FFP

[Gritty]

Could do with @ramblur help. If we let Butterfield go for say 3mn to 4mn less than we paid for him; does that mean we book a loss of 3mn to 4mn in the accounts and hit our ffp loss figure?

Given Blackman, butters, Camara, Anya all likely to leave at a loss I wonder whether simply selling players is going to cause us issues....

[Sparkle]

6 minutes ago, feisty said:

Could do with @ramblur help. If we let Butterfield go for say 3mn to 4mn less than we paid for him; does that mean we book a loss of 3mn to 4mn in the accounts and hit our ffp loss figure?

Given Blackman, butters, Camara, Anya all likely to leave at a loss I wonder whether simply selling players is going to cause us issues....

Mainly humour but many would say signing those mentioned caused us more issues ???

[Spanish]

42 minutes ago, feisty said:

Could do with @ramblur help. If we let Butterfield go for say 3mn to 4mn less than we paid for him; does that mean we book a loss of 3mn to 4mn in the accounts and hit our ffp loss figure?

Given Blackman, butters, Camara, Anya all likely to leave at a loss I wonder whether simply selling players is going to cause us issues....

cost is spread over contract term, simply by someone for £5m over 5 years the book value drops by £1m pa  so if you sold him with 2 years left his value would be £2m anything below that would be a loss

[Gritty]

I don't think that's how it works now.  Accounting treatment changed I think

[Mistaram]

1 hour ago, feisty said:

The problem is even if the owner puts the cash in for transfers you can still get a situation where the wage bill is so high the club makes a loss each year. 

So if the owner dies/loses interest/goes bankrupt the club is then left making massive losses with nobody to pump in cash.  Club then goes bust and creditors (local businesses, other clubs, the general tax payer) then lose money (when Leicester went bust I believe some local businesses that were suppliers folded due to unpaid bills.  No proof but remember clough saying something)

Oct 2002 Burse the developers who built Leicester City football ground have had to give up the fight for their final payment of £5.5 million Along with many smaller local businesses they have been forced to give the fight to get any of their money back 

[G STAR RAM]

1 hour ago, Spanish said:

cost is spread over contract term, simply by someone for £5m over 5 years the book value drops by £1m pa  so if you sold him with 2 years left his value would be £2m anything below that would be a loss

Not anymore.

The club either set a residual value for the players or re-assess the value of players each year.

Example 

Sign Vyrda for £8m on 4 year contract. Under old rules we would have taken £2m hit each year.

Under new rules we set a residual value (what we think Vydra in the last year of his contract ie what we could sell him for) of £4m, therefore, he will only lose £4m value over his contract so we would take a hit of £1m each year.

Alternatively, at the end of years 1,2 and 3 we think we could get all of transfer money back so value him at £8m still but, his contract expires and he leaves for free, so we take the full £8m hit in year 4.

[RamNut]

All players are worth nil at the end of their contracts.

[G STAR RAM]

1 minute ago, RamNut said:

All players are worth nil at the end of their contracts.

Yes but you could still possibly sell them for cash in the final year of their contract.  

[Phoenix]

24 minutes ago, Mistaram said:

Oct 2002 Burse the developers who built Leicester City football ground have had to give up the fight for their final payment of £5.5 million Along with many smaller local businesses they have been forced to give the fight to get any of their money back 

Also, I believe that when they went into administration,they didn't get a points deduction. That was introduced as a result of Leicester's chicanery. Makes me puke what Leicester got away with.

[G STAR RAM]

Didn't we have some of our Co-Op bank loan written off?

Or did it become payable when we got promoted?

Either way, it's not the sort of thing banks would do for the general public without serious repercussions!

[eddie]

Just now, G STAR RAM said:

Didn't we have some of our Co-Op bank loan written off?

Or did it become payable when we got promoted?

Either way, it's not the sort of thing banks would do for the general public without serious repercussions!

Yes, but the Co-Op were culpable in bringing in the Amigos in the first place.

[Gritty]

24 minutes ago, G STAR RAM said:

Not anymore.

The club either set a residual value for the players or re-assess the value of players each year.

Example 

Sign Vyrda for £8m on 4 year contract. Under old rules we would have taken £2m hit each year.

Under new rules we set a residual value (what we think Vydra in the last year of his contract ie what we could sell him for) of £4m, therefore, he will only lose £4m value over his contract so we would take a hit of £1m each year.

Alternatively, at the end of years 1,2 and 3 we think we could get all of transfer money back so value him at £8m still but, his contract expires and he leaves for free, so we take the full £8m hit in year 4.

So if we've continued  to value butterfield at 5mn but sell him for 1mn next year, it'd hit our ffp calculation  to tune of 3mn (4mn in write-off less 1mn received)

Given we currently have ffp profit due to Hughes and Ince sales, we'll want to sell any players that will hit ffp prior to 1 July I think (end of ffp period?)

[ramblur]

On 9/2/2017 at 08:18, sage said:

I have the Ramblur stamp of approval on something financial.

My life is complete.

 

Sorry to be a party pooper,sage,but I forgot to mention the obvious possibility that Gary had more money to spend,but couldn't find a target to match his valuation.However,I wasn't aware of Gary's comments on Bryson and would fall in the camp that believes it would be strange to ditch a player you wanted to keep (in preference to several others),just to reduce the squad by 1.My belief in this is further strengthened by the fact that Bryson would appear to have been a good influence around the place.

[G STAR RAM]

Just now, feisty said:

So if we sell butterfield for 1mn next year, it'd hit our ffp calculation  to tune of 3mn (4mn in write-off less 1mn received)

Given we currently have ffp profit due to Hughes and Ince sales, we'll want to sell any players that will hit ffp prior to 1 July I think (end of ffp period?)

Depends what value Butterfield has now. He was signed for £4m so his value should have been 'written down' at the end of each of the last 2 seasons.

What value Butterfield has at the moment in time is anybody's guess. (Under the old rules he would be valued at £2m so if sold for £1m we would only take a £1m hit)

[ramblur]

On 9/2/2017 at 08:44, curtains said:

Easy .

http://www.birminghammail.co.uk/sport/football/football-news/financial-fair-play-actually-impact-12408433

Unfortunately not so easy, as this piece is obviously based on a website I linked some time ago,viz 'Financialfairplay.com' ,and there are 2 issues here. The amortisation treatment is now old hat and has since been replaced with residual values.I had an email exchange with the guy behind this site,pointing out that the average exemptions of £500k were low and that he hadn't mentioned one of the bigger ones,infrastructure depreciation (our own stadium depreciation is roughly 3 times this figure alone).I also pointed out that youth development alone could come in far above this figure,and that our total exemptions (by deduction) would appear to have come in at £5m+ in 15/16. In his reply he did mention that he had become aware of the situation regarding exemptions after writing the piece and conceded that Brighton were probably ok because of these considerations.

[Gritty]

I wonder if we have 'overvalued' any players in the books which could hit us under ffp.

Players like johnson, Butterfield, Anya are one's that we paid a lot for and could realise losses on if we haven't downward adjusted their value. 

I assume we can't upward adjust values beyond purchase price to create a  ffp gain (e.g.. value Lowe at 2mn and get a ffp positive impact)

[G STAR RAM]

2 minutes ago, feisty said:

I wonder if we have 'overvalued' any players in the books which could hit us under ffp.

Players like johnson, Butterfield, Anya are one's that we paid a lot for and could realise losses on if we haven't downward adjusted their value. 

I assume we can't upward adjust values beyond purchase price to create a  ffp gain (e.g.. value Lowe at 2mn and get a ffp positive impact)

In the last accounts our amortisation,  £3m off the top of my head, seemed very low in comparison to carrying value of our players.

Correct re upward valuations not being allowed.

[Gritty]

Just now, G STAR RAM said:

In the last accounts our amortisation,  £3m off the top of my head, seemed very low in comparison to carrying value of our players.

Correct re upward valuations not being allowed.

Do you mean we wrote off very little?

[ramblur]

41 minutes ago, G STAR RAM said:

 

Alternatively, at the end of years 1,2 and 3 we think we could get all of transfer money back so value him at £8m still but, his contract expires and he leaves for free, so we take the full £8m hit in year 4.

Not so sure about this,and this is an example where you'd really have to have a good look through the relevant financial reg,which I've absolutely no intention of doing,as I've already got plenty of problems,without adding to them.

It's quite possible to revalue fixed assets upwards,as we've done in the past with the stadium,creating a 'gain' represented by a revaluation reserve,as part of the capital structure.I simply don't know if you can revalue intangibles to a figure higher than the current carrying value,which your example would imply,as a gain would arise and it would be pointless my trying to work out the accounting implications,when I simply don't know.

[Gritty]

Let's hope Butters has a storming season at Weds then and earns a move with a decent fee. And likewise Anya gets a January loan, plays well, and goes for a couple of mn.

We'll lose money on both though I think