Ok
Currently we receive £3m from Kitbag but we have no expenses to get that £3m. We do not run the megastores, website or other distribution channels. So the £3m is profit however we do not see the whole income from the operation.
If we did run the operation then we would have costs of £7m to get that £3m. Hence our income would be £10m consisting of £7m operating costs plus the £3m profit.
Spurs & Villa run their own inhouse operation, therefore they have the cost of sale included in both their income & operating costs. We outsource so we do not have that line in our income & costs.
Therefore to make a direct comparison between our operating costs & their operating costs, we need to take this into account. We can do this by adding the supposed £7m into our operating costs. This gives us a fairer comparison in how we manage our cost base.
In essence, our operating costs are even worse than they initially look