ClaretPete001 wrote: ↑Sun Apr 28, 2024 11:51 am
I've said before but I'm a bit surprised there has been much discussion on the minutiae of structural issues like shareholding and little on the meaning of the accounts going forward..
From any perspective, this is a problematic set of accounts. Not least because it doesn't include almost £40 million that was spent in the summer and although the contingent liabilities are not accounted for as assets there is potentially another £15 million worth of liability in terms of players contracts not to mention whatever is included in the contracts of the £40 million not included in these accounts.
The Balance Sheet is bolstered by the inter company debt and cashflow by the receipt of £40 million from players sales that happened from the previous summer.
Commercial revenue has dropped dramatically and there is no evidence of external investment.
Looking at the accounts over a couple of weeks - it surprises me not the auditors are flagging up cash flow issues. The cash is being shored up by bank borrowings and debt from players sales now satisfied.
It's very hard to see the overall picture but if we are relegated a combination of the loss of PL broadcast revenue, the re-structure of bank loans, the bringing forward of transfer debt and the fact we haven't sold anyone recently would hit cash quite badly. I suppose you could ponder that the PL revenue would mitigate some of that but I guess the auditors have seen the forecasts and aren't entirely convinced.
Survival is everything.....!
I posted about this at the time - the only thing you have missed re cash flow is that we factored part of the parachute payments early last summer as well.
If there is a requirement to reduce the capital on the MGG loan (as was the case with both the Macquarie and MSD loans) then there is an immediate chase for cash, though that may equate to what would have had to be paid in bonuses and conditional transfer payments if we stay up. There will be a number of standard transfer instalments to pay in June also - certainly more than indicated in the last accounts as a result of the additional incomings you have mentioned.
So how does the club generate the extra cash?
the obvious route is player sales - Profit can potentially be booked thanks to amortisation, but this is not cash. Factoring of any significant sales is an option, but we must also consider the differences in rules around players signed internationally and domestically.
A domestically acquired player, must have all outstanding payments completed in a subsequent selling transaction.
With an Internationally acquired player, the terms of the original transaction apply, which is why I still believe we are paying for Maxwell Cornet eve though we allegedly got a full fee up front for him from West Ham. This may make it more attractive to sell those internationally acquired players.
If the club want/need to kick the cash flow issue even further down the road it could factor the staged payments on transfers outwards this summer, though it will no doubt prefer to get the cash in upfront.
Of course the auditors made warnings about the plans regarding player sales - it is expected that the mid-market will tighten up domestically as FFP/PSR has now proven it has teeth and there are new rules coming in on that front as well. the Premier League is also the entering the final year of the current broadcast deals and we already know the next domestic deal is flat and most of the major global markets are in the middle of loner term deals - only the UEFA clubs will see TV revenue growth next season thanks to it's new format and substantially increased broadcast agreements.
On reflection, it is of little surprise that the club has recently become a leading actor in issues that are seen to impact it's own operational situation - first by being the visible broker of engagement between the EFL Championship and the Premier League (
viewtopic.php?f=2&t=74339) and this week by joining the Union of European Clubs (and becoming Executive representatives (
viewtopic.php?f=2&t=75557) who are fighting for a voice with UEFA (and FIFA) and against the might of the ECA who have exclusionary agreements with both UEFA and FIFA . It is amazing how self interest can change perspectives, remember how ALK/VSL were originally in favour of the Independent Regulator when they took over and then against it when they saw the fan led review and Government White Paper, how long before they switch again?
