The AVFC FFP thread

[OutByEaster?]

Just now, Czarnikjak said:

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

If Sheffield Utd were to sell him on to someone else - would that £200m still be with them, or with the team that bought the player?

The £200m doesn't really exist surely if we're saying that the PSR figure and the real figure don't need to be the same?

[Czarnikjak]

1 minute ago, OutByEaster? said:

If Sheffield Utd were to sell him on to someone else - would that £200m still be with them, or with the team that bought the player?

The £200m doesn't really exist surely if we're saying that the PSR figure and the real figure don't need to be the same?

I'd they bought him from us for £200m on 200 year contract, they would need to sell him this summer for £199m, anything less than that would count as loss on their PSR calculation.

Regardless if any cash out of this £200m actually changed any hands!

[blandy]

2 minutes ago, OutByEaster? said:

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? 

We booked 9 mill profit for PSR last summer.

We buy him back for (say) 7 mill. As we discussed, if we sell him straight away, then any difference in what we sell him for and what we paid (7 mill) goes into this (or next) years PSR calcs (depending on the sale date). If we keep him and he's on a new n year contract, then PSR uses the amortisation calcs for those years (say 3 years at 2.33 mill per year). PSR takes no account of the 4.5 mill and 2.5 mill figures in the way the payments between us and Sheff U are structured. But the actual accounts do.

And then the rules around PSR change anyway next year, just to add to the confusion and complexity.

[OutByEaster?]

Just now, Czarnikjak said:

I'd they bought him from us for £200m on 200 year contract, they would need to sell him this summer for £199m, anything less than that would count as loss on their PSR calculation.

Regardless if any cash out of this £200m actually changed any hands!

So why put players on long contracts?

Are there different rules when selling a player (book the whole lot immediately) to when buying a player (where the PSR value is taken a year at a time)?

(I should point out that I don't doubt for a minute that you're right, I just can't get my head around it)

[Czarnikjak]

Just now, OutByEaster? said:

So why put players on long contracts?

Are there different rules when selling a player (book the whole lot immediately) to when buying a player (where the PSR value is taken a year at a time)?

(I should point out that I don't doubt for a minute that you're right, I just can't get my head around it)

Because when you buy someone for £50m fee (book value, regardless of cash installments), on 1 year contract PSR cost is £50m for that year. On 5 years contract, PSR cost is only £10m for that year (50m/5).

Yes different between selling and buying.

[OutByEaster?]

1 minute ago, blandy said:

We booked 9 mill profit for PSR last summer.

We buy him back for (say) 7 mill. As we discussed, if we sell him straight away, then any difference in what we sell him for and what we paid (7 mill) goes into this (or next) years PSR calcs (depending on the sale date). If we keep him and he's on a new n year contract, then PSR uses the amortisation calcs for those years (say 3 years at 2.33 mill per year). PSR takes no account of the 4.5 mill and 2.5 mill figures in the way the payments between us and Sheff U are structured. But the actual accounts do.

And then the rules around PSR change anyway next year, just to add to the confusion and complexity.

So the £7m has no effect on the £9m we booked as pure profit last season?

The profit we make on any sale over £7m can be booked as profit this season?

If we keep him ,we begin to amortise him at 3 years of 2.33m (not at £7m as a fee)?

The actual accounts reflect that we've written off a future credit of £4.5m  and bought him for £2.5m (or just reflect that we bought him at £7m), but don't have the same effect on the PSR?

And ultimately if we were to sell him for £12m we'd make make a PSR 'profit' of £9m in his first year and a PSR profit of £5m in the second year for a total profit from a PSR perspective of £14m - albeit with an actual accounting profit of £9.5m (the £4.5m we received, minus the £7m we paid, plus the £12m we received)?

 

[OutByEaster?]

2 minutes ago, Czarnikjak said:

Because when you buy someone for £50m fee (book value, regardless of cash installments), on 1 year contract PSR cost is £50m for that year. On 5 years contract, PSR cost is only £10m for that year (50m/5).

Yes different between selling and buying.

So from a PSR perspective, as a seller, a one year loan with a £1m fee banks you a million, but selling a player for £5m and buying him back for £4m a year later banks you £5m and you still have the player.

And as a buyer, buying a player for £5m over five years means you amortise him at £1m a year and take that PSR hit, then selling him a year later for £4m means you come out even on PSR (four years of one million) and have paid a million pounds for one year of that player?

 

[Czarnikjak]

1 minute ago, OutByEaster? said:

So from a PSR perspective, as a seller, a one year loan with a £1m fee banks you a million, but selling a player for £5m and buying him back for £4m a year later banks you £5m and you still have the player.

And as a buyer, buying a player for £5m over five years means you amortise him at £1m a year and take that PSR hit, then selling him a year later for £4m means you come out even on PSR (four years of one million) and have paid a million pounds for one year of that player?

 

Correct. You getting there finally

 

[OutByEaster?]

Just now, Czarnikjak said:

Correct. You getting there finally

Wait, what?

That's what you've been telling me is wrong - I'm trying to figure out which bit I'm not getting - don't tell me I'm right! 

[Czarnikjak]

1 minute ago, OutByEaster? said:

Wait, what?

That's what you've been telling me is wrong - I'm trying to figure out which bit I'm not getting - don't tell me I'm right! 

Lol,

The downside of this for the selling club is that now when you buy the player back you end up with £4m to amortise.

If you simply loaned the player for a year your don't have that £4m problem.

[OutByEaster?]

1 minute ago, Czarnikjak said:

Correct. You getting there finally

So in this case - we sold Archer for £9m - and we bank all of that on our PSR.

Sheff Utd put in a quarter of that (4yr deal) on their PSR so £2.25m.

We agree to buy him back for, say, £6.75m which covers the remaining amount they have on their books for him or less if they'd agreed to that when they took him on.

We sell him this summer for £12m.

We can bank £9m for last seasons PSR when we sold him and £5.25m this summer when we sell him, for a total PSR profit of £14.25m?

[Czarnikjak]

1 minute ago, OutByEaster? said:

So in this case - we sold Archer for £9m - and we bank all of that on our PSR.

Sheff Utd put in a quarter of that (4yr deal) on their PSR so £2.25m.

We agree to buy him back for, say, £6.75m which covers the remaining amount they have on their books for him or less if they'd agreed to that when they took him on.

We sell him this summer for £12m.

We can bank £9m for last seasons PSR when we sold him and £5.25m this summer when we sell him, for a total PSR profit of £14.25m?

Correcto, you're welcome.

[OutByEaster?]

4 minutes ago, Czarnikjak said:

Lol,

The downside of this for the selling club is that now when you buy the player back you end up with £4m to amortise.

If you simply loaned the player for a year your don't have that £4m problem.

So in this case, the downside for the selling club (Villa) when we buy the player back is that we have a value based on the price we paid which we need to amortise (and I guess we could reduce that by buying him back and putting him on a six year deal) but the benefit is that as well as the amortisation problem you also have the asset to sell. So you're looking at one year of amortisation cost against the value of the player if you're planning a quick sale?

It seems a much better option for both clubs than a loan.

 

[Czarnikjak]

1 minute ago, OutByEaster? said:

So in this case, the downside for the selling club (Villa) when we buy the player back is that we have a value based on the price we paid which we need to amortise (and I guess we could reduce that by buying him back and putting him on a six year deal) but the benefit is that as well as the amortisation problem you also have the asset to sell. So you're looking at one year of amortisation cost against the value of the player if you're planning a quick sale?

 

If you sell immediately again, you don't have anything to amortise (well maybe 1 day of his contract which would be peanuts). You just need to make sure you are selling for at least the same amount you bought him back for.

[OutByEaster?]

2 minutes ago, Czarnikjak said:

Correcto, you're welcome.

I think then that the fault in my logic was looking at the (second) selling price potentially being set as a proportion of the single year (real) cost to the buying club - ie that Sheffield Utd, having only spent a 'real' £2.25m would sell him back for something like £2m rather than as a proportion of the whole of the remaining amortisation amount.

Thank you for your help! 

[cheltenham_villa]

1 hour ago, OutByEaster? said:

So why put players on long contracts?

Are there different rules when selling a player (book the whole lot immediately) to when buying a player (where the PSR value is taken a year at a time)?

(I should point out that I don't doubt for a minute that you're right, I just can't get my head around it)

Because PSR isn't the only thing in the world. If you spend big money on a player that you think will have resale value, you dont want them to disappear in a couple of years. 

[blandy]

1 hour ago, OutByEaster? said:

So the £7m has no effect on the £9m we booked as pure profit last season?

The profit we make on any sale over £7m can be booked as profit this season?

If we keep him ,we begin to amortise him at 3 years of 2.33m (not at £7m as a fee)?

The actual accounts reflect that we've written off a future credit of £4.5m  and bought him for £2.5m (or just reflect that we bought him at £7m), but don't have the same effect on the PSR?

And ultimately if we were to sell him for £12m we'd make make a PSR 'profit' of £9m in his first year and a PSR profit of £5m in the second year for a total profit from a PSR perspective of £14m - albeit with an actual accounting profit of £9.5m (the £4.5m we received, minus the £7m we paid, plus the £12m we received)?

 

Last season’s 9 mill is done and dusted. So no.

Any profit or loss on the (notional) 7 mill will count for this season, or next if it’s after 30 June for the sale date.

3 years of 2.33m (not at £7m as a fee) - it’s the same thing. 3 years of 2.33m is the £7m fee over a (notional) 3 year contract.

The actual accounts show all kinds of transaction summaries over the financial year to end June ( used to be May), But they don’t directly detail what counts as PSR and what doesn’t. So they will reflect money owed to the club by debtors and money the club owes to creditors as well as money that came in and went out.

Actual profit over the 2 different seasons on CA would be the total money received minus the total paid out (including to all agents and the transfer levy). Notionally 4.5 mill plus next transfer fee (say Of 12 mill) = 16.5 mill, then minus money paid out  of 4.5 mill, plus taxes and fees, so yeah. But over 2 different seasons. For PSR not all agents fees count and the calculation uses the 9 mill fee plus the notional 12 mill fee, minus the notional 7 mill buy back fee, but the 9 mill is in last years PSR , the 12 in this year (or next) if we sell him. and the 7 over the next length of his contract if we keep him.

[blandy]

1 hour ago, OutByEaster? said:

we could reduce that by buying him back and putting him on a six year deal)

No. I believe they’ve put a max time limit of 5 years on amortisation because of Chelsea’s gaming the system.

[OutByEaster?]

2 hours ago, blandy said:

No. I believe they’ve put a max time limit of 5 years on amortisation because of Chelsea’s gaming the system.

Ah, I thought  they'd limited it at six for that reason.

[blandy]

3 hours ago, OutByEaster? said:

Ah, I thought  they'd limited it at six for that reason.

You might be right, dunno, if so whatever, fair play as they say.