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KevinFromRadioShack t1_ixhtmz2 wrote

They are more than likely making money, the amortization and depreciation is used to decrease tax liability. The assets they are depreciating against (stadium?) will be around longer than the set depreciation schedule

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KanedSonAreYouDumb t1_ixhvgex wrote

Only £15m of the amount is depreciation, £150m is primarily player registration amortisation.

When they buy a player, they are really buying their registration, then that registration is amortised over the life of their contract.

What it doesn’t account for is when players increase in value, until they are sold.

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burnshimself t1_ixjvb7a wrote

It does account for that because their sale of contracts is netted against acquired contract costs in that amort figure

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KanedSonAreYouDumb t1_ixlghyh wrote

That’s what I meant by “until they are sold”, Garnacho might have appreciated by £30m for example but that’s not reflected in the accounts

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burnshimself t1_ixmarwm wrote

They have historically acquired contracts at a far higher rate than selling any. It is a net cash outflow every year for the past 5 years.

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Majestic_Food_4190 t1_ixhuw7z wrote

Yeah, I feel there must be something missing here. It's unclear to me how long an organization could run sinking 87m a year.

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johnniewelker t1_ixiidtq wrote

You are looking for a cash flow statement.

The company takes on debt or raise new equity to cover the short fall in cash. I don’t know what Man U does. Also they had £165M in depreciation. That’s not real cash spent. It’s possible they had positive cash flow even before accounting for cash raising activities

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AccuracyVsPrecision t1_ixjrn8b wrote

They pay the Glazers money in the books in the form of a loan instead of paying taxes as a dividend.

Most of the capital used by Glazer to purchase Manchester United came in the form of loans, the majority of which were secured against the club's assets, incurring interest payments of over £60 million per annum

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KanedSonAreYouDumb t1_ixhwb3s wrote

Yes there are things that can’t be accounted for, e.g. increase in brand value, that would increase the company’s market value even though its equity is decreasing every year.

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phyrros t1_ixj675r wrote

Because the majority of football Clubs are not for Profit. Actually most Fans sneer at the idea of a for profit club. Or buying a club

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Aardark235 t1_ixku8v2 wrote

ManU has had a 15% annual growth rate from 2005. Compare that to 9% for the S&P 500 over the same time period. Better deal than Twitter according to my maths.

Could the value go from 7B pounds to 100B pounds in the next 20 years? Absolutely.

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phyrros t1_ixm0tit wrote

Yeah, or ManU drops down to the second league and is worth little if anything.

Using sports Clubs as an investment vehicle is imho both everything that is bad about modern football and rather risky

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Aardark235 t1_ixm24sf wrote

That, my friend, is why you are poor. Check out the comparison between sports teams vs stock market over the last three decades:

https://mercercapital.com/article/investors-view-major-league-sports/

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phyrros t1_ixm4v4x wrote

No, that,my friend, is why i'm happy with my life and i can enjoy football.

I don't invest in Clubs just as i don't buy slaves :)

I've got a job, a house and have financial security for about 12 months - why should i chase after more money?

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Aardark235 t1_ixn4m30 wrote

You have a job so you obviously are chasing after more money. If you only had 10B pounds, you could enjoy your football and get paid to own a team.

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phyrros t1_ixncorz wrote

Actually no, i do i job in a company where i earn a lot less than in other companies because i really like my job :)

With 10b i would simply do nothing at all which i unhealthy

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Aardark235 t1_ixnihz5 wrote

With 10b, you can pay other people to be healthy for you.

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phyrros t1_ixqhcmz wrote

that you can do with 4 mill. There is absolutely no sensible reason to ever have more than a few million dollars.

And, just accept it, some people don't want to enrich themself on the work of other people. I believe in the value of work, and thus I deem getting rich off stock options as asocial.

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strangemanornot t1_ixhzcpj wrote

Just like any real estate. Homes can last for 100+ years but the amortization schedule is 27.5 years

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eliminating_coasts t1_ixi8gsg wrote

Wouldn't that normally refer to the amortization of the mortgage, rather than the house itself?

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_mister_pink_ t1_ixidbfj wrote

Depends but in the UK it’s generally based on the ‘useful economic life’ of the asset (minus the land portion which doesn’t suffer depreciation).

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Manumitany t1_ixiqrhl wrote

You still amortize expenses if you pay cash for them.

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Happytallperson t1_ixix4z7 wrote

I imagine its the value of a players contract. If you bought in a player for a transfer fee of £10 million and they signed a 3 years contract, you would write it down 3.3 Million a year.

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belanaria t1_ixks0jj wrote

Amortisation is of player contracts. It’s what they pay for the players divided by the number of years on the contract. So if a player cost 100m on a 5 year contract, then they will amortise 20m a season. If he renews then the remaining will be split over the new contract. So no they aren’t quite making money here. Big contracts, missing out on champions league (poor performances in the league for the last 10 years really) and constant dividends to the owners (uncommon in the industry) weigh down their finances.

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burnshimself t1_ixj9vdb wrote

No they’re not. If you swap D&A (which is an accounting concept and non-cash expense) for their Capex and acquisition of intangible assets (which is the annual cash outflow) they’re still running at a loss. That D&A line primarily consists of the amortized value of acquired contracts, which is to say there were recent cash outflows tied to that and it isn’t just an accounting / tax avoidance concept.

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