Finances

[SamUltraRam]

I miss the days before FFP & transfer windows when you'd buy the Derby Telegraph in mid season and discover we'd bought a Geraint Williams for £ 40k or a Nigel Callaghan for £ 140k etc etc

[RoyMac5]

45 minutes ago, SamUltraRam said:

I miss the days before FFP & transfer windows when you'd buy the Derby Telegraph in mid season and discover we'd bought a Geraint Williams for £ 40k or a Nigel Callaghan for £ 140k etc etc

I actually prefer the modern game of leaks and gossip, much more fun in a way. Afterall fans will still have an opinion on whether the new signing is any good or not before they've even put their boots on! ?

[europia]

11 hours ago, G STAR RAM said:

Let's be honest, what happens on the field plays second fiddle to what is on peoples mobile phone in many cases these days.

It certainly isnt finances that is changing football beyond recognition.

I think it is, and I also get the feeling that many genuine supporters of the game see it that way. Just my opinion though.

Too many associated to the game taking out far more than they are contributing. That includes, owners, players, managers, broadcasters, pundits, agents, unethical 'sponsors' .....the list goes on, if I missed anyone.  

[Shadowplay]

 

No stopping Mel now.?

[richinspain]

Sorry but I missed this thread when it started and can't bring myself to read through 6 pages, but I have been wondering about the three year (or 4 as it will be now). Let's imagine that a club sells a player for £40million (yes I know it's not going to happen but let's imagine). Over the next three years they make a loss of £13million each year. They would still have theoretically £1million in the bank, but would fail FFP?

[Van der MoodHoover]

1 minute ago, richinspain said:

Sorry but I missed this thread when it started and can't bring myself to read through 6 pages, but I have been wondering about the three year (or 4 as it will be now). Let's imagine that a club sells a player for £40million (yes I know it's not going to happen but let's imagine). Over the next three years they make a loss of £13million each year. They would still have theoretically £1million in the bank, but would fail FFP?

Yep. There's this club in Hampshire......?

[Van der MoodHoover]

5 minutes ago, richinspain said:

Sorry but I missed this thread when it started and can't bring myself to read through 6 pages, but I have been wondering about the three year (or 4 as it will be now). Let's imagine that a club sells a player for £40million (yes I know it's not going to happen but let's imagine). Over the next three years they make a loss of £13million each year. They would still have theoretically £1million in the bank, but would fail FFP?

I interpreted your scenario as follows

Year 1     Year 2   Year 3 Year 4

+40m     -13m      -13m    -13m

you don't get any credit for the sale in year 4, but you get the losses for years 2 and 3 counting towards FFP so your FFP loss at end year 4 is -39m (and actually you;re just ok, but right on the limit)

[richinspain]

13 minutes ago, Van der MoodHoover said:

I interpreted your scenario as follows

Year 1     Year 2   Year 3 Year 4

+40m     -13m      -13m    -13m

you don't get any credit for the sale in year 4, but you get the losses for years 2 and 3 counting towards FFP so your FFP loss at end year 4 is -39m (and actually you;re just ok, but right on the limit)

Yes, I've probably not worded it well but you get the idea. So a club can be in the black with the bank, but still fall foul of FFP. It doesn't seem like a very good system does it? Even allowing relegated teams their parachute payments, it doesn't seem to give a crack for any club that either has money in the bank from previous successful years or those that have an owner willing to put his cash in. (Sorry, I'm struggling to express myself properly but the system really does need a complete overhaul)

[G STAR RAM]

2 hours ago, richinspain said:

Yes, I've probably not worded it well but you get the idea. So a club can be in the black with the bank, but still fall foul of FFP. It doesn't seem like a very good system does it? Even allowing relegated teams their parachute payments, it doesn't seem to give a crack for any club that either has money in the bank from previous successful years or those that have an owner willing to put his cash in. (Sorry, I'm struggling to express myself properly but the system really does need a complete overhaul)

It's a very good point.

In an ideal situation, clubs would be allowed to carry forward profits to set off against future year losses.

Way too complicated for the EFL though.

[rammieib]

3 hours ago, Van der MoodHoover said:

I interpreted your scenario as follows

Year 1     Year 2   Year 3 Year 4

+40m     -13m      -13m    -13m

you don't get any credit for the sale in year 4, but you get the losses for years 2 and 3 counting towards FFP so your FFP loss at end year 4 is -39m (and actually you;re just ok, but right on the limit)

The sale is in year 0 (Current accounting year but I think you are calling that year 1). Assuming that player has been fully depreciated (or could be an academy player) the profit of £40 million is in the current year. The other years are just cash flow.

Any business could make a profit year after year but run out of cash and therefore go bankrupt. 

[cheron85]

On 29/08/2020 at 08:47, Gritty said:

Apologies if this has been captured elsewhere but I think we're still in a bit of a hole.

I have to confess that I assumed you were enquiring about my finances - which have taken a bit of a hit since my lockdown amazon addiction has crashed into the world opening up a bit again and therefore beer money being a necessity again

However - I'm assuming the sale of Bennett will cover well enough beer money for the amount the squad is now allowed so I think we'll be fine

I've essentially given up on all football finance at this level - Parachute payments are utterly ludicrous and have grossly inflated the power of relegated clubs - The idea to protect them from financial ruin was lovely but now they have the financial clout to keep their squad completely intact and even go out and add to it - There used to be a financial necessity to sell some of your best talent and that is no longer the case - West Brom have used this to excellent effect and oddly enough been able to challenge easily two years running

[G STAR RAM]

14 minutes ago, rammieib said:

The sale is in year 0 (Current accounting year but I think you are calling that year 1). Assuming that player has been fully depreciated (or could be an academy player) the profit of £40 million is in the current year. The other years are just cash flow.

Any business could make a profit year after year but run out of cash and therefore go bankrupt. 

But P&S does nothing to address that.

[rammieib]

14 minutes ago, G STAR RAM said:

But P&S does nothing to address that.

Correct but I assume cash flow isn't generally the issue?

[richinspain]

43 minutes ago, rammieib said:

The sale is in year 0 (Current accounting year but I think you are calling that year 1). Assuming that player has been fully depreciated (or could be an academy player) the profit of £40 million is in the current year. The other years are just cash flow.

Any business could make a profit year after year but run out of cash and therefore go bankrupt. 

I know absolutely nothing about accounting etc, but I really don't understand how a business can make a profit year after year and still go bankrupt?

[rammieib]

12 minutes ago, richinspain said:

I know absolutely nothing about accounting etc, but I really don't understand how a business can make a profit year after year and still go bankrupt?

Very easy - you say to the customer you can pay me in three years time but right now I still have my costs (like my salary) to pay immediately. However I have no money right now to pay it.

Likewise, you could make a loss but actually have more cash coming in.

’Cash is king’ is often a well used business phrase.

[G STAR RAM]

27 minutes ago, richinspain said:

I know absolutely nothing about accounting etc, but I really don't understand how a business can make a profit year after year and still go bankrupt?

Just as an example:-

Ticket sales £2m

Player wages £1m

Profit £1m

Players purchased £10m

Club has made a £1m profit but have a cash deficit of £9m

[Van der MoodHoover]

22 minutes ago, G STAR RAM said:

Just as an example:-

Ticket sales £2m

Player wages £1m

Profit £1m

Players purchased £10m

Club has made a £1m profit but have a cash deficit of £9m

That isn't bankruptcy tho as you have a player worth 10m on your balance sheet.

A rational financial intermediary would provide you liquidity (cash) against the value of your asset (player).

So for @richinspain I think if you ARE making accounting profits year after year then you CANT go bankrupt. 

In your example, you'd be bankrupt if your 10m player did an acl and was worth only 1m.

[Rev]

I do wonder if fans really grasp just how bad finances are in football post Covid?

Post shutdown, broadcasters showed every single PL game live, even during the long held Sat 3pm-5pm blackout.

Much more content than scheduled, yet it's resulted in a large rebate from the PL Clubs to the rights holders.

If the biggest beast in the jungle has had to take a haircut, despite increasing live content, you can only imagine the loss further down the pyramid.

EFL clubs can only dream of getting away so lightly with the loss of gate revenue. It's going to be an absolute dogfight for every penny going at our level, and even worse below.

I don't see how many clubs will even survive the season unless the situation changes PDQ, yet I still see fans thinking we've beat a charge, let's press on and splash the cash.

 

It's not going to happen, we're skint and so is everyone else, strap yourselves in and hope the academy can provide the answers, at least we have that to fall back on, unlike most clubs.

[G STAR RAM]

20 minutes ago, Van der MoodHoover said:

That isn't bankruptcy tho as you have a player worth 10m on your balance sheet.

A rational financial intermediary would provide you liquidity (cash) against the value of your asset (player).

So for @richinspain I think if you ARE making accounting profits year after year then you CANT go bankrupt. 

In your example, you'd be bankrupt if your 10m player did an acl and was worth only 1m.

Wasnt necessarily showing bankruptcy, just how you can make profits but lose money.

Would be surprised to see anyone lending money against an intangible asset such as a player.

[minesahartington]

1 hour ago, rammieib said:

Very easy - you say to the customer you can pay me in three years time but right now I still have my costs (like my salary) to pay immediately. However I have no money right now to pay it.

Likewise, you could make a loss but actually have more cash coming in.

’Cash is king’ is often a well used business phrase.

Yep cash flow