BFC Accounts May 2022

"After a change of coach they got 6 points ouy of 36".
Sarnds familiar. Conway - the appointment supremo.

 

It's not straightforward, especially if you're unfamiliar with accounting terms.

A little guidance first:
Player contracts are treated as intangible assets within football accounts, so the purchase cost is shown as an asset, and then written off (amortised) over the life of the contract. So, assume we sign someone for £1m (I know, let's just pretend!) on a 4 year contract. At the point we sign them we add £1m to the value of our intangible assets. In each year's accounts we then charge £250k of amortisation so that the value of this player in our books is £1m, then £750k, then £500k, then £250k then ultimately zero. In essence, assuming he sees out his contract in full, this player will 'cost' the club £250k per year for 4 years, in terms of what it recognises for profit and loss purposes.

In reality, these valuation updates will occur monthly in the club's management accounts, but the above hopefully explains the principle. Any profit calculations on sale are based on whatever his net value is at the time of sale, regardless of what we paid for him. So if after exactly 2 years, we sell the above player for £2m, the profit recognised on sale would be £1.5m, as his 'book value' at that point would be £500k.

In our accounts, the summary information is in the income statement on page 11. This year, BFC made a loss on trading of intangible assets of £238k, compared to a profit of £491k in the previous year. There's then a note further in the accounts that breaks this down further (note 7). I'll upload this when I can, but it's returning a server error at the moment.

The note shows that we made profit of £2.8m on sales in the year, but offsetting this were amortisation charges of £2.6m (this being the annual write down of value of all the contracts during the year). We also recognised £327k of impairment costs and £60k of fees within the £238k net loss. Impairment costs are when the club decides that the carrying value of any contract is less than the current value, and take an immediate hit of costs. Best guess is that this relates to Leya Iseka, as I believe we paid a fee for him. The more obvious name of Obbi Oulare came, I believe, on a free transfer so in theory he never carried any value as an asset (which is somewhat prophetic!)

We can then use the intangible fixed assets note (note 10) to get a bit more information on this. The purchase price of the players sold was originally £2.4m, and at the time of sale they'd had £1.8m of amortisation charged on them. Consequently, their book value on sale was £0.6m. Given that we made a profit of £2.8m, the total transfer fees we recognised for these sales was £3.4m. We can also see from this table that the total transfer fees for new players signed in the year was £1.2m.

As at 31st May 2022, we have a squad with an original purchase cost of £7.3m, on which we've amortised £4.7m to date, so the book value of the entire playing squad is £2.6m. At the same time last year, the equivalent figure was £4.9m.

I've been careful above to refer to fees recognised, rather than cash paid/spent. Transfer fees are, in the main, paid in instalments, so that £1m fee I used in the example might be paid as 2 annual instalments of £500k or 4 6-monthly instalments of £250k, for example. I won't go into too much detail about where we can interpret this in the accounts (some from cashflow information, some from debtors and creditors) as I suspect a few heads might have exploded from reading this already. However, the cash 'in and outs' for player trading in the year were £4.1m received and £2.0m paid out. We don't know for certain who this will relate to as it will include instalments from previous season's transfer dealings.

So there you go. Simple, innit?

NB: Still no joy uploading the extract or pasting it as an image into the post. I suspect the functionality has been switched off on the site, as it doesn't look to be a glitch.