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Cgb09146 t1_ixhy4h5 wrote

As much as this is interesting data, it's really lacking in any meaningful detail. For example, this is a one year view of the club. Nobody should be buying a business based on a single year of operation. The club is also spending a fortune on dividends to the Glazers and on Interest payments.

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xelabagus t1_ixj274i wrote

Also player transfers is such a volatile number and utterly useless in helping understand the financial vialbility of the club. This year they have spent 240m euro and taken in 13m, but you can't just plug those numbers into this chart.

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burnshimself t1_ixjv68i wrote

The way this is accounted for in the profit and loss statements (which this maps out) smoothes our those year to year fluctuations. Acquiring contracts / transfers are treated as asset acquisitions and so the full cost is not booked to the P&L but to the balance sheet as an asset. Then that cost is booked as expense in the P&L statements over the life of the contract. So if you buy a 5 year contract for 100m, then you don’t book 100m immediately as expense but you amortize 20m per year over 5 years. That is the bulk of that depreciation and amortization line in this mapping of expenses. They buy players year over year consistently so it isn’t a one-time event but a recurring cost of operating a top tier football club.

They have it in their financial statements. They have 115m of player acquisitions netted against 30m of player sales this year for a net outflow of 85m in FY22. 138m netted against 46m for a new outflow of 113m in FY21. They do this every year, it’s effectively an operating expense which is what that amort line is meant to represent. But people with amateur understanding of accounting think that amort is a tax aberration - it isn’t, it represents the expensing methodology for real material cash outflows the business has very recently spent cash on.

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BoringAccountNG t1_ixlil8s wrote

And most payments for player transfers are spread out over many years.

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tewas t1_ixl14ey wrote

There is 165M depreciation. Thats a paper expense, great for taxes, but no real money leaving hands. Im sure they structured depreciation of prior capital investments over period of time to maximize tax subsidies

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scrchngwsl t1_ixl4gwe wrote

That's how they account for player purchases (and sales) - it's amortised over the length of the contract.

The player purchases are often themselves paid in instalments, the structure of which differs from how it's amortised, but it's not typically all paid in one lump sum either.

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Tsupernami t1_ixle9bw wrote

You cannot claim depreciation in the UK for tax purposes. You have to use capital allowances

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wellknownname t1_ixleboh wrote

On the contrary, for tax purposes you would prefer to expense the whole thing immediately rather than have to amortise over several years. Actually I suspect that is what happened for tax purposes - the UK is unusual in that tax treatment of assets does not follow the accounting treatment but uses a system of 'capital allowances' instead, and the HMRC manuals do not seem to suggest there are capital allowances on football players.

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Diligent-Road-6171 t1_ixnarpm wrote

>There is 165M depreciation. Thats a paper expense, great for taxes, but no real money leaving hands.

Depreciation and amortization are real expenses that cost real assets to make up for them.

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burnshimself t1_ixj9x79 wrote

The other years look like this.

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maverick4002 t1_ixk3xbk wrote

No they don't. I believe this is the first year without a profit.

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burnshimself t1_ixktil0 wrote

No, the last 3 years in a row have all been loss making

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MeteorMan2020 t1_ixl0kaf wrote

This year was 87.4m in operational losses

What were the last two years

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Michael90_Denmark t1_ixjikdp wrote

Future dividends is what will attract investors to buy United. If United is not producing enough profit to pay dividends it doesn’t become an attraction, and vice versa.

But completely agree with your points

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323464 t1_ixk8itg wrote

This is actually one QUARTER. Not even a year. And yeah, agreed with the last statement. These are probs just 'paper losses'. That or the team may lose money to act as a tax shelter for the owner. That's pretty much how auto and horse racing work for the rich owners. They get to have their fun etc and lose some money to mitigate other gains.

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Bill_Lumbergh_VP t1_ixko7es wrote

The image says it's for the 12 months ending June 30, so not one quarter. Unless you're saying it's mislabeled?

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PowerhousePlayer t1_ixkwkcl wrote

He probably saw the "Source: Manchester United Q4 2022 earnings release" at the bottom (which just tells us when the information was released) and not the subtitle at the top

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Diligent-Road-6171 t1_ixn99bw wrote

> The club is also spending a fortune on dividends to the Glazers and on Interest payments.

Dividend payments don't show up on earnings, if it did, it would make these numbers worse not better.

And interest payments are real expenses.

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