The AVFC FFP thread

[Czarnikjak]

5 minutes ago, OutByEaster? said:

So in theory, it's possible that (on paper) we sold him for £18m last summer and are buying him back for £3.4m this summer?

That would be beautiful.

No, That sounds too good to be true. If of that £18 only £9m was guaranteed and £9m were conditional addons (as others said here, I don't know), then we would have only booked £9m for his sale. Conditional addons are only booked when conditions are met.

Also if for example we buying him back for £10m and signing again on 5 year contract, from psr perspective it actually only costs us £2m this season.

Edited May 4 by Czarnikjak

[fightoffyour]

9 hours ago, OutByEaster? said:

How does this work for the financial regulations?

We sold him for £18m as a home grown player and booked the lot.

We now have to buy him back for £14m, presumably in the same way as any other signing.

If we sell him again now, it will be against the (amortised) value of that £14m - so we'd need to get more than £14m for him to book it as a profit this summer?

Would we be better trying to loan him to someone like Ipswich or a good Championship side, bank a couple of million and hope he does well enough for us to get the money back?

Do you think there might be a buyer out there at £15m?

I'd hate to think that having made a big profit last season, we've now left ourselves in a position where we have to sell him for a loss this summer.

Whatever we sold him for and booked is indeed irrelevant now in the context of bringing him back. We'd have to sell him for at least whatever we pay to buy him back this summer to avoid a loss - both in real terms and WCA (whatever current acronym) terms.

A loan might work best this time.

[tinker]

Hopefully he gets a move, reckon he would be a great buy for Leicester, similar style to Vardy .

[OutByEaster?]

So potentially anything we get over and above the £3.4m we've bought him back for is profit?

So we've sold him for (book) £9m and we can sell him again for about the same?

If we can do the same deal with Leicester as we did with Sheffield Utd then sell him next summer - he could end up making us an absolute fortune!

 

[PaulC]

Or he could just fight for his place in the squad. Don't like these buy back clauses if relegated. Basically made it a loan deal. 

[Czarnikjak]

1 hour ago, OutByEaster? said:

So potentially anything we get over and above the £3.4m we've bought him back for is profit?

So we've sold him for (book) £9m and we can sell him again for about the same?

If we can do the same deal with Leicester as we did with Sheffield Utd then sell him next summer - he could end up making us an absolute fortune!

 

You might be getting confused here.

If Sheffield bought him for £9m (book) there's no way the buyback clause is only £3.4m (book). It would make no sense from their point of view. Probably closer to £7m.

So to make profit on him again this summer, we would need to sell him for more than the buyback clause is, as his buyback purchase price (let's say that  £7m) is not amortised yet at all, hence whole £7m is still on our books.

Edited May 4 by Czarnikjak

[paul514]

3 hours ago, Czarnikjak said:

I see many people making the same argument.

"We cannot be in ffp red zone this season, otherwise we wouldn't buy any players in January"

I don't agree with that, and looking at the numbers involved explains why.

Total sum of wages and amortisation for  all players we bought this January is about £10m per year. Divide it by 2, as they are only on our books for half of this season, and they only adding £5m to this seasons ffp calculation.

If let's say our ffp hole this season was £30m, and the plan is to sell player X in June for £40m, adding extra £5m in January (while buying player X's replacement) doesn't make significant difference to our situation.

So your point is seriously they were so far over the limit already that they thought I'll spend some more now as it won't matter in June as I have to sell (insert player name) by then or break the rules anyway.........

Not a chance.

[OutByEaster?]

54 minutes ago, Czarnikjak said:

You might be getting confused here.

If Sheffield bought him for £9m (book) there's no way the buyback clause is only £3.4m (book). It would make no sense from their point of view. Probably closer to £7m.

So to make profit on him again this summer, we would need to sell him for more than the buyback clause is, as his buyback purchase price (let's say that  £7m) is not amortised yet at all, hence whole £7m is still on our books.

I am confused but I'm confused by the difference in money changing hands - from the sound of things we can book a whole fee for a player who leaves, but the buyback is based on the actual money that changed hands - so in this case we book the whole £9m even though we only receive half, and the buyback is based on the figure that's the actual money that changes hands.

Can you book a whole fee when you sell a player even if you don't ultimately receive it all?

[Czarnikjak]

2 minutes ago, OutByEaster? said:

I am confused but I'm confused by the difference in money changing hands - from the sound of things we can book a whole fee for a player who leaves, but the buyback is based on the actual money that changed hands - so in this case we book the whole £9m even though we only receive half, and the buyback is based on the figure that's the actual money that changes hands.

Can you book a whole fee when you sell a player even if you don't ultimately receive it all?

You need to forget when and how much actual cash changes hands, from Profit and Loss standpoint (and current PSR rules) it doesn't matter.

When you sell, you book whole sell value immediately (excluding conditional addons).

When you buy, you start amortising the fee over the course of whole contract.

To calculate Profit on player sale you takeaway any remaining non-amortised book value of the player from the agreed selling fee (booked, irrelevant of cash installments).

So if  the buy back clause is £7m and we want to sell him again next day, he's non-amortised value on our books is still going to be £7m. So to make any profit on player sale again, we need to sell him for more than £7m

 

[OutByEaster?]

6 minutes ago, Czarnikjak said:

You need to forget when and how much actual cash changes hands, from Profit and Loss standpoint (and current PSR rules) it doesn't matter.

When you sell, you book whole sell value immediately (excluding conditional addons).

When you buy, you start amortising the fee over the course of whole contract.

To calculate Profit on player sale you takeaway any remaining non-amortised book value of the player from the agreed selling fee (booked, irrelevant of cash installments).

So if  the buy back clause is £7m and we want to sell him again next day, he's non-amortised value on our books is still going to be £7m. So to make any profit on player sale again, we need to sell him for more than £7m

 

So in this case we sold for a book £9m - but we're buying back on a proportion of the actual payments we've received (a lot less than £9m)?

So in principle can we sell Archer to Leicester this summer for £30m (spread over his 6 year contract with them) receive £5m from them as the first instalment, then buy him back for £4m of the £5m they paid the following summer?

So instead of booking a £1m loan fee, we book a £26m profit and still keep the player?

 

 

[Czarnikjak]

2 minutes ago, OutByEaster? said:

So in this case we sold for a book £9m - but we're buying back on a proportion of the actual payments we've received (a lot less than £9m)?

So in principle can we sell Archer to Leicester this summer for £30m (spread over his 6 year contract with them) receive £5m from them as the first instalment, then buy him back for £4m of the £5m they paid the following summer?

So instead of booking a £1m loan fee, we book a £26m profit and still keep the player?

 

 

Lol, you again bringing in cash payments and installments to the calculation. They don't matter to the PSR calculation.

If we bring him back for £7m and immediately sell for £30m (regardless of agreed payment plan) we straight away book £23m profit on player sale.

[OutByEaster?]

7 minutes ago, Czarnikjak said:

Lol, you again bringing in cash payments and installments to the calculation. They don't matter to the PSR calculation.

Yes, exactly. The book value counts on the sale - but the real value counts when actually trading the player.

if it wasn't for the new rules on contract length, we could sell him to Leicester on a £200m, 200 year deal for a million a year, then buy him back one season later after they'd paid us a million for next to nothing and bank £199m+ for our PSR calculation. As it is, we can sell him for a massive fee over six years, then buy him back for a sixth or less and make a big profit on him twice - yes please!

That seems a pretty big loophole in the PSR calculation!

[blandy]

2 hours ago, OutByEaster? said:

So potentially anything we get over and above the £3.4m we've bought him back for is profit?

So we've sold him for (book) £9m and we can sell him again for about the same?

If we can do the same deal with Leicester as we did with Sheffield Utd then sell him next summer - he could end up making us an absolute fortune!

 

I don't think so. It's important to separate FFP/PSR calcs from audited accounts.

By that I mean, if we sold him for a reported 9 million (with 9 mill, potentially additional add ons, if various factors are met such as Sheff U staying up) then we booked the 9 mill as profit for PSR purposes. But if Sheff U structured the payments, with our agreement, to be (say) 4.5 mill up front, last summer, and then another 4.5 mill (or whatever figure(s) in due course), then that's irrelevant for PSR purposes, but for the financial accounts it would be detailed as money received and then the further payments are shown as money owed to us by external debtors (Sheffield u). Back to FFP, if we buy him back for the agreed fee and then sell him for more or less than that received fee, we make a profit or loss (for PSR purposes) on that difference. So if the agreed buy back fee was (say) 7 million and we sell hm for 10 million, we make 3 mill for PSR purposes. But if Sheff U have actually only paid us the 4.5 mill up front, the other 2.5 mill they owed us is taken from the 7 mill buy back and we transfer 4.5 mill in cash to their bank as the actual transaction to buy him back...

If I've not messed up, then TL;DR is "it's complicated"

[Czarnikjak]

7 minutes ago, OutByEaster? said:

Yes, exactly. The book value counts on the sale - but the real value counts when actually trading the player.

if it wasn't for the new rules on contract length, we could sell him to Leicester on a £200m, 200 year deal for a million a year, then buy him back one season later after they'd paid us a million for next to nothing and bank £199m+ for our PSR calculation. As it is, we can sell him for a massive fee over six years, then buy him back for a sixth or less and make a big profit on him twice - yes please!

That seems a pretty big loophole in the PSR calculation!

Just remember there are 2 parties to it. If Sheffield bought him for £200m (book) they would need to sell him back to us for close to that £200m (book). Otherwise their are making massive PSR loss! 

So we end up having £200m to amortise if we don't sell him on again for £200m or more

[OutByEaster?]

9 minutes ago, blandy said:

By that I mean, if we sold him for a reported 9 million (with 9 mill, potentially additional add ons, if various factors are met such as Sheff U staying up) then we booked the 9 mill as profit for PSR purposes. But if Sheff U structured the payments, with our agreement, to be (say) 4.5 mill up front, last summer, and then another 4.5 mill (or whatever figure(s) in due course), then that's irrelevant for PSR purposes, but for the financial accounts it would be detailed as money received and then the further payments are shown as money owed to us by external debtors (Sheffield u).

I was fine until here.  The difference between wooden dollars for PSR and real money for audited accounts I get.

10 minutes ago, blandy said:

IBack to FFP, if we buy him back for the agreed fee and then sell him for more or less than that received fee, we make a profit or loss (for PSR purposes) on that difference. So if the agreed buy back fee was (say) 7 million and we sell hm for 10 million, we make 3 mill for PSR purposes.

This bit too makes perfect sense to me. Buy something for £7m, sell it for £10m, make £3m profit - treat it as completely separate to the previous summer.

10 minutes ago, blandy said:

But if Sheff U have actually only paid us the 4.5 mill up front, the other 2.5 mill they owed us is taken from the 7 mill buy back and we transfer 4.5 mill in cash to their bank as the actual transaction to buy him back...

This bit gets away from me - I'm not sure where the £2,5m comes from and I can't figure out the maths - are we saying that whilst we might buy him back for figure A. w'ed book figure A plus whatever they owe us in terms of what would appear in the accounts (but not the PSR) or both, or something else?

[OutByEaster?]

5 minutes ago, Czarnikjak said:

Just remember there are 2 parties to it. If Sheffield bought him for £200m (book) they would need to sell him back to us for close to that £200m (book). Otherwise their are making massive PSR loss! 

So we end up having £200m to amortise if we don't sell him on again for £200m or more

But don't teams tend to book purchases on a basis of spreading that cost over a number of years - in the same way that Chelsea do? In essence meaning they're buying him for £1m a year over the course of the time they're buying him?

So Sheffield would book £1m of that £200m then write the rest off when they no longer have the obligation to pay it?

 

[blandy]

Just now, OutByEaster? said:

This bit gets away from me - I'm not sure where the £2,5m comes from and I can't figure out the maths - are we saying that whilst we might buy him back for figure A. w'ed book figure A plus whatever they owe us in terms of what would appear in the accounts (but not the PSR) or both, or something else?

They owed us 9 mill transfer fee for him (afawk). They paid (in this example) 4.5 mill up front, so still owed us 4.5 mill, as yet unpaid.

But we then buy him from them for 7 mill. We owe them 7 mill, they owe us 4.5 mill - so the 2.5 mill is the money we send them, and the debt they owed us is cancelled.

[Czarnikjak]

1 minute ago, OutByEaster? said:

But don't teams tend to book purchases on a basis of spreading that cost over a number of years - in the same way that Chelsea do?

So Sheffield would book £1m of that £200m then write the rest off when they no longer have the obligation to pay it?

 

Player value "write offs" also count towards your PSR calculation. You can't just magically erase that £200m from your accounts without psr consequences.

[OutByEaster?]

1 minute ago, blandy said:

They owed us 9 mill transfer fee for him (afawk). They paid (in this example) 4.5 mill up front, so still owed us 4.5 mill, as yet unpaid.

But we then buy him from them for 7 mill. We owe them 7 mill, they owe us 4.5 mill - so the 2.5 mill is the money we send them, and the debt they owed us is cancelled.

So if they paid £4.5m of the £9m - we can use the £9m for PSR - then having only paid off £4.5m they might agree a £3m fee for the buy back to cover over the equivalent of a £1.5m loan fee. They still owe us £4.5m but from a PSR (and accounting) point of view, can't we write that off? 

[HanoiVillan]

13 hours ago, paul514 said:

We categorically would not have signed players in January if we had an issue with this seasons compliance.

FACT CHECK: Nottingham Forest literally did exactly that.