Players current worth????

[Van der MoodHoover]

2 hours ago, ramblur said:

Don't think so. I think the idea is that you try and extend the contract of a player you want to keep, probably in the penultimate year of the contract. If the player doesn't play ball you try and sell him before the contract expires, hopefully at a fee near to, or better than, the residual value you'd allocated at that point in time. Obviously, if you don't want a player, you're trying to flog him all the time, again at least around the RV. The problem arises when you can't sell a player, but in that case you should lower the RV to reflect this, thus introducing an impairment (i.e. the amortization charges that would have applied in prior years, had you amortised down to this lower RV from the outset). For what it's worth, this is an extract from the Club's accounts regarding intangibles/ players' regs :-

" The costs associated with acquiring players' registrations,inclusive of EFL levies, or extending their contracts, including agent fees, are capitalized and amortised over the period of the respective players' contracts, after consideration of their residual values.

Where a contract is renegotiated, the unamortised costs, together with the new costs relating to the contract extension,are amortised over the term of the new contract. Residual values are reviewed by the board on an ongoing basis over the course of the season by reference to active market values.

The Company undertakes annual impairment reviews for player registrations." 

I'll admit there might seem to be a bit of ambiguity there. I once toyed with the idea that at the end of the year, after reviewing RVs, that the annual amortization charge for each player might be the current carrying value minus the current residual value allocated ( in other words, the total carrying values at the end of each year should reflect what you consider the total market value of such registrations to be, at that particular point in time). However, I can see 2 torpedoes speeding towards the hull of that particular theory :-

1) If that were the case, there'd be no need for the last sentence quoted, as there couldn't be any impairments.

2) As the total carrying value of the registrations as at 30/6/17 was over £40m, this theory would put the total market values at this figure (and it might be over £50m at the end of this year).

In conclusion, I'll give an example of how I think it works:-

You sign a player on a 4 year contract for an all in fee of £12m, and allocate an RV of £4m. The annual amortization would be (£12m -£4m) / 4 = £2m per year. If at the end of year 3 you decide that an RV of £2m better reflects current market value, then if that RV had been applied from the outset, the annual amortization would have been £2.5m, so you apply that figure in the 3rd year. However, because you'd only charged £4m in the 2 prior years, as opposed to £5m, an impairment of £1m also arises, giving a total charge against profits in that 3rd year of £3.5m.

Headaches all round- I've already got mine.

 

 

Oh well. So although we'll save some wages on bent baird and shackell releases we might yet take a write down on shackell  ( which hopefully could not be too large).

And it sounds like we'd better write down the values of some of the 2019 contract expiry's or we could have a problem if we can't shift them now and all the impairments come through next year.

What fun!