Solvency and summer transfer expectations

[roydo]

Just taken a look at these, and I am really baffled.

We had a cash deficit of £10k. In other words, the amount that needs to be covered by loans or owners to cover costs.

We have a positive operating cash flow, but pretty low. We pay £4m interest on a debt of £45m, but Fulham pay £500k on a debt of £192m., Villa pay £600k on debt of £113m. Man Utd have debt of £300m, but have a have a positive interest payment of £55m!. Just do not get it. How can you owe £300m, but be paid £55m in interest, FFS?? Man Utd owe 8 times what we do, but get paid 14 times in interest that we shell out!!

It is obviously some sort of financial gymnastics, but when one of our Directors is worth in the region of £1.2BILLION, why cant our affairs be a bit more generous??

Seems totally nuts to me.

 

[TheBlueGibbon]

This is not something that's been a problem this or last season...its been a problem since Kenwright took over and Johnson before him.

We've grown bit by bit mainly down to the avenues David Moyes opened. But the board took baby steps to put concrete plans in place over 10+ years and failing miserably at any major shake ups ie ground moves. Its now stagnated and their business plan is spent.

As for some cash "injection" Im sure our major shareholder who's worth £240million can boost our profile in the states merchendise wise.

We've got an exclusivity agreement with Kitbag on merchandising haven't we?

 

[Tubey]

At least we're not Vil -

Oh wait.

 

[njligernj]

It's more that Everton aren't worth anything. Who is going to buy a business with negative cash flows?

Football clubs are not businesses (in any traditional sense) despite having many of the trappings. If you want Everton to be run like a business we would likely all be utterly horrified by what happens. An accountant would need about ten minutes to weigh risk/reward before he orders all assets to be liquidated.

If someone held a gun to your head and said "make money with Everton" the only sane choice would be to sell everything (or take a bullet for the cause I suppose).

City, Chelsea, Madrid, Barca (Barca have debts of 600m euros while they are likely close to their peak revenue generating potential ... putting more money into the club isn't "business" it's because they just want to win) ... even mid/low table teams in the Prem like Sunderland, Stock and QPR are all spending huge amounts of money which they wouldn't spend if they were a business concerned with turning a profit. As for "investing some money so you can make the CL" ... as I alluded to above an accountant would need very little time to realize the risk of that venture cannot be justified given the likelyhood (low) of success.

I do not want someone to buy Everton who is keen on making money. Which is fortunate because nobody who wants to make money would buy Everton. So problem solved.

There are however billionaires who enjoy the status and challenge of owning a team and who could increase our turnover (which as others point out there are actually many valid ways to do so) in order to support the club and pay for their hobby. Why that hasn't happened is the age old debate we've been having for years and I don't want to get into ... I just wanted to address this myth that football clubs are businesses.

If someone bought Everton and said they planned to make money on the venture I would assume they were Romneying the joint.

 

[kenada_blue]

We've got an exclusivity agreement with Kitbag on merchandising haven't we?

Yeah, and the one before that was with JJB....

Im sure we could've got better deals, or at least get people in to find us better deals, and also expand our exposure in the states via Mr Earl..the bloke who owns 23% shares in the club.

 

[roydo]

Football clubs are not businesses (in any traditional sense) despite having many of the trappings. If you want Everton to be run like a business we would likely all be utterly horrified by what happens. An accountant would need about ten minutes to weigh risk/reward before he orders all assets to be liquidated.

If someone held a gun to your head and said "make money with Everton" the only sane choice would be to sell everything (or take a bullet for the cause I suppose).

City, Chelsea, Madrid, Barca (Barca have debts of 600m euros while they are likely close to their peak revenue generating potential ... putting more money into the club isn't "business" it's because they just want to win) ... even mid/low table teams in the Prem like Sunderland, Stock and QPR are all spending huge amounts of money which they wouldn't spend if they were a business concerned with turning a profit. As for "investing some money so you can make the CL" ... as I alluded to above an accountant would need very little time to realize the risk of that venture cannot be justified given the likelyhood (low) of success.

I do not want someone to buy Everton who is keen on making money. Which is fortunate because nobody who wants to make money would buy Everton. So problem solved.

There are however billionaires who enjoy the status and challenge of owning a team and who could increase our turnover (which as others point out there are actually many valid ways to do so) in order to support the club and pay for their hobby. Why that hasn't happened is the age old debate we've been having for years and I don't want to get into ... I just wanted to address this myth that football clubs are businesses.

If someone bought Everton and said they planned to make money on the venture I would assume they were Romneying the joint.

Agree with that mate, footie is not a business in the true sense of the word, and in the wider context, the revenues are not that brilliant. I can understand the vanity project approach to owning one, but, sorry, the Galziers, that mob over the way, Lerner at Villa, Ashley at Barcodes etc etc are not in it to lose money; they intend to sell/float for a return. What I dont get, is who would consider (sanely), buying from them??

 

[davmaher]

Just taken a look at these, and I am really baffled.

We had a cash deficit of £10k. In other words, the amount that needs to be covered by loans or owners to cover costs.

We have a positive operating cash flow, but pretty low. We pay £4m interest on a debt of £45m, but Fulham pay £500k on a debt of £192m., Villa pay £600k on debt of £113m. Man Utd have debt of £300m, but have a have a positive interest payment of £55m!. Just do not get it. How can you owe £300m, but be paid £55m in interest, FFS?? Man Utd owe 8 times what we do, but get paid 14 times in interest that we shell out!!

It is obviously some sort of financial gymnastics, but when one of our Directors is worth in the region of £1.2BILLION, why cant our affairs be a bit more generous??

Seems totally nuts to me.

I think it depends on who you owe the money to. With Villa, Fulham and most other PL clubs I suspect the money they owe has come from the owners and at no interest. Our loans come from banks, other financial institutions or the likes or Robert Earl, who still wants his pound (or 15%) of flesh. Although our overall debt burden seems to be reducing, the increased cost of borrowing means we are probably paying more interest on less debt.

 

[pfim]

Football clubs are not businesses (in any traditional sense) despite having many of the trappings. If you want Everton to be run like a business we would likely all be utterly horrified by what happens. An accountant would need about ten minutes to weigh risk/reward before he orders all assets to be liquidated.

If someone held a gun to your head and said "make money with Everton" the only sane choice would be to sell everything (or take a bullet for the cause I suppose).

City, Chelsea, Madrid, Barca (Barca have debts of 600m euros while they are likely close to their peak revenue generating potential ... putting more money into the club isn't "business" it's because they just want to win) ... even mid/low table teams in the Prem like Sunderland, Stock and QPR are all spending huge amounts of money which they wouldn't spend if they were a business concerned with turning a profit. As for "investing some money so you can make the CL" ... as I alluded to above an accountant would need very little time to realize the risk of that venture cannot be justified given the likelyhood (low) of success.

I do not want someone to buy Everton who is keen on making money. Which is fortunate because nobody who wants to make money would buy Everton. So problem solved.

There are however billionaires who enjoy the status and challenge of owning a team and who could increase our turnover (which as others point out there are actually many valid ways to do so) in order to support the club and pay for their hobby. Why that hasn't happened is the age old debate we've been having for years and I don't want to get into ... I just wanted to address this myth that football clubs are businesses.

If someone bought Everton and said they planned to make money on the venture I would assume they were Romneying the joint.

This is the mentality I just don't get. Football is 100% a business. Maybe some don't like that, but it doesn't change the truth. This is the premier league era, it is all about branding, revenue streams, commercial media. It's all business, don't fool yourself.

Some may not realize profits until after they sell their club, but they are still building brands and cash flows to someday sell off and cash in.

Maybe I'm jaded from living where I do, but Americans have made sport one of the ultimate industries to be a part of. It's why so many are looking across the pond to the television jackpot of the premier league and buying a piece of it.

 

[roydo]

I think it depends on who you owe the money to. With Villa, Fulham and most other PL clubs I suspect the money they owe has come from the owners and at no interest. Our loans come from banks, other financial institutions or the likes or Robert Earl, who still wants his pound (or 15%) of flesh. Although our overall debt burden seems to be reducing, the increased cost of borrowing means we are probably paying more interest on less debt.

Get that bit mate, especially the Earl loan, which stinks, IMO, but Utd raised cash via a bond issue, which is open market, price, or interest they pay based on their ability to repay the "loan". For example, if Spain wants to raise money, they would be paying an interest rate of about 6%; UK about 2%. The markets conclude that is is riskier lending to Spain than the UK, so demand a higher return.

So how TF do Utd RECEIVE £55million in interest? Assuming a 5% return, that means they have LENT apx £1000m, or have a similar amount on deposit somewhere! Do not get it at all.

Bruce. Bruce! help!!

 

[Matt Damon]

The Telegraph have done a study into the solvency of PL clubs, basically looking at how much each club can fund their debts through their own trading operations.

http://www.telegraph.co.uk/sport/fo...the-current-health-of-the-Premier-League.html

We're in 16th place, ie not in a very good way financially. So don't expect to see us buying anyone fancy this summer unless we sell someone for big bucks.

Oh, and before the Kenwrong naysayers pipe up about him not spending, it seems clear from the stats that we are in fact spending more than we have, but that money is going on wages rather than transfer fees.

LOAD OF BOLLOCKS.

Aston Villa should be near the or if not BOTTOM of that list.


"Solvency index for 2010-11 is compiled using operating cashflow minus interest paid/plus received"

Thats not sufficient. Its like comparing apples and pears ffs.

ASTON VILLA have lost £50million NET in one season. £100million NET in three years ffs. (after player sales last summer).

Hence load of bollocks.

 

[Desaparecido]

I'd like to mention, since I just thought of it, that there has been talk on here about the academy being close to a level where it wil produce quite good players, having been in development for years.

This is a possible significant revenue stream for the future.

 

[kenada_blue]

This is the mentality I just don't get. Football is 100% a business. Maybe some don't like that, but it doesn't change the truth. This is the premier league era, it is all about branding, revenue streams, commercial media. It's all business, don't fool yourself.

Some may not realize profits until after they sell their club, but they are still building brands and cash flows to someday sell off and cash in.

Maybe I'm jaded from living where I do, but Americans have made sport one of the ultimate industries to be a part of. It's why so many are looking across the pond to the television jackpot of the premier league and buying a piece of it.

you've got a point.

its not about how much debt a club owes its about how much it brings in. the revenue brought in makes the big wigs rich, the brand gets bigger. It's all about controlling the debt, managing it, because that doesn't stop a business making money.

Man City may have spunked 500mill on players and have a ridiculous wage bill...but their revenue has sky rocketted, they've put infestructure in place, and a mental naming rights deal that, in a few years, will balance itself out.

there's money to be made in a billion pound machine

 

[kenada_blue]

LOAD OF BOLLOCKS.

Aston Villa should be near the or if not BOTTOM of that list.


"Solvency index for 2010-11 is compiled using operating cashflow minus interest paid/plus received"

Thats not sufficient. Its like comparing apples and pears ffs.

ASTON VILLA have lost £50million NET in one season. £100million NET in three years ffs. (after player sales last summer).

Hence load of bollocks.

hahaha straight to Villa

 

[pfim]

LOAD OF BOLLOCKS.

Aston Villa should be near the or if not BOTTOM of that list.


"Solvency index for 2010-11 is compiled using operating cashflow minus interest paid/plus received"

Thats not sufficient. Its like comparing apples and pears ffs.

ASTON VILLA have lost £50million NET in one season. £100million NET in three years ffs. (after player sales last summer).

Hence load of bollocks.

Net isn't necessarily the best measure of a football club's cash flow, especially with player contracts and how they are depreciated.

 

[Matt Damon]

Net isn't necessarily the best measure of a football club's cash flow, especially with player contracts and how they are depreciated.

It is when you're talking about DEBT.

NET DEBT is one of the best metrics to look at.

Its how much money is owed by a club to someone else.

A NET DEBT PER UNIT TIME is an indication of a trend.

The rate of Aston Villa's debt increase is the most damning part of it all and their position.