Everton, our summer transfers and short term cost control regulations

[The Esk]

@The Esk

How do book values work when a player extends his contract?

You take the existing book value and depreciate that across the length of the new contract.

 

[scratchnsurf]

You take the existing book value and depreciate that across the length of the new contract.

Thanks - haven't quite figured out how yet, but that strikes me as having possibilities for manipulation to show greater profit from a players eventual sale.

 

[catcherintherye]

No mate, just the profit.

So for example we bought player X two years ago for £12 million on a 5 year contract. That player's book value is now £7.2 million because his value is depreciated in a straight line across the term of the contract.

We sell player X for £18 million. The profit on the player is £10.8 million which would be added to the non broadcasting income. We can use that income for total salary increases.

Apologies as you've probably answered these already mate. However;
1) If profit based across all transactions. For example if we make a profit on say Lennon of say 5 million and Oviedo of 4 million but loose 9 million on Niasse can we still claim back the 9 million or would that wipe it out?

2) What value is assigned to Bosman signings like Cleverley?

3) Do young players from the academy ever be given a value?

You can see why Monchi appeals to Moshiri and I think it gives it some context to the Kenwright comment about "doing it differently to Chelsea" as it isn't that easy. I also think you will get a good market from top teams looking to offload talent (hence the links to Schneiderlain and Mata).

 

[ToffeeDoug]

Apologies as you've probably answered these already mate. However;
1) If profit based across all transactions. For example if we make a profit on say Lennon of say 5 million and Oviedo of 4 million but loose 9 million on Niasse can we still claim back the 9 million or would that wipe it out?

2) What value is assigned to Bosman signings like Cleverley?

3) Do young players from the academy ever be given a value?

....

Q.1 It would be treated as a loss on the disposal of the asset. The £13.5m spent on Niasse will have been depreciated down since the day he signed, 4.5 year contract from 1st Feb 2016 say, so 54 months and a monthly depreciation value of £250k. Say we sell him in August, 6 months depreciation = £1.5m cumulative, net book value is now worth £12m (£13.5m less £1.5m) and we sell him for £4.5m, so the loss on disposal to be booked to the P&L is £7.5m and would offset any gains made on the disposal of an asset (e.g. Stones, Lukaku etc). The loss of £7.5m is bad news in terms of STCC Regs and more likely that Niasse would be loaned out and his asset value to the club depreciated down further over that loan period till it reached point where the transfer fee we got for him was a lot closer to the new net book value and so the loss on sale would be lower.[/QUOTE][/QUOTE]

 

[bluestevon]

Q.1 It would be treated as a loss on the disposal of the asset. The £13.5m spent on Niasse will have been depreciated down since the day he signed, 4.5 year contract from 1st Feb 2016 say, so 54 months and a monthly depreciation value of £250k. Say we sell him in August, 6 months depreciation = £1.5m cumulative, net book value is now worth £12m (£13.5m less £1.5m) and we sell him for £4.5m, so the loss on disposal to be booked to the P&L is £7.5m and would offset any gains made on the disposal of an asset (e.g. Stones, Lukaku etc). The loss of £7.5m is bad news in terms of STCC Regs and more likely that Niasse would be loaned out and his asset value to the club depreciated down further over that loan period till it reached point where the transfer fee we got for him was a lot closer to the new net book value and so the loss on sale would be lower.

[/QUOTE][/QUOTE]

I may be wrong here, but i believe also that any loan fee recieved for a player we loan out would be factored into the current season as a profit on player trading, it would kind of explain the Chelsea system of loaning 30-40 players or such sillyness out, not omnly our their wages covered allowing that to be used elsewhere, but the loan fees recieved will allow them to increase their wage structure further still - partuicularly important these days as Roman has pulled the plug on the endless spending

 

[The Esk]

Thanks - haven't quite figured out how yet, but that strikes me as having possibilities for manipulation to show greater profit from a players eventual sale.

Its possible if the longer contract increases the sale value of the player. If it doesn't increase the sale value then the lengthening of a contract slows down the depreciation which produces the reverse effect in terms of generating income.

 

[ToffeeDoug]

I may be wrong here, but i believe also that any loan fee recieved for a player we loan out would be factored into the current season as a profit on player trading, it would kind of explain the Chelsea system of loaning 30-40 players or such sillyness out, not omnly our their wages covered allowing that to be used elsewhere, but the loan fees recieved will allow them to increase their wage structure further still - partuicularly important these days as Roman has pulled the plug on the endless spending

Good point, hadn't even considered loan fees, surely more non-broadcasting revenue.

 

[scratchnsurf]

Its possible if the longer contract increases the sale value of the player. If it doesn't increase the sale value then the lengthening of a contract slows down the depreciation which produces the reverse effect in terms of generating income.

I was thinking more in terms of getting players to sign shorter length contracts for higher wages when you know they are going to move in a couple of Windows time. Value depreciates quicker showing greater profit on the sale.

 

[bluestevon]

Apologies as you've probably answered these already mate. However;
1) If profit based across all transactions. For example if we make a profit on say Lennon of say 5 million and Oviedo of 4 million but loose 9 million on Niasse can we still claim back the 9 million or would that wipe it out?

2) What value is assigned to Bosman signings like Cleverley?

3) Do young players from the academy ever be given a value?

You can see why Monchi appeals to Moshiri and I think it gives it some context to the Kenwright comment about "doing it differently to Chelsea" as it isn't that easy. I also think you will get a good market from top teams looking to offload talent (hence the links to Schneiderlain and Mata).

To nip in ahead of esk here and try answering

1. In a situation which we sold two players for 9m and one at a loss of 9m, the net effect on the player trading would be zero, not sure what happens in the circumstance of losing money in player trading over the entire window though, although think it doesn't effectively 'lower' the wgaes allowed and is ignored for that purpose

2. Bosmans are given a zero net value, just the same way that any signing fee for a player is not added onto their transfer fee that was paid, so Cleverley for example would be whatever we sold him for inits entirety as a trading profit

3. No, the only thing that matters is the fee paid for a player - ofc some situations say like Sterling with the rs, they paid a fee to QPR to poach him into the academy in the first place so that would apply, but more often than not a player such as thats initial transfer fee has depreciated over the course of his initial contract to zero

 

[bluestevon]

Good point, hadn't even considered loan fees, surely more non-broadcasting revenue.

Can't think how they'd not be mate, added a bit to my earleir post about the chelsea model of doing things btw

 

[ToffeeDoug]

Any one else sense that FFP has added inflationary pressure to already stupid transfer values? Clubs buy at high transfer values and want to sell at even higher ones in order to create the profit on sale?

 

[The Esk]

Apologies as you've probably answered these already mate. However;
1) If profit based across all transactions. For example if we make a profit on say Lennon of say 5 million and Oviedo of 4 million but loose 9 million on Niasse can we still claim back the 9 million or would that wipe it out?

2) What value is assigned to Bosman signings like Cleverley?

3) Do young players from the academy ever be given a value?

You can see why Monchi appeals to Moshiri and I think it gives it some context to the Kenwright comment about "doing it differently to Chelsea" as it isn't that easy. I also think you will get a good market from top teams looking to offload talent (hence the links to Schneiderlain and Mata).

@ToffeeDoug answered the first question perfectly.

2) Zero

3) No I don't believe so.

 

[bobbydigital]

I was thinking more in terms of getting players to sign shorter length contracts for higher wages when you know they are going to move in a couple of Windows time. Value depreciates quicker showing greater profit on the sale.

Yes, but the players value also goes down in consideration of the length left on the contract when we sell.

 

[The Esk]

I was thinking more in terms of getting players to sign shorter length contracts for higher wages when you know they are going to move in a couple of Windows time. Value depreciates quicker showing greater profit on the sale.

Two edged sword really though especially in the past when less profitable as player depreciation obviously hits the P&L account (aside from the benefit of increasing profits when sold).

There is though, as you point out, scope for manipulation .

 

[bobbydigital]

Any one else sense that FFP has added inflationary pressure to already stupid transfer values? Clubs buy at high transfer values and want to sell at even higher ones in order to create the profit on sale?

No, I don't feel this is the case. The profits and losses on player trading we need to generate right now because of FFP is only a specific issue for us as we want to massively increase our wage bill instantly. If we wanted to constantly massively increase our wage bill every season without generating any more commercial revenue then it could become a problem. However this would be a poor business model that will not work for very long and the effect of one poorly run club on the prices seen across a whole market would be minimal or more likely non existent.

The increases in transfer values is down to the increases in money within football from TV rights. Clubs are simply richer and don't have as much need to sell and they recognise the massive increases in revenue on offer from hanging on to good players to finish higher up the league massively outweighs the short term gain of selling a good player. On the other hand clubs that want to buy players realise this too and the price they are prepared to pay goes up.