Which is amortisation. Every player they have bought will count.
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Definitely not an out of car window Transfer Thread
- Thread starter Lemonade Money
- Start date
Which is amortisation. Every player they have bought will count.
Think it's €60m now. As allowable loses, but it'snot a rolling 3 year period anymore. Each year is judged jan till dec. Failure is punished the next season. (The €60m is not per season, tbh they've overcomplicated it again. Probably on purpose).
Bedfordspurs
Chris Waddle
Unless they flared the debt in the purchase so you can take the hit once
You amortise to stop the FFP hit and in most cases transfers are paid that way too… in instalments
But if they cheated the debt when buying they don’t need the amortisation
No. Whatever the price you pay or how you pay it, is split over the contract.
Basically in financial terms you are swapping cash for an asset (player). So you are not losing anything. But the asset depreciates in value (duration of contract). So you spend £10m on a player on a 5 year contract (no matter how you pay it), their amortisation will be £2m a year.
Bedfordspurs
Chris Waddle
No no I’m sure you’re wrong.
It’s up to the company how you write something off but the maximum is the contract duration. It’s asset life and value.
We do it all the time at work
It can change but it can’t be extended after the capital is paid
We buy a piece of equipment with a 5 year life (there are accountancy standards for it) we generally write it off I’ve normal life of 5 years as that spreads the burden for tax etc… with recognises debt on the books
However we can write it off earlier if we see fit as long as it’s actually paid for
I’m footy terms it’s more for profit than loss
You can declare a book profit on a player take a loss on
50m buy over 5 years is 10m a year
Sell him in year 3 for 40m and you have made 10m book profit
https://thesportsgrail.com/explaine...mortization-in-football-and-how-does-it-work/
“When a player is bought, his cost is capitalised on the balance sheet and written-down (amortised) throughout the life of his contract,” . In layman’s terms, transfer fees are spread out throughout the duration of a player’s contract for accounting purposes. If we take an example, then in the case of Chelsea’s recent purchase of Romelu Lukaku, a club amortises €90 million over a five-year deal which means € 19.5m per season.
In essence, amortisation is the player’s transfer price divided by the term of the contract. Depending on how many years the player has played for the club, the amortised worth of the player decreases each year. Ronaldo’s transfer to Juventus is a great example. They paid 100 million dollars for a four-year deal. As a result, Ronaldo’s amortised worth decreases by $25 million per year. Let’s imagine if they sold him for 70 million dollars after two years then They would declare a 20 million plusvalenza in their books since he’s worth 50 million in amortised value by then.
“When a player is bought, his cost is capitalised on the balance sheet and written-down (amortised) throughout the life of his contract,” . In layman’s terms, transfer fees are spread out throughout the duration of a player’s contract for accounting purposes. If we take an example, then in the case of Chelsea’s recent purchase of Romelu Lukaku, a club amortises €90 million over a five-year deal which means € 19.5m per season.
In essence, amortisation is the player’s transfer price divided by the term of the contract. Depending on how many years the player has played for the club, the amortised worth of the player decreases each year. Ronaldo’s transfer to Juventus is a great example. They paid 100 million dollars for a four-year deal. As a result, Ronaldo’s amortised worth decreases by $25 million per year. Let’s imagine if they sold him for 70 million dollars after two years then They would declare a 20 million plusvalenza in their books since he’s worth 50 million in amortised value by then.
Bedfordspurs
Chris Waddle
Yep
I get that
And you can reduce it
That way you have no value on the books and your player sales are then all profit
It’s why the new buys are all joining on 71/2 year contracts
Bedfordspurs
Chris Waddle
I wonder if it’s all through a new company and they brought the players registrations for the 1.75B and the debt due on the players
But not the accountancy risk
That way they have a clean balance to pile players into
But not the accountancy risk
That way they have a clean balance to pile players into
You can't reduce it. You can sell the player, then it will be recorded as the price minus whatever amortisation is left. Or give a new contract, which will be whatever amortisation left, divided by the new contract.
Yes the longer the contract the smaller the amortisation.
Bedfordspurs
Chris Waddle
You can
I’ve seen it many times
You can’t increase it
It’s netted against capital value
How?
Bedfordspurs
Chris Waddle
How what?
You issue your accounts annually
You have write offs which include your amortisations which is Baka fed against your profit
You have a high profit year and you want to pay less tax your bring forward your amortisation’s which means they are not available next year for “profit balancing” but they help you in the year you do it
Banks do it with property and building assets. BP and tescos would do it too
In fact what tescos would do is buy some plant (fridge equipment). Pay for it when it’s commissioned. Write off the purchase over 5 or 7 years (I can’t remember which) and halfway through that sell the asset and lease it back with the revenue of the sale coming in as profit the. The year before the sale they would reduce the amortisation so it had no value on the books and then the following year it was BIg money coming in.
It was all aligned with IFRS as I had to do some work on it
IIRC derby had a big issue with it as they did something funny where they assumed as the end of the contract duration the player would still have a residual value
Ok i get you. Teams did it to a certain extent with covid (everton a lot, which should have been called foul). But the write offs "should" be minimal. Not sure uefa would accept it. Basically the rules are amortisation, wages agents fees.
Bedfordspurs
Chris Waddle
UEFA would accept anything as long as it’s legal and in accordance with IFRS or the other accountancy rules GAP I think
well I assume so anyway
but who knows with Chelsea
AjaxDeSuperYids
Drama queen
So if we end up selling a 25% stake for £1bn is there a way within the rules that allows us to spend that on the team?
I know we can spend something like £400m currently within the rules so would this go up to £1.4bn?
I know we can spend something like £400m currently within the rules so would this go up to £1.4bn?
Bedfordspurs
Chris Waddle
AjaxDeSuperYids
Drama queen
Yes
We can spend the lot it seems
Joking aside I am trying to understand that if we cannot spend it, then how this differs to the chelsea situation where it seems they intend to spend about a billion in no time at all and apparently this doesn't breach ffp.
Bedfordspurs
Chris Waddle
I think we can spend a load
We did have the highest head roll for spend of any side in the league not that long ago
The only nuance might be that in the Chelsea situation the guy owns 100% of the club, whereas a minority investor putting in money doesn't. No idea whether the rules makes this distinction though
There's also the other question of whether Levy would accept that free-wheel spending given that it would pile liabilities (wages etc) on to the club