FFP

[G STAR RAM]

8 minutes ago, ramblur said:

It was said right at the outset,but I've no link. I tried throwing 'Gary Rowett appointed Derby Manager' into Google,but only got links to the national press for some reason. I can't even remember if I read or heard it,tbh, but as Cornie has now backed me up,I hope you'll at least begin to believe it may have been said.I'm so convinced, I'd almost stake my life on it,not that that's a particularly massive stake (taken some very large amortisation hits in recent years ).

I remember seeing it too, believe it was said in the first fans forum at The Bell but can't be certain on that, will try and have a look later.

[G STAR RAM]

1 hour ago, EnigmaRam said:

@G STAR RAM this is what I was referring too mate.?

I will hold my hands up on that, appears that I may have misinterpreted what he meant about having to move players out before bringing some in.

I'm still pretty sure that this was the impression he gave the day after deadline when discussing the reasons for letting Bryson go, will see if I can dig anything out!

[ramblur]

2 minutes ago, EnigmaRam said:

It was said mate. It was more in line with a wage structure than anything else. So not everyone is on £30k + PW.  Which is probably one of the reasons why Will and Ince went out. To remove 2 top wage tier players to allow GR some flexibility within the wage structure.

Just shows what a difficult job Gary has got,not only managing squad numbers,but 2 distinct tiers within same.

[ramblur]

5 minutes ago, G STAR RAM said:

I remember seeing it too, believe it was said in the first fans forum at The Bell but can't be certain on that, will try and have a look later.

I was going to suggest an early forum because,whilst I can't be sure,I tend to think I heard it.

[cheron85]

18 minutes ago, ramblur said:

It was said right at the outset,but I've no link. I tried throwing 'Gary Rowett appointed Derby Manager' into Google,but only got links to the national press for some reason. I can't even remember if I read or heard it,tbh, but as Cornie has now backed me up,I hope you'll at least begin to believe it may have been said.I'm so convinced, I'd almost stake my life on it,not that that's a particularly massive stake (taken some very large amortisation hits in recent years ).

Wasn't sure whether to like your post or not - I meant to like the top bit and not so much the bottom bit - You will always have more value than you give yourself credit for around here dude!

[BOB BIGGS]

Hi Ramblur

Like others, I hope you are keeping as well as you can. Your efforts on FFP are much appreciated.

I wonder whether you are thinking about Mel's interview with "The Ram". I read that some time ago. I googled it just now and it shows 30 April 2017 as the date. He talks about a 4 tier structure but mentions 3 really. The first is the high earners [6-7], second is the bulk [ 8-9] and thirdly the Academy [5-7]. The fourth is actually loans, to be used as a "top up" over a number of transfer windows. So, as Cornwall Ram says, that's a max of 16 permanent senior pros.

I've taken the view over the last couple of years that we are in a for a tough fight on the pitch. I have no expectations of a Top 6 finish this season but particularly regret the sales of Ince and Hughes. However, some very poor decisions have been made on recruitment over several years and in reality, Gary Rowett is paying the price for that. Some of the prices we paid were outrageous. I didn't understand it then and still don't.

So, we carry on. Hopefully, the penny will drop across a wider fan base that we are hemmed in financially for some time. I think a top half finish will be a decent effort this year. Whether we can develop that next season and beyond will depend on many issues so I'll take it a season at a time

[ramblur]

8 minutes ago, curtains said:

Thanks so in theory we could have spent more this window but would have to reign back in future windows to stay within the 39 Million over the 3 year period. The other thing I don't quite understand is the amortisation on player transfer fees as they are often a depreciating asset.

If say for example you pay 7 Million for Lawrence does it depend how much upfront say if it's 50 percent and then he's only worth 5 Million in 3 years how does that fit with FFP !

No curtains,you can completely,absolutely,utterly forget about payments in regard to FFP,as it's solely about amortisation. Let's say he cost £5m over a 5 year contract (that was suggested). Now we come onto the residual value bit.Lawrence is a young player who you'd expect to improve,and you might expect transfer fees to inflate further in the next few years,so I'm going to put a fairly high %age RV of £4m on him (if you're not going to put a high RV on him,then why did you buy him in the first place?)'

Thus your £5m cost tapers down to £4m after 5 years,implying amortisation of £200k/yr. Under the old system it would have been £1m/yr,so you can see that where younger players are concerned,wages are the main consideration,whereas under the old method it would have been a mixture of the 2.

[ramblur]

10 minutes ago, cheron85 said:

Wasn't sure whether to like your post or not - I meant to like the top bit and not so much the bottom bit - You will always have more value than you give yourself credit for around here dude!

You're too kind,Cheron. Probably not the best thing to joke about,but it somehow keeps me in good spirits.

[Curtains]

11 minutes ago, ramblur said:

No curtains,you can completely,absolutely,utterly forget about payments in regard to FFP,as it's solely about amortisation. Let's say he cost £5m over a 5 year contract (that was suggested). Now we come onto the residual value bit.Lawrence is a young player who you'd expect to improve,and you might expect transfer fees to inflate further in the next few years,so I'm going to put a fairly high %age RV of £4m on him (if you're not going to put a high RV on him,then why did you buy him in the first place?)'

Thus your £5m cost tapers down to £4m after 5 years,implying amortisation of £200k/yr. Under the old system it would have been £1m/yr,so you can see that where younger players are concerned,wages are the main consideration,whereas under the old method it would have been a mixture of the 2.

Thanks did you mean tapers down to 1 Million . i.e. 5 Million-4 Million value increase equalling 1 Miilion which is 200 K for FFP each year and  if so I totally understand why you would want to sign younger players who have a appreciating  value and not older players for high fees who would most likely be a depreciating asset 

[Animal is a Ram]

1 hour ago, curtains said:

Thanks so in theory we could have spent more this window but would have to reign back in future windows to stay within the 39 Million over the 3 year period. The other thing I don't quite understand is the amortisation on player transfer fees as they are often a depreciating asset.

If say for example you pay 7 Million for Lawrence does it depend how much upfront say if it's 50 percent and then he's only worth 5 Million in 3 years how does that fit with FFP !

If I understand it correctly, transfer fees are split over their length of time for FFP purposes. Money upfront would be more a cashflow thing, rather than FFP?

If a player is signed on a 4yr deal for an initial £4m, this year, then it will be £1m in 17/18, £1m 18/19 etc. etc. I assume then that any addons come in the year that they are triggered - if that player plays X games, scores Y goals or whatever.

Not sure how it works for value at selling time, mind.

[ramblur]

32 minutes ago, curtains said:

Thanks did you mean tapers down to 1 Million . i.e. 5 Million-4 Million value increase equalling 1 Miilion which is 200 K for FFP each year and  if so I totally understand why you would want to sign younger players who have a appreciating  value and not older players for high fees who would most likely be a depreciating asset 

No,curtains,I think you need to look at it again.It tapers down by £1m to the RV of £4m,thus equating to the £200k /yr for FFP. We might as well look at an example where he was actually sold for £4m during the final year. The cost of £5m would have been amortised by (4x£200k) =£800k,giving a net book value of £4.2m,so he would be sold at a book loss of £200k. This is offset,however,by the £200k of amortisation that isn't now charged in the final year.

If you look at the same example under the old method,the amortisation would have been £1m/yr,and so the net book value in the final year would be £1m,and there would therefore have been a book profit of £3m (with final year amortisation of £1m being saved).

The difference between a £3m profit and a £200k loss is £3.2m. The difference between (4x£1m) and (4x£200k) is £3.2m. Swings and roundabouts.

[Animal is a Ram]

http://www.telegraph.co.uk/football/2017/09/04/aston-villa-escape-financial-punishment-summer-clear-out/

Villa nearly fell foul even with parachute payments - I think we'd have heard something about it if we were sailing any nearer the wind.

John Terry is on £70k a week, and they're paying Snodgrass £40k a week wages too. 

[Curtains]

23 minutes ago, ramblur said:

No,curtains,I think you need to look at it again.It tapers down by £1m to the RV of £4m,thus equating to the £200k /yr for FFP. We might as well look at an example where he was actually sold for £4m during the final year. The cost of £5m would have been amortised by (4x£200k) =£800k,giving a net book value of £4.2m,so he would be sold at a book loss of £200k. This is offset,however,by the £200k of amortisation that isn't now charged in the final year.

If you look at the same example under the old method,the amortisation would have been £1m/yr,and so the net book value in the final year would be £1m,and there would therefore have been a book profit of £3m (with final year amortisation of £1m being saved).

The difference between a £3m profit and a £200k loss is £3.2m. The difference between (4x£1m) and (4x£200k) is £3.2m. Swings and roundabouts.

Mate you are brilliant at explaining it. 

Thanks. 

[Curtains]

50 minutes ago, Animal is a Ram said:

If I understand it correctly, transfer fees are split over their length of time for FFP purposes. Money upfront would be more a cashflow thing, rather than FFP?

If a player is signed on a 4yr deal for an initial £4m, this year, then it will be £1m in 17/18, £1m 18/19 etc. etc. I assume then that any addons come in the year that they are triggered - if that player plays X games, scores Y goals or whatever.

Not sure how it works for value at selling time, mind.

This is a good article on it mate  but I'm not sure if this is right as regards latest percentages for amortisation because Ramblur mentions old and new methods regarding calculating the amount so maybe Ramblur could tell us  when it was changed  

 

https://newtrendsinaccountingandfinance.wordpress.com/2014/11/26/how-football-clubs-use-accounting-and-amortization/

[G STAR RAM]

1 hour ago, curtains said:

This is a good article on it mate  but I'm not sure if this is right as regards latest percentages for amortisation because Ramblur mentions old and new methods regarding calculating the amount so maybe Ramblur could tell us  when it was changed  

 

https://newtrendsinaccountingandfinance.wordpress.com/2014/11/26/how-football-clubs-use-accounting-and-amortization/

That shows how DCFC used to do it, amortising the whole transfer fee evenly.

Now they give a player a residual value, and only the difference between transfer fee and residual value is amortised.

I believe it is still amortised evenly over the length of contract.

[ramblur]

3 hours ago, cheron85 said:

Wasn't sure whether to like your post or not - I meant to like the top bit and not so much the bottom bit - You will always have more value than you give yourself credit for around here dude!

Shame on me,I used the wrong terminology.Both RA and Pulmonary Fibrosis slash life expectancy,so I should have said impairment,rather than amortisation.To suffer one impairment would be unfortunate;two would be rather careless.Don't know what Acquired Haemophilia does,but I've a suspicion it doesn't grant you eternal life.

Wonder why you don't get acquired jaundice,influenza,gout,diabetes etc? Of course I'm being facetious because it's 'acquired' to distinguish  from the more common 'hereditary'.

[ramblur]

1 hour ago, curtains said:

This is a good article on it mate  but I'm not sure if this is right as regards latest percentages for amortisation because Ramblur mentions old and new methods regarding calculating the amount so maybe Ramblur could tell us  when it was changed  

 

https://newtrendsinaccountingandfinance.wordpress.com/2014/11/26/how-football-clubs-use-accounting-and-amortization/

The change came in the 15/16 accounts.

The irony is that if it hadn't come then,we wouldn't have been able to do so much transfer business,and we wouldn't have got into such a pickle.

[ramblur]

3 hours ago, BOB BIGGS said:

Hi Ramblur

Like others, I hope you are keeping as well as you can. Your efforts on FFP are much appreciated.

I wonder whether you are thinking about Mel's interview with "The Ram". I read that some time ago. I googled it just now and it shows 30 April 2017 as the date. He talks about a 4 tier structure but mentions 3 really. The first is the high earners [6-7], second is the bulk [ 8-9] and thirdly the Academy [5-7]. The fourth is actually loans, to be used as a "top up" over a number of transfer windows. So, as Cornwall Ram says, that's a max of 16 permanent senior pros.

I've taken the view over the last couple of years that we are in a for a tough fight on the pitch. I have no expectations of a Top 6 finish this season but particularly regret the sales of Ince and Hughes. However, some very poor decisions have been made on recruitment over several years and in reality, Gary Rowett is paying the price for that. Some of the prices we paid were outrageous. I didn't understand it then and still don't.

So, we carry on. Hopefully, the penny will drop across a wider fan base that we are hemmed in financially for some time. I think a top half finish will be a decent effort this year. Whether we can develop that next season and beyond will depend on many issues so I'll take it a season at a time

Thanks Bob.I think the version I saw/heard came earlier than that -perhaps it was subsequently subjected to a bit of fine tuning? Must say that 5-7 Academy lads looks a bit ambitious.

I actually think things will be a bit better next year.Knowing out of contract players that you don't want to keep on means you know exactly what the wage savings will be from this source,before you start thinking about anything else.You've then just got the tricky problem of the few that might be left that are difficult to move on,before you launch into a bit of inward activity.As I've pointed out before,younger players don't cause a hefty FFP hit on amortisation,so you're mainly talking about a wages swap with one of the outgoings.

I say that as a matter of course,but I'm well aware that it's not quite as simple as that. Although FFP might not be a big problem,some poor soul has to pod out the fee.

[Curtains]

44 minutes ago, ramblur said:

The change came in the 15/16 accounts.

The irony is that if it hadn't come then,we wouldn't have been able to do so much transfer business,and we wouldn't have got into such a pickle.

Blimey didn't know that 

[RamuelLJackson]

Thanks ramblur - always a wizard at making the numbers make sense to those of us who are thicker than you. Wishing you all the best and hoping health is kind to you.