6.7 million profit

[Sun Tzu]

2. If you re read the thread you'll spot that it was actually your alter ego that started the 'abuse'. Where? and to whom?

I'm sure you can find where Schards starts his accusations of me making stuff up in response to a very lighthearted comment. He follows it up with another couple of caustic asides. All before anything you accuse me of. Look it up, then talk to Schards about the procedure for apologising

3. Sobered up yet dear ?I resent your constant remarks about me being drunk. I shall have a few tonight, not that it's any of your business.

Again, sauce for the goose etc... and 'constant' ? Ha ha !!

Enjoy the drinks tonight, don't fall over !! I assume it'll be bitter you'll be on ?

Has he managed to extract his head yet ?You spout absolute rubbish.

I know, your style just rubs off on me....

[Royal Lady]

I've had better sparring with a couple of hormonal teenagers.

1.You were sarcastic in your reply to Schards' comments, he responded accordingly.
2.I have nothing to be bitter about. My life and those around me is fantastic at the moment, thanks. The club are doing well, we may still get automatic promotion. Everything in our garden is rosy.

[Royal Lady]

Oh and Schards isn't my "alter ego" - he's my husband.

[Sun Tzu]

2.I have nothing to be bitter about. My life and those around me is fantastic at the moment, thanks. The club are doing well, we may still get automatic promotion. Everything in our garden is rosy.

I see, it's just an online personality you adopt then !!!

My original comment was slightly tongue in cheek but totally relevant. Schards chose to snap back in his usual high handed and offensive manner, we should remember that you two will accept no views other than your own.

You should leave off sparring with teenagers. If you can;t handle discussions with adults then the kids will run rings round you.

[Sun Tzu]

Oh and Schards isn't my "alter ego" - he's my husband.

Really ?

It's absolutely impossible to spot the difference.

You must wear matching anoraks as well.

[Royal Lady]

Yes. We've got one just like your nice blue one.

[Sun Tzu]

Yes. We've got one just like your nice blue one.

I'd have thought two of you sharing one anorak would be a bit cosy, alhough it could prove the alter ego theory....

For the record I don't own an anorak of any colour though, fleeces are so much more trendy.

[brendywendy]

why is it that some threads just turn into gay bitchfests at the drop of a hat round here?



this is one of the gayest ive ever seen



and thanks to that person who posted above for some well thought out and knowledgeable opinion/facts
the first time this has been seen on this thread

[Royal Lady]

I agree Bendy. We were only asking a question re the accounts and instead we get this load of old rubbish. I apologise to everyone if I was to blame.

[brendywendy]

Wasnt blaming anyone. Just good to see the one worthwhile post in there somewhere!

[The 17 Bus]

Everything in our garden is rosy.

Except no doubt for all the dead bits!!!!

[The 17 Bus]

Wasnt blaming anyone. Just good to see the one worthwhile post in there somewhere!

Oi you big girls blouse, i posted sensible replies.

[Schards#2]

The hotel appears to be the greater priority

I run the risk of appearing to be having a go at Schards/RL (even though that does seem to be a favourite occupation) but this assumption of the basis of the accounts is way off.

The 7 million increase in land and buildings was 5 on RFC and less than 2 on the hotel. The land expenditure was on the training ground and the media centre as far as I am aware.

You may resent the hotel subsidising the club up until the last 2 seasons but that is exactly what it did as the accumulated losses are still 17 million in Reading Football Club Ltd after 2 years of profits of 6 to 7 million. So despite the perceived lack of spending from a lot of Reading fans the club has still not made enough in the 2 seasons in the Premier League to wipe out the losses from earlier years and so is still not in a financial position to throw money around.

It may not be a great money spinner but there is another company in the holding company and that is Reading FC Community Trust which is there to provide education and training to children in the local community.

I do not get on here very often but I do have copies of the abbreviated accounts for the holding company, RFC and Madejski Hotel so I will try to answer any questions but given that they are abbreviated it may not be possible to be as specific as you may like.

Thanks for taking the time to reply.

I'm not an accountant so forgive me if i'm asking the bleedin' obvious. An earlier post stated:

The amount owing in the accounts to JM has remained the same at just under 26 million, 9 million of which is football related and 17 million relates to the hotel.

My main question is, in the hypothetical scenario that JM called in these loans, is RFC in any way responsible for the 17 million in addition to the 9 million?

This leads to further questions about the relationship between the football club and the hotel. Previous posters have suggested that the hotel provides the football club with an income stream and you said that it had been, historically, subsidising the club. If that's the case, does it follow that, in a scenario where the football club was making a vast profit and the hotel a loss, the reverse would be true?

Finally, if the hotel went bust, can creditors recover their money from the football club on the grounds that the debt becomes the responsibility of the holding company and the football club is an asset of that company?

It be grateful if you could answer these points, not for any alterior motive, but simply out of curiosity as i'd never previously appreciated the apparant interdependence between the hotel and the football club. Thanks

[Sun Tzu]

My understanding is as follows

RFC Holdings is owned by JM and owns almost the entire share capital of RFC and all of the hotel / conference centre / stadium with the football club being a seperate entity.

Therefore profits from the hotel flow to the holding company as do debts from the football club. The owners of the holding company can offset losses in one company against profits in another. I would guess the implication of that is that should the hotel make a massive loss and the football club make a huge profit the football club money could be used to offset the hotel loss. However for various reasons I don;t think this situation is anywhere near as likely as the reverse as the operational running costs of the hotel are nothing like the costs of running a football club, plus as has been mentioned before I think the hotel is actually franchised and run by a third party. Effectively RFC holdings own the building and allow someone else to run it which means they are probably fairly immune to losses. If the compnay running it went bust then I would guess we would lose revenue but not be saddled with any debts.

I don;t think any of the loan for the hotel can be reclaimed directly from the football club, but seeing as it's all JM's it's pretty unlikely to happen anyway. If the money isn't in the business then JM can't reclaim it without banrupting his own business and therefore making sure he can't get it any way.

One aspect which I've never quite understood (and i think is much more important than issues of debt and the hotel) is the actual ownership of the ground. If RFC Holdings own the ground then technically the football club are just tenants. JM could sell the ground (perhaps to London Irish...) although there may be covenants which prevent that. I don't think it is actually unusual for grounds to be owned by different companies - Stamford Bridge isn't owned by Chelsea - and it can be a good thing if the football club gets into financial trouble as it means it can't be forced to sell it's ground.

I do think the question of clubs diversifying their interests can be a double edged sword. Chelsea spent so much on Ken Bates' Chelsea Village scheme that it sucked the life out of them for a long time. But it must make sense for clubs to spread their interests and make their land and assets work for them. Gone are the days when a fortnightly match could raise enough to run a club (with a few million thrown in from a well heeled local businessman). Obvioulsy businesses need to be properly structured to stop the things that you are concerned with happening (ie bad business schemes becoming a drain on the football side). What has been done at the club since we moved has been instrumental in our progress (as I understand it). The Conference Centre has been very well used and the hotel has been successful. In a recession we might see business in both tail off but I don't think either are likely to turn into a negative asset and take money from the club, they just wouldn't contribute as much.


HTH, and none of the above is in any way gospel - just what I've heard, picked up or figured out and am more than happy for corrections, rebuttals or additions to be made !!

[Ian Royal]

That last post was quite interesting. Thanks.

It doesn't mean a great deal to me, but I'm not fussed.

The pleasing thing is the arguers have shut up and hopefully it can stay that way. This is a good thread otherwise.

Be interesting to see how the transfer income effects this seasons finances. We should in theory (I'd guess) be back to making a loss, but the transfer fees from Kitson, Shorey and Sonko may hopefully off set that. I doubt we'll see a profit though.

[Royal Rother]

The tfr fees and parachute payment should hopefully mean we'll be close to profit I'd have thought - depending on what happens in January of course!!

(Although it should be remembered that if we buy someone for £5m on a 3 year contract, the cost in the accounts would only be a proportion of the fee, probably 1/6th, (representing 6 months of 3 years if you see what I mean). If we sell Hunt it will all show as income with no part of a signing on fee to write off as a cost.)

Therefore if in January we sell Hunt for £5m, and buy someone else for same fee on a 3 year contract we would effectively make an accounting profit to show in the 2008/9 accounts of £4.17m, (being £5m less £833k).

Hope that's clear!!

[Ian Royal]

The tfr fees and parachute payment should hopefully mean we'll be close to profit I'd have thought - depending on what happens in January of course!!

(Although it should be remembered that if we buy someone for £5m on a 3 year contract, the cost in the accounts would only be a proportion of the fee, probably 1/6th, (representing 6 months of 3 years if you see what I mean). If we sell Hunt it will all show as income with no part of a signing on fee to write off as a cost.)

Therefore if in January we sell Hunt for £5m, and buy someone else for same fee on a 3 year contract we would effectively make an accounting profit to show in the 2008/9 accounts of £4.17m, (being £5m less £833k).

Hope that's clear!!

That doesn't make any sense. How can the whole outgoing fee not show up!? It's been spent already. Wages fine, but fee doesn't make any sense to me at all.

[JC]

My understanding is as follows

RFC Holdings is owned by JM and owns almost the entire share capital of RFC and all of the hotel / conference centre / stadium with the football club being a seperate entity.

Therefore profits from the hotel flow to the holding company as do debts from the football club. The owners of the holding company can offset losses in one company against profits in another. I would guess the implication of that is that should the hotel make a massive loss and the football club make a huge profit the football club money could be used to offset the hotel loss. However for various reasons I don;t think this situation is anywhere near as likely as the reverse as the operational running costs of the hotel are nothing like the costs of running a football club, plus as has been mentioned before I think the hotel is actually franchised and run by a third party. Effectively RFC holdings own the building and allow someone else to run it which means they are probably fairly immune to losses. If the compnay running it went bust then I would guess we would lose revenue but not be saddled with any debts.

I don;t think any of the loan for the hotel can be reclaimed directly from the football club, but seeing as it's all JM's it's pretty unlikely to happen anyway. If the money isn't in the business then JM can't reclaim it without banrupting his own business and therefore making sure he can't get it any way.

One aspect which I've never quite understood (and i think is much more important than issues of debt and the hotel) is the actual ownership of the ground. If RFC Holdings own the ground then technically the football club are just tenants. JM could sell the ground (perhaps to London Irish...) although there may be covenants which prevent that. I don't think it is actually unusual for grounds to be owned by different companies - Stamford Bridge isn't owned by Chelsea - and it can be a good thing if the football club gets into financial trouble as it means it can't be forced to sell it's ground.

I do think the question of clubs diversifying their interests can be a double edged sword. Chelsea spent so much on Ken Bates' Chelsea Village scheme that it sucked the life out of them for a long time. But it must make sense for clubs to spread their interests and make their land and assets work for them. Gone are the days when a fortnightly match could raise enough to run a club (with a few million thrown in from a well heeled local businessman). Obvioulsy businesses need to be properly structured to stop the things that you are concerned with happening (ie bad business schemes becoming a drain on the football side). What has been done at the club since we moved has been instrumental in our progress (as I understand it). The Conference Centre has been very well used and the hotel has been successful. In a recession we might see business in both tail off but I don't think either are likely to turn into a negative asset and take money from the club, they just wouldn't contribute as much.


HTH, and none of the above is in any way gospel - just what I've heard, picked up or figured out and am more than happy for corrections, rebuttals or additions to be made !!

I have the full set of consolidated accounts and it quotes the group having tangible fixxed assets of £59 million but the company (ie RFC Holdings plc) having fixed assets of 750k. Therefore the holding company does not appear to own the ground. I would guess therefore, without seeing the individual company accounts, that RFC limited owns the ground and the hotel company the hotel.
I think this whole debate is somewhat spurious since what happens to the club is down to JM and him alone. It becomes academic in many ways as to what accounting treatment is used to record ownership of assets in differents compamies.

[Sun Tzu]

I think this whole debate is somewhat spurious since what happens to the club is down to JM and him alone. It becomes academic in many ways as to what accounting treatment is used to record ownership of assets in differents compamies.

Not sure it's spurious. It may be Academic whilst we are under JM's stewardship but different owners could chose to use the various entities differently and there have been plenty of instances of asset stripping at football clubs in the past to make it an issue of longer term interest.

Your clarification on the ground ownership is helpful, although I've had many London Irish fans tell me that the football club do not own the ground and we are no more than tenants along with them !!

[Royal Rother]

The tfr fees and parachute payment should hopefully mean we'll be close to profit I'd have thought - depending on what happens in January of course!!

(Although it should be remembered that if we buy someone for £5m on a 3 year contract, the cost in the accounts would only be a proportion of the fee, probably 1/6th, (representing 6 months of 3 years if you see what I mean). If we sell Hunt it will all show as income with no part of a signing on fee to write off as a cost.)

Therefore if in January we sell Hunt for £5m, and buy someone else for same fee on a 3 year contract we would effectively make an accounting profit to show in the 2008/9 accounts of £4.17m, (being £5m less £833k).

Hope that's clear!!

That doesn't make any sense. How can the whole outgoing fee not show up!? It's been spent already. Wages fine, but fee doesn't make any sense to me at all.

The rest of the £5m in my example sits in Intangible Assets on the Balance Sheet and is only recorded as a cost in the Profit & Loss account (reducing the profit) as it is written off over the period of the initial contract.

e.g. if £5m is spent in Jan 09 on a player on a 3 year contract, the fee will be effectively spread at £1.67m per year for the 3 year term. At the start that fee is treated as a (Intangible) Fixed Asset of the club so does not impact on the Profit recorded which tends to be what most supporters are most interested in, in discussions about the accounts.

(Comany's year end is June.)

In the accounts to June 2009 6 months' worth of player's £5m fee is written off, i.e. £883k. At that point the Balance Sheet now has a value of the player in Fixed Assets of £4.17m.

In the accounts to June 2010 a full year of his contract value is written off (thus reducing the profit recorded in the accounts), being £1.67m, so now a cumulative 18 months' has been written off - unsurprisingly he is now worth £2.5m in the Balance Sheet... I'm sure you can extrapolate this to the end of the contract...