So, Forbes has done its annual valuation of football teams.

Milan is in 6th place overall and is the highest-ranked Italian club. Significantly, they're also the only Italian club without any debt.

There's some interesting stuff in the valuation.

link

There is indeed some interesting stuff there

Thanks Tennie

Thanks Tennie

Thanks... Forbes!


...

The debt/financial situation at Milan is encouraging, especially in these times.

Another significant thing to notice is that revenue is higher than operating income, meaning clubs are generating profits from advertising, etc and that constitutes to the bulk of their bottom line.

But keep in mind, profit does NOT equal cash.

Clearly we have money to spend. Becks and ronnie was a clear stroke of genius on Galliani's behalf. Both on and off the pitch.

We still have cash to spend. I'm not talking 100s. But we got enough for our summer targets.

For the short term yes, but we need to start planning for the future as well.

Well Blue .. Milan does have cash .. But what I was pointing towards is that you would need to see a Cash Flow (Funds Flow) Statment for that year to know how much Milan generated in cash.

United, Chelsea, merda, and Liverpool (considering they are the big european sides) have high debt-to-net worth ratio, because, and although they all have high profits - they need to borrow that amount of funds to accommodate for their lack of cash.


The way I see this valuation is that Milan and Munich are the most healthy sides in Europe at the moment.

Some of the things don't make sense to me.

Chelsea's operating income is negative?? What is operating income?? Lot of teams like that with negative operating incomes.

And what is that 1 year value change. For Milan it's 24%. Not sure.

Could someone clear this up for me. Football economics 101?

Operating income is exactly that; income from normal course of business. In an income statement, you have three main headings each of which is a combination (addition/subtraction) of certain income/expenses.

Operating profit:
The first combines (simplified format) is sales (could be gate receipts in the case of football clubs) minus cost of sales (what it cost to produce the sales) minus depreciation (depreciation in value of buildings, vehicles, equipment) and minus fixed expenses (wages, rent, transport, bank charges, general office expenses, heating & lighting, etc). The outcome of that (let that be positive or negative) is called the operating profit.

Profit before tax:
You then take the operating profit and deduct interest charges from banks or other entities that you are borrowing from. That gives you your profit before tax.

Net profit:
Finally you deduct tax, dividends and get your net profit.


That is basically what an income statement consists of.

Operating profit is a loss for chelsea most likely because their wages are over the roof ? That could be an explanation.

1 yr value change .. Value in this case must be Net Worth, Equity or Total Assets (all the same) .. An increase is attributed to extra capital employed in the company.

Good enough ?

No debts?? I can remember Galliani said in January that Kaka - the key to resplve our debts problems....

too much money less players ..... we should spend them on young powerful players to win the league

You absolutely rock!!! So despite having one of the highest wage bills in Serie A and running Milanello, we still make an operating profit.

So is Operating income = Revenues - Operating costs



I think Beckham, Ronaldinho, all the crazy friendlies and of course all the associated sponsorship might have taken care of that.

hmm no, operating cost would be cost of sales

An equation would be:

Operating Profit (or Loss) Less (or plus) other expenses/income = Revenue.

Think of it this way Jack .. Operating profit or loss is the top part .. then after adding (subtracting) other income (expenses) you get the Revenue which is the bottom part.

Ronnie and Becks have sold some jerseys to help out with revenue, although the results on the pitch have been lacking