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SBD Global/March 8, 2013/FinancePrint All
Adidas has been forced to write off £265M ($344M) at its Reebok business during a year in which Reebok "uncovered fraud at its Indian unit, endured a strike" in the NHL and saw a 10-year U.S. football contract "come to an end," according to Simon Neville of the London GUARDIAN. The writedown "pushed the German-based business into the red" by €239M ($310M) over the last three months. Sales in emerging markets "are improving," but the economic downturn in western Europe has "pushed sales down 4%." Over the full year, "profits were down" 3% to €920M ($1.2B) (GUARDIAN, 3/7).
STAYING IN INDIA: REUTERS' Keith Weir reported adidas CEO Herbert Hainer said that the sportswear company "plans to keep its Reebok brand in India despite finding financial irregularities at the unit." Adidas said that it believed it "had uncovered all the wrongdoing at the Indian business and laid the basis for a profitable operation there in the future." Hainer said, "Here let me reiterate our full commitment to the Reebok brand in India." Hainer also said that he expected the company to build on momentum in China where sales grew 15% in '12 (REUTERS, 3/7). PTI reported adidas said that "commercial irregularities" in India "negatively impacted" its balance sheet for '11 by euro €153M ($199M). In April, the company stated that "the estimated maximum negative impact" due to the alleged fraud by its two top executives at Reebok India, could be up to a pre-tax amount of €125M ($162M). Adidas said that it has "corrected its consolidated financial statements" (PTI, 3/7).
Alex McLeish’s "ill-starred tenure" as Aston Villa manager cost Owner Randy Lerner £6M ($9M) in compensation payments last season, according to Paul Kelso of the London TELEGRAPH. The cost of McLeish takes Villa’s total spending on "hiring and firing managers" to £18M ($27M) in two years, following on from the £12M ($18M) paid in compensation to Martin O’Neill and Gerard Houllier in the previous season. Despite the cost related to McLeish the accounts show that total wages at Villa fell by £14M ($21M) to just under £70M in the '11-12 season as the club "benefitted financially from the sales of Brad Friedel, John Carew and Luke Young among others. Including the payment to McLeish, the wage bill amounts to £69.9M ($105M), which equates to 87% of Villa’s turnover of £80.4M ($121M). The accounts also show that the club "remain reliant on the largesse" of Lerner, who pumped in another £10M in Dec. '11 to "help balance the books." Half of the money "was injected as a loan, repayable in ten years," and the other £5M ($7.5M) as equity in the form of new shares (TELEGRAPH, 3/7).
The scale of the challenge facing EPL Queens Park Rangers if Manager Harry Redknapp fails to keep them in the Premier League "is laid bare in newly published financial results for last season, which show their wage bill doubled even before the latest spending spree," according to Owen Gibson of the London GUARDIAN. Thanks to increased TV income, revenue "rose sharply" from £16.2M ($24.4M) to £64M ($96.4M). But the initial splurge on players including Shaun Wright-Phillips and José Bosingwa -- followed by Bobby Zamora and Djibril Cissé in Jan. 2012 -- "meant that QPR's wages-to-revenue ratio stood at over 90% even before spending in the last two transfer windows is taken into account." Owner Tony Fernandes admitted in his directors' report that the board is "conscious of the need for expenditure to be closely monitored and controlled" but also the need to invest in the playing squad (GUARDIAN, 3/7).