Readings New Black Hole in Accounts

[Royal Rother]

also- we probably only really had a better balance book the year before to which these figures are compared because we were still trying to make the business look as attractive as possible to prospective new owners

I doubt it. The accounts are what they are - the policies will remain consistent year after year.

And in any case, due diligence completely negates any stab at that sort of practice so it's really not worth the effort.

Not at all - you change the accounting policies to best negotiate the tax rules at the time, thus saving millions in corp tax.
If the figures suggested that the club is making any kind of profit year in year out, THEN I'd be worried, as it means the accountants aren't doing their jobs properly!!

I'm sorry but you are looking at this with a small business head on.

This is not tin pot accounting we're talking about here with owner / Directors taking as much out of the business in the most tax efficient way possible. And in any case, making a profit that will result in any significant tax bill has not exactly been at the forefront of most Chairmen's minds in recent years.

But the main point I was making there was that the club would not have been massaging the figures to make the Balance Sheet look more attractive to potential investors. That's Micky Mouse and just not the way any decent business operates in the real world anymore, because it is so easily exposed in due diligence.

[RoyalBlue]

FFS....More newspaper bullshit.

FYI My business makes a healthy profit on its activities. When I'm doing the accounts, I make sure that it makes as little profit as possible - whether that be by paying into loans from the directors, or large capital expenditure purchases, or whatever - the less profit I can report, the better....

Why?

Because businesses are taxed on profit. Make yourself look like a loss making business, and HMRC can't charge you anything - make a major loss, and it has a knock on effect on the following years tax too.

This is the most ridiculous non event in the history of the world. The more of a loss that RFC makes in the accounts for the championship year, the more of the Premier League money they don't have to pay in tax.

I agree with this. I've also seen it happen a fair bit in businesses. As far as I know, it was all done in a perfectly lawful manner and no one has ever appeared in court because of it. Yet when I've previously suggested that good accountants are skilled in painting pictures/telling stories (and that's not a euphanism for telling lies) to portray certain things, some of the accounting fraternity on here have got quite upset!

Incidentally, would the dip in revenue be down to the previous parachute payments ending?

[Royal Rother]

Yes it happens in business all the time, I have been involved in numerous such schemes and wheezes down the decades, but totally different entities and structures to this football club.

[Albert Spangler]

Reading FC's pre-tax losses have more than doubled and are almost at the same level as their turnover, the Premier League club's latest accounts have revealed.

Accounts for the Reading Football Club Ltd show the club had a turnover of £14.8m in the year to 30 June 2012, down from £17.2m in the previous year.

But losses on ordinary activities before tax increased from £5m in 2011 to £11.7m. Staff wages last season amounted to £23.4m, up from £16.2m in the previous year.

The widening losses came as Reading pushed for promotion from the Championship. And after securing promotion in April 2012, the club were sold to Thames Sports Investments Ltd a month later.

"The board acknowledges this and recognises that to remain competitive it needs to continue to invest in players while managing the costs associated with this within the financial constraints the company faces," the club's directors' report said.

The Royals' directors added they have "continued to manage a significant shortfall in working capital requirements in a prudent, long term manner".

In a statement with the accounts, chairman Sir John Madejski said: "Early in 2012 we received investment from Thames Sport Investment and this summer we were delighted to officially welcome in a new sea and owner Anton Zingarevich.

"Anton's arrival has signalled a period of positive change at Reading and his input has been integral in helping the club move forward.

"Investment, which by the very nature of modern day football is what every club needs to succeed, will now allow us to build as opposed to rebuild every season, offering us stability alongside progress and growth helping us to strengthen in terms of our squad as well as the club's infrastructure and our burgeoning academy systems."

Earlier this week, Reading sacked manager Brian McDermott. The club currently sit 19th in the Premier League.

SDR:
Little detail in this release but the Madman get's the other half of the Buy Out Money in September 2013 so egt ready for RFC saying they are skint come August with a Black Hole in the Balance Sheet.
At least at present we have few decent players to sell but exits will be on the cards. Of course there is £22mill relegation money for the next three years but we tend to ignore that as a minor detail. The slide is onnnnnnnn and will continue next seasonnnnnnnnnnnn

Hi Rodger. You're a oxf*rd.

[SLAMMED]

Knew it wouldn't be long before SDR was back here.

Didn't see much of you last year though?

[Rex]

Is there a new girl working in accounts.

[Reading4eva]

RFC haven't received their Sky TV money yet, so a balance pre-TSI is pretty pointless to be honest. I'll be more interested in the figures after this season's net spend vs outgoings.

This. And even that doesn't take into account the "long term investment" planning. However, that all depends in getting out of the Chumpionship and back into the Premier Leaage - as opposed to League 1 - and we all know what a bastard league the Chump is.

This season is the single most critical ever - period - to remain in the Prem given the influx of extra spondoolies next season. It will be very, very hard for any club to make the step up in the future.

The Chump is one of the most exciting competitive leagues in the world that throws the odd suprise! I bet the teams there won't want us back in it so soon as we are experts of getting out of it! Most will be wetting themselves with excitement that Villa a team with no clue of getting out of it and could go into freefall and QPR who could be skint could be coming down! Who knows next year we could be celebrating the title, with Barnsley and Yeovil come join the ride with us! Is really that unpredictable!

[Mid Sussex Royal]

Turnover down so much doesn't sound right.

Yes we had playoff final previous season but had 20K plus gates after xmas last season = increased revenue from other pasts of teh business and a good deal of the prem ST money will be included as year end is 30/6 - doesn't look right to me.

[Royal Rother]

Turnover down so much doesn't sound right.

Yes we had playoff final previous season but had 20K plus gates after xmas last season = increased revenue from other pasts of teh business and a good deal of the prem ST money will be included as year end is 30/6 - doesn't look right to me.

Breakdown as follows:

y/e June 2011

£6,105,011 - Media & Broadcasting
£7,276,559 - Match day Income
£2,992,397 - Commercial Income
£ 625,191 - Commission from Rugby Matches
£ 210,495 - Other Income

y/e June 2012

£5,075,166 - Media & Broadcasting
£5,628,414 - Match day Income
£3,,108753 - Commercial Income
£ 615,109 - Commission from Rugby Matches
£ 325,882 - Other Income

The ST money for Premier League will NOT be included in the 2012 accounts, regardless of when the money was received. It will be deferred into the year in which the season begins.

[Westwood52]

So presumably teams are better off going to the Play Offs-three extra big games (and gamble on getting through) rather than outright promotion ?
I am shocked at the level of fall in turnover.

[MouldyRoyal]

The 2011 year would have included an FA Cup run where as last year we went out in the 3rd round. This there's a reasonable bit of cash that getting into the quarters gets you.

[melonhead]

Turnover down so much doesn't sound right.

Yes we had playoff final previous season but had 20K plus gates after xmas last season = increased revenue from other pasts of teh business and a good deal of the prem ST money will be included as year end is 30/6 - doesn't look right to me.

extra FA cup games, two play off semis and a wembley final with 80 thousand fans in.


WHY doesnt this equal the same as a couple of thousand extra fans in for ten home games!!!!!!!!!!!

[Alexander Litvinenko]

The income from the 4 play-off matches semi-finals is totted-up and split 4 ways between the 4 clubs involved.

The total attendances were over 100k :
21485 @ Reading
25200 @ Cardiff (Approx.)
27881 @ Forest
19816 @ Swansea

And by convention the winning finalists give their share of the Wembley receipts top losers, so we would have had the income (after expenses) from the 86,851 at Wembley (paying Wembley prices) also.

[Wimb]

And a detailed look at those results.

http://www.thetilehurstend.com/2013/3/2 ... -2011-2012

[Royal Rother]

Decent article.

Couldn't help but smile at this though:

As a rather techy accountant, I couldn’t help noticing that the financial statements aren’t prepared consistently with UK Accounting Standards. They are taking an exemption from preparing a cash flow statement (FRS 1 para 5(a) for those that are interested), which is not available to them. Whilst some readers of the accounts won’t be too bothered, it is a fairly basic error and does raise a question of the ability / competence of the Club’s financial management.

It doesn't cast any shadow whatsoever over the club's financial management - in reality it's the sort of thing that actually matters not a jot to anyone apart from accountants who take themselves and their profession way too seriously.

[North Somerset Royal]

Decent article.

Couldn't help but smile at this though:

As a rather techy accountant, I couldn’t help noticing that the financial statements aren’t prepared consistently with UK Accounting Standards. They are taking an exemption from preparing a cash flow statement (FRS 1 para 5(a) for those that are interested), which is not available to them. Whilst some readers of the accounts won’t be too bothered, it is a fairly basic error and does raise a question of the ability / competence of the Club’s financial management.

It doesn't cast any shadow whatsoever over the club's financial management - in reality it's the sort of thing that actually matters not a jot to anyone apart from accountants who take themselves and their profession way too seriously.

Without a cash flow statement it is impossible to determine precisely what has happened. The question is therefore not whether or not they are entitled to the exemption but why they do not want to publish the cash flow statements which they have undoubtedly prepared.

[Royal Rother]

Is it not more likely that it was an oversight because it is an exemption that they have previously been entitled to?

[Royal With Cheese]

This thread should be renamed "New Black Hole between Dodger's ears"

[North Somerset Royal]

Is it not more likely that it was an oversight because it is an exemption that they have previously been entitled to?

Maybe but then I suppose it would be indicative of the standard of the financial controls as stated in the article.

[Royal Rother]

Omission of a page in the published accounts due to an oversight is not an indication of poor financial control.