NUFC specific FFP/PSR discussion

[Unbelievable]

6 minutes ago, macphisto said:

We don't need it scrapped. We need to start putting these deals in place, even if they are "fair value". 

 

It doesn't make sense to think PIF will go from a situation where they don't exploit every income stream to one where a PIF company will pay millions to sponsor the match ball. Related sonsors are not banned and there are numerous ways we could generate income. 

I disagree. "Fair value" simply means you can have party related commercial deals in line with your current standing as a club. So Man U and Liverpool can have their 150m per year shirt sponsor because they have 800m revenue, but because Newcastle United only have 300m revenue we don't think a shirt sponsor from Saudi or in any way related to PIF or the Ruebens should bring Newcastle more than lets say 50m. Same for all other forms of sponsorship. We'd be chasing shadows forever more, because that is by its very definition a self sustaining handicapping of up and coming clubs with the funding behind them to bridge the gap. We'd be kept at arms length forever.

 

I think it does make sense for PIF to move up a gear or two if these restrictions are lifted, because to them it is worth more to invest sponsorship money in their Saudi Arabia promotion vehicle than in other clubs, and ultimately they will see it as failure if by the time 2030 and especially 2034 come around, Newcastle United and their own league are still seen as also rans. Our chairman made clear last year the objective of PIF is to become "number one". There is no way if these restrictions were lifted they wouldn't then proceed to accelerate our development plans. 

[macphisto]

4 minutes ago, Unbelievable said:

I disagree. "Fair value" simply means you can have party related commercial deals in line with your current standing as a club. So Man U and Liverpool can have their 150m per year shirt sponsor because they have 800m revenue, but because Newcastle United only have 300m revenue we don't think a shirt sponsor from Saudi or in any way related to PIF or the Ruebens should bring Newcastle more than lets say 50m. Same for all other forms of sponsorship. We'd be chasing shadows forever more, because that is by its very definition a self sustaining handicapping of up and coming clubs with the funding behind them to bridge the gap. We'd be kept at arms length forever.

 

I think it does make sense for PIF to move up a gear or two if these restrictions are lifted, because to them it is worth more to invest sponsorship money in their Saudi Arabia promotion vehicle than in other clubs, and ultimately they will see it as failure if by the time 2030 and especially 2034 come around, Newcastle United and their own league are still seen as also rans. Our chairman made clear last year the objective of PIF is to become "number one". There is no way if these restrictions were lifted they wouldn't then proceed to accelerate our development plans. 

What do you think their real main objective is now if they're just chasing shadows under the current rules? 

[Unbelievable]

22 minutes ago, macphisto said:

What do you think their real main objective is now if they're just chasing shadows under the current rules? 

I will refer to this earlier post in this thread about what I think our current strategy is. However, if the circumstances change I very much doubt that would not then induce a massive rethink of our approach.

[80]

3 hours ago, Unbelievable said:

  

This was a good post with many excellent points @80, but I was wondering about how you got to the 35m in the bit in bold, as that would indeed make it look quite appealing to those not well versed in the complexity of our PSR conundrum to sell Almiron and replace with let's say Madueke.

 

If we assume Rich's numbers from his analysis on the previous page regarding Almiron's amortisation due to deal extension as correct we have "Almirón signed for £20M in January 2019 on an initial 5.5-year deal, re-signed on a 3.5-year deal in February 2023 after 4 years (so only ~3 months reflected in the accounts)" leading to "Almirón from £3.64M per year to £1.15M per year (-£2.49M)". Almiron's remaining book value would be around 4m, so a 10m sale fee would give a 6m PSR profit on the deal, just in this PSR year (2024/25). Capology have Almiron on a 60k/week wage, or let's say 3m per year. By selling Almiron for 10m we'd bank a 6m profit and save ourselves 3m in wages, so let's say for 2024/25 impact only that would give us 9m to spend on amortisation and wages of a replacement player. If we were to spend the 35m you mentioned, that would leave only 2m for wages, or 40k/week. If for example Madueke would be available for under 30m and willing to accept the same wage as at Chelsea (50k/week again according to Capology), it would just about work out for this PSR year (6m amortisation + 3m wages).

 

However, for the first four years of the replacement's contract we'd also have that 9m per year cost compared to Almiron at 4m, so 5m added to annual player cost base.

 

Having done the numbers I think that pair of deals, if they were available to us as presented, would have actually made sense from a sporting and probably financial perspective due to Madueke being a better player and probably growing in value as he is still young, hence a better long term investment.

 

However to suggest a 10m sale allows 3,5 times the incoming money to be spend as a rule of thumb almost might lead people to believe selling Almiron, Wilson and the like for paltry fees is a no brainer and I don't think it is in our PSR situation sadly.

 

The more I think about it, the more it is clear increasing commercial revenue is going to be the key for us. We need the exposure of CL football, and being seen as one of the top clubs in the PL, and then to transform that momentum into better commercial deals that will allow us to close the revenue gap. Alternatively we need related party rules scrapped. Here's hoping Man City tear the PL a new one in their hearing.

To be honest, it was simpler than all that - I was just trying to give easy to understand figures to illustrate a less explored impact of PSR!

 

I realise there are a lot of complexities in any specific examples e.g. with Almiron, he also has the Atlanta sell on fee, which applies either to any profit or the gross sale price - no one outside the club appears to know. Re: your Madueke figures, as an alternative you can also look at the choices of the club e.g. could that Almiron deal fund 4 or 5 Minteh-sized deals, with lower overall wages than one Madueke? Yes. Good idea? Obviously a pretty controversial one.

 

My example would have been better if I'd used Miley, and a lot worse if I'd mooted flipping Hall for £30m. That's why I indicated that what I was saying wasn't a watertight case for selling Almiron. But the broader thrust was about the different perspectives driving different valuations of the same player. How an extra £2m on a sale - which was barely anything even a decade ago in football - can today have an outsized impact on your future options.

 

As I said the other day, we have an extra, parallel economy in football now - a bit like the idea of carbon credits. I understand people getting pissed off with PSR conversations, I am too, but if you don't understand it you're basically cut off from understanding what's going on in football nowadays.

 

 

Edited August 15 by 80

[SUPERTOON]

 

[Unbelievable]

1 hour ago, 80 said:

To be honest, it was simpler than all that - I was just trying to give easy to understand figures to illustrate a less explored impact of PSR!

 

I realise there are a lot of complexities in any specific examples e.g. with Almiron, he also has the Atlanta sell on fee, which applies either to any profit or the gross sale price - no one outside the club appears to know. Re: your Madueke figures, as an alternative you can also look at the choices of the club e.g. could that Almiron deal fund 4 or 5 Minteh-sized deals, with lower overall wages than one Madueke? Yes. Good idea? Obviously a pretty controversial one.

 

My example would have been better if I'd used Miley, and a lot worse if I'd mooted flipping Hall for £30m. That's why I indicated that what I was saying wasn't a watertight case for selling Almiron. But the broader thrust was about the different perspectives driving different valuations of the same player. How an extra £2m on a sale - which was barely anything even a decade ago in football - can today have an outsized impact on your future options.

 

As I said the other day, we have an extra, parallel economy in football now - a bit like the idea of carbon credits. I understand people getting pissed off with PSR conversations, I am too, but if you don't understand it you're basically cut off from understanding what's going on in football nowadays.

 

 

 

 

Another great post, fully agree, especially about the bit in bold. I'd rather be frustrated trying to understand the rules and how much they limit the club than frustrated at the perception the club isn't doing enough and should just spend more as our owners can easily afford it. I've done the best part of a decade doing the latter, so I enjoy trusting the current custodians to do the best they can with the club's interest at heart even in the face of the PL and the competition throwing up new obstacles every opportunity they get.

[Hudson]

4 minutes ago, Unbelievable said:

 

Another great post, fully agree, especially about the bit in bold. I'd rather be frustrated trying to understand the rules and how much they limit the club than frustrated at the perception the club isn't doing enough and should just spend more as our owners can easily afford it. I've done the best part of a decade doing the latter, so I enjoy trusting the current custodians to do the best they can with the club's interest at heart even in the face of the PL and the competition throwing up new obstacles every opportunity they get.

Great post and  On my life I have never felt more comfortable with an owner than our current ones. If they get it wrong it will be put right no pissing around.

 

There here to Win, Nothing will stop them Nothing. 
Just look at who they are a business men. Ruthless 

 

It’s just going to take time, but hey we have 14 years of the Cunt face to put right  all while being shackled by the cartels 

[80]

3 minutes ago, Unbelievable said:

 

Another great post, fully agree, especially about the bit in bold. I'd rather be frustrated trying to understand the rules and how much they limit the club than frustrated at the perception the club isn't doing enough and should just spend more as our owners can easily afford it. I've done the best part of a decade doing the latter, so I enjoy trusting the current custodians to do the best they can with the club's interest at heart even in the face of the PL and the competition throwing up new obstacles every opportunity they get.

Yep, exactly. People should be directing all the pain and frustration caused by this stuff at the rules and the custodians of the game who set those rules.

 

It's now set up in an opaque way which deprives a lot of people the joy of following a relatively simple game. I think it's unintended, but they're really asking people to just switch off from the game and stop caring. It'll be only for the most hardcore, eventually.

[r0cafella]

For all the nerds the thing which is worrying me is the incoming squad cost ratio rules paired with PL’s heavy handed punishments. 
 

in our last accounts or wages to turnover ratio was 80%, the problem we have though is the new rules include amortisation which for us currently stands at 86.8m salaries stand at 198m. Basically as of our last accounts are squad cost calculation is more than 100% or revenue. To comply with these rules in future we need to either increase revenue by 60m or reduce costs or player trade to get to 60m 

 

basically squad cost will put a big dent in our ambitions. 
 

PS this came to mind due to Guehi deal, if it happens I expect it will cost us 20m per year. 

[Ben]

8 minutes ago, r0cafella said:

For all the nerds the thing which is worrying me is the incoming squad cost ratio rules paired with PL’s heavy handed punishments. 
 

in our last accounts or wages to turnover ratio was 80%, the problem we have though is the new rules include amortisation which for us currently stands at 86.8m salaries stand at 198m. Basically as of our last accounts are squad cost calculation is more than 100% or revenue. To comply with these rules in future we need to either increase revenue by 60m or reduce costs or player trade to get to 60m 

 

basically squad cost will put a big dent in our ambitions. 
 

PS this came to mind due to Guehi deal, if it happens I expect it will cost us 20m per year. 

 

It's like trying to walk through treacle 

 

 

Edited August 16 by Ben

[TheBrownBottle]

1 hour ago, r0cafella said:

For all the nerds the thing which is worrying me is the incoming squad cost ratio rules paired with PL’s heavy handed punishments. 
 

in our last accounts or wages to turnover ratio was 80%, the problem we have though is the new rules include amortisation which for us currently stands at 86.8m salaries stand at 198m. Basically as of our last accounts are squad cost calculation is more than 100% or revenue. To comply with these rules in future we need to either increase revenue by 60m or reduce costs or player trade to get to 60m 

 

basically squad cost will put a big dent in our ambitions. 
 

PS this came to mind due to Guehi deal, if it happens I expect it will cost us 20m per year. 

Likewise - we're already fucked on that front.  It feels like offering criticism for the slow pace of commercial revenue increases leads to pelters, but there is a fucking massive brick wall looming next season.  We really haven't capitalised on all available streams - and the 'they're waiting on the Man City ruling' is unconvincing - we're three years in, that's three years of lost revenues on the smaller deals.  There is nothing in the rule books which would have stopped us signing 1-year commercial deals.  Even the adidas one feels short-sighted - it is a five-year deal, and we might have left a lot of potential money on the table during that period.

[r0cafella]

Just now, TheBrownBottle said:

Likewise - we're already fucked on that front.  It feels like offering criticism for the slow pace of commercial revenue increases leads to pelters, but there is a fucking massive brick wall looming next season.  We really haven't capitalised on all available streams - and the 'they're waiting on the Man City ruling' is unconvincing - we're three years in, that's three years of lost revenues on the smaller deals.  There is nothing in the rule books which would have stopped us signing 1-year commercial deals.  Even the adidas one feels short-sighted - it is a five-year deal, and we might have left a lot of potential money on the table during that period.

Yeah I was perplexed by Silverstone words about Needing the right partners etc. just go to PIF and ask them for a company to give a one year deal whilst you work on those long term deals. 
 

I can’t knock the adidas deal, according to reports it’s very much a revenue sharing agreement, it is gutting seeing our rivals sign much bigger deals though especially if your locked in for such a long time. 
 

In really anticipating the stadium question being answered as it will tell me all I need to know about our direction. 

[Maggies]

How do add-ons work when it comes to PSR. Are they all added to amortisation numbers like the transfer fee, or added when they’re achieved just over a shorter period of the remaining contract? Or something else?

[r0cafella]

13 minutes ago, Maggies said:

How do add-ons work when it comes to PSR. Are they all added to amortisation numbers like the transfer fee, or added when they’re achieved just over a shorter period of the remaining contract? Or something else?

I’m not sure, my assumption would be added on as and when they are met? Maybe a provision is made I’m not sure. 
 

Looks like we’ve offered 65m for Guehi, that’s 20m per year to find I really do wonder how we will manage that. 

[r0cafella]

As per my post earlier and with the caveats of the numbers I used are the clubs figures from 22-23 if we close Guehi and everything else being the same, our squad cost deficit would be 60m. I don’t see how that could be bridged by Commercial revenue or TV money tbh. 
 

Can we bridge that without selling a purple? 

[Shays Given Tim Flowers]

This is a good, if somewhat depressing thread. 

[r0cafella]

1 minute ago, Shays Given Tim Flowers said:

This is a good, if somewhat depressing thread. 

Aye sorry about that. I’m sure all of the people contributing to this thread hate that the thread is needed. 

[Ben]

1 minute ago, r0cafella said:

Aye sorry about that. I’m sure all of the people contributing to this thread hate that the thread is needed. 

 

Hopefully we'll find out next week if Man City have won their case so we can get some decent sponsors in

[Shays Given Tim Flowers]

10 minutes ago, r0cafella said:

Aye sorry about that. I’m sure all of the people contributing to this thread hate that the thread is needed. 

No need to apologise. Makes it much easier to appreciate the issues to navigate. 

[r0cafella]

Just now, Shays Given Tim Flowers said:

No need to apologise. Makes it much easier to appreciate the issues to navigate. 

The subject has obviously become extremely unpopular generally, I know myself and some others tend to bang on about it which often doesn’t help people who feel that way. 
 

That’s the idea, at least from my point of view just to raise awareness about the artificial constraints we are under and try to predict potential ways out of it. 

[r0cafella]

Re squad cost. 
 

I must admit, I haven’t read the detailed proposal as it’s not out yet and will be far too boring so if anyone else has and can correct me please do it’s most welcome. 
 

With this kind of system we will face a couple of immediate and obvious issues. 
 

1; deficits. As the rules are now you essentially have 3 years to balance the books due to it being a rolling 3 year period. As far as I’m aware this won’t be the case with squad cost and it will be a relatively simple did you comply with the ratio yes or no. The problem with this is if you say a 60m deficit one year and you sell a player for 50m and let’s say his salary is 10m then yes you’ve complied for that year. The issue comes in the next year whereby your still 50m over (it would be less as your amortisation for the player would also be removed) but I hope it illustrates the point. 
 

2; owner capital. the current rules allow for a certain amount of losses to be covered by owner investment, this is obviously something our owners have been doing, if this isn’t included this is yet another hit we will take in real terms. 

[Maggies]

4 hours ago, r0cafella said:

For all the nerds the thing which is worrying me is the incoming squad cost ratio rules paired with PL’s heavy handed punishments. 
 

in our last accounts or wages to turnover ratio was 80%, the problem we have though is the new rules include amortisation which for us currently stands at 86.8m salaries stand at 198m. Basically as of our last accounts are squad cost calculation is more than 100% or revenue. To comply with these rules in future we need to either increase revenue by 60m or reduce costs or player trade to get to 60m 

 

basically squad cost will put a big dent in our ambitions. 
 

PS this came to mind due to Guehi deal, if it happens I expect it will cost us 20m per year. 

Aren’t most clubs already near the 70% with wages to turnover ratio, and if amortisation is now included surely this screws up a lot of other clubs as well? Same as removing allowable losses… 

 

In my simple mind, Champions League brings a lot of revenue so aim is to push for that. If we don’t achieve then we’re likely to see a big player being sold before the 30th June cut off next year.

[r0cafella]

1 minute ago, Maggies said:

Aren’t most clubs already near the 70% with wages to turnover ratio, and if amortisation is now included surely this screws up a lot of other clubs as well? Same as removing allowable losses… 

 

In my simple mind, Champions League brings a lot of revenue so aim is to push for that. If we don’t achieve then we’re likely to see a big player being sold before the 30th June cut off next year.

Absolutely yes, it will be more acute for us though as our amortisation compared to our Revenue is quite high. 
 

 

[r0cafella]

@HayDen Traces

 

That’s not quite correct, we have quite a clear idea of FFP picture as we had a 60m + hole to file by July 1st. 
 

Ultimately revenue forecasts aren’t particularly relevant as what matters is actuals. I understand the points your making about trust but it isn’t a case of trust or not trusting, it’s a case of having a grasp of the finances and how they will impact us in future. 
 

I estimate the deal for Guehi will cost us about 20m per year on accounting basis, that sum has to be covered by revenue. 
 

I think it’s important to be clear here, I think he’s a great player and will be great for us, I do question weather the deal makes sense financially though. 

[TK-421]

14 minutes ago, Maggies said:

Aren’t most clubs already near the 70% with wages to turnover ratio, and if amortisation is now included surely this screws up a lot of other clubs as well? Same as removing allowable losses… 

 

In my simple mind, Champions League brings a lot of revenue so aim is to push for that. If we don’t achieve then we’re likely to see a big player being sold before the 30th June cut off next year.

Its been said before, but failure to qualify for CL may mean some of our elite start eyeing the door anyway regardless of the PSR situation. Even Europa League/Conference may not be enough, if they deem we're still not able to challenge for top 4 properly.

But I suspect theres a hope our commercial income can gain a signifigant boost this season which might offset some potential PSR issues next June anyway.

Suspect we may have a few deals lined up. Some high value if Citys case has gone well and rules change, and some a little more conservative if they haven't, but still more income.

 

 

Edited August 16 by TK-421