Surprised. Embarrassed. Frustrated.

[Seaside Sam]

11 hours ago, Mr Tibbs said:

As stated by a few earlier in the thread, it was quite a nice mess to be taking over. 

I bet there's football clubs around the world that would have loved to be in our "mess".

Bet there is a few who wouldn't as well

[ramblur]

On 2/17/2018 at 01:36, Carl Sagan said:

Thanks. I'm guessing the residual value would start to decline from about 18 months to go, with significant drops at 12 months and 6 months.

It's old ground with Will but we sold him before the season was even over (he'd gone out to play in the Euros), my connections said the fee was right at the bottom of the different estimates and his agent is a recent Watford player (and no one else) so I'm sure that's why he went there. No other Premier League clubs had started their summer recruitment. It is inconceivable to me there wouldn't have been other higher bidders for the second-youngest ever England U21 international. Just look at the national buzz when he made his Watford debut and scored, and the whole of twitter reacted in astonishment that Watford had been able to buy him.

If Thorne hadn't done his ACL we'd have got promoted and become established and him, Will and Jeff would be bossing it in the Prem with George and Will already booked on the plane for Russia. You can see I'm still bitter and disappointed (Watford play him in our right wing position where he looks really dangerous and would have fitted into Rowett's system) but Rowett has obviously proved  himself with where we are. I was also disappointed over Martin who I thought had a lot to offer us in the run-in and I couldn't see the sense unless financially desperate, but it'll be up to Rowett to prove himself again. I do trust in Gary and I suppose someone had to make tough and painful decisions. But it doesn't mean I like those decisions.

And with the oldest squad in the league, might we struggle financially because we'll have the lowest residual value of our squad versus our competitors? And does that partly still explain the net negative expediture, or are you saying the books look fine and we weren't on the limit?

As far as I'm aware,the RVs allocated can't exceed the total,all inclusive,fees concerned.You can revalue tangible fixed assets,and generate a gain (as we did some years ago with the PP revaluation),but I suspect intangibles will be a different ball game. @Diag Ram would be the guy to answer this,as I suspect he has to keep up to speed with financial regs.

In your example,whilst the value of the player might be decreasing,in some cases it might still be more than the RV allocated. If not,where you have a case where a player won't extend his contract,and we were unable to sell him in the penultimate year,I'd expect the RV to be downgraded (thus triggering an amortisation charge) in that year,to avoid a heavier hit in the following year. I don't think there'd be much point in downgrading in the final year,because I don't see much difference between an amortisation charge and a heavier (to the tune of such amortisation) book loss on the sale.

As far as the older players go, their values would be diminishing irrespective of any RVs allocated. The one good thing about their situations is that their RVs (purely age related) are likely to be less than their fees,meaning that amortisation will be charged on an annual basis,thus reducing their book values.

As far as the books and FFP goes,I can only go on gut feelings,because it's impossible to get a fix on wages. When I said that the 15/16 wages figure would have to be reduced by £8.5m just to equate to an alarming 100% of total income,I wasn't suggesting that the 100% would somehow make us FFP safe. If wages completely knock out income,then there's a host of other expenditure to build up your FFP loss (you could start off with £3.37m of amortisation in 15/16,a figure which has probably increased as a result of what I outlined in the paragraph above.)

To get things into perspective,that £8.5m I mentioned,taking into account ENIC, would be the equivalent of shedding 7 players on an average wage of £20k/week. If you have incoming players at the same time,then the £8.5m has to be net. Whilst I freely admit I can't get a handle on changing wages, I don't get the feeling we've as yet reeled in £8.5m net,and I think that some of the candidates that might still need to be moved on might prove to be a bit tricky.

Going back to your first point,I suspect that Butters may have been allocated an RV equal to his fee. I guess that this may have been/will be this year downgraded to avoid a potential, nasty,one off shock some time in the future.

[ramblur]

I must cut out the "as far as..." for a few weeks. What I forgot to mention was Nick B's case,probably another case where an RV equating more or less to his all inclusive fee was allocated. Whilst @sage seemed to be pinning his hopes on a big wage reduction (and I'm sorry if my original reply caused his pupils grief),I can only see 3 instances (though I stand to be corrected) where we're totally in control of events. Benty and Shacks will be off the wage bill (JR has already happened) and Chris Baird (sadly,from my point of view,as I think he's a decent year left in him) is out of contract. To me,this leaves the fairly tricky situations of Nick,Butters,Bryson,Chris M,and possibly Anya to be resolved (if all of those could happen,then my gut feeling would swing to being ok on wages,probably with a little bit of leeway for fresh faces.) The problem with these RVs,particularly in the cases of Nick and Butters (but not at all in the cases of Bryson/Martin) is that we mightn't be able to shift either on lowish fees (to generate some cash for Gary,and free up wages,or should I say reduce wages) because this might trigger book losses (straight charge against FFP) way in excess of any wage savings. In both these cases,a lot may depend on whether their RVs have been downgraded in the meantime (which in itself would have led to charges against FFP in the year done -probably at the end of this year,at a guess,and if this year's FFP could stand it),and by how much.

Gary doesn't have an easy job here at all. We badly need Chris to do well at Reading and Brys to continue to do well at Cardiff,because any subsequent fees received for either is going to mean book profits. Butters is the one that really worries me (there seem to be green shoots of recovery where Nick's concerned) as we badly need him to force his way back into the Owl's team,and play well.I can't help feeling there's still a decent player in there somewhere.

[RamNut]

So basically we bought a load of crap with no resale value.

we will also lose a shed load of money on bradley johnson, weimann, and even tom lawrence in due course.

[S8TY]

Some good points on this thread , what I’d like to point out is Huddersfield did not spend millions getting promoted but got a good manager and used the loan market very well ....why wasn’t we in for Mooy before Hudds got him ?.. as to me he was the best player in the championship last season.....and if I remember right Bournemouth didn’t  either it’s not just about spending millions it’s about building a cohesive hard working skilful side to me ...this where the problem lies for me our scouting system is pathetic!!! Not one of GRs signings needed scouting not one !! Look at Bristol City now and the average age of there squad ..they obviously have good scouts and abroad as well Kodga for one before he was sold to villa..... as much as I’ve liked some of GRs signings it has disappointed me that he has not got some younger players in so if we were to go up we had players who were hungry and capable to keep us up with a few additions once we were there.... I actually think some of GRs signings maybe past it come next season if we don’t go up leaving us with an even bigger squad if we wanted to change it about ....but do think that GR is doing a great job so far getting us into the top 6 although I will  admit to not  liking our style at times.

There is a lot of football to be played and we are in the mix and as I’ve stated before we can help by being loud and getting right behind them as we can still do it this season

 

[ramblur]

Throughout life I've been plagued by an inability to switch off, and here I am again at this unearthly hour of the morning being hit with the realisation that an RV doesn't form part of the accounts,it's merely a note allowing you to perform amortisation calculations. Consequently,it'd be pointless having an RV greater than the all inclusive transfer fee,as this alone would be enough to result in zero amortisation.....which also means that a pointless higher RV wouldn't increase the asset value anyway. Grrrrr.

To compound my felony,a reduction in the RV would probably lead to an impairment,rather than triggering amortisation (I badly want to get to sleep before I start thinking about this too much). However,the rather large mouth of Mr FFP would open just as wide whatever term you applied to the charge,so I'll just leave it as it is.It really doesn't matter in the grand scheme of things

[ramblur]

1 hour ago, RamNut said:

So basically we bought a load of crap with no resale value.

we will also lose a shed load of money on bradley johnson, weimann, and even tom lawrence in due course.

We don't know that at all.It doesn't seem that long ago that many thought we'd paid over the odds for Vyds,and some were willing to flog him for peanuts,yet here he is now as one of our better 'RV' stories. What resale value would you have put on David Nish a couple of months into his Derby career? I can assure all of those who didn't watch David's torture that the gap between his early performances and his undoubted ability was far greater than the difference between Tom's performances (and I've seen many good things there) and his ability. I think too many on here show a tendency to kick a player when he's down.

I suspect that when Tom hit shots in his Ipswich days he expected them to go in,whereas now I feel he may just hope they might.A lot of this game is down to confidence. I hope he doesn't dwell on things too much,because in sport if you invite the conscious mind to poke its beak where it doesn't belong,you're inviting trouble.After a couple of seconds,the present has become the past and that's more than enough time to spend on regrets. Your conscious mind should be applied to the present and the future,where it might do some good.

[sage]

3 hours ago, ramblur said:

We don't know that at all.It doesn't seem that long ago that many thought we'd paid over the odds for Vyds,and some were willing to flog him for peanuts,yet here he is now as one of our better 'RV' stories. What resale value would you have put on David Nish a couple of months into his Derby career? I can assure all of those who didn't watch David's torture that the gap between his early performances and his undoubted ability was far greater than the difference between Tom's performances (and I've seen many good things there) and his ability. I think too many on here show a tendency to kick a player when he's down.

I suspect that when Tom hit shots in his Ipswich days he expected them to go in,whereas now I feel he may just hope they might.A lot of this game is down to confidence. I hope he doesn't dwell on things too much,because in sport if you invite the conscious mind to poke its beak where it doesn't belong,you're inviting trouble.After a couple of seconds,the present has become the past and that's more than enough time to spend on regrets. Your conscious mind should be applied to the present and the future,where it might do some good.

@ramblur

Am I right in thinking then that FFP encourages you to buy young players of potential with lower fees and wages than older experienced pros who receive sizeable wages and fees, as these can be a real millstone if they don't do well?

Therefore unless you have parachute money, you need to me cute with frees, loans and gambles from lower and foreign leagues or risk being left in depreciation hell if you don't go up within 3 years of investing?

[cannable]

7 hours ago, Saity said:

....why wasn’t we in for Mooy before Hudds got him ?.. as to me he was the best player in the championship last season

In all fairness we had a blonde-haired carbon copy of him and the manager didn’t want him 

[S8TY]

23 minutes ago, cannable said:

In all fairness we had a blonde-haired carbon copy of him and the manager didn’t want him 

I don't agree because I think Mooy is a better player cannable but that's just my opinion but the point I'm making is why don't we pick these players up ? When was the last player we can say we scouted??  There was no scouting involved with Hudds Ledley Nugent Jerome Davies etc ...that needs improving for me 

[ramblur]

2 hours ago, sage said:

@ramblur

Am I right in thinking then that FFP encourages you to buy young players of potential with lower fees and wages than older experienced pros who receive sizeable wages and fees, as these can be a real millstone if they don't do well?

Therefore unless you have parachute money, you need to me cute with frees, loans and gambles from lower and foreign leagues or risk being left in depreciation hell if you don't go up within 3 years of investing?

Don't think it's quite as simple as that,sage. As far as I know,these RVs were introduced because it was felt that amortising all players down to zero led to an undervaluation of intangible assets. The introduction of RVs has led to a big reduction in amortisation,thus increasing the overall net book value of intangibles,in other words increasing the asset values to what was hoped would be a more realistic level........but this only works if the RVs turn out to be reasonably accurate,in the main. Thus it's not really anything to do with FFP,apart from the fact that,as RVs reduce amortisation (a charge against FFP),you can actually conduct more transfer business and stay within FFP limits than was the case prior to 15/16.

If you take the case of Vyds,I've no doubt that his RV would have been put in at or around his total transfer fee and I think that most would agree that his current market value probably way exceeds this,so there'll almost inevitably be a lot of swings and roundabouts.The reason I mention Vyds is that he doesn't fit your profile of young players with lower fees and wages, and if Tom L were to come good,then he might also prove to be ok in terms of FFP. In actual fact,the things you suggest were probably better suited to the era before RVs when reg fees were amortised down to zero. If you had low fees,then there would have been less amortisation to charge against FFP.

It's not so much a case of getting the RVs right,more a case of getting the players right. If you were to sign a relatively young player,then if you didn't put in an RV more or less equal to the total fee, you would be as good as admitting either that you'd signed a duffer at the outset,or that you'd paid over the odds......so why sign him in the first place?

The thing about older players is that you're likely to put in much lower RVs,and as a consequence of this a good element of amortisation will have been charged before you get to the final year,thus softening any potential nasty surprise then. Say you bought a 30 yr old on a 3 year contract for £4m; if you allocated an RV of £1m, then 2 lots of £1m/year amortisation would already have been charged to FFP,and you're thus left with an opening(financial year) book value of £2m in the final year (and if you'd downgraded the RV in the penultimate year,this could be even less). I'd forgotten to mention that it's a good thing we got Curtis and Tom for snips,because in Tom's case it's his sublime passing ability that's his main asset,which won't diminish with age,and I get the feeling that Curtis has a few more good years left in him,with any dropping of pace being compensated by his vast experience and positional sense.

I don't want to paint a picture of doom and gloom, because if we were to sell any of Martin,Bryson,Fozzy,Carson or George (if he regains form) off the top of my head (oh,and add in Ledley,and of course Vyds) then book profits would likely arise in each case,hence the swings and roundabouts I mentioned earlier. GT would have had 1 year's full amortisation charged in 14/15, thus lowering his net book value (compared to original fee) before the advent of RVs. I'm then guessing that he would have been allocated an RV equal to this net book value.

Of course,we don't want to see some of those mentioned above leaving; I'm just talking potentials here to offset the potentially bad cases.

Good loans/free transfers would be great with or without RVs,as RV's don't really count here (apart from,maybe,agents' fees in the case of frees). Signing on fees aren't capitalised,but are charged straight to P/L as and when paid.Hardly surprising because they're really just glorified extra wages anyway.    

[Van der MoodHoover]

Sounds to me like the introduction of residual values has been yet another stimulus to a massively inflated transfer market. 

[ramblur]

30 minutes ago, HantsRam said:

Sounds to me like the introduction of residual values has been yet another stimulus to a massively inflated transfer market. 

Think you're spot on there. Let's take the example of,say, a 24 yr old bought for £16m on a 4 year contract, and let's say he was sold in the final year for £16m. Under the old arrangements,the annual charges against FFP for the first 3 years would have been £4m amortisation+wages -quite daunting.In the final year,with a book value of £4m and a sale figure of £16m, a £12m profit on sale arises,to the credit of FFP.

Now let's look at the new arrangements,where the player's age would justify an RV of £16m. Only wages charged to FFP in each of the 4 years,with the final year yielding a break even sale,so you could easily see how clubs might spend more than before on transfers and hope that the RVs work out ok.

You can see how it could all unravel if the player were only sold for £8m in the final year. In the first case,the only change is that the profit on sale would reduce to £4m,whilst in the second case,same as for the first 3 years (if you'd not downgraded the RV), but a whopping loss of £8m against FFP in the final year.

This reassessment of RVs is fine (our accounts tell us that these values are looked at every year), but what would happen if a club were sailing very close to the wind on FFP and suddenly decided that the book value of a player probably justified an impairment of,say, £1.5m. If such impairment would take the club over the FFP limit,they'd hardly apply it (in full,at any rate).

Didn't like it when I first saw it,as it seems fraught with potential dangers to me. 

[Van der MoodHoover]

1 hour ago, ramblur said:

Think you're spot on there. Let's take the example of,say, a 24 yr old bought for £16m on a 4 year contract, and let's say he was sold in the final year for £16m. Under the old arrangements,the annual charges against FFP for the first 3 years would have been £4m amortisation+wages -quite daunting.In the final year,with a book value of £4m and a sale figure of £16m, a £12m profit on sale arises,to the credit of FFP.

Now let's look at the new arrangements,where the player's age would justify an RV of £16m. Only wages charged to FFP in each of the 4 years,with the final year yielding a break even sale,so you could easily see how clubs might spend more than before on transfers and hope that the RVs work out ok.

You can see how it could all unravel if the player were only sold for £8m in the final year. In the first case,the only change is that the profit on sale would reduce to £4m,whilst in the second case,same as for the first 3 years (if you'd not downgraded the RV), but a whopping loss of £8m against FFP in the final year.

This reassessment of RVs is fine (our accounts tell us that these values are looked at every year), but what would happen if a club were sailing very close to the wind on FFP and suddenly decided that the book value of a player probably justified an impairment of,say, £1.5m. If such impairment would take the club over the FFP limit,they'd hardly apply it (in full,at any rate).

Didn't like it when I first saw it,as it seems fraught with potential dangers to me. 

I assume that the setting of RVS is the responsibility of the Board?  Which increases the risk  (in my view) that clubs spend more than they would under an amortisation approach.

I expect to see a hiatus followed by more clubs falling foul as RVS ultimately have to be written down.

[sage]

@ramblur is there then a possibility of a club buying time with these RV values which may come back to haunt them?

Could for example a Chief Exec makes decisions which aren't in the long term fiduciary interests of the club to try and gain short term glory?

 

[ramblur]

17 hours ago, HantsRam said:

I assume that the setting of RVS is the responsibility of the Board?  Which increases the risk  (in my view) that clubs spend more than they would under an amortisation approach.

I expect to see a hiatus followed by more clubs falling foul as RVS ultimately have to be written down.

My guess would be Stephen Pearce,aided by Gary (particularly on the annual reassessment front). Some may get in a pickle,but we should remember they don't stop clubs making sales profits in some cases. On my earlier list of players we could turn a profit on,I missed off the obvious example of Keogh,albeit another one we wouldn't like to lose.We could probably turn profits on Curtis and Tom H as well.

[ramblur]

5 hours ago, sage said:

@ramblur is there then a possibility of a club buying time with these RV values which may come back to haunt them?

Could for example a Chief Exec makes decisions which aren't in the long term fiduciary interests of the club to try and gain short term glory?

 

The possibility could be there,which isn't to say that it has happened. You're bound to get some of these wrong,as it can't be an exact science,and you'll always get cases where players are sold for more than the original purchase price. These wouldn't represent RV mistakes,as you can only put in RVs less than or equal to the original overall cost.

In our own case,I've no way of knowing (yet) if any adjustments were made in 16/17,just as I can't know if anything is to be done this year. 

Going back to my example of the £16m player,just imagine the fall out if such player were to sit out his contract. Luckily,this kind of thing seems a relatively rare occurence.

[Wolfie]

20 hours ago, ramblur said:

Think you're spot on there. Let's take the example of,say, a 24 yr old bought for £16m on a 4 year contract, and let's say he was sold in the final year for £16m. Under the old arrangements,the annual charges against FFP for the first 3 years would have been £4m amortisation+wages -quite daunting.In the final year,with a book value of £4m and a sale figure of £16m, a £12m profit on sale arises,to the credit of FFP.

Now let's look at the new arrangements,where the player's age would justify an RV of £16m. Only wages charged to FFP in each of the 4 years,with the final year yielding a break even sale,so you could easily see how clubs might spend more than before on transfers and hope that the RVs work out ok.

You can see how it could all unravel if the player were only sold for £8m in the final year. In the first case,the only change is that the profit on sale would reduce to £4m,whilst in the second case,same as for the first 3 years (if you'd not downgraded the RV), but a whopping loss of £8m against FFP in the final year.

This reassessment of RVs is fine (our accounts tell us that these values are looked at every year), but what would happen if a club were sailing very close to the wind on FFP and suddenly decided that the book value of a player probably justified an impairment of,say, £1.5m. If such impairment would take the club over the FFP limit,they'd hardly apply it (in full,at any rate).

Didn't like it when I first saw it,as it seems fraught with potential dangers to me. 

Well that explains why one of GR's objectives is to increase squad value.

[ramblur]

Personally,I'd like to see an arrangement wherein the RV is restricted to a maximum 50% of the all inclusive fee. This would still lead to a more realistic valuation of intangibles (compared to the situation prior to 15/16) that the financial reg appears to have been keen to address,whilst introducing a bit of a safety valve. This would lead to amortisation charges in respect of a £4m player that would previously have applied to a £2m player prior to 15/16.

It appears to me that the current situation may be in conflict with the accounting convention of conservatism.

[ramblur]

Too disappointed to post anything about the game,so I'll take the opportunity to correct something I put in my last post. It could well be that the combined market value of our players equals or exceeds the overall net book value, so there's probably no conflict with conservatism. At least I don't have to wear a disguise in the village for the rest of the season,just look a bit glum.I thought all those village idiots were going to give me huge grief 20 minutes ago.