The European Kings of Debt

Without getting too technical. The Stadium is rented from the Council on a long term lease. City are responsible for maintaining the Ground under the terms of the lease. Any major costs such as expansion of a Stand will be paid for by the Club, in our case without going in to debt. If that’s the case the cost of the new Stand is treated as a fixed asset which then appears in the balance sheet as the Stand will have a life of over 12 months. To balance the balance sheet the bank account will go down as the expansion is paid for to the Contractors building it. To replenish the bank, the great Sheikh, and other investors introduce more bank funds and the other side of the balance sheet to keep the balance sheet balancing, will be done by the Club issuing more shares to the existing shareholders. Because the Stands won’t last forever, Company Law says the Club have to apply a wear and tear allowance based on the shorter of the period of the long term lease, just in case the Club have to give the Ground back to the Council or, an estimate of how long the stand will last before it needs replacing. This annual wear and tear goes through the profit and loss account in other words comes off any profit we have made for that year. As a completely separate issue the Club pays an amount to the Council each year instead of paying a percentage of gate receipts. Without going through the Accounts I think it’s £4 million and is up for renewal every 5 years. This is a commercial separate agreement between the Club and the Council and is NOT a lease. The amount ie £4 million will appear as a charge to the profit and loss account , in other words, will come off the bottom line profit. The only bit of this which will appear in the balance sheet will be what's owed to the Council , but not yet paid at the balance sheet date. If the Council have invoiced the Club, but are awaiting payment, it will be shown in the Clubs Accounts as part of Trade Creditors, if they have not yet invoiced, it will be shown as Accruals in the Accounts. To further complicate matters, if the Club have paid in advance, and the period they have paid for has gone beyond the balance sheet date, it will be treated as a prepayment in the Clubs Accounts which is a fancy term for saying we haven’t had our money’s worth yet. A bit like when you pay for your Season Ticket up front but not yet seen all the games. Of course if I was to go all technical I could explain things in greater detail but it would defeat the object of trying to explain things in layman’s terms.
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In united's case let's not forget they now conduct their business from that tax and accounting black hole that is the Cayman Islands, so who knows what the true extent of their debts and liabilities really are.
Won't stop the clowns buying another 10 players with Eric, before his big pay-off in 18 months :)
 
In united's case let's not forget they now conduct their business from that tax and accounting black hole that is the Cayman Islands, so who knows what the true extent of their debts and liabilities really are.
Manchester United is now a shell company represented by a single sheet of paper in a filing cabinet. It does not trade.
 
Looks like the Debt Table is out from Deloitte…





This is how it feels to be City
This is how it feels to be small
You owe Billions
And we owe the banks fuck all
…Owe the banks fuck all!

Extremely misleading tweet. There are many kinds of debt and depending on the amount and the use of debt, may be classified as stable or unstable.
For example Madrid's debt is mainly related to improvements in stadium (infrastructure debt secured against the assets) which will pay us in future. As a "company" with an EBITDA of almost €200 million expected for FY2022, this is a very sustainable amount. We also only have to pay a fixed €30-40 million annually to pay this off (over 25 years, similar to funding a home).
Manchester United on the other hand owe most of their debt to banks for "acquisition financing" ... basically nothing of value is being created in United through this debt. Its only increased the wealth of their owners.
Barcelona has a significant amount of debt for both infrastructure and salaries (working capital debt). Their issue is that their working capital debt allows them to only fund short term objectives (paying wages) and since they have deferred wages to latter years, they may have to increase working capital debt at the cost of long term investments such as acquiring new players or renovating stadium.
 

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