Depreciation isn't a cash loss.
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ENIC
- Thread starter mattls
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Depreciation isn't a cash loss.
Finney Is Back
Luka Modric
Yes but much of that is driven from commercial and broadcast revenues that are unrelated to the stadium (hence why City's EBITDA is so high).
Finney Is Back
Luka Modric
No, but you have to be careful that assets cover liabilities.
We're a limited company so would that matter as much? The stadium/training ground may depreciate each year. But it doesn't (in real terms) mean they are degrading.
I do appreciate that, but it surely reflects cash that we do have to pay eventually (by paying off the loans).
And it’s not just the depreciation - it’s the significant increase in ‘other expenses’, which takes us to second highest in the league, which Swiss Ramble has interpreted as additional costs to run the stadium.
No, the debts to the bank reflects cash that we have to pay.
As far as i understand it (anyone wants to step in and correct me feel welcome). We've paid for the stadium and training ground. Whether or not we needed loans to do so. They cost £1.4bn to build. Now they are considered as an asset that is given a lifespan before it needs replacing. Say 30 years. So every year that asset depreciates in value. £1.4bn ÷ 30 = £46.6m a year.
Finney Is Back
Luka Modric
That is correct (though our depreciation numbers suggest that we're depreciating the assets over less than 20 years).
SpurMeUp
Jimmy Cantrell
A means to offset profits? Pay less tax?
Would something like a stadium usually be given such a short lifespan? How is it even worked out?
I think we’re talking at cross purposes a bit. I understand the depreciation figures don’t 100% represent / correlate with cash we have to pay. I just meant they’re a rough indication.
But to look at it another way - the stadium cost ~1bn, which we have to pay at some point. Then there’s interest on top of that. What I hadn’t appreciated is that there’s seemingly a fair amount of ‘operating expenses’ on top of that too.
We've already paid around £700m. We'd paid a huge chunk before the stadium was even finished. We have gross debt of around £800m of which the interest paid is around £20m (we actually paid about £41m of the debt though i think). This is seperate from the depreciation in the value of the stadium/training ground.
Ok, £800m rather than £1bn - fair point.
I’ve already said I understand that the depreciation is something different.
As I said in my last two posts, it was the additional operating expenses that surprised me, and that inspired my initial post about the stadium seeming a bit of a burden.
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Stadium and training ground which was £1.4bn.
Stadium brings in an extra £66m than whl. Interest is £21m. We paid £41m. Nfl pays £10m of that, other commercial (concerts and that) more. That will increase again this year. Basically the extra revenue from the stadium is like making champions league every year. It's not a burden. Much of the operating expenses are things like stewards and police that we didn't have to pay when there were no fans at the ground.
Have you read the Swiss Ramble blog, including the bit about ‘other’ expenses?
Highlight the bit you are concerned with. It would make it easier.
> second highest expenses in the league, with a jump that coincided with the new stadium in 18/19. Which are above and beyond loans and interest payments.
Ask swiss ramble. Leave a comment.
My guess is that a lot of that is depreciation (i.e. the amount which you write-down a fixed asset by each year). If you have the most expensive stadium in the country then you're depreciation change will be sky high. For example, a £1bn stadium depreciated over 20 years is £50m expense. Its a non-cash expense (the cash was spend building the stadium) but it would go through the P&L as a big expense nevertheless
edit: checked the accounts and its not depreciation
and not staff or players. So probably covers running the stadium, running the training ground, shops, corporate costs etc.