16 hours ago, Zeta said:

I admit, I am concerned about the future. We are spending so much money it's crazy. And we're banking on most of these young players working out and not having to buy much in the future, and that we'll get European football money.

We've seen many many expensive/promising players not work out. I can name loads off the top of my head just at Chelsea:

Lukaku, Morata, Torres, Bakayoko, Koulibaly, Havertz, Werner, Pulisic, Kepa

All costing 50m or above, I think. Most of them came in with lots of potential, some were supposed to be the final article. And how many of them worked out? How much money did we waste on their transfer and wages over the years?

There is no guarantee that these signings will work out. And it's not like we can just sell them easily if they don't. We'll have the likes of Inter offering loans and optional 10m fees at the end, because when we want to sell a player who hasn't worked out, we are at the disadvantage in the deal, and everyone knows it, and they will take the piss.

 

Maybe it'll all work out okay. But the pessimist in me is quite worried for the long term.

Relax, read this thread 

 

Edited August 17, 20232 yr by azpi28

52 minutes ago, azpi28 said:

Relax, read this thread 

 

This sums it up for me

 

A good take but it's important to remember that FFP doesn't distinguish between transfer fees and wages, both sum to form the yearly 'cost' of a player. Our strategy of offering low wages is counterbalanced by the extremely high transfer fees we're paying to clubs.

It does, however, shift a bit of the issue. To borrow a term from American sport, it's essentially front-loading the expense. A big chunk of the player's expense, in real terms, can be offset by that year's income from transfers. It bears repeating that the real problem is in 2025-26 when expenses are capped to just 70-% of revenue.

8 hours ago, SydneyChelsea said:

A good take but it's important to remember that FFP doesn't distinguish between transfer fees and wages, both sum to form the yearly 'cost' of a player. Our strategy of offering low wages is counterbalanced by the extremely high transfer fees we're paying to clubs.

It does, however, shift a bit of the issue. To borrow a term from American sport, it's essentially front-loading the expense. A big chunk of the player's expense, in real terms, can be offset by that year's income from transfers. It bears repeating that the real problem is in 2025-26 when expenses are capped to just 70-% of revenue.

Spot on another component that will add to the “ squad costs” is agents fees and that is something that is a hidden but not unsubstantial expense.

Again these costs are front loaded in terms of when a player is initially signed but those costs repeat when an extension to a contract is running down particularly when the player is high performing and knows they hold-all the cards in the negotiations.

Players like Fernandez will in their 8/9 year deals have their pay over the contracts length already mapped out so no need to incur agents costs after 3-4 years nor will football inflation uplift the players pay by more than planned.

 

 

Klopp and Pep putting the boots in and adding their voices to those calling for us to be looked in to.

Pep said to the media if City spent what we have in a year they would "kill them".

15 minutes ago, axman2526 said:

Klopp and Pep putting the boots in and adding their voices to those calling for us to be looked in to.

Pep said to the media if City spent what we have in a year they would "kill them".

Well maybe Guardiola needs to be more informed because we didn't spend all of that in a year, it's being spent over MULTIPLE years.

With those 2 whinging, it shows they're obviously worried.

7 hours ago, axman2526 said:

Pep said to the media if City spent what we have in a year they would "kill them".

Man City have been charged with 115 FFP offences.

10 hours ago, axman2526 said:

Klopp and Pep putting the boots in and adding their voices to those calling for us to be looked in to.

Pep said to the media if City spent what we have in a year they would "kill them".

It's all relative though. When he came in he spent a quarter of a billion in replacing his defence. This when 100m was a lot of money!

It's PR bullsh*t. Who gives a flying fig? 

On 17/08/2023 at 09:33, azpi28 said:

Relax, read this thread 

 

Edited August 19, 20232 yr by The Rising Sun
Info

On 16/08/2023 at 17:38, terraloon said:

 

All transfers come at a risk and every club runs the risks you talk about 

We are extremely lucky in that we have a significant number of really promising youngsters who can be coached and some we really haven’t paid, in modern day thinking, that much of those some will inevitably fall by the wayside.

There are two ways of looking at long contracts one your stuck with them if they don’t work out but the counter is that you have protected your asset. 
 

What you  need to factor in is that the new owners are addressing income and that is key. There will be some hurdles they need to overcome but under RA we really didn’t advance the commercial income by close to the numbers that others have.

Will all the players work out ? No of course not but I for one can’t wait to see how this group develops 

But why are we buying " promising" young players ?

Isn't the Academy supposed to be the place where we produce those kind of players ?

13 hours ago, Scott Harris said:

Well maybe Guardiola needs to be more informed because we didn't spend all of that in a year, it's being spent over MULTIPLE years.

I sort of get that for accounting reasons we can say the cost of the fee is spread over the length of the contract, but for example, we gave Brighton the most of the fee for Caceido in one large  lump sum ?

So that is what we have actually spent ?

Is that correct ?

I feel that the players bought from these brazilian clubs will be worth a lot in the future... With players costing more money each year they know they can make some serious money

Don't forget we have sold a lot of players and reduced the wage bill and we will still sell more and more... 

I don't doubt the club when it comes to business acumen dont forget boehley found the loophole in transfer market and FFP and took advantage straight away. 

Also, if we win titles our club value grows tremendously + who knows if the super league doesn't get announced 2026-2030??? 

16 minutes ago, Conte said:

I feel that the players bought from these brazilian clubs will be worth a lot in the future... With players costing more money each year they know they can make some serious money

Don't forget we have sold a lot of players and reduced the wage bill and we will still sell more and more... 

I don't doubt the club when it comes to business acumen dont forget boehley found the loophole in transfer market and FFP and took advantage straight away. 

Also, if we win titles our club value grows tremendously + who knows if the super league doesn't get announced 2026-2030??? 

even in FM this always works because they usually have a release clause under 30 million euros 

On 16/08/2023 at 18:18, Scott Harris said:

I'm up and down with how I feel about the money being spent. On the one hand, it's always exciting signing players and especially when you beat your rivals to signing them, but on the other hand, it feels like it has to work because of how much is being spent.

It's not like before where an expensive signing could be a bust and we could still go and get somebody else, these players must work out. If they don't work out, where does that leave us? how would we be able to afford the rest of their transfer fee over 4,5,6 years if we have no Champions League money coming in? If they don't work out, it won't be possible to replace them because we would still be paying 10m here, 20m there and 30m over there over multiple years.

I think the biggest risk of this failing is the lack of experience with these players. So many of them have under 100 appearances at senior level, Caicedo and Lavia combined only have 134 appearances at senior level. One season wonders are very frequent in football, so the odds that we have signed a few of them are very high. Another issue I have is goals, hardly any of these players have a goal to their name at senior level. I haven't checked the numbers, but I wouldn't be surprised if Sterling has more goals in his career than the rest of the squad combined. So the likes of Jackson, Mudryk, Madueke, Olise (if we sign him) Enzo, Chuwuemeka, Gallagher, they must start scoring goals right now, we can't have them scoring 3 or 4 a season and waiting for them to grow into top players. A few of them must hit double figures this season.

On 16/08/2023 at 18:18, Scott Harris said:

I'm up and down with how I feel about the money being spent. On the one hand, it's always exciting signing players and especially when you beat your rivals to signing them, but on the other hand, it feels like it has to work because of how much is being spent.

It's not like before where an expensive signing could be a bust and we could still go and get somebody else, these players must work out. If they don't work out, where does that leave us? how would we be able to afford the rest of their transfer fee over 4,5,6 years if we have no Champions League money coming in? If they don't work out, it won't be possible to replace them because we would still be paying 10m here, 20m there and 30m over there over multiple years.

I think the biggest risk of this failing is the lack of experience with these players. So many of them have under 100 appearances at senior level, Caicedo and Lavia combined only have 134 appearances at senior level. One season wonders are very frequent in football, so the odds that we have signed a few of them are very high. Another issue I have is goals, hardly any of these players have a goal to their name at senior level. I haven't checked the numbers, but I wouldn't be surprised if Sterling has more goals in his career than the rest of the squad combined. So the likes of Jackson, Mudryk, Madueke, Olise (if we sign him) Enzo, Chuwuemeka, Gallagher, they must start scoring goals right now, we can't have them scoring 3 or 4 a season and waiting for them to grow into top players. A few of them must hit double figures this season.

Hi Scott   I think , although I may be wrong,  that spreading the cost of the fee over the length of the contract is just an accounting thing. The whole fee has been paid, we don't have the money any more , the selling club has it. So we are not spending millions every year on a transfer, that's just an accounting thing  ( I think) So Brighton aren't getting Caceido' s fee over 8 years for instance. This is just my take on it mind, and I may be wrong .

There are more knowledgeable fans on here than me, so hopefully they can provide clarification.

Take care

On 16/08/2023 at 15:49, dkw said:

Its made even more enjoyable knowing they were all so excited when roman had to sell, thinking we were going to an owner who wouldnt spend money and we would drift down the league.

Instead our new owner is spending even more money, and taking the piss out of the FA at the same time with all his lovely loopholes.

And they were wrong about us " drifting down the league" too.

We plunged right down it 🤣

On 14/08/2023 at 20:26, dkw said:

I pointed this out to a daft Liverpool fan I know, he thought it was great that they had "caught up with us". As per that tweet I explained that we've made great use of it, now it being changed means no one else can take advantage, so we're the only ones to gain from it. Confused the hell out of the daft sod.

The only thing they've changed is to limit the length of the contracts.

Amortization is used by clubs as a creative accounting ruse to pretend that the fee that has already been paid in full is really being paid  in yearly installments 

Load of bollocks really but everyone does it apparently, but we gave longer contracts to spread the cost,  the practice still remains in place.

But if nothing else, it annoys everyone to f**k , so well worth it !

 

2 hours ago, The Rising Sun said:

But why are we buying " promising" young players ?

Isn't the Academy supposed to be the place where we produce those kind of players ?

It is but there is no way that our academy, as good as it is, will be able to take under its wings players from say Brazil or Argentina nor since Brexit can 16 year olds from Europe bought in.

1 hour ago, The Rising Sun said:

The only thing they've changed is to limit the length of the contracts.

Amortization is used by clubs as a creative accounting ruse to pretend that the fee that has already been paid in full is really being paid  in yearly installments 

Load of bollocks really but everyone does it apparently, but we gave longer contracts to spread the cost,  the practice still remains in place.

But if nothing else, it annoys everyone to f**k , so well worth it !

 

FIFA restrict the length of contracts to five years unless the National law allows longer and  that’s the situation in England and hence why these  6,7,8 year contracts are awarded by us.

Amortisation isn’t creative at all all it I falls in line with standard  accounting practice and every club that pays a fee for a player in the UK and indeed most jurisdictions use the same process. There is another approach that could be adopted but I won’t go into that as it’s not relevant.

You need to dismiss the thought that how the fee is paid is relevant in this discussion it really isn’t. It’s quite simply you devalue the asset over the period of the contract. From an accounting point of view nothing has changed. From the PLs version of FFP that  hasn’t changed yet .
All that’s happened is UEFA have ruled post 1/7/23 the maximum time you can amortise the fee is 5 years. The funny bit for me some clubs haven’t yet grasped the fact that that rule change will Impact them as well

I will explain.

 

Currenty say Rice who signed for Arsenal on a 5 year deal for ( I know it wasn’t exactly this sum) £100 million on a 5 year deal so he’s fee is amortised at £20 million a season so after 2 years his un amortised sum is £60 million. In the past if he had then signed another contract extending his stay by another three years the annual sum would be £12 million but became the rule change it stays at £20 million 

32 minutes ago, terraloon said:

It is but there is no way that our academy, as good as it is, will be able to take under its wings players from say Brazil or Argentina nor since Brexit can 16 year olds from Europe bought in.

FIFA restrict the length of contracts to five years unless the National law allows longer and  that’s the situation in England and hence why these  6,7,8 year contracts are awarded by us.

Amortisation isn’t creative at all all it I falls in line with standard  accounting practice and every club that pays a fee for a player in the UK and indeed most jurisdictions use the same process. There is another approach that could be adopted but I won’t go into that as it’s not relevant.

You need to dismiss the thought that how the fee is paid is relevant in this discussion it really isn’t. It’s quite simply you devalue the asset over the period of the contract. From an accounting point of view nothing has changed. From the PLs version of FFP that  hasn’t changed yet .
All that’s happened is UEFA have ruled post 1/7/23 the maximum time you can amortise the fee is 5 years. The funny bit for me some clubs haven’t yet grasped the fact that that rule change will Impact them as well

I will explain.

 

Currenty say Rice who signed for Arsenal on a 5 year deal for ( I know it wasn’t exactly this sum) £100 million on a 5 year deal so he’s fee is amortised at £20 million a season so after 2 years his un amortised sum is £60 million. In the past if he had then signed another contract extending his stay by another three years the annual sum would be £12 million but became the rule change it stays at £20 million 

Thanks for your reply

But if we pay £100 million, it's gone from our bank account ?. The bank balance doesn't show the total amount spent as the fee divided by the years does it ?

It shows a debit of £100 million as soon as we pay ?

Anyway, thanks for your reply, I used the word  "creative " because it popped up in something I was reading !!

18 hours ago, axman2526 said:

Klopp and Pep putting the boots in and adding their voices to those calling for us to be looked in to.

Pep said to the media if City spent what we have in a year they would "kill them".

Whereas every pundit is saying how wonderful it is we are spending money 

1 minute ago, bisright1 said:

Whereas every pundit is saying how wonderful it is we are spending money 

It's wealth re- distribution, our money going to clubs like Brighton and Southampton as a way of supporting those in need 😙😙

1 hour ago, bisright1 said:

Whereas every pundit is saying how wonderful it is we are spending money 

Aye, that's why Everton fans are wrong. We are the true peoples club lmao!

2 hours ago, The Rising Sun said:

Thanks for your reply

But if we pay £100 million, it's gone from our bank account ?. The bank balance doesn't show the total amount spent as the fee divided by the years does it ?

It shows a debit of £100 million as soon as we pay ?

Anyway, thanks for your reply, I used the word  "creative " because it popped up in something I was reading !!

Each signing comes with it a different arrangement as to how the fee is paid. There is no standard agreement it between the seller and buyer to agree how it’s paid

I won’t go into technical details but if a club pays the buyout clause you pay the fee in one sum. That’s why sometimes you hear a club has paid more than the buyout because they want or need to pay the fee by instalments.

Again I won’t get too technical but when you buy a player you might agree say 40% of the fee immediately and maybe 15% of the fee over each of the next 4 years. You might get charged interest  on top but as I say depends on what you agree

So that 40% will come out of your bank account the other 60% is listed in your creditors in your accounts. Any add ons will be mentioned in your accounts but don’t feature as a true debt till they have to be paid

 

  

1 hour ago, terraloon said:

Each signing comes with it a different arrangement as to how the fee is paid. There is no standard agreement it between the seller and buyer to agree how it’s paid

I won’t go into technical details but if a club pays the buyout clause you pay the fee in one sum. That’s why sometimes you hear a club has paid more than the buyout because they want or need to pay the fee by instalments.

Again I won’t get too technical but when you buy a player you might agree say 40% of the fee immediately and maybe 15% of the fee over each of the next 4 years. You might get charged interest  on top but as I say depends on what you agree

So that 40% will come out of your bank account the other 60% is listed in your creditors in your accounts. Any add ons will be mentioned in your accounts but don’t feature as a true debt till they have to be paid

Additionally, we may be routing the money through a third party to have a more balanced cash flow. (e.g. we need to send out 125m this year but we are sending out 25m+ a fee to a financier for 5 years).