Wolves annual report and financial statements 2018/19

[Incognito]

PriceOfFootball on Twitter

Liked this:
They are an excellent example of initial investment paying off and turning into an immediately sustainable business model. Very well ran club - and they deserve after decades of football poverty and mismanagement.
Money and Morgan take note.

 

[Leominster_Wolf]

Liked this:
They are an excellent example of initial investment paying off and turning into an immediately sustainable business model. Very well ran club - and they deserve after decades of football poverty and mismanagement.
Money and Morgan take note.

My favourite line
Wolves wrote off £5m from transfer fees on players they signed who were a bit bobbins in 2018/19

 

[OLDGOLD]

If you are implying that wolves have posted dodgy accounts you better have a reason for thinking that

Just saying... ;-)

Not implying that at all, merely saying that there are clubs out there who will be trying to hide things, and we all have some thoughts about who they are likely to be...

 

[Agent Cooper]

Meanwhile in B6 ....

 

[Bondi Wolf]

Just a word on the "borrowings"

Companies can spend two types of money

1. Equity, the money that fosun has in its business
2. Debt, by borrowing money from elsewhere.

Many people like to use their own money for their finances but in business it can be quite different.

1. Fosun looks for a 15% return on equity.
2. Fosun is probably paying 4% interest to Macquarie for the money, given its guaranteed by future payments.

So from fosuns point of view, why use money that could get a 15% return to buy players, when it can borrow money at 4% and use its equity on other projects?

Imagine you have 100,000 in the bank earning 15% interest
You go to buy a car for 10,000. The dealer will do you a car loan at 4%
Its better financial sense to get the loan. Costs you 400 a year but your savings make you 1,500
However many people in private life would rather use their savings to avoid the debt

A car is probably an analogy better suited to Villa. They've bought a bunch of high mileage cars that have turned out to be worth a lot less than they paid.

The assets we've bought lately have gone up in value. Even less reason to worry about the borrowing

 

[North West Wanderer]

Are our accounts excellent or worrying?
People who are meant to understand finances are saying contradictory things on this thread.

Excellent

 

[Flea]

I think we have to put the economics of a football club in it´s right environment so to speak.
It is hard to compare to other business.
All I can say is that it is highly risk borrowing money to buy a crazy volatile assett in the form of a football player.
The value of the player can shift massively from one season to the next(like Traore or this seasons Helder Costa for example).
Borrowing money is not ideal of course..but we are a football club after all.It is not business as usual so to speak.

At the end of the day I think it is the number in the last line that counts the most.
We are turning a decent profit as we speak and in football club terms that is excellent.

 

[WickedWolfie]

I get scared when I owe £100 on my credit card, so to me ...... SCARY !!

Owing on your credit card is only scary if you lack the ability to clear it in full. Minimum payments are a mugs game.
Borrowing to smooth cashflow is pretty standard for businesses.

 

[WickedWolfie]

Ca

can we get away with offering £5 a week until we get CL football?

Er... No! lol

 

[RosehillWolf]

Yawn, the prophet of doom speaks

Says the wally who assured us Cutrone would not be leaving . Credibility chasm with this one

 

[North West Wanderer]

Says the wally who assured us Cutrone would not be leaving . Credibility chasm with this one

Smile Rosehill. Great position to be in.

an accountant, an economics expert from a top uni and even a banker like me all agree. Almost right there

 

[RosehillWolf]

Smile Rosehill. Great position to be in.

an accountant, an economics expert from a top uni and even a banker like me all agree. Almost right there

I'm always smiling NWW ..... it was just the debt level that spooked me , but thanks to some great info on here, it's all good. Have a nice day

 

[Southdownswolf]

SwissRamble's take on it..

Swiss Ramble on Twitter

 

[RosehillWolf]

SwissRamble's take on it..

Swiss Ramble on Twitter

That's very informative , match day income..... we were £100million behind Manure !! doesn't this underline the need to expedite redevelopment to increase capacity and corporate facilities etc ?

 

[SteveBullsKnee]

Says the wally who assured us Cutrone would not be leaving . Credibility chasm with this one

There isn't a more negative wolves fan on this entire forum than you. Literally everyone calls you out on it

 

[North West Wanderer]

I'm always smiling NWW ..... it was just the debt level that spooked me , but thanks to some great info on here, it's all good. Have a nice day

You too

 

[North West Wanderer]

That's very informative , match day income..... we were £100million behind Manure !! doesn't this underline the need to expedite redevelopment to increase capacity and corporate facilities etc ?

Our wage bill is amazing. Hence why a small but quality squad?

 

[wolvesjoe]

Keeping the squad lean, as Wolves, (and other clubs) try to do, means a more effective use of wages, ie players can be on comparable terms to other clubs who spend far more. It also means that the players are closer to the first team, and hopefully more motivated because of that.

The only downside was that the team can find itself short of players, as happened over December.

 

[glorybox]

Just a word on the "borrowings"

Companies can spend two types of money

1. Equity, the money that fosun has in its business
2. Debt, by borrowing money from elsewhere.

Many people like to use their own money for their finances but in business it can be quite different.

1. Fosun looks for a 15% return on equity.
2. Fosun is probably paying 4% interest to Macquarie for the money, given its guaranteed by future payments.

So from fosuns point of view, why use money that could get a 15% return to buy players, when it can borrow money at 4% and use its equity on other projects?

Imagine you have 100,000 in the bank earning 15% interest
You go to buy a car for 10,000. The dealer will do you a car loan at 4%
Its better financial sense to get the loan. Costs you 400 a year but your savings make you 1,500
However many people in private life would rather use their savings to avoid the debt

A car is probably an analogy better suited to Villa. They've bought a bunch of high mileage cars that have turned out to be worth a lot less than they paid.

The assets we've bought lately have gone up in value. Even less reason to worry about the borrowing

Precisely. And Fosun may well convert that debt into equity at some point.

 

[RosehillWolf]

There isn't a more negative wolves fan on this entire forum than you. Literally everyone calls you out on it

Harsh but probably true , I've never been and never will be a happy clapper, I have my reasons thanks to my journey in life ( so far)

 

[WickedWolfie]

Harsh but probably true , I've never been and never will be a happy clapper, I have my reasons thanks to my journey in life ( so far)

Being serious, sorry to hear that. Sounds grim.

 

[glorybox]

Looks like Everton are totally ****ed. I note they haven't yet filed their 18/19 accounts and have extended their year end by a month to buy more time to file them. I can only assume they'll be even more shocking than the previous ones. With a stadium move too I can see them really struggling, they do have a good manager though.

 

[The Wolf In The North]

The SwissRamble breakdown just makes everything look even healthier.

So demoralising to see the financial doping of the Big Six in comparison though. Either you fudge and cheat like Man City, or catch lightning in a bottle like Leicester, otherwise you are just running uphill in deep sea diver boots all the time.

The only way to compete is to buy dozens of youngsters at a couple of mil maximum and develop and sell on the odd couple for big money if you're lucky, then reinvest. While maintaining enough of a high profile presence to maximize revenue. Which, to be fair, sounds exactly like our current business model. But the financial kevlar of the top clubs, with tv cash and CL, that's just relentless and mind****ing.

Fosun have got it almost spot on. The only thing the club misjudged, I still think, is that extra bit of quality squad depth for a PL and EL combined season... but you can also see why they're baulking at player prices in the current market instead of giving in to the "Dude, just pay the money!" mentality.

The more you look at the necessity of Champions League, the more you start to think that the club are going to seriously throw everything at this Europa opportunity Nuno and the players have carved out. Could seriously be our Wonka's golden ticket.

 

[glorybox]

The SwissRamble breakdown just makes everything look even healthier.

So demoralising to see the financial doping of the Big Six in comparison though. Either you fudge and cheat like Man City, or catch lightning in a bottle like Leicester, otherwise you are just running uphill in deep sea diver boots all the time.

The only way to compete is to buy dozens of youngsters at a couple of mil maximum and develop and sell on the odd couple for big money if you're lucky, then reinvest. While maintaining enough of a high profile presence to maximize revenue. Which, to be fair, sounds exactly like our current business model. But the financial kevlar of the top clubs, with tv cash and CL, that's just relentless and mind****ing.

Fosun have got it almost spot on. The only thing the club misjudged, I still think, is that extra bit of quality squad depth for a PL and EL combined season... but you can also see why they're baulking at player prices in the current market instead of giving in to the "Dude, just pay the money!" mentality.

The more you look at the necessity of Champions League, the more you start to think that the club are going to seriously throw everything at this Europa opportunity Nuno and the players have carved out. Could seriously be our Wonka's golden ticket.

Spot on re the Champions League. It's startling really that some of the big clubs from the lesser leagues only really compete as they're almost guaranteed the Champions League qualification. A few years out of that for the likes of Ajax and Porto and they would be really struggling.

 

[rolopolo]

In very simple terms can somebody confirm if this how it works.

Wolves are a separate entity
Fosun loan Wolves money
Wolves operate club ( via Jeff/ Fosun)
Profit can be taken from Fosun
Club value rises - benefits Fosun

if it all goes wrong. Fosun call in their loans

is that right?

If so this is a very low risk investment with high returns for Fosun. All the risk is stacked with Wolves business.

 

[SA Wolf]

In layman's terms; Wolves comment: Accounts show ambition under Fosun

 

[LetTheBullLoose]

Excellent. (And for northnorfolkwolf's benefit, I'm an Accountant. I'll readily admit though, whilst I understand the basis of the Accounts submitted, I won't profess to be an expert on FFP and what these figures mean from an FFP point of view. I understand the basics but it's always very difficult to compare submitted accounts to FFP rules due to parts of accounts that are outside the scope of FFP but not shown separately within the figures)

Purely from an accounting point of view: -

We posted a profit in the year with a considerable improvement on the previous year. Our wages to income ratio is one of the lowest in the league and in-spite of the fact our debts rose overall the net liabilities (net amount of our assets less our liabilities) reduced from £62m to £40m which essentially means that whilst our debts rose, our assets rose by a greater amount meaning overall our balance sheet is stronger than it was 12 months previously.

Also when you consider that the assets are based on net book value (i.e. cost less amortisation to date over the lengths of the players contracts) is only stated as £102m compare this to what our squad would actually be worth in today's market and we're in a great position. as it means the reality is the net asset position of the company is much better than the balance sheet implies.

The majority of our debt is owed to Fosun who have injected cash in to the club to cover paying up front for players etc. and despite peoples concerns about their ongoing commitment recently this proves they've put £131m in to the holding company (W.W 1990 Ltd) up to 31 May 2019 with £57m of that being in the 2018/19 year (this doesn't include additional income received from them in way of sponsorship such as the £1m they paid for the naming rights of the training ground etc.) which they have stated they have no intention on recalling and are willing to continue to fund the club further where required.

They also appear to be charging no interest on on this loan unlike most owners in the league which further shows their commitment to the club as they'd be well within their rights to but haven't.

Liabilities of a company are always something to be wary of however a large increase doesn't point to any issues, especially when compared to the relative increase in both assets on the balance sheet and hugely improved P&L from last year.

For Fosun to inject cash in to the club they will always have to have a "loan" on the balance sheet as the accounts have to be put together within company law and for every debit (money in the bank) there's always a credit on the other side (money owed to Fosun). They will have consciously decided to inject this money and I see no reason for people to worry about them taking it back now, especially considering they've stated within the accounts when discussing cash flow forecasts that they prepared including some that cover worst case scenario, i.e relegation, its stated that "Fosun International Limited has indicated its intention to continue to make available such funds as are needed by the company, and that it does not intend to seek repayment of the amounts due at the balance sheet date, for the period covered by the forecasts."

All in all, these figures are much improved on last year and show exactly why Fosun threw everything they could at gaining promotion.

We are a club in a very good position both on and off the pitch.

Thank you for doing this - makes it much clearer to me

 

[GuzzWolf]

Just a word on the "borrowings"

Companies can spend two types of money

1. Equity, the money that fosun has in its business
2. Debt, by borrowing money from elsewhere.

Many people like to use their own money for their finances but in business it can be quite different.

1. Fosun looks for a 15% return on equity.
2. Fosun is probably paying 4% interest to Macquarie for the money, given its guaranteed by future payments.

So from fosuns point of view, why use money that could get a 15% return to buy players, when it can borrow money at 4% and use its equity on other projects?

Imagine you have 100,000 in the bank earning 15% interest
You go to buy a car for 10,000. The dealer will do you a car loan at 4%
Its better financial sense to get the loan. Costs you 400 a year but your savings make you 1,500
However many people in private life would rather use their savings to avoid the debt

A car is probably an analogy better suited to Villa. They've bought a bunch of high mileage cars that have turned out to be worth a lot less than they paid.

The assets we've bought lately have gone up in value. Even less reason to worry about the borrowing

15% Interest on money banked...that would be nice with todays lending rates.

 

[Deleted member 8455jwf]

Scary ..... we have borrowed £164million ?? which is payable within 12 months...have I read this correctly ? I assume this includes the two tranches of Macquarie money..... so when we get our PL payment and TV rights, that will have to go towards paying this off , and will still leave monies owing. Add to this the escalating salary bill due to contractual obligations , deduct season ticket revenue and we are in a big hole by the looks of things
My question is , where are the funds for new players ?? and to me, it looks like we need to sell in the summer ..... and I have to say, if I've read those figures correctly we are totally ****ed if we get relegated !

Never ceases to amaze me how people who have no clue what they are talking about opine so openly.

 

[reanswolf]

Our wage bill is amazing. Hence why a small but quality squad?

Its is amazing, that really stood out.
ALso that we take way less in gate receipts than clubs like Southampton and Brighton, though of course they are in more affluent areas.
Also noted our highest paid Dierctor was 14th best paid in the Premiership, despite finishing 7th!
Wasn't that long ago when our highest paid Director was 6th best paid despite getting relegated.
Overall, to be 25th richest/biggest club based on income in Europe is quite incredible.

 

[JonahWolf]

Referring to the debt payable.... is this simply not inflating our own income through loans and borrowing to get around FFP ?? This is all very confusing , my understanding of a secure debt is a mortgage....it's still payable isn't it ?
So if FOSUN want to take back that money ( loan) ...we would be in trouble ?

Ok, to entertain your doomsday fantasy, say Fosun want their money back.
2 choices. They sell the club, cover their loans easily, plus the initial investment, and a good chunk on top, minimum £100m profit.

Or, they try and claw the money back as quickly as possible, slash the operating budgets, sell off players, buy cheap substandard replacements.....all to massively devalue their overall investment as we plummet through the league/leagues.
At which point they’ll be lucky to get the amount invested back.

So I suppose, yes, it is kind of like a mortgage in that It’s in everybody’s interest to keep the status quo. The bank make money with you keep making your payments....they have to incur substantial extra costs to repossess your home, and can then only get market value at best for it back instead of more than double, albeit over a long period.

Your worry here is quite a stretch, even by the standards set with your usual negativity.
Owners don’t try and take the money and run from a successful project still on an upward trajectory.
They might try and sell at the highest possible point if it feels like we’ve plateaued, and some mug is willing to stump up top dollar (Peace at the ****)....or they cut their losses if things turn to ****.

We are currently nothing like the latter two, definitely the first.

 

[JonahWolf]

This guy says we have posted excellent accounts

This is who he is

Kieran Maguire - University of Liverpool

‘Best finance teacher award’. That do you @RosehillWolf?

 

[RosehillWolf]

Ok, to entertain your doomsday fantasy, say Fosun want their money back.
2 choices. They sell the club, cover their loans easily, plus the initial investment, and a good chunk on top, minimum £100m profit.

Or, they try and claw the money back as quickly as possible, slash the operating budgets, sell off players, buy cheap substandard replacements.....all to massively devalue their overall investment as we plummet through the league/leagues.
At which point they’ll be lucky to get the amount invested back.

So I suppose, yes, it is kind of like a mortgage in that It’s in everybody’s interest to keep the status quo. The bank make money with you keep making your payments....they have to incur substantial extra costs to repossess your home, and can then only get market value at best for it back instead of more than double, albeit over a long period.

Your worry here is quite a stretch, even by the standards set with your usual negativity.
Owners don’t try and take the money and run from a successful project still on an upward trajectory.
They might try and sell at the highest possible point if it feels like we’ve plateaued, and some mug is willing to stump up top dollar (Peace at the ****)....or they cut their losses if things turn to ****.

We are currently nothing like the latter two, definitely the first.

OK, I get all that .....but haven't FOSUN tried to sell 20% of us ? does that not infer they want part of their investment back ?

 

[JonahWolf]

15% Interest on money banked...that would be nice with todays lending rates.

That’s the margin they want if they plough investment into something. Sure as hell cant make that by sticking it somewhere for someone else to invest and cream off their own profit (like a bank or low risk investment account).

Its being more than achieved at present with Wolves. They’ve stuck approx 200m in and the club is worth £400m ish.
That’s 100% in 4 years.

 

[RosehillWolf]

‘Best finance teacher award’. That do you @RosehillWolf?

Depends who gave him the Award .... did you watch the Brit awards, Christ they were ****

 

[JonahWolf]

OK, I get all that .....but haven't FOSUN tried to sell 20% of us ? does that not infer they want part of their investment back ?

Ever cashed out an acca, or the idea of playing a double, treble, and four-fold so you get paid out on your wins so far even if the massive payout at the end doesn’t quite come off?

The 20% they’re trying to sell already includes a massive profit. Their total investment is 200m ish, meaning that 20% share cost them 50. They’re trying to flog that share for 75m+.
That’s a healthy margin for Guo and Jeff’s retirement fund to still be then keeping the vast majority of a rapidly appreciating asset.

 

[RosehillWolf]

Ever cashed out an acca, or the idea of playing a double, treble, and four-fold so you get paid out on your wins so far even if the massive payout at the end doesn’t quite come off?

The 20% they’re trying to sell already includes a massive profit. Their total investment is 200m ish, meaning that 20% share cost them 50. They’re trying to flog that share for 75m+.
That’s a healthy margin for Guo and Jeff’s retirement fund to still be then keeping the vast majority of a rapidly appreciating asset.

There's another obvious question relating to the above, but I think I best leave it be lol

 

[JonahWolf]

There's another obvious question relating to the above, but I think I best leave it be lol

By all means, I’m intrigued now. If your implication is that they don’t fully believe the good times will roll, then jaysus you need to lighten up.
Risk aversion is normal in business. Hope for the best, plan for the worst.

Morgan only ever did the latter, he was never willing to front up enough to do the former.
If Fosun didn’t think there was a genuine opportunity, then why have they stuck over 200m into what was, to outside eyes, a pretty much nothing club?
If it was time to bail before it all turns to ****, then why try and sell 20%? Flog the lot, a la Peace.
They’re struggling to sell that 20% because they’re asking so much for it. You don’t hold out for top dollar if you’re desperate to be shot of something.

If your outlook is genuinely that bleak rather than being a WUM, I think it’s time to talk to someone, anyone, ideally professional. I’ve done some dumb ****, suffered for it, had more **** dumped on me from various quarters less of my own doing, but at least attempt a positive outlook, if not always possible. In fact, easier to feel positive about Wolves atm than most other things tbh.

 

[RosehillWolf]

By all means, I’m intrigued now. If your implication is that they don’t fully believe the good times will roll, then jaysus you need to lighten up.
Risk aversion is normal in business. Hope for the best, plan for the worst.

Morgan only ever did the latter, he was never willing to front up enough to do the former.
If Fosun didn’t think there was a genuine opportunity, then why have they stuck over 200m into what was, to outside eyes, a pretty much nothing club?
If it was time to bail before it all turns to ****, then why try and sell 20%? Flog the lot, a la Peace.
They’re struggling to sell that 20% because they’re asking so much for it. You don’t hold out for top dollar if you’re desperate to be shot of something.

If your outlook is genuinely that bleak rather than being a WUM, I think it’s time to talk to someone, anyone, ideally professional. I’ve done some dumb ****, suffered for it, had more **** dumped on me from various quarters less of my own doing, but at least attempt a positive outlook, if not always possible. In fact, easier to feel positive about Wolves atm than most other things tbh.

All I Was going to say was that they do seem to be struggling to get that £75m share sold don't they ? and purely devils adocating..... if our numbers are perceived in the market as triumphantly as they are on here, why haven't we buddied up with this partner already ?

 

[JonahWolf]

All I Was going to say was that they do seem to be struggling to get that £75m share sold don't they ? and purely devils adocating..... if our numbers are perceived in the market as triumphantly as they are on here, why haven't we buddied up with this partner already ?

Possibly because it doesn’t represent good enough value to an investor. Not that it’s not worth 75m, just that it’s not nailed on to make the huge gains that Fosun have so far. Hence why they bought a struggling championship club in the first place, rather than one in the premier.
We are very much at the slow uphill battle stage now, with the deck very much stacked against us for exponential growth and quick success. That bit has already been done.

Like I said, if they wanted to shift it enough, the price would be lower. I’d be more worried if they did accept a cut price slice.
If an investor wants to dump large amounts of money for more reliable, smaller gains, then there are plenty of markets less volatile than football clubs.