Good Morning Everyone Mike Thornton has gone into detail regarding Cellino's sale of Leeds Utd Eleonora Sport Accounts to June 2017 This is just a quick look at the Eleonora Sport accounts to clear up some of the speculation that surrounded the sale of Leeds United to Mr Radrizzani. There is a not a great deal of information relevant to today to be gleaned from these accounts so I’ll try and keep it brief: However there does seem to be some confusion about “Note 17” which is easily mistaken as profits that Eleonora Sport will make from future cash receipts; there is also a reference to “present day value” in Note 17 which is a term many people will not have come across. Sale Price The accounts are clear that they sold the club for £45m (more precisely stated later as £44,757,193 which accounts for currency differences). Closer inspection of the accounts indicates a likelihood that this sale price was not paid up in cash immediately but has been paid in two installments of £36.5m with £8.5m held back to be paid in annual installments up until August 2026. In financial terms this gives a “headline” sales price of £45m but it is realistically worth less to ESL because it doesn’t get the money immediately. This “write down” of value is often hard to understand and is known as “Present Day Value” of an income stream. I’ll try and explain more about Present Day Value (PDV) later but the net effect is that the sales price is better expressed as £2.5m less at £42.5m. This lower price has implications for the profit that ESL make and the tax that they will pay Profit On Sale Eleonora Sport (ESL) made a paper profit on sale of Leeds United shares of £3.5 million – this is simply the profit that the two 50% sale transactions brought about and is the difference between the cost ESL incurred in buying the shares and the sales price they achieved on sale. But matters are a little more complicated than that. As I’ve said above the present day value of the sale was only £42.5m and so the present day value of the profit is also lower at around £900,000 rather than the £3.5m on first look. Tax Why do accountants use present day values? To put it simply, when a payment is not going to be received for some time its true value is eroded due to inflation. This means that year by year the £3.5m headline profit gets eroded too. If ESL were charged full tax immediately on the full £3.5m profit they would then get back a tax refund each year to reflect the erosion in the profit due to inflation – this repetitive practice is wasteful of money and resources at HMRC so accounts will work out what the effect will be and tax is paid on that final effect just once. Closer inspection ESL had running costs during their time in operation – they themselves had to borrow money to fund Leeds United and had various expenses in keeping the company going. They also charged Leeds United management fees (note – LUFC isn’t specifically mentioned as the company they charged management fees to so that is an assumption on my part) and received interest on cash they held at the bank. When ESL’s losses in previous years are combined with the profit made selling the club and accounting for the erosion of future values the overall profit ESL achieved in their time as Leeds United owners was just over a million at £1.2 million. Caution I must stress that although it is clear that ESL are owed £8.5m which will be paid in installments up to 2026 (ie just under a million pounds each year over the next nine years) there is no statement saying who it is that owes ESL this debt. From looking at ESL accounts and the details of their trading it seems likely to me that this money relates to money held back as part of the sale of the club. I can see no other trading that ESL have undertaken that would give rise to such a debt but I may be wrong. Management Fees The ESL accounts state that they charged a Uk company just over half a million pounds in management fees during July 2016 to June 2017. Again, there is no indication in the accounts as to who exactly was charged these fees but it is reasonable to assume it was Leeds United or a related subsidiary of ESL. These fees for services rendered of £515,000 are income that ESL got during the year and have contributed to the overall profit of £1.2m I mentioned earlier. These fees are on top of any profit from the sale of the club but are included in my overall profit figure for ESL so shouldn’t be added on again. Summary In brief: ESL spent £41.5m buying Leeds United shares ESL got £36.5m as immediate payment selling the shares ESL will get an annual payment of almost £1m per annum for the next nine years as residual payment for the shares The profit ESL has made from the sale was £3.5m headline, reduced to present day value of £1m ESL charged Leeds United £515,000 in management fees Present Day Value Present Day Value (PDV) of a debt is often confusing. It basically means that if you are owed money but you don’t get the money until after inflation has increased living costs then the money is worth less than you thought originally. Say you have £1,000 spare and have decided to buy a holiday with the money but I ask you to lend it to me; if I pay you back next year we both might feel you are back at square one – BUT when you come to buy your holiday next year you find that hotel room rates have increased, flights are more expensive and the fuel surcharge has gone up so you need £1,100 to buy your holiday. Clearly although you got your money back your buying power has decreased. This is effectively what accountants mean by present day value – £1,000 today needs to be £1,100 next year to be EQUIVALENT. Accountants reverse the wording and say the £1,100 next year is equivalent to only £1,000 today (they actually use estimates of interest rates as well as inflation rates to come up with a percentage annual rate). In this way, ESL getting £1m as final payment in 2026 will not be able to buy a house that costs £1m today with that money – in 2026 it will only buy a house that today is selling for £500,000 for instance. Thus the Present Day Value of £1m received in 2026 is £500,000. In the case of ESL selling Leeds United the £8.5m staged payments have a calculated present day value of just less than £6m. This is all calculated and put into the accounts now so that they don’t have to be redone each year and ALL profit is accounted for in these accounts – there is no extra profit later when the cash is actually received. Mike Thornton 26th February 2018 please log in to view this image As you may know Rad, Orta and Kinnear faced a Q and A session last night. Here is what was said.... Orta on Heckingbottom involvement in transfers... "We have a lot of information in this part of the year. Our scouting department is watching around 3,000 matches and it's difficult for a head coach to watch that amount. He needs a person who provides information and my experience at Sevilla and Middlesbrough has always seen good between the director of football and the head coach. I need the coach focused on the next game and for me this is really important. In 15 years I have never signed a player without the head coaches agreement." Radrizzani on what he will do differently going forward... "Firstly, I have learnt that football is very fast and everything happens quickly. I need to do opposite that I usually do in my business. I need to rationalise and spend more time with someone to make sure they understand the DNA of the club and matches with my mentality as well. Whether this is a player or coach or part of the top executives at the club. I think I need to dedicate more time in the hiring process." Orta on Lasogga's future... “They are in a special situation. Pierre, he is happy in Leeds and now his family grows in Leeds with a new child. I think it is a situation we can discuss and can be a possibility. With his quality we are obviously evaluating this possibility. Pierre is showing his quality. I never doubted him because he’s a quality, top player. Now he is established, he knows more the league, he knows more his team-mates and he’s started to play with confidence.” Orta/Radrizzani on future of Saiz/Jansson if Leeds remain in the Championship... VO: "We've already renewed the contract of Jansson. We are really keen to keep these players in the squad. But, for example, with Chris Wood if the desire is really hard (on leaving) then it's difficult to manage the squad. If they have the economical desire to play in the Premier League and they're pushing you it's difficult. All the players who want to play at Leeds United will stay at Leeds United." AR: "I would like to add that the club was seen before as a transaction period for the players where they would stay for one or two years then leave. I feel now the players understand how big the club is." Radrizzani on being questioned where Chris Wood/Charlie Taylor money has gone... "To put it simply we can say we have spent arounf £19/20 million on player transfers. Obviously we didn't get all the money for Chris Wood but it will be paid by Burnley over three years. We've increased the salary wage by about £8 million from last year so I think if you make the calculations we've spent much more than what we got for those players." Orta on Pablo Hernadez future... “It’s true that he’s a player who’s out of contract in June. I’ve had several discussions with his agent, talking about the situation, talking about his aim to stay with us. That for me is very important. He showed the other day in his press conference that he wanted to stay with us and that for me is the first step towards reaching an agreement. Obviously Paul Heckingbottom has an important word in this situation. We’re discussing it and we need to evaluate this situation in the short term.” Radrizzani on letting Rob Green leave... "It wasn't an easy decision. I think he got (to the decision) a little bit by himself. We were really happy to keep him included in the squad but at his age I think he wanted to guarantee he would play as number one but the coach couldn't know for sure." Kinnear on Elland road plans... "In the short term we'll look to invest to improve the match day experience. The second strand is looking longer term to build a stadium that is fit for the Premier League. In the last 10 years I think there's been a disconnect between the city and the club."
Morning ell haven't looked to closely at the financial bit, not really interested to be fair. More concerned about that farce that was passed off as a q&a session. They have not answered any questions, just left them all open ended. Really feels like next season is going to be Groundhog Day again assets gone saiz/jansson/viera And a punt on unknown foreign ****e again. Radrizanni is fast losing my confidence.
Morning all... Lots to chew over Elland We needed Cellino’s money at the time and when we wanted him gone he sold and moved on probably realising the task of promotion was beyond him. He meant well, just wasn’t very good at his job and he was still better than Bates and GFH small steps in the right direction. Does Rads have the financial power to get us promoted? - Answer probably not Does Rads have the business knowledge to get us promoted? - Possibly with the right appointments and a splash of luck but not holding my breathe Does Rads have the business knowledge to make us a VERY attractive purchase for a buyer who would have the funds to take us to the PL? - Yes without a shadow of a doubt. For me, Rads is a stepping stone, the man to undo the damage of his predecessors. Rads is the man who is making great strides at putting us back in the shop window for a buyer who wants to own a big club with no ghosts, no nasty surprises and no pending law suits. A buyer who doesn’t want to rebuild us, a buyer who wants to come in, not pay ground rent, a buyer who wants to splash the cash on good players and compete at the top.
Morning all. I know it's PR spin which is Radz speciality but there was one line from the Q & A I really liked. When Kinnear referred to us as a sleeping giant Radz corrected him and said "I like to think we are a waking giant. " It's a clever line but I like it and sounds better than sleeping.
Good Morning to Matt and co from a slightly sn ow covered Baardsey So we have had a Q'A and it would appear that Lassonga is very likely to stay for next season and as I said a few weeks ago you can tell with his body language he is enjoying himself We really don't know how much AR has planned to put into the club but we do know he his getting a lot of young blood in for the future .We are monitoring Harry Cochrane a 16 year old future star from Scotland I think the fact that we have a connection with Qatar speaks volumes a wealthy Arab makes ones mouth water yes AR made mistakes and is the first to admit them at the prospect all is not doom andgloom I for one will continue to support him
Morning Nick. Totally agree. The last thing we need is another publicity Pete. He is certainly not in the background like I expected him to be. I think he likes the attention.
Morning ristac. I thought Cellino was good at making the difficult decisions but he had no idea how to run a club. Before he came along the club was losing millions a month. He was the only person to have us running on an even Keel.
Morning Mike. I think we signed Cochrane but he Doesn't arrive until the Summer. I do wonder if he is throwing a lot of mud at the Wall to see how much of it sticks as regards to the amount of youngsters he has bought in.
is it Lasogga or lasonga?. you continually get the players name wrong and i think that is very disrespectfull and ignorant.and its becoming very tedious do you have a brother called issac and your surnames are hunt. post over cheers Pat B.
Morning 2pennth, let' call it cautious... Our supremo's in the last 20 years don' fulfill us with much confidence.
