All the attention of football commentators this morning is on yesterday’s 4-1 defeat of Manchester United by Manchester City at the Etihad and what it means for David Moyes. Replacing Sir Alex Ferguson and taking over the reigning champions was always going to be a difficult challenge.
All the attention of football commentators this morning is on yesterday’s 4-1 defeat of Manchester United by Manchester City at the Etihad and what it means for David Moyes. Replacing Sir Alex Ferguson and taking over the reigning champions was always going to be a difficult challenge.
Meanwhile, financial analysts have been trying to deconstruct Manchester United’s latest accounts. The results earlier this week were spun as good ones, ahead of a possible new share issue. United fans remain less happy about this summer’s transfer activity and certainly yesterday’s results leads to questions about whether value for money was obtained.
The Financial Times put their Alphaville team on to the task of decoding the accounts, but it seems to have defeated even the best brains at the Pink ‘Un. They confess, ‘It’s not clear to FT Alphaville whether this is actually a profitable business or not.’ What it all seems to come down to is a tax credit which disappears and reappears in different accounting years.
This allows the production of a profit of £146.4m for the 12 months to June 2013 and an impressive adjusted ebitda (earnings before interest, tax, depreciation and amortisation) of £108.6m. Ebitda is treated as a key performance indicator which provides a snapshot of the current operational profitability of a company.
This favourable outcome is all explained in the accounts in terms of a capital reorganisation, and is evidently consistent with International Financial Reporting Standards. Even so, it seems to confirm the views of those who think that accounts are a social construction of reality.
Perhaps what will interest fans more is that net financing costs amounted to £71m, money that is effectively taken out of the club.
It is also interesting that the FT devotes so much attention to what is a medium-sized company by global standards, showing how the appeal of football spills over into the financial world.