More transfer rumours

[The Prophet]

1 minute ago, NWMag said:

 

 

They're very different players.

[bobloblaw]

This bit accurate?

 

http://www.financialfairplay.co.uk/financial-fair-play-explained.php 

 

3. Transfer Fees

An important part of the rules relates to the way that player transfers have to be accounted for. Although a club will often pay a transfer fee to another club immediately, from a Break Even perspective the financial cost of acquiring a player has to be written-off over the duration of the contract. We need an example: let's assume Torres was signed for £50m on a 5 year contract and that Chelsea paid Liverpool £50m via an immediate bank transfer. As far as the Profit & Loss section of accounts is concerned (and the Break Even test), Torres' purchase price would be depreciated (or amortised) evenly over the 5 years of the contract. So, during the first 12 months, only £10m would be incurred as a cost in the accounts and Torres would end the year with a 'book value' of £40m. After 5 years, Torres' contract would have ended and he would be free to leave the club (he would also have a book value of zero). If the club sells Torres part way-through the contract, the club the difference between the amount they receive for the player and the book value at the date of the sale is accounted for immediately in the accounts (and the Break Even test) as a 'loss/profit on player trading'. This is important as it explains how a club can sell a player for below the original purchase price and still record a profit in the accounts during the year of sale. If Liverpool sell Andy Carroll for anything above £18m in the summer, they will record the difference as a profit on player sales during 2013/14. If we assume that Falcao comes to Chelsea for £50m on a 5 year deal in the summer, the club's P&L account for the year will only include £10m as an expense (under the heading 'amortisation'). The club will also, of course, have to include the player wages as an expense in the Profit & Loss account. If  you want to know more about 'amortisation', see the video at the foot of this page.

[Abacus]

Yep. There are complications, of course, but basically that's right.

[et tu brute]

1 minute ago, Abacus said:

He is correct here, though. When you actually pay the cash doesn't matter. Likewise people talking about debt with Chelsea etc.

 

I'm wondering if a separate FFP or football finances thread might help, as it seems to derail other threads quite often and means most people can ignore it if they're not interested.

 

There might already be one mind - I'll have a look first.

So are you trying to say if we buy 10 players per say at 100 million up front under our current revenue streams, that we wouldn't fall foul of FFP? I don't think so.

[bobloblaw]

5 minutes ago, Abacus said:

Yep. There are complications, of course, but basically that's right.

 

So the example is for a fully upfront payment.  If you pay in installments, does that change things?  Buy a player for 10million over five years, pay 5 the first year then 5 the second.  Is it 10m depreciated over 5 years, or 5m depreciated over 5, and 5m depreciated over the remaining 4 years?

[Bompeter]

Just now, et tu brute said:

So are you trying to say if we buy 10 players per say at 100 million up front under our current revenue streams, that we wouldn't fall foul of FFP? I don't think so.

“so are you trying to say [something completely different to what you were actually saying]???

[HaydnNUFC]

Convinced one of these new posters that joined or started posting a lot more from after the takeover is the second coming of Penn/IMTTS, like.

[hakka]

58 minutes ago, thomas said:

It's crazy how impossible it is to tell if comments like that are a troll or not anymore. Actual people out there thinking that unironically. Others saying anything short of top 6 will be a failure. Wondering why we haven't spent 100m this window. Living up to every cheap stereotype (inaccurately) lobbed at us for the last 20 years about "divine rights" and "delusional". Actually over it.

 

The owners said from the start - this will be steady continous progress to challenge over time, pretty sure they indicated like 5 years or so. We've spent more than we could ever dream of under Ashley in last 7 months, saved from relegation and now easily are in great shape for top 10 finish. If we sign a good right winger and striker that could be top 8 finish. That's amazing progress and fast. Stability to do top 8 every year and close the gap is the aim for next two years ideally. We shouldn't demand or expect it now. 

[Guest reefatoon]

Can’t believe so many people interact with that Yelevets. He only posts his utter shite so people will bite and give it attention.  Just let him get on with it and he’ll soon get bored.

 

 

Edited July 22, 2022 by reefatoon

[et tu brute]

8 minutes ago, Bompeter said:

“so are you trying to say [something completely different to what you were actually saying]???

Nope I'm just quoting your stupid statement that it doesn't matter if we buy players for 100 million up front. I know fine well about asset amortisation for accounts. 

 

 

Edited July 22, 2022 by et tu brute

[Abacus]

18 minutes ago, et tu brute said:

So are you trying to say if we buy 10 players per say at 100 million up front under our current revenue streams, that we wouldn't fall foul of FFP? I don't think so.

No, what I'm saying is, if you bought 10 players for £100m, the minute you do that is when it gets recorded for FFP reasons regardless of whether you pay the cash up front or in installments later on.

 

For FFP, it's treated more or less identically.

 

There are complications of course, but this is why I thought of a different thread, rather than bore the arse off everyone with numbers chat.

 

 

Edited July 22, 2022 by Abacus

[Abacus]

17 minutes ago, bobloblaw said:

 

So the example is for a fully upfront payment.  If you pay in installments, does that change things?  Buy a player for 10million over five years, pay 5 the first year then 5 the second.  Is it 10m depreciated over 5 years, or 5m depreciated over 5, and 5m depreciated over the remaining 4 years?

It makes no real difference.

 

If you're committed to pay £10m, then it doesn't matter too much as to when you actually hand over the money.

 

So, it would be £10m over 5 years no matter how you structure the payments.

 

There are other benefits to paying later - like if you had to borrow the cash to pay upfront and got charged interest on that borrowing. That interest would affect FFP.

 

But assuming you don't need to borrow, no.

 

The other thing with paying up front is that you might get them cheaper to start with if the selling club needs cash. I.e. if you're paying up front, a club might be happier to sell for £9m rather than £10m in the first place.

[et tu brute]

Just now, Abacus said:

No, what I'm saying is, if you bought 10 players for £100m, the minute you do that is when it gets recorded for FFP reasons regardless of whether you pay the cash up front or in installments later on.

 

For FFP, it's treated more or less identically.

 

There are complications of course, but this is why I thought of a different thread, rather than bore the arse off everyone with numbers chat.

 

 

 

Understand that, but if you do pay 100 million up front for those 10 players, then you will fall foul of FFP within the 3 year period with our current revenue streams. I get the amortisation of players fees and contracts. You're right about leaving it for another possible thread, I think that's a good idea. 

[SUPERTOON]

After the FFP argument, isn’t it time for the Paqueta one ? 

[bobloblaw]

Just now, Abacus said:

It makes no real difference.

 

If you're committed to pay £10m, then it doesn't matter too much as to when you actually hand over the money.

 

So, it would be £10m over 5 years no matter how you structure the payments.

 

There are other benefits to paying later - like if you had to borrow the cash to pay upfront and got charged interest on that borrowing. That interest would affect FFP.

 

But assuming you don't need to borrow, no.

 

The other thing with paying up front is that you might get them cheaper to start with if the selling club needs cash. I.e. if you're paying up front, a club might be happier to sell for £9m rather than £10m in the first place.

 

That's what I figured, same as a business buying a new vehicle.  Pay up front or take out a loan, depreciation still starts right away.

[STM]

 

Busy day transfer rumour wise eh.

[LV]

2 hours ago, Solitude20 said:

Just like many others, I was wondering why the PIF isn’t splashing more cash in their negotiations to make a quicker jump in the quality of our players, then it occurred to me that the PIF is an investment fund after all. They have spent north of 150 millions in the transfer market so far in a span of 6 months, and if we count the staff appointments and the other investments in our facilities then that might be more than 200 million since the takeover. They might actually be thinking on their return of investment as well. I know sport washing and all but what if they were treating the takeover as a business that should reward a good return just like all of their other investments in an effort to diversify away from oil.
 

Fair play regulations might not be the only factor that limits our spendings, it might be the expected return in investment on those said transfers that may not make much sense to them. It’s a business after all. 

 

 

 

It definitely doesn’t seem to be the all guns blazing sportswashing vehicle many thought it would be when they first took over, with millions splashed out on statement signings in quick time. 

 

I always said this window would determine just what sort of owners they are looking to be.
 

There’s still time left though for more signings yet and I’d much rather us build up slow and steady and in the right way for sustained success. 

[bobloblaw]

1 minute ago, STM said:

 

Busy day transfer rumour wise eh.

 

You'd have been better off making this post in one word installments.

[Fatwax]

31 minutes ago, reefatoon said:

Can’t believe so many people interact with that Yelevets. He only posts his utter shite so people will bite and give it attention.  Just let him get on with it and he’ll soon get bored.

 

 

 

Much like his name he’s backwards.

[STM]

Just now, Fatwax said:

Much like his name he’s backwards.

I thought he must be Hungarian or something. 

[LV]

51 minutes ago, HaydnNUFC said:

Convinced one of these new posters that joined or started posting a lot more from after the takeover is the second coming of Penn/IMTTS, like.

I think it’s more of a whiff of blue drink and chicken dippers from them than likely to be Luke. 

[madras]

27 minutes ago, STM said:

 

Busy day transfer rumour wise eh.

I'm choosing to believe that it's just that we are now very professional and know how to keep things very quiet.

[gdm]

i’m so bored. Sign someone (good)

[KaKa]

1 hour ago, bobloblaw said:

This bit accurate?

 

http://www.financialfairplay.co.uk/financial-fair-play-explained.php 

 

3. Transfer Fees

An important part of the rules relates to the way that player transfers have to be accounted for. Although a club will often pay a transfer fee to another club immediately, from a Break Even perspective the financial cost of acquiring a player has to be written-off over the duration of the contract. We need an example: let's assume Torres was signed for £50m on a 5 year contract and that Chelsea paid Liverpool £50m via an immediate bank transfer. As far as the Profit & Loss section of accounts is concerned (and the Break Even test), Torres' purchase price would be depreciated (or amortised) evenly over the 5 years of the contract. So, during the first 12 months, only £10m would be incurred as a cost in the accounts and Torres would end the year with a 'book value' of £40m. After 5 years, Torres' contract would have ended and he would be free to leave the club (he would also have a book value of zero). If the club sells Torres part way-through the contract, the club the difference between the amount they receive for the player and the book value at the date of the sale is accounted for immediately in the accounts (and the Break Even test) as a 'loss/profit on player trading'. This is important as it explains how a club can sell a player for below the original purchase price and still record a profit in the accounts during the year of sale. If Liverpool sell Andy Carroll for anything above £18m in the summer, they will record the difference as a profit on player sales during 2013/14. If we assume that Falcao comes to Chelsea for £50m on a 5 year deal in the summer, the club's P&L account for the year will only include £10m as an expense (under the heading 'amortisation'). The club will also, of course, have to include the player wages as an expense in the Profit & Loss account. If  you want to know more about 'amortisation', see the video at the foot of this page.

 

Great post. So it's based on the length of contract rather than the payment schedule then? Interesting.

[KaKa]

3 hours ago, STM said:

I'd have Wijnaldum back on loan like. Don't give a fuck what system you fit him in, he's quality and him and Bruno would soon find a rhythm.

 

And before you bother, I know wages and yada yada.

 

No thanks. Wijnaldum can stay where he is.