The AVFC FFP thread

[MrBlack]

27 minutes ago, Mark Albrighton said:

Yeah thanks that would fall under the more obvious advantage 

I wasn’t sure if there was some clever accountancy/FFP trick. 
 

Assuming we got all the money now,  we'd have to use it in the next 3 years, Otherwise any profit leftover from this year gets erased from the ffp calcs at that point.

However, I assume the whole 100m won't be realised this year anyway, depending on how man City structured the deal. I imagine a key part of the transfer was to work the finances in our favour, and at the same time its in City's interest to also avoid incurring a 100m loss in this year's books.

So assume they are paying it us over at least 3 years, we'll have a 33m windfall this year, a significant chunk of which is taken up already.

Amortising the cost of our new signings over the life of their contracts.. Rough guesses...

25m/3 for Ings = 8.3m cost

33m/5 for buendia = 6.6m cost

25m/4 for Bailey = 6.25m cost

Makes for a 21.15m loss.

Means we can still buy another 45m player on a 4 year contract and break even... although wages are a factor I've not considered. Losing Jack, our highest earner, probably offsets most of the above also.

Edited August 5, 2021 by MrBlack

[OutByEaster?]

I think looking forward, we'll get a really useful income boost in the next set of accounts.

We deferred £30m from last years income which will show up this time around. I think that means that our top line income for 2021/22 will benefit from two lots of that difference - the first being the income that has come from last season into this season and the second being that this time around we'll be declaring a full year of income, not carrying £30m into the following season. That'll be a decent boost to our bottom line, even without the Grealish income.

[tomsky_11]

47 minutes ago, MrBlack said:

However, I assume the whole 100m won't be realised this year anyway, depending on how man City structured the deal. I imagine a key part of the transfer was to work the finances in our favour, and at the same time its in City's interest to also avoid incurring a 100m loss in this year's books.

So assume they are paying it us over at least 3 years, we'll have a 33m windfall this year, a significant chunk of which is taken up already.

Payment terms are irrelevant. Unless any of the £100m is conditional, which I suspect it won’t be or the clause wouldn’t be triggered, we will recognise a gain of £100m in this season’s accounts, whether we receive the cash now or in instalments over several seasons.

And from City’s perspective, it’s a cost of one-sixth of the £100m each year for six years.

Edited August 5, 2021 by tomsky_11

[HeyAnty]

As the legendary Warren Buffett says, time to invest is when there is fear in the market and to hold tight when its bullish.  I say take advantage now - sanson being a very good example 

[tomsky_11]

7 hours ago, Czarnikjak said:

As far as I can tell from the information available, we have met the FFP limit last season, but only just.

The main change that occurred was the continuation of COVID and the ability to write off player's residual value (thus reducing amortisation costs) in the books, while treating this impairment as a FFP excluded covid induced cost.

Why would COVID allow us to impair book value of players? Apologies if you’ve explained this already and I’ve missed it.

[Czarnikjak]

11 minutes ago, tomsky_11 said:

Why would COVID allow us to impair book value of players? Apologies if you’ve explained this already and I’ve missed it.

Expected deflation of transfer fees due to COVID making players less valuable.

For example, in their 19/20 accounts Everton took an intangible assets ( in other words players) impairment charge of £26m and attributed it to COVID.

I fully expect us to do the same in 20/21 accounts. It’s a free FFP hit.

[Rugeley Villa]

Why don’t Villa as a club generate that much income ? We always seem to be near the bottom in terms of match day revenue and merchandise revenue or am I missing something .

[MrBlack]

4 minutes ago, Rugeley Villa said:

Why don’t Villa as a club generate that much income ? We always seem to be near the bottom in terms of match day revenue and merchandise revenue or am I missing something .

Relatively low ticket prices, slow shit service at the bar. 

[Sulberto21]

2 hours ago, Rugeley Villa said:

Why don’t Villa as a club generate that much income ? We always seem to be near the bottom in terms of match day revenue and merchandise revenue or am I missing something .

Not that much hospitality. We're not in the Europa League or champions League. It'll be interesting to know how much commercial capacity on match days the other club's have.

[Rugeley Villa]

5 hours ago, Sulberto21 said:

Not that much hospitality. We're not in the Europa League or champions League. It'll be interesting to know how much commercial capacity on match days the other club's have.

Premier League clubs almost £1 billion in the red as Aston Villa incurred heavy losses in first season back

Now that Newcastle United have finally published their 2019/20 accounts, a full picture of the first COVID-19 affected season can be painted, and it's not a pretty sight

https://www.google.co.uk/amp/s/www.birminghammail.co.uk/sport/football/aston-villa-premier-league-billion-21252823.amp

Keep scrolling down, there’s a few revenue tables regarding tickets sales and merchandise etc. We are surprisingly low and below clubs I thought we’d be above. 

Edited August 8, 2021 by Rugeley Villa

[jim]

10 hours ago, Rugeley Villa said:

Why don’t Villa as a club generate that much income ? We always seem to be near the bottom in terms of match day revenue and merchandise revenue or am I missing something .

Merchandising would be much better if they had normal person sizing of the official clobber for more than a month a year. 

[Czarnikjak]

2 hours ago, Rugeley Villa said:

Keep scrolling down, there’s a few revenue tables regarding tickets sales and merchandise etc. We are surprisingly low and below clubs I thought we’d be above. 

This data is a bit misleading as number of clubs extended their accounting period that year to cover project restart.

We didn't, hence large chunk of our revenue was deferred to 20/21 set of accounts.

Still, we are very average in our ability to generate revenue, on par with teams like Southampton and Crystal Palace perhaps.

[Rugeley Villa]

4 minutes ago, Czarnikjak said:

This data is a bit misleading as number of clubs extended their accounting period that year to cover project restart.

We didn't, hence large chunk of our revenue was deferred to 20/21 set of accounts.

Still, we are very average in our ability to generate revenue, on par with teams like Southampton and Crystal Palace perhaps.

Maybe I’m overstating us, but surely we should be pulling more revenue than Southampton and Palace? 

[Rugeley Villa]

12 minutes ago, jim said:

Merchandising would be much better if they had normal person sizing of the official clobber for more than a month a year. 

We sell more shirts now than we ever have done. Another record breaking year regarding shirts, I think , which carries on the trend from the previous two years. 

[Czarnikjak]

2 minutes ago, Rugeley Villa said:

Maybe I’m overstating us, but surely we should be pulling more revenue than Southampton and Palace? 

We should, but 10 years of criminal negligence and mismanagement under Lerner and Dr Tony left us behind. We are also still recovering our reputation after 3 years spent in the championship.

[OutByEaster?]

The biggest impact on our revenues are that the two most important deals in the football club for income generation - the shirt manufacturer and the shirt sponsor - were both signed for a club that was fighting relegation - we're currently renegotiating both of those deals for next summer, as a club pushing to compete for European football - those deals should be the biggest in Villa's history. 

It'll help.

 

[Czarnikjak]

In this post I will try to show how the departure of JG for £100m changes our FFP position and what's possible with this kind of money.

For some background, you can look at one of my previous posts (linked below), where I explained our situation before JG departure. I also showed some numbers in that post explaining why I think that Buendia and Bailey came in regardless of JG money, but Ings and any further incomings will be funded by his departure:

 

Important thing to remember is that the £100m sale profit is a one-off injection and it will disappear from our FFP balance after 3 years. For this reason one would always prefer a long term revenue increase instead of a player sale, but I digress.

With this in mind, the sale of JG frees up ~£106.5m (including his £6.5m per season wages) from our FFP allowance this year and ~£120m (including £20m 3 years wages) over the next 3 years. Past the 3rd year, its just his wages that are freed up.

Obviously there is an unlimited number of ways how you can spend this £100m, below I will show 3 illustrative examples how we can do that from the FFP standpoint. I am not suggesting that any of these options are what we will or should do. Its just to show what's possible.

 

Option 1 - Lets go mental (aka Dr Tony's method)

Lets just spend all this money straight away, ok...we freed up £106.5m for this season and used £16m on Danny Ings (£10m amortisation and £6m wages). Still have £90m allowance left this season.

Technically, we could still buy players for about £250m to fill that allowance (£50m amortisation if signed on 5 year contracts and £40m to cover their wages) and not breach FFP this season.

Possible, but nobody in their right mind would do that as it leaves us massively exposed next year. We would need to either win the Champions League to bring in £100m extra revenue or sell players again for close to £100m just to balance the FFP books.

Option 2 - Full on but sustainable

As I mentioned before this £100m is time boxed to 3 years. Including freed up wages we have £120m allowance to play with over the next 3 years. This gives us £40m per year if divided equally.

With that in mind, we can increase our wages and amortisation by £40m this summer and it will be covered from FFP standpoint for next 3 years. In 3 years time, hopefully our revenue will be sufficiently higher to cover that, or we can simply sell a player or two.

The table below shows how that could look in terms of incomings (number of players is irrelevant as long as total wages and amortisation don't exceed £40m per season):

 

 

Option 3 - Cautious approach

Maybe we don't want to bring in too many players at once to destabilise the squad? Maybe we want to leave some money in reserve for next year?

We could just simply only add one more cheap CB cover (£2m amortisation + £2m wages) and only use £20m of our newly freed up FFP allowance this year. That would leave us with sizeable budget for next summer spending.

Personally I think we will end up doing something in between Option 2 and 3.

 

 

 

[Czarnikjak]

Reports of United wanting £5m loan fee for Tuanzebe, if that indeed includes wages I would be ok with it, if not, than it is taking a micky.

https://www.unitedinfocus.com/news/manchester-united-hope-to-land-8-75m-in-loan-fees-for-williams-and-tuanzebe/

Quote

The Telegraph report United want £5 million for Axel Tuanzebe to go on loan, amid interest from Newcastle United and Aston Villa.

 

The same outlet reports United are seeking £3.75 million for Brandon Williams, with Southampton and Norwich City linked. The fees also cover wages for the two players.

 

[blandy]

21 hours ago, Czarnikjak said:

the £100m sale profit is a one-off injection

Paid over 3 years (if reports are correct) rather than a one off in terms of income calcs and FFP, so the last payment in 2 years time will still be part of calcs  in 5 years.

[mrjc]

21 hours ago, Czarnikjak said:

In this post I will try to show how the departure of JG for £100m changes our FFP position and what's possible with this kind of money.

For some background, you can look at one of my previous posts (linked below), where I explained our situation before JG departure. I also showed some numbers in that post explaining why I think that Buendia and Bailey came in regardless of JG money, but Ings and any further incomings will be funded by his departure:

 

Important thing to remember is that the £100m sale profit is a one-off injection and it will disappear from our FFP balance after 3 years. For this reason one would always prefer a long term revenue increase instead of a player sale, but I digress.

With this in mind, the sale of JG frees up ~£106.5m (including his £6.5m per season wages) from our FFP allowance this year and ~£120m (including £20m 3 years wages) over the next 3 years. Past the 3rd year, its just his wages that are freed up.

Obviously there is an unlimited number of ways how you can spend this £100m, below I will show 3 illustrative examples how we can do that from the FFP standpoint. I am not suggesting that any of these options are what we will or should do. Its just to show what's possible.

 

Option 1 - Lets go mental (aka Dr Tony's method)

Lets just spend all this money straight away, ok...we freed up £106.5m for this season and used £16m on Danny Ings (£10m amortisation and £6m wages). Still have £90m allowance left this season.

Technically, we could still buy players for about £250m to fill that allowance (£50m amortisation if signed on 5 year contracts and £40m to cover their wages) and not breach FFP this season.

Possible, but nobody in their right mind would do that as it leaves us massively exposed next year. We would need to either win the Champions League to bring in £100m extra revenue or sell players again for close to £100m just to balance the FFP books.

Option 2 - Full on but sustainable

As I mentioned before this £100m is time boxed to 3 years. Including freed up wages we have £120m allowance to play with over the next 3 years. This gives us £40m per year if divided equally.

With that in mind, we can increase our wages and amortisation by £40m this summer and it will be covered from FFP standpoint for next 3 years. In 3 years time, hopefully our revenue will be sufficiently higher to cover that, or we can simply sell a player or two.

The table below shows how that could look in terms of incomings (number of players is irrelevant as long as total wages and amortisation don't exceed £40m per season):

 

 

Option 3 - Cautious approach

Maybe we don't want to bring in too many players at once to destabilise the squad? Maybe we want to leave some money in reserve for next year?

We could just simply only add one more cheap CB cover (£2m amortisation + £2m wages) and only use £20m of our newly freed up FFP allowance this year. That would leave us with sizeable budget for next summer spending.

Personally I think we will end up doing something in between Option 2 and 3.

 

 

 

Good stuff, and interesting.

One big opportunity has to be have more players in the squad with a decent resale value, even once they are surplus to our first team / squad requirements.  This was the big problem when we came up - we had the extreme position of loans ending - players retiring - needing to keep some bodies - one outlier with a huge value.  So basically no £ inflows and lots of £ outflows needed (wages and fees).  If we've been buying well, but continue to improve the squad....the players who drop down the pecking order can hopefully maintain some value to help balance things up.

This is all part of the long term problem we've been having to correct over the last few years, but should ultimately help balance between options 2 and 3.