6 + 2 Point Deductions

[Victus]

Seems weird to be able to be done again for years already charged. How could a team such as us hit by a charge ever truly get out of it without going down?

 

[Goat]

Sales are accounted for when the deal is done, not when the cash is received.

If you buy a player, you recognise an asset at the total price you will pay

If you sell a player, you recognise a gain or loss based on what you receive less their book value.

When fees are paid is still very important, but it's a cash flow issue more than accounting

I just dont think we understand Tim.

We have a Net spend of around 25p over the last 3 or 4 years.

And yet we have also posted a loss of around 300million in that same period.

Those figures arent real, but you get what I mean? I honestly havent got a club how to read a balance sheet or have any idea of what it all means and im suggesting that 99% of Football fans are the same.

In short, I reckon we post a loss in this accounting period, mainly due to reduced income and MASSIVE loan repayments.

 

[Tipp blue]

I was under the impression it's a rolling 3 year cycle with one year in, one year out, each year. Not 3 year blocks of time.

In that case you could be potentially punished for the same year multiple times if you've had a shocker in that season.
You could well be right I figured it was a 3 year rolling block.

 

[roydo]

That would be what I said.. 21/22 has already been accessed... so 22/23..23/24..24/25 is the next period which we are just about half way through at the moment. So we can't fall foul of rules this month or even next year.

But do you KNOW? I dont.

 

[ClausThomsen]

The deals are worth whatever amount will be paid, regardless of when it will be paid. That's why I disagreed with the narrative last summer about us spending nothing, because we had delayed payment. You wouldn't buy a car on credit and tell people it was free.

You put the total value of a contract on the books as an asset in year 1, at the total value it ultimately will cost you. The fact you haven't paid for a player yet doesn't change that, it just means you have a liability as well

Chelsea have spent an astronomical amount of money and will have to write off the value of all these players.

You also wouldn't pay for the entire car in Year 1 or plan your weekly shopping around the full price you paid for the car. If you delay payment for a year then you are spending nothing that first year - you may be liable in future years but it's not an outgoing that first year. Nobody says that delaying payment is akin to something being free.

In terms of outgoings there is no requirement to put the full potential value of a deal through the books that first year. A club likely can't accurately put the total amount a player will cost in Year 1 as they don't know how much that deal will cost. Nearly all deals have additional payments that are triggered by competition wins, league positions, the player's individual achievements and other such things that are not possible to predict accurately.

And to claim that Chelsea will have to write off the value of ALL these players seems a VERY strong claim. They moved on Kai Havertz for little to no loss (and maybe a profit on the books) after a couple of pretty underwhelming seasons.

 

[Lapeno77]

They will need to continue to sell certain assets, with a large book markup (e.g. academy players), to help balance the books.

If they don’t reach CL, which they won’t this year, I have no idea how they will make it work.

Presumably they're hoping the Saudi madness continues and they can offload a couple in overpriced deals

 

[ToffeeTim]

I just dont think we understand Tim.

We have a Net spend of around 25p over the last 3 or 4 years.

And yet we have also posted a loss of around 300million in that same period.

Those figures arent real, but you get what I mean? I honestly havent got a club how to read a balance sheet or have any idea of what it all means and im suggesting that 99% of Football fans are the same.

In short, I reckon we post a loss in this accounting period, mainly due to reduced income and MASSIVE loan repayments.

The biggest costs to the P&L for clubs are amortisation of transfer fees and of course wages. I'd imagine wages has been our biggest issue over the last number of years and continues to be the biggest issue.

I'm still expecting a loss, just hoping it's much less of a loss and shows a trend in the right direction. With a 40 odd million profit on the Gordon transfer, you'd hope this offsets some of the issues we have with high wage costs.

But basically, the total fees matter more, for accounting purposes, than when things are paid. It's common in lots of transactions, across many industries, for the amount to be paid in instalments or down the line. Football is not unique in that regard.

I don't want to get technical, but what you physically pay in an accounting period isn't necessarily what goes into the accounts. It's when costs are incurred or when a transaction is completed.

 

[ToffeeTim]

You also wouldn't pay for the entire car in Year 1 or plan your weekly shopping around the full price you paid for the car. If you delay payment for a year then you are spending nothing that first year - you may be liable in future years but it's not an outgoing that first year. Nobody says that delaying payment is akin to something being free.

In terms of outgoings there is no requirement to put the full potential value of a deal through the books that first year. A club likely can't accurately put the total amount a player will cost in Year 1 as they don't know how much that deal will cost. Nearly all deals have additional payments that are triggered by competition wins, league positions, the player's individual achievements and other such things that are not possible to predict accurately.

And to claim that Chelsea will have to write off the value of ALL these players seems a VERY strong claim. They moved on Kai Havertz for little to no loss (and maybe a profit on the books) after a couple of pretty underwhelming seasons.

Selling players is absolutely an option, of course. If they can sell for profit then that will help a lot with FFP. We seem to have got a bit better at selling players so I'm hoping that helps our position improve.

And it's a fair point on contingent fees etc. But I'm guessing there will be lots of amounts in football transfers that are ascertainable when the deal is being agreed.

 

[Toffeeback]

Yes I stole £100 from you, but you went to work all this week and through great effort made £90 of it back.
Stop complaining.

Really can't get behind this "deduction was good" and "we've made the points back" nonsense. If we still had that 10 points we'd be top half of the table near Europe. As it stands we're just barely above the relegation zone. Not to mention the prize money difference is not insignificant.

We should not be satisfied that we got a 10 point deduction but it didn't take us down. We should be fighting tooth and nail to get every one of those points reinstated.

We might have another breach this month.

This is exactly the reason why I also support the argument that @Melchizedek stated above - we can't just accept the 10 point deduction, whether or not it has any effect on our standing this season. Once we do, it sets a precedent that will absolutely be used against us again very soon if we do in fact have another breach, which has been stated as a distinct possibility.

We simply cannot allow that precedent to be set if it's at all within our power to help stop it.

 

[MikeH72]

Has anyone worked out why 2019/20 and 2020/21 have been combined regarding FFP? They’re treating them as “Covid years”, but 80% of the 2019/20 season was pre-pandemic, including both transfer windows, so that makes absolutely no sense. It isn’t fair to be including our spend from the 2019 summer transfer window as part of the pandemic year because it wasn’t.

 

[kev]

Soon as I see the words "you heard it here first" I automatically think you're a clueless attention seeking bellend.

I assumed the same as soon as I saw the word Twitter.

 

[roydo]

Has anyone worked out why 2019/20 and 2020/21 have been combined regarding FFP? They’re treating them as “Covid years”, but 80% of the 2019/20 season was pre-pandemic, including both transfer windows, so that makes absolutely no sense. It isn’t fair to be including our spend from the 2019 summer transfer window as part of the pandemic year because it wasn’t.

Dunno. Maybe lobbed them together as one?

 

[MikeH72]

Dunno. Maybe lobbed them together as one?

But why though? That’s completely unfair and doesn’t benefit anyone.

 

[Goat]

Has anyone worked out why 2019/20 and 2020/21 have been combined regarding FFP? They’re treating them as “Covid years”, but 80% of the 2019/20 season was pre-pandemic, including both transfer windows, so that makes absolutely no sense. It isn’t fair to be including our spend from the 2019 summer transfer window as part of the pandemic year because it wasn’t.

Well considering we "wrote off" around 180million pounds worth of loses due to "covid years", I dont really think we should focus too much on that Mike.

You know?

 

[ToffeeTim]

Dunno. Maybe lobbed them together as one?

I don't know myself, but just thinking out loud, didn't the 2019/2020 season finish really late during the summer?