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Conor Sammon


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This might be a long shot , and i dont like making assumptions ,,, but are you an accountant :)

 

Well, "allegedly".

I know it's been covered to previously ( Ramblur springs to mind ) , but DCFC's accounts are quite complicated and people often make incorrect comments without understanding them.

I'm a reader rather than a poster - but just thought I might help with this comment.

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Well, "allegedly".

I know it's been covered to previously ( Ramblur springs to mind ) , but DCFC's accounts are quite complicated and people often make incorrect comments without understanding them.

I'm a reader rather than a poster - but just thought I might help with this comment.

Be very careful. We all started as readers now look at us poor miserable souls.
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Using Connor Sammon as an example; if we paid £1.2m for a three year contract that gets apportioned to the accounts at £400k per year. If we sold him after one year for £1m, then a profit of £200k would be recorded in that years accounts.

?

Okay, but the final year would still have the £400k loss as well so overall you'd have made a loss on the sale right?

ALSO how come it's not split out like say, material costs? If you make a solid product and buy the raw materials up front (ignoring credit here) then that goes straight into the loss collumn right? So why doesn't the up-front cost for a player?

Not saying you're wrong it just seems odd...

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Book value is a completely different thing to market value.

Correct, that's why I referred to both separately (where I said "worth").

I think with this...

Book value methodlogy is fine for applying a valuation to an asset for the purpose of preparing your end of year accounts, P&L etc but it has little basis in determining a transfer valuation.

You contradict yourself with this...

The Brayford scenario has nothing to do with depreciation in value it is risk mitigation. You run the risk of an asset who's value has increased leaving for zero because you lose ownership. I think you can only start to think this way when your near the final year of a contract. A player who signs a 4 year contract will not be worth any less on the market after 1 year or even after 2 years (assuming they are equally as good as when they were purchased).

That I agree with, it doesn't affect it until you get into the last two years on contract. Which, is exactly the situation we are in with Brayford.

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Okay, but the final year would still have the £400k loss as well so overall you'd have made a loss on the sale right?

ALSO how come it's not split out like say, material costs? If you make a solid product and buy the raw materials up front (ignoring credit here) then that goes straight into the loss collumn right? So why doesn't the up-front cost for a player?

Not saying you're wrong it just seems odd...

 

OK, here goes ...

Materials are classed as a current asset - ie. you buy it do something to it and sell it on in a short period of time. Players registrations last for a longer period of time - say three years - and as accounts are usually for just 1 year they are classed as a fixed asset, which are treated differently.

Also, market value and book value are completeley different. If we bought Salmon for £1.2m then the physical cash is spent straight away, but in the books you'd write-off or depreciate the expense over the length of the contract so say £400k for 3 years. After 1 year the net value in the books would therefore be £800k, so if you sold him for £1m you'd make £200k "profit", and this would be realised straight away when the sale took place.

Think back to the time when we got promoted to the Premiership last - Claude Davies cost c£3.5m for a 4 year contract - so you're looking at c£900k per year. Add onto that wages and other payroll charges etc and you're probably looking at close to a cost of c£2m a year - for just 1 player for 4 years !

It's easy then to see how clubs can make huge losses.

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Wouldn't the advent of bids or open market valuations being readily available that materially contradict the net book value of an asset lead to the requirement to revalue the asset and in this case that would be upwards. This would mean increasing the revaluation reserve and in itself taking a paper profit. God that is sooooo boring I really wish I hadn't bothered.

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Obviously players can go up in value.....whether sammon has gone up in value depends on what his original value was.

I still think £800k max...........absolute max.

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Wouldn't the advent of bids or open market valuations being readily available that materially contradict the net book value of an asset lead to the requirement to revalue the asset and in this case that would be upwards. This would mean increasing the revaluation reserve and in itself taking a paper profit. God that is sooooo boring I really wish I hadn't bothered.

Very much doubt it. You couldn't just revalue one player, you would have to do them all. You can't just pick and choose what you revalue.

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Claude Davies cost c£3.5m for a 4 year contract - so you're looking at c£900k per year. Add onto that wages and other payroll charges etc and you're probably looking at close to a cost of c£2m a year - for just 1 player for 4 years !

It's easy then to see how clubs can make huge losses.

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Very much doubt it. You couldn't just revalue one player, you would have to do them all. You can't just pick and choose what you revalue.

It's not picking and choosing, the requirement is that if sufficient evidence is available that an asset on your balance sheet is carrying at an incorrect value it should be revalued. Not sure how this translates to intellectual assets, weird phrase for a footballer but used in this context to mean a skilled human contracted to the company. This was something that was a big issue a few years ago in respect of IT developers and fashion designers but i changed industry and never followed it up.

It could be argued that the carrying value of an asset is the value to the business that owns it, meaning the players contract in this instance but then again if the resale value is demonstrably different then it should still be considered for revalue.

The picking and choosing argument would mean that you would only be able to apply this to a class of assets but this was legislated away some years ago.

Anyway far too boring

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......and given the huge effect this must have on the annual accounts, are we really losing money each year or are the losses these slightly fictitious losses?

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