permalink for this thread : http://search.catflaporama.com/post/browse/141874
Cockney_Barra_Boy Posted on 14/02/2008 08:49
17m Loss.......

Not I'm not familiar with a football clubs accoutns and therefore only look from a laymens terms.

Does this 17m include the 12m we spent on Alves or is this a general loss of income. having a chunk of supportes not turning up at home games can't cause this sort of loss.......can it?

Have to say that this is worrying especially if it;s a continued trend as at some point Gibbos got to say...enough is aenough and cut back or transfers and budget for a team we can afford. Hate to see the club cripple Gibson.

Is there someone at fault for this horrific loss, surely it could have been better managed. What's annoying is seeeing clubs around us making profits..can't remember who exactly but sure I heard or read that.


Get_your_rat_out Posted on 14/02/2008 08:50
17m Loss.......

where does it say this? or is this just a figure you've made up

Buddy Posted on 14/02/2008 08:57
17m Loss.......

If it's a recently published set of accounts then it'll be up to summer last year, so it won't include Alves or Yakubu.

We lose in excess of £10m every year so far as I know.

When I say "lose" of course I mean "invest in sporting success".

Sleaford Posted on 14/02/2008 08:58
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Won't the extra £15million from the new TV deal nicely cover this?

plonker Posted on 14/02/2008 08:58
17m Loss.......

we get 35 million every year in susbsidies from the premier league

call it an overdraft..

Peachy Posted on 14/02/2008 09:03
17m Loss.......

This is really connected with the whole Downing saga. We are shipping money so impose a reasonable wage ceiling. Agent knows this and tells the player that he could be earning x% more elsewhere - good job we've got men of quality controlling the club as there is no easy answer. I must say though I could have filled the stadium more if I was in charge of such things.

sasboro1 Posted on 14/02/2008 09:54
17m Loss.......

what i don't get is back in 1997ish we use to make 10m loss. even with the explosion in tv money and increases in ticket prices were are now making a bigger loss. I think villa and bolton managed to break even and mark hughes apparently built his team for under £12m. So you don't need to spend loads to build a decent team. Has martin o'neill spent as much as southgate for example.

scoea Posted on 14/02/2008 10:13
17m Loss.......

It really isn't difficult. It is in Gibson's interests that MFC makes a loss. It is a manageable loss and not something that should concern any of us.

Lefty Posted on 14/02/2008 10:16
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How is it in his interests to make a loss?

scoea Posted on 14/02/2008 10:19
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Offsets profit in other companies.

Lefty Posted on 14/02/2008 10:22
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Which saves him tax of 30%. He's still out of pocket by £12million.

scoea Posted on 14/02/2008 10:23
17m Loss.......

No he isn't because it's not his money that funds that loss!!

The_same_as_before Posted on 14/02/2008 10:26
17m Loss.......

Thats stupid, scoea I really enjoy your journalistic nonsense, but think about it. To make a tax loss unless you buy it, it costs the difference beween the loss and the tax.

Lefty Posted on 14/02/2008 10:30
17m Loss.......

Then the other companies are still £12m worse off. Whichever way you cut it, if a company makes a loss it only makes a tax saving at the applicable tax rate (UK Corporation Tax is 30%) the treasury doesn't hand them all of the loss back. Everyone would start a company if they did, it would be risk free.


Pasty Posted on 14/02/2008 10:33
17m Loss.......

Scoea is right, just offsets the profit off one against the loss of the other, it works something like Bulkhaul will owe MFC the tax that they have saved

Lefty Posted on 14/02/2008 10:35
17m Loss.......

It is still only reducing the loss by 30%, therefore it is costing someone 70% of £17m = £12m.

Buddy Posted on 14/02/2008 10:36
17m Loss.......

I sort of agree with "any loss is a loss", except to say that £12m less profit is not the same as £12m straight loss. If your parent company, (let's call it Gibson O'Neill), makes £150m (that's an entirely made up figure) from one of its subsidiaries (let's call it Bulkhaul) and loses £12m from another (let's call it MFC), it still posts a net profit of £138m.

I realise that might be exaggerated but it makes the point that it's not as if you start at x and lose £12m per year until there's nothing left, as long as the sister company's profits are comfortably outstripping the losses.

Pasty Posted on 14/02/2008 10:37
17m Loss.......

Well yeah, in effect neither company make a profit

Lefty Posted on 14/02/2008 10:42
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However clever you are at utilising them, it is not 'in your interest' to make a loss. You end up with less money somewhere along the line.

Buddy Posted on 14/02/2008 10:46
17m Loss.......

True, but if you choose to spend your money on propping up your football club that's your choice. No different to me spending my income on going to watch them.

Lefty Posted on 14/02/2008 10:53
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Actually, there is a difference. It isn't his money it is a Companies money (we assume). There is a good argument that Gibson is breaking Company Law by subsidising the loss making enterprise that is MFC. Milton Friedman would certainly have argued that fact.

heaton_mersey_boro Posted on 14/02/2008 10:53
17m Loss.......

scoeas' right.

Money Boro "loses" is offset against Bulkhaul etc.

Did have it explained fully to me once, but its complex. And boring. Needless to say, there is nowt to worry about as long as Bulkhaul continues to make as much profit as it is.

sasboro1 Posted on 14/02/2008 10:54
17m Loss.......

the loss has to be picked up somewhere along the line. there is no magic wand that makes it go away. think that would be classed as money laundering.

maybe the loss is down to bank loans and every couple of seasons payments are made to bring that down.

still doesnt explain how we are still losing more than 10 years ago despite all this extra tv money. bet when the new overseas tv deal kicks in we still make a loss.

Buddy Posted on 14/02/2008 11:14
17m Loss.......

But if all the shareholders of the parent company (or indeed whatever the Articles say is a majority) agree that that's the way they want to do it, that's up to them, isn't it? The Gibson O'Neill Company Ltd is not a plc.

Lefty Posted on 14/02/2008 11:26
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Yes, Buddy. We are luckier than most fans realise. Let's hope that they don't sell some of their shares.

I'd be surprised if the purpose of Bulkhaul was stated anywhere in part to be to support MFC, so we probably rely on the fact that the directors are the shareholders and none of them want to challenge their own decisions.

Sleaford Posted on 14/02/2008 11:28
17m Loss.......

Do you think the new Hotel/Golf resort is being paid for from the clubs accounts? I thought Gibbo said something about the club being funded by the hotel when it's finished?

Corcaigh_the_Cat Posted on 14/02/2008 11:35
17m Loss.......

It will be.

groovy_kind_of_love Posted on 14/02/2008 11:38
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The Golf/hotel thing is a good point, but at most I can see that only attributing about £2 million

Cockney_Barra_Boy Posted on 14/02/2008 11:56
17m Loss.......

The 17m was quoted by Lamby at the fans forum.

He said that he can;t keep going to Gibbo with cap in hand asking for another 17m each year. He was talking up his backing of the 39th game and how this clubs neeeds the extra 5 million.

sasboro1 Posted on 14/02/2008 11:58
17m Loss.......

its not as if the £5m will go towards paying off the 17m debt, it will just go towards higher wages and spending more on transfers. so the debt remains or actually increases as our income has gone up so can borrow more.

scoea Posted on 14/02/2008 12:12
17m Loss.......

It is in Lamb's interest to promote the myth that Gibson dips his hand in his pocket to fund MFC. It just isn't as simple as that.

In this case a "loss isn't a loss". You are under the misapprehension that Gibson somehow funs MFC's loss. He doesn't and neither does Bulhaul. MFC's 'losses' are funded by structured and manageable debt that is backed by the O'Neil/Gibson group of companies.

So, in effect, MFC's loss is funded by banks and the tax benefit (which far outweighs any interest payments the club make) is enjoyed by

I have put this extremely simply and it is actually a lot more complex but in basic terms, that is the reality. Don't get me wrong, Gibson has been fantastic for our club and is the best chairman in the league but don't make the mistake that he dips in his pocket.

Buddy Posted on 14/02/2008 12:25
17m Loss.......

I don't understand that scoea. If it's funded by debt, that debt has to be paid off at some point. It actually makes more sense to me for it to be a loss-making subsidiary of a highly profitable company.

boroboymike Posted on 14/02/2008 12:48
17m Loss.......

The usual thinly veiled Lamb attack on the fans for not buying enough season tickets.

Keith neglects to mention £2million of the loss is Mendi's wages, down to his stupid decision to give him a 4 year deal after his loan.


HolgateEnd Posted on 14/02/2008 13:03
17m Loss.......

As I understand it, MFC and Bulkhaul are owned by the Gibson O'Neil Group.

MFC takes out loans and uses an overdraft to pay the bills, but at the end of each year, reports a loss to the Gibson O'Neil group. They offset that loss against the profit made by Bulkhaul, and bob's yer uncle - the company as a whole still makes a profit.

The problems will come if (God forbid) Bulkhaul made a loss. Because then the G-O'N group as a whole would make a loss which it could keep affording year on year.

As for losing more than we were 10 years ago, that's because because (a) crowds have dropped, (b) wages have increased and (c) transfer fees have increased. For example. back in 97 there were no players earning £100k + a week, and the record transfer fee was £15m - now it's about £45m.

The_same_as_before Posted on 14/02/2008 13:27
17m Loss.......

Bulkhaul aka Gibson O´Neil MFC

Profit (say) 40m Loss (say) (17m)

tax 8m Tax loss (3m)

Funds kept 32m Funds lost (14m)


No matter how I do it Bulkhaul is down by 14m

Bugga the formatting

Buddy Posted on 14/02/2008 13:33
17m Loss.......

Not arguing with the maths blot, just saying that clearly the shareholders of Gibson O'Neill are happy with it.

Fabio_Go_Go Posted on 14/02/2008 13:34
17m Loss.......

The fact that Lamb has said MFC made a loss is completely irrelevant, it is just something, that to an uneducated oik looks like Gibson is king and is 'bankrolling' boro.

Depending on the period covered by the accounts:

The 'loss' could include amortising the 'asset' that was Mark Viduka for exmaple as he walked away on a free transfer

Bank loan repayments are irrelevant, however the cost of the loan (interest / charges) would be included.

A better indication as far as us as fans are concerned would be the companies 'cash-flow', if Gibson is constantly injecting liquid cash then that is much more of a worry than any 'loss' shown in the accounts

The_same_as_before Posted on 14/02/2008 13:35
17m Loss.......

The boys right. Cash is king.

Fabio_Go_Go Posted on 14/02/2008 13:42
17m Loss.......

In my above post i am not questioning the fact the Gibson is the best Chairman we could ever hope for or that he doesnt or hasnt put his own personal wealth second behind his beloved boro. But no-one should be under any illusions that £12m / £17m has been 'put into' MFC either by Gibson personally to cover that 'loss'

Cockney_Barra_Boy Posted on 14/02/2008 13:55
17m Loss.......

Fabio....So because I've taken the statement - I can't KEEP going back (past tense) to Steve asking for another 17m - as the truth I'm an uneducated oik.

Never been called that before!!

bear66 Posted on 14/02/2008 14:05
17m Loss.......

I buy something for £1

Next year it is valued at £50 - I make £49 profit - I pay £17 in tax

Next year it is valued at £33 - I make a loss of £17 - I manage to offset £5 as a tax benefit

My asset is worth £33, I paid £17 in tax, I recovered £5 as a rebate

My networth is 33 - 1 - 17 + 5 = £20 - not bad for a £1 investment

Lefty Posted on 14/02/2008 14:06
17m Loss.......

I see same as before has now covered this, but I’d started writing this before I got called away so bugger it I’m still posting it.

'You are under the misapprehension that Gibson somehow funs MFC's loss'

No, I'm not. I'm happy to accept that it is the Group rather than Steve Gibson personally.

However to say a "loss isn't a loss" is nonsense. MFC is required to provide audited accounts. If they show a loss then it has lost money.

What you are saying is that MFC lost £17m and, keeping it simple, this is serviced by a bank overdraft of £17m. Now the bank may well charge interest at say 17.5% on this overdraft which would be £3m the following year.

The Tax saving by setting the losses against Group profits @ 30% is £5m. What you are saying is that this more than covers the interest and even reduces the debt by £2m, hence no real cash flow problem as long as the group are doing well. Erm, that still leaves a debt to the bank of £15m.

Think about it.
The rest of the Group might have made profits of say £150m. The tax on this would be £45m leaving £105m in the bank. That is without the burden of MFC. With MFC, even with a tax saving of £5m the group will only have £90m sat in the bank after servicing a £3m interest charge the next year.

I accept he is not putting his hand into his own pocket and banking a cheque into the clubs bank account, but as a major shareholder in his Group, he could be taking that £15m, investing it elsewhere and making money. Instead MFC’s bank are gonna get it eventually.

Fabio, won’t there be specific rules for accounting for players as assets particularly since Bosman? Any transfer fee will be written off over the length of the contract won’t it and I wouldn’t have thought any player signed on a free would then be revalued?

Diasboro_Dan Posted on 14/02/2008 14:15
17m Loss.......

1. A loss is still a loss, no matter who does your accounts. How many times do you to say this to some people?
2. There is no guarantee that Bulkhaul will always make enough profit to cover MFCs losses.
3. As we've witnessed this year, the more money that comes to a club via PL contracts, the more that club has to spend to recruit and retain players. In other words, there's no advantage except compared with foreign clubs (assuming the foreign clubs' income is unchanged).

bear66 Posted on 14/02/2008 14:17
17m Loss.......

"I wouldn’t have thought any player signed on a free would then be revalued?"

Why not?

Jonicama Posted on 14/02/2008 14:26
17m Loss.......

Structuring companies withing a group of companies to get the optimal structure, including minimising tax charges, is a fiendishly complicated matter. I presume Gibson has good advisors and is somewhere close to the optimal strucutre.

When I looked at the Gibson O'Neil published accounts a few years ago it was impossible to see how the group was structured. As a private company it doesn't have to provide anything like the detail of a public company.

I think it is clear that Middlesbrough FC Ltd (or whatever we're called) is a company within the Gibson O'Neil group of companies and this is a fundamental strength.

This has a number of advantages eg the banks will have security over other assets within the Group so the interest rates on any borrowings will be lower than otherwise would be the case.

However it doesn't change the fundamental point that a loss by any subsidiary company is not a good thing. Yes the loss can be used to reduce tax elsewhere but as other people have said this only picks up, maybe 30% of the loss.

Gibson has not written a cheque for £17 million, but he has lsot the opportunity to have an increased in retained profit in the Gibson O'Neil group of £12 millon say. Ultimately this will reduce the value of the Group.

Maybe Gibson has so much value in the Group that he deosn't need that extra £12 million, but to me it is still a big committment.

My concernis what happens when Gibson looks to sell Gibson O'Neil. Who will fund the football club then.

Also I've oftern wondered what Mr O'Neil thinks of it all. even if he only owns 25% he is effectively subsidising the footbal team for a few million each year.

Fabio_Go_Go Posted on 14/02/2008 14:28
17m Loss.......

C****ney_Barra_Boy - Sorry mate, wasnt refering to you personally as 'an uneducated oik' or anyone on here. But there will be thousands of people that read Lamb's comments and think that Gibson / Bulkhaul has actually given £17m to MFC (to cover the 'loss') when i am almost certain that wont have happened.

I would imagine all players are 'revalued' for accounting purposes each year to take into account mayb injuries, perhaps even form or international recognition.

At the end of the day a player is an asset of the business, with the exception of LDG who is most certainly a liability!

The value of those assets will go down in the case of Pro's signed at say 29 on a 4 year contract and up in the case of players like Wheats and Downing, to a point before they will start to lose value again - as the contract is nearing an end.

I would guess that there are specific rules in place to deal with this.

Lefty Posted on 14/02/2008 14:28
17m Loss.......

Bear66,

1.Accounts tend to be done on the historical cost basis.
2.Players contracts short term assets.
3. How do you come up with a valuation?
4. Part of the transfer value to be written off over the length of the contract is already incorporated into the wages contract, hence accounted for really.

This is just my guess.

Fabio_Go_Go Posted on 14/02/2008 14:32
17m Loss.......

Lefty, revaluing playes is something that i reckon is probs really complicated / or there are a very specific set of rules.

There are all kinds of variable factors. And also the commitmant to paying the players wage for the term of their contract would have to be taken into account too.

Fabio_Go_Go Posted on 14/02/2008 14:45
17m Loss.......

In the year to 31 December 2006 the amortisation of players contracts was £10.2m.

Interestingly, Interest paid on loans from the group of companies that MFC is a part of was £4mil

bear66 Posted on 14/02/2008 14:54
17m Loss.......

"How do you come up with a valuation? "

googling around there appear to be many methods of valuation - sometimes in terms of cost, sometimes in terms of potential benefit - others, like young players or 'frees' who cost nothing could be valued at replacement cost - perhaps 'we've' written off values of players? We'll never know because private company accounts are not available like listed companies

Fabio_Go_Go Posted on 14/02/2008 14:56
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Bear, i am sat looking at the accounts of course they are available.

Lefty Posted on 14/02/2008 15:00
17m Loss.......

Fabio,

What is the value of our intangible assets?

Fabio_Go_Go Posted on 14/02/2008 15:02
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Lefty - £23.6mil
Cost is £69mil though.

In my opinion it would seem like on paper we are undervaluing our players, however these figures are at Dec 2006 and as we know alot has happened since then. I expect next years accounts to look quite a bit different.

Lefty Posted on 14/02/2008 15:11
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Which accounting period is it?

Do they show additions/diposals?


Ha, you beat me to it! Don't know how it took so long to post.

George1507 Posted on 14/02/2008 15:13
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Some of you have got very inflated ideas of what Bulkhaul is making. The profit made by the Bulkhaul group in 2006 was around £24 million, so the ever increasing Boro loss is soon going to be a critical problem.

In spite of the conspiracists on here, I am sure that Woodgate and Hutchinson were sold to partly fund the purchase of Alves.

Fabio_Go_Go Posted on 14/02/2008 15:14
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Hutchinson hasnt been sold George

Lefty Posted on 14/02/2008 15:15
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I wonder if shaun71 could help with the actual transfer cost of our squad at that time.


Fabio_Go_Go Posted on 14/02/2008 15:17
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Lefty - The period is the year to December 2006, Additions in that year were £12mil. So that is Huth and Arca and who else?

Lefty Posted on 14/02/2008 15:21
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George,

Is that so? You're right there.

I was just going from previous posts.

bear66 Posted on 14/02/2008 15:29
17m Loss.......

"i am sat looking at the accounts of course they are available" - the detail isn't required but assuming there is detail :

So how much was Viduka valued at then? What loss was shown on him for the year?

scoea Posted on 14/02/2008 15:32
17m Loss.......

HolgateEnd and Fabio have it sussed.

All sorts of accountancy goes into creating those accounts and they will be set up in such a way that it benefits Gibson. Anyone that thinks Gibson takes a hit on MFC is very naive.

Fabio_Go_Go Posted on 14/02/2008 15:39
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Bear - Statuatory company accounts do not show the value of one player.

Scoea - I'm glad someone sees sense!

bear66 Posted on 14/02/2008 15:47
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Fabio - that was my point - public accounts would list all significant assets - as I said, we'll never know

Fabio_Go_Go Posted on 14/02/2008 15:53
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Bear - No they wouldnt.

Look at any PLC's accounts they will not mention every individual Debtor, Creditor, Asset or Liability.

The_same_as_before Posted on 14/02/2008 15:59
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They will next year, almost, we have new 16 pages of notes on assets and liabiliites down to bed debt provisions, the only thing we do not have to reference is the clients names.


However it does not matter, the reality is as fabio said its all about cash.

If over a period a business needs to be injected with cash its losing money, if you can extract cash from the pot your making money.

Lefty Posted on 14/02/2008 16:09
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Fabio,

Can only think of Euell. This suggests we put the increase in the value of the players coming through or those signing new contracts at around £5m for the year.

It probably isn't far off.

Scoea,

It is not in Gibson's interest that MFC makes a loss and he isn't creating one through clever accounting either. The loss was £17m of which 10m was amortisation on players contracts. Even ignoring that a lot of this amortisation will relate to actual transfer fees being written off and therefore a genuine cost, as opposed to perhaps a write off on a revaluation of academy players, it is still a loss of £7m.

Fabio, do you disagree with Jonicama's post of 14:26?

Lefty Posted on 14/02/2008 16:15
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The_same_as_before

So, if the accounts show interest on loans from the group of £4m, at a guess how would you say we are doing?*


*Assuming the loans are not to fund the golf project.

Diasboro_Dan Posted on 14/02/2008 16:15
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This only makes sense if MFC one day becomes profitable. Otherwise, they must ultimately sell the players, then Rockcliffe, and if that's not enough, Bulkhaul must cough up. Sounds like a house of cards. I'm glad I am not investing in some of the people on here.

Lefty Posted on 14/02/2008 16:19
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It explains why they like the idea of £5m for one game.

Cockney_Barra_Boy Posted on 14/02/2008 16:27
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I hear what everyone isaying about how the losses are covered by the GON group, but the thing that ios worrying me is that we are making aloss full stop. Other clubs operate at a profit...didn't Reading and Birmingham make profits. I bet even Balckburn and Bolton did and they get the same gates as us.

Where are we going wrong?

bear66 Posted on 14/02/2008 16:42
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It wasn't a great year - we only got to the FA Cup semi and the UEFA cup final - also not huge transfer (Jason Euell, Jonathan Woodgate ( loan), Julio Arca,Herold Goulon and Robert Huth

How does this balance out?


scoea Posted on 14/02/2008 17:11
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The club makes a loss because Gibson WANTS it to. It makes a loss on paper. Whether there is any actual loss in a net sense is an entirely different thing. As I keep saying, anyone that believes Gibson does not get benefit from the club is naive. Of course he does (and rightly so).

The_same_as_before Posted on 14/02/2008 17:12
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I´m naive.

Lefty Posted on 14/02/2008 17:21
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[:D]

sasboro1 Posted on 14/02/2008 17:22
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So what does he benefit(apart from being a fan's point of view)

whether loans are restructured or bulkahul swallow up the 17m loss, somewhere down the line 17m(after corporation tax) must have some effect, impact or appear.

it stil doesnt answer the question on how some other similar size clubs manage to break even and perform better than us. and how come we are still after 10 years in the premier league we are still losing over 10m?

Was mfc/lamb spinning the accounts to justify the extra tv money from this game abroad. I thought lamb had said in recent season we will get the club we can afford so assuming we are tryign to get the club to break even. Is this 17m very subjective depending on a snap shot of the season.ie when someone is sold or signed.

in 12 months time will the club spin it and say we are breaking even.

how do we know for fact that what lamb says is true? who can verify it?

Diasboro_Dan Posted on 14/02/2008 17:23
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Most of us are naive, apparently. The only way it makes sense is if the Riverside site was expected to soar in value, once the Middlehaven area was developed. That looks a long way off. Hurworth is saleable, but in an area currently awash with new houses, so that will take time as well. Debt has gone out of fashion now. That's why the yanks who own Liverpool have got cold feet. If Boro's finances go pear-shaped, being able to say 'I told you so' on here is no consolation, though.

Shaun71 Posted on 14/02/2008 21:42
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The accounts are available for anyone to purchase. It costs £3 from Companies House if anyones interested

The past few seasons theyve started publishing. I was at the Fans Forum and Keith Lamb did say £17m, but when they were announced in November 2007 it was £13m. That was for the 2005/06 season though


Link: 2005/06 Figures

Shaun71 Posted on 14/02/2008 21:44
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Buy the accounts Sas if you want to see the actual figures. I also bet you struggle to show a Prem team breaking even never mind making a profit

Shaun71 Posted on 14/02/2008 21:49
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As Fabio says the last accounts are up to Dec 2006.

Hutchinson was sold in the end. We reached agreement in the end with Celtic for £250k.

However this figures Lamb is suggesting is probably for 2007, so any of the Jan 2008 transfers wont be in there

scoea Posted on 14/02/2008 22:22
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That isn't the only way it makes sense Dan, it really isn't. Accountants can give you a loss, profit or a break even situation in multi-million pound companies - it all depends on the accounting treatment adopted.

offside_ruel_fox Posted on 14/02/2008 22:38
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Don't worry lads we have had a £17 million loss too.

His name is Darren Bent [;)]

Fabio_Go_Go Posted on 14/02/2008 23:04
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Has he shaun? I thought you would know like! haha
I guess £250k's not bad for him is it, any idea what we could of expected from a tribunal?

Dan, what are you saying fella...? There does not appear to be any sort of provision in the accounts regarding anything to do with 'middlehaven taking off'. Its not even worthy of a note in Gibsons directors report, It is completely irrelevant.

As Scoea says an accountant can turn Multi million £ turnover companies into loss making companies depening on how we treat certain things.

Shaun - Any transfers dont really affect the profit / loss of the company either as these are treated as balance sheet items rather than profit and loss items (see my post above about the net book value of the 'Intangible assets', i.e the playing staff we have bought). Things like agents fees etc will though especially if they are paid cash on completion of the deal rather than spread over a period of time. And it is clear that wages are the biggest expense!

sasboro1 Posted on 14/02/2008 23:53
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Here you go shaun71, looks like bolton do ok.


Link: .

sasboro1 Posted on 14/02/2008 23:57
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This website seems pretty good for seeing how much each club has lost each year


Link: .

zaphod Posted on 15/02/2008 05:15
17m Loss.......

The cash impact is more important, probably. A tax loss would reduce the tax paid by the group in cash, but the loss itself may not be entirely cash, if it is funded by loans or if a lot of the costs (like transfer fees) are deferred.

I don't know what the valuation of MFC is in GON's books. It's probably in the balance sheet at cost, effectively, so the increase in value since acquisition is hidden. Of course, MFC's real value is only what someone is willing to pay for it.

BTW in the early 1970s, a lot of property companies were happy to show losses, because the value of the underlying property asset was appreciating & not disclosed in the accounts because of accounting rules at the time.

Cockney_Barra_Boy Posted on 15/02/2008 09:09
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However it's glossed over with how Gibbo wants it to make a loss, 'he'll make mone..don't you worry' and all that rubbish.

It's still says something when a club like Birmingham make a profit consistently for the last 5 years while we make a continued loss.

I am asking why do we make a loss when others don't. SIMPLE.

scoea Posted on 15/02/2008 09:14
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And I have answered - because Gibson WANTS it to. Simple.

zaphod Posted on 15/02/2008 09:18
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So it's better to be a yoyo club with no ambition??

Fabio_Go_Go Posted on 15/02/2008 09:29
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C_B_B - Birmingham have a number of shareholders to keep happy therefore they need to show a profit.

Shareholders do not like seeing a loss, it means they will not get dividends.

Gibson does not take ANY money out of our club.

SAS, with regards your points above about a loss is still a loss.
I choose to spend my wages following boro, but i do so after i have paid my tax. Simplistically Gibson does the same tho to a far far greater extent, except he does it with his money and then is taxed.

George1507 Posted on 15/02/2008 09:36
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Scoea, you said that Steve Gibson wants the company to make a loss. He may get benefit from the club - lots of benefit from being associated with it, but that wouldn't change if MFC was making a profit. Your point about accountants can make losses into profits and vice versa is true as well, but you can consistently do that year after year. Treatment of numbers might be accepted in any one year by the HMRC, and even maybe a few years. But if you are shoving money into reserves, or understating the value of assets, then sooner or later they will stop you.

The fact is, that the club is losing money - a lot of money - and someone has to make that loss good. In other words, pump in the value of the loss in cash. Maybe months later, maybe in small amounts or large amounts, but someone has to put money in to cover the loss. It could be a loan, but that means that someone has to pay the cost of the loan. There's no way round it - Bulkhaul has to pay the loss that Boro is incurring.

If I was a manager at Bulkhaul, I don't think I'd be pleased to see my profitable work being p****d away by overpaid footballers. And it's getting to a critical point because Bulkhaul's profits are only marginally more than Boro's losses.

I've never met anyone who wanted to lose money when there is an alternative, and I'm sure Steve Gibson is just the same. He may be prepared to tolerate the loss, but he won't WANT to make a loss. A £17 million loss on the turnover we make is TERRIBLE - it would need us to sell another 34K season tickets at £500 just to break even.

I know this is football economics, and those are economics of the madhouse, but things can't go on much longer like this.

scoea Posted on 15/02/2008 09:39
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Sorry George but that simply isn't true. It is pointless repeating what I have already posted.

Cockney_Barra_Boy Posted on 15/02/2008 09:55
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Scoea, not trying to wind you up or have a dig but how do you what Gibson wants?

You can guess what he wants but unless you actually know him which you might as I not sure who you know etc.

It the greater schemes of things, we make a loss end of.

If Gibbo ever wants out will the next buyer.owner have to deal with a loss of millions each year or is the 17m fictious.

If all the wheeler dealings weren't happening to enable tax reliefs, would we actually make a profit??

scoea Posted on 15/02/2008 10:24
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I don't know Gibson. I do know that what I am saying is accurate though.

Cockney_Barra_Boy Posted on 15/02/2008 10:28
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How? Who had told these details?

But can you see my point about if it weren't for Gibbo running the club at a loss on purpose....would we make a profit?

bear66 Posted on 15/02/2008 10:53
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If the club was in a major financial crisis, would it have committed £20m on an unproven striker 2 weeks ago?

Fabio_Go_Go Posted on 15/02/2008 11:00
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C****ney_Barra_Boy - The loss is not £17mil in the year ended December2006 it was approx £12mil, so perhaps Lamb is refering to the current year (ended December 07)

The amortisation of players transfer fees is a book figure only, it does not represent the cash position of the club and in those accounts it is approx £10 mil so would account for almost all of the loss.

But hey the team are playing well so i guess you lot have got to have something else to moan about.

Cockney_Barra_Boy Posted on 15/02/2008 11:09
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I'm not moaning. If I wanted to moan I could talk about the stoupid tart who hit my car this morning, or the fact my dog has now desitroyed 4 beds in two weeks, or the fact that I still have 6 hours of work left till the weekend. [;)]

I'm just asking why our club is run this way.....my question still stands.

Would we make a profit if run as per normal models??

sasboro1 Posted on 15/02/2008 11:10
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yeah, why cant we run it like bolton?

Cockney_Barra_Boy Posted on 15/02/2008 11:16
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No need to be sarcastic sas but then that would be too polute wouldn't it.

Phucking idiots on here who constantly have to have little bitchy digs. Are you lot all that bitter that you have to belittle others opinions and questions.

Other clubs would included Blackburn like i said before...though you choose to overlook that sas as it would make you look a fool.....!

If a club can perform as badly as Bolton and turn a profit then why not. How the club is run in the financial sense doesn;t effect the players performance...does it?

sasboro1 Posted on 15/02/2008 11:19
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I wasnt being sarcast, bolton break even every season but perform just aswell if not better than us over recent seasons. why cant we run things more efficient?its not as if we are 17m loss but in 4th place. apaprently mark hughes has built a team for under £14m but they are quite high.

Norman_Knobsock Posted on 15/02/2008 11:21
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"If I was a manager at Bulkhaul, I don't think I'd be pleased to see my profitable work being p****d away by overpaid footballers. "

I'm acquainted with one of the executives at Bulkhaul and he and his family are season ticket holders, so I don’t imagine they're that concerned, and you have no idea how their bonus is structured either (nor do I).

Boomerang Posted on 15/02/2008 11:25
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its not real terms money it perception of money

players can be valued down as assets.(for tax purposes)

ie alves £12m plus £2m a year total cost £20m over 4 years

but we say we have a loss of £20m not an asset worth (lots i hope)

Lord Riverside (Sir Steve) does not fund the Boro out of his own pocket and is a successful businessman.

I wonder what we paid for the Riverside & area
what we declare its value at.
& what we could realise for it.

Fabio_Go_Go Posted on 15/02/2008 11:26
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C****ney_Barra_Boy - i suspect our club could be run at a profit, but it isnt. Its not as straight forward as some on here would like it to be unfortunatly.


Fabio_Go_Go Posted on 15/02/2008 11:27
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Boomerang, it would appear that we have revalued our stadium to double its initial cost.....

Boomerang Posted on 15/02/2008 11:40
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me thinks that that is a lot lower than it would be sold for. A big hidden asset there.
Probably 5 or 6 times original cost at least.

Its like buying a car for a business and depreciating its value at 20% per year over 5 years.

you still have a car and some hold a large residual value, but you do not tell the taxman that( The girl at the bar maybe if its a Lambo)

boro8686 Posted on 15/02/2008 11:42
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boomerang - the land was given on a 999 year lease to the club by the tdc i believe for a token gesture of a pound or something stupid l;ike that

Buddy Posted on 15/02/2008 11:49
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""If I was a manager at Bulkhaul, I don't think I'd be pleased to see my profitable work being p****d away by overpaid footballers. "

I wouldn't give a F*** what the owners spent their money on as long as I got paid my salary.

Boomerang Posted on 15/02/2008 12:04
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well thats a huge leasehold valued at £1

I wonder what the market rate is.

The point that I am trying to make is that these chairmen with a few exceptions like Abramovic ( and i am not sure about his motives) are business men and they do nowt for free. Ken Bates is a lifelong Chelsea fan he aint chairing Leeds for fun theres money there to be made. All these overseas owners are looking to make money not fund an overly expensive hobby ( that in the case of many americans do not even understand)

Diasboro_Dan Posted on 15/02/2008 12:25
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"I wouldn't give a F*** what the owners spent their money on as long as I got paid my salary."

If they had a profit-sharing scheme you fcuking would.

George, C****ney, you're flogging a dead horse with these guys. Life's too short.

scoea Posted on 15/02/2008 12:49
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By "flogging a dead horse" I presume you mean misunderstading completely.

MFC is part of a group of companies owned by Gibson & O'Neil. MFC's accounts, the treatment of its assets, its outgoings, its structured debt etc etc are all part of the overall group and will be produced to maximise the benefit of the group as a whole from a tax perspective. It is not in the same vicinity as being as simple as saying MFC makes a £17m loss and that is a problem.

I say again - the reason MFC is run at a loss is because it is to the overall benefit of Gibson and O'Neil in a broader sense. If it were the case, genuinely, that MFC were making a £17m cash loss season upon season then there is a strong possibility that its directors could be in breach of their duties and that the company had been wrongfully trading - Insolvency Act 1986.

You need to be able to see the difference between an accounting loss and a pure cash loss.

Fabio_Go_Go Posted on 15/02/2008 12:57
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Scoea is 100% correct. No one here knows enough about the group as a whole to make anything other than guesses, the accounts for MFC alone do not tell the full story of how MFC stands in relation to the group of companies.

TBH i dont care enough to source a copy of the other associated companies accounts i am happy trusting Gibbo to run MFC as he see's fit. Things cant be that bad if we have just broken our transfer record FACT!

As i have said before anything to have a good moan eh!

sasboro1 Posted on 15/02/2008 13:01
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"You need to be able to see the difference between an accounting loss and a pure cash loss."

So really that 17m isnt a cash loss and Keith lamb put some spin on it and misled the fans forum by implying it was a cash loss and that £5m from the 39th game will be useful to help balance the books. which in reality we dont need to balance the books as gibson is happy to lose 17m as it is of benefit to gibsononeill ltd?

scoea Posted on 15/02/2008 13:04
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No Sas. Keith Lamb has made the point that the club can ill afford to turn down a £5m injection. He has, however, put it in simplistic terms that the club, on paper, made a loss. It's spin if you like but I just call it good and prudent accountancy (which is Keith's field) and good PR. Much rather that than him sitting there explaining the ins and outs of the company structure and accountancy practices.

Fabio_Go_Go Posted on 15/02/2008 13:04
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Yes sas, see my first post on this thread, i genuinly believe that lamb said what he said to 'impress' fans that cant think for themselves and to get them onside. I'm not critisising (sp) that though. I'm happy to listen to spin and opinions from anyone but will always form my own opinions as i'm sure you do too.

But everyone must understand that cashflow is much more important.

Fabio_Go_Go Posted on 15/02/2008 13:04
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Scoea beat me to it damn you! ha

scoea Posted on 15/02/2008 13:05
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Dead on Fabio!!!!!

Fabio_Go_Go Posted on 15/02/2008 13:12
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scoea Posted on 15/02/2008 13:19
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Speak up.

Fabio_Go_Go Posted on 15/02/2008 13:20
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was sooooooooo good i put it in its own thread! haha

Liamo Posted on 15/02/2008 13:33
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Fabio, I think you've just made a very telling statement, possibly the truest one on this thread so far:

"No one here knows enough about the group as a whole to make anything other than guesses."

sasboro1 Posted on 15/02/2008 13:34
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If only Lamb had been honest and said he wanted the £5m to pay players more money.

Fabio_Go_Go Posted on 15/02/2008 13:35
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But people assume that MFC has made unintentional losses of £17 mil. I know FOR CERTAIN that that isnt true! And i suspect that Scoea knows too.

Fabio_Go_Go Posted on 15/02/2008 13:41
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SAS - come of it! haha That wouldnt be very god spin / PR by the club would it? You are right tho!

bear66 Posted on 15/02/2008 13:46
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There is the possibility that "£5m" might be just to stand still but the threat is that standing still will be better for most clubs rather than the top 4 doing their own deals - just look at the top 20 clubs - there aren't many Spanish clubs as only the top few teams have decent TV deals - that might be why all 20 clubs appear to be for it

sasboro1 Posted on 15/02/2008 13:47
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According to those links i posted earlier in 2005/06
turnover was 47.984m 79.8% (wages/turnover ratio)..so does that mean the wage bill was about £38m? that compares to 28m at bolton and west ham

Cockney_Barra_Boy Posted on 15/02/2008 13:48
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I'm just playing devils advcate here and understand what you are saying about the 'supposed losses' and the group as a hole though you seem ceratin but then say we can only guess.

How do you for certain?

Also you talk about people buying out clubs but who would even look at Boro (not that we want anyone to) with Lamb going on about £17m losses.

Surely forcing a compnay like MFC into 17m losses by cooking the books or what have you is illegal. Making accounts look good or bad in your favour is fraud.....isn't it?

Fabio_Go_Go Posted on 15/02/2008 13:51
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Yes SAS £38,270,000. Thats quite alot of money isnt it. Think it would include GS, UGO, Parlour, J Flo, Viduka, Reiziger, Macca. All big earners arent they.

bear66 Posted on 15/02/2008 13:51
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£38m doesn't sound right as it equates to the first team squad ALL getting £30k per week - unless the 'back room boys' are taking out about £15m per annum? Now the losses look quite small really

Fabio_Go_Go Posted on 15/02/2008 13:58
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C_B_B - I Have a copy of the accounts for 2006. I am not invloved in preparing / auditing either MFC's or Bulkhauls acounts, which is why i say we can guess.
Everything i have said i have 'read' from the accounts.

I dont think anyone is looking at buying Boro are they and i dont think they will either. And you are right if you were trying to sell a company it stands to reason that perhaps a profitable one is a better one to buy than a loss making company. But that is on the pretence that you are buying the company to make money.

Its not 'cooking the books' or fraud, it 'tax planning'.

Fabio_Go_Go Posted on 15/02/2008 14:00
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Bear you question it sounding 'right'?? It is a fact whether it sounds right or not.

There was 54 playing staff and 128 other staff in the year to December 2006.
It is wages costs for all of them and also includes pension contributions £3mill approx and employers NIC

sasboro1 Posted on 15/02/2008 14:13
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when you look back over the years at the turnover and wages you can clearly see that wages take up all the tv money. accrdoing to those figures our wage bill in 1997ish was about £11m. then in 2000 it was about 20m, then in 2003 it was about £28m.
if its now about £38m just where is it going to stop? is all the extra tv money going to mean we have a wage bill of £50m+ soon?


Diasboro_Dan Posted on 15/02/2008 14:25
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We've all seen how extra TV money is lost in inflated wages. It only seems to benefit clubs who are sure to be in european competition every year. It pushes those clubs higher up the money league table until ultimately they can outspend Real and Barca. For the other PL clubs there is no adavantage unless they get relegated maybe?

Fabio_Go_Go Posted on 15/02/2008 14:26
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If it wasnt spent paying better players to play for our team, where would you like to see it spent?

sasboro1 Posted on 15/02/2008 14:30
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breaking even and paying off some of the debts or maybe build a hotel and golfcourse on middlehaven[;)]

scoea Posted on 15/02/2008 14:32
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Breaking even or paying off the debts?

Have you not read everything above?

sasboro1 Posted on 15/02/2008 14:52
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womnder how much of that 17m has been diverted to pay for a golf course and hotel near darlington

Fabio_Go_Go Posted on 15/02/2008 14:55
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sas - you will find that the accounting treatment of a project such as that is not a P&L item but is a balance sheet item.
i.e money spent on the hotel and golf course increases the value of that asset in the accounts. So my guess would be almost none!