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Bitter_Hawk1272 t1_iulnopg wrote

Why does a net finance loss come before the income and expenses?

217

Hattix t1_iulp0pz wrote

Replying to Bitter_Hawk1272 (#416,478)

When the Glazers acquired the club, they used borrowed money to finance their acquisition (including an utterly stupid 20% APR PIK loan!), and they assigned that debt to the club itself.

So Manchester United took on around £750 million pounds of debt to make itself private in the early 2000s.

It's refinanced (and refloated) since, but remains in debt and has to service that debt - It is still around £350 million in debt, has spent a billion pounds on interest payments

For this service, the Glazers pay themselves around £30 million a year.

On the diagram, the finance works that way to make it easier to see!

164

Damascinos t1_iulp7ta wrote

Revenue? Sure. Doesn’t look like any money is being made though

115

wozza365 t1_iulpxov wrote

Replying to Hattix (#416,509)

Owners of West Ham have been doing something similar. They "bought" the club but the club is just in debt to them and paying interest on the loans

5

knowknowknow t1_iulwkw0 wrote

They received £34m in tax credits? Why?

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chapalatheerthananda t1_ium5gro wrote

Employee Benefit expenses?

More like all dividends for the Glazers!

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Master__of_Orion t1_ium66tm wrote

So there's a net loss (every year?). How do they survive?

18

Mkwdr t1_iumatnm wrote

Replying to knowknowknow (#416,667)

You can get a future tax break if you lose money this year? One might think that they find ways to make it look like it’s loss making which gives then credits for others years in which they slip up and look like they made a profit so they don’t have to pay tax then either? Or the owners make sure that they get paid plenty but the thing they own doesn’t officially make any money…. Nah, I’m sure that can’t happen.

Edit: I feel like I might need to add a /s to my last sentence?

−2

Svitii t1_iumc9zf wrote

Title should be "How does Man United lose money"

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elerar t1_iumd4s0 wrote

Uhm, pretty sure that "operating expense" should not be larger than the "net revenue" it originates from.

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BMG_3 t1_iumd62z wrote

It's a good job the Premier League & UEFA brought in those Profitability & Sustainability Rules to ̶s̶e̶c̶u̶r̶e̶ ̶t̶h̶e̶i̶r̶ ̶p̶l̶a̶c̶e̶ ̶a̶t̶ ̶t̶h̶e̶ ̶t̶o̶p̶ ̶o̶f̶ ̶t̶h̶e̶ ̶t̶a̶b̶l̶e̶ make sure they are run on a financially sound basis.

4

Damascinos t1_iumqsxb wrote

Replying to [deleted] (#417,327)

Just because they have cash doesn’t mean they’re profitable. On paper they’re not. No one in their right mind after looking at their books will buy this dumpster fire

−10

33Marthijs46 t1_iumtyt7 wrote

Replying to [deleted] (#417,327)

Amortization and depreciation might not be cash expenses but they are derived from cash expenses. United buying Anthony this summer for 100 million isn't listed here. Instead they depreciate 100 million over his contract length. Their net incoming cashflow from operations is near equal to the net outgoing cashflows from investments in intangible assets (player transfers).

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Flashward t1_iumuvni wrote

Awesome

Do one for Arsenal please

1

cskopnik t1_iumv4z4 wrote

Money laundering operations

−2

nockyy t1_iumvrnd wrote

This is pretty incomprehensible

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Trell3k t1_iumyg05 wrote

From what i can see they lose money

1

iamamuttonhead t1_iun6s2e wrote

Replying to Svitii (#417,190)

That is what the Glazers would have you believe. The fact is that they are accruing huge future profits in increased franchise value. They "bought" the club in 2005 for about $1.5B. It's current value is about $4.6B. So they are getting a 7% annual rate of return in franchise value. They are now earning more than $300K annually in franchise value.

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njp6969 t1_iun8fgp wrote

wonder how much of the money comes from ronaldo (indirectly)

1

ronnyFUT t1_iun9qb9 wrote

Can anyone explain why operating income is fed into pre tax losses?

1

el_barterino t1_iunggcn wrote

Why is the operating income positive when the expense is greater than the revenue?

2

AlphaAndOmega t1_iunjft9 wrote

Depreciation and Impairment - £14m (aka Maguire)

2

El_Bean69 t1_iunkzo3 wrote

Ah yes another reason to despise the glazer family

1

Gone247365 t1_iunna3e wrote

I think you fucked your numbers up, OP, or you made a shit sankey chart.

You've got:

Net Revenue (583) splitting into Operating Income (88) and Operating Expense (671)

AKA: 583 = 88 + 671

Perhaps Net Revenue was supposed to be 671 and Operating Expense was supposed to be 583?

AKA: 671 = 88 + 583 (with some unseen rounding I assume?)

If the numbers ARE correct, then this is not how you make this kind of chart.

12

sabo-metrics t1_iunocy3 wrote

Whatever chevy pays to be THE LOGO, it's not enough.

Man U chevys lookin like a youth rec league with a local sponsor

0

ShapersB t1_iunpu5p wrote

Replying to slothonvacay (#418,321)

Not exactly. They take out loans to cover the loss because they've used up the cash reserves. The interests are only part of the losses.

That being said, the total cost of the Glazers' ownership of United has surpassed £1.6 billions when you include their recent sale of shares that should have benefited the club that actually paid for them.

Swiss Ramble source and the entire thread in threadreader.

3

boethius70 t1_iunvyrw wrote

Replying to gladiwokeupthismorn (#419,324)

It seems to me most professional sports franchises increase significantly in value over time. Pretty rare they're not worth considerably more in say 10 or 15 years after a purchase. Football, baseball, American football, basketball, etc.... they all tend to appreciate considerably in value over time.

The increase in value is probably more a product of the value of the franchise name and its relative success vs individual players though obviously if they can recruit and build up a lot of successful teams and players that will add even more to the value of the franchise.

The financial performance of the team I am sure plays into valuation but even if they're an eternal money-loser if they have strong revenue overall and continue growth in recognition, product / merch revenue, stadium / venue revenue, etc. etc. it has value to owners.

Nearly all pro sports franchises are hugely coveted by billionaire types, cities, States/countries, and investment groups. Maybe the very worst teams that can't seem to pull together winning teams for decades might eventually not have much value but it seems to me like even the worst teams draw fans and fill seats. The Clippers have sucked for decades but have stayed around forever and have a significant fan base.

I don't necessarily think the economics and math make any sense but it's maybe like the rarefied ownership aspect and prestige that draws investment. Private jets, multiple huge sprawling mansions that the super-rich maintain around the world, super yachts whose value could feed a small country and get used 2 weeks of the year.. I mean the math makes no sense but there's a certain prestige factor that belies that stupidity.

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przhelp t1_iuoe8ju wrote

Replying to iamamuttonhead (#418,650)

The money they're losing is just debt service on the privilege of owning an appreciating asset.

It's like if I buy a house to rent out. I take a mortgage for 300k, I pay whatever that is, like 2k/month on the mortgage. Let's say I rent it for 1.8k, I can say I'm "losing" 200 dollars a month.

But I know people are going to want homes so I'm willing to take that loss because in the future I can sell it for more.

There are only so many Premier League clubs, so it's always going to have value and that value is always going to go up so long as there are billionaires that need places to put their money and egos to stoke.

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Much-Street-8757 t1_iuoi4yr wrote

Didn't we have a few player sales this year? Garner, Pereira come to mind? Shouldn't they count as revenue too?

1

iamamuttonhead t1_iuoye1q wrote

Replying to Dragon_Five_ (#421,756)

Except that's not what's happening. The Glazers purchase was HIGHLY leveraged (the debt was twice the cash invested). Their return on THEIR investment is far, far greater than 7% ARR. Their roughly $500M investment has an ARR much closer to 15% - far better than any stock index. I'd also add, as a marque EPL team, there was essentially zero downside risk, I defy you to find a better investment.

2

opinionated-dick t1_iup3bve wrote

Why does Man Utd get tax credits? Do they have children in nursery perhaps?

1

L1A_M t1_iup8sm5 wrote

Why is the amortisation so high?

1

PikeMcCoy t1_iupfpti wrote

wtf is this? it’s incorrect. remove it.

2

nortob t1_iupi5p3 wrote

Would be clearer imo just to focus on operating items in this situation, but I like the breakdown of revenue by source…

1

OnundTreefoot t1_iuppbhb wrote

Replying to getwhatyoudesire (#416,639)

Between the taxes on salaries, merchandise, television revenue, the economic benefits that multiply well beyond the team itself (MU supports many secondary and tertiary businesses) UK citizens are getting an economic boom all year long from MU. The $34m in "tax breaks" is a token drop in the bucket compared to the money the government is taking in from MU and its doings.

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bpjker t1_iuq3efd wrote

this really isn't beautiful data tbh, data sure, beautiful idk

1

Bobinho4 t1_iuqilqz wrote

I am curious how much they pay for the ref and VAR support?

1

Matt4669 t1_iuqu7c9 wrote

This is a bit confusing, so is Man Utd making a profit or a loss, the graph makes it look like a loss but we’ve still been able to sign big name players easily

1