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The Financial Health of the Premier League Laid Bare

  • 10-05-2012 11:40am
    #1
    Paully D
    Registered Users, Registered Users 2 Posts: 28,710 ✭✭✭✭


    From the Telegraph:

    http://www.telegraph.co.uk/sport/football/competitions/premier-league/9255617/Revealed-the-financial-health-of-the-Premier-League-laid-bare.html

    Interesting enough.

    Can't copy over a picture or anything for some reason but if you click the link it's all there.
    Unlike other surveys, this focuses on the true cash income and expenditure of top flight clubs, giving a far more accurate portrait of their strength than the operating profit or loss figures which have been used previously.

    The key figures here are a club's turnover, what it pays in wages and "other" running costs (comprising heating, lighting, travel expenses etc).
    The working capital movements also demonstrate a number of cash items — money spent on buying stock for retail outlets for example.

    Amortisation and depreciation are simply accounting charges and do not affect cash flow, but do need to be presented to show how a club's operating profits or losses are calculated.

    When all the elements have been added up, it gives sight of a club's operating cash flow, the cash left over from revenues after their day-to-day expenses have been paid. After interest bills have been paid, a club's disposable income available to spend on transfers, or paying down debts, is revealed.

    Notes

    Net debt: What money is owed to the banks: it does not include football debts such as unpaid transfer fees.

    Income: All money earned from television, sponsorship, the gate etc. Transfer fees are not included.

    Wages: Salaries paid to players and other staff.
    Other costs: Other general running costs, eg: lighting, heating, food, travel, auditing, legal and agents' fees etc.

    Operating profit/loss: A number that includes accounting charges called "amortisation and depreciation" which have no effect on the club's cash position.

    Operating cash flow: The true cash income/losses from running the club day to day. This does not include discretionary spending such as transfers/stadium improvements.

    Net interest paid/received: Cash paid/received from bank debts/cash balances

    Net transfer spending/income: Cash received for selling players minus cash paid for signings.

    Net cash inflow (before financing): The total cash deficit/income after all the above. £0 is breakeven; a negative number represents what support a club's owner (or lenders) have had to provide to cover costs. A positive number means the club was richer at the end of last season than at the start.


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