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.
Amortisation and organic growth