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Amortisation and organic growth

Afternoon all,

I am curious as to why the sudden (and seemingly only pertinent to United) craze with amortisation has dawned upon us?

Amortisation is, for all intents and purposes, an accounting concept created to show the effects of time/wear-and-tear upon the underlying intangible asset, which is then netted-off in its presentation on the balance sheet.

In lamen's terms: IT IS MADE UP!

It is not a "real" figure and, indeed, the process by which the amortisation is calculated is at the discretion of the firm under most accounting standards. I'm also interested as to why, if we are going into it that much, we are simply using a straight-line basis of amortisation? What are we going to end up doing - start calculating the valuation of players on a reducing balance basis!?

Further, if you are going to use this amortised cost basis, then you are recognising the release of a % of the value of the asset to the P&L each year. It goes to stand, then, that when we (or, more likely, rival fans) total-up the value of our squad/starting 11, you have to include the value at the NET level (i.e. deducting the cumulative amortisation up to that point). Do you think anyone will take that into consideration? Or, when including Sanchez (if he signs) in the total of our team sheet in some hypothetical starting 11 in 4-years time, will they include the gross original fee/agent's fee/wages fee etc.

If you are going to be so pedantic, at least be consistent.

Finally, and as my new friend AW says, United use their naturally accumulated resources to reinforce their business. Crazy world, eh!?

Using the returns from your business to invest in your business! Madness!

Their raison d'être - their mission statement - is to operate as a football club and become successful as a football club. Why then, is it to be a point of contention if they use their resources to further facilitate the journey to that cause?

If they invested in something completely unrelated, I'd understand your gripes; if they had external investment that facilitated unnatural or super-normal growth, I'd appreciate your concerns, however, using their own funds to potentially further the success of their football club is in the interest of ALL of their stakeholders, as per the Company's Act 2006

As a personal note, I would prefer these self-same resources be put straight into an academy and facilities, however, I'm none-too-privy to the ongoings within the MUFC treasury and significant amounts may be going in, or maybe they're seeing significantly diminishing returns etc.

I'm sure it's something a firm the size of MUFC have considered, even if for financial reasons, as opposed to our more sentimental ones.

posted on 18/1/18

Not sure I quite get the question post (as in if a downturn happens, then surely that would impact everyone and so costs would decrease?) but he doesn't need to. I doubt he would invest any more given he's turned to selling instead, unless the club and the cfg keeps growing like it has been. Bear in mind, given what he sold 13% for, he's going to make a significant profit if he wanted to.

posted on 18/1/18

Do we actually know roughly what proportion of City's revenue is still derived from agreements (of any kind) with Abu Dhabi-based organisations Melts?

posted on 18/1/18

Yep, I looked at that boy too long ago. It’s around 20%. I doubt it will drop too much from that (and may go up a bit again if we renew the etihad deal). There always be some, it wouldn’t really make sense for there not to be.

posted on 18/1/18

Not too long ago that should have said!!

posted on 18/1/18

I think what I was trying to say is that city aren’t a mega brand like Barca, Bayern, Real or (dare I say it) United, and these are the teams that can throw their own money around to maintain their position or, like United, dig themselves out if a slump. I just don’t see city competing for a Neymar or Mbappe if times have been lean on the trophy front for a few years and you’re not getting subsidised. I can’t see Adidas chucking you £75m a year if it’s just about the global pulling power of Manchester City.

posted on 18/1/18

Ah got you.

I’d say our global pulling power has grown a fair bit (it’s not just about number of fans, it’s about exposure in terms of continuously being in the cl too). We do pretty well in South America too just by having Aguero and Jesus playing for us, and then also in China from the recent investment. That’s where the CFG should also really help.

Yes though, if we were to go after a player like that, then it would need some investment from somewhere, at least today it would, perhaps not if the slump came in another five years. There is only a finite amount of players a team can have though, it isn’t always just about being able to buy yourself to the top. It’s being able to at least keep around the top table whilst that change is happening, like you guys have been able to.

We tend to have invested more in a few top quality rather than a real galactico so far though. I’m pretty sure we haven’t broken or got close to the transfer fee since Robinho (which is probably a blessing!)

posted on 19/1/18

Other than ardent footy fans, most Chinese do not know of Man City. That could change in a few years time or by buying a Chinese player.

posted on 19/1/18

We did, quite a while ago, we have had a considerable following there since.

posted on 19/1/18

comment by meltonblue (U10617)
posted 2 hours, 3 minutes ago
We did, quite a while ago, we have had a considerable following there since.
----------------------------------------------------------------------
Sun Jihai? He always made me laugh, not sure why.

posted on 19/1/18

Me too, to be honest!

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