in plant and machinery? I can make a start:

1. Funky lights to make the grass grow £10,000
2. 10 lawnmowers £6,000
3 . 2 rollers £400
4. All other £23,983,600?

 

[Mr Putdown]

The PL have a rule now that only 55%ish of the tv money can be spent on wages (This is the rule that lot up the road are trying not to fall foul of). So 45% of the tv revenue is available for other expenditure, so any club would be hard pushed to actually make a real loss in the PL unless they are rebuilding the ground or something.

Not really. You do have to buy the players as well as pay them wages and Premier players certainly don't come cheap.

 

[KZNSeagull]

Not really. You do have to buy the players as well as pay them wages and Premier players certainly don't come cheap.

True. But the last figures I saw from the PL showed that only 3 clubs made a loss.

 

[Mr Putdown]

True. But the last figures I saw from the PL showed that only 3 clubs made a loss.

Apparently six made a loss in the last season that accounts have been published for, but I take your point.

https://www.theguardian.com/footbal...ue-finances-club-by-club-breakdown-david-conn