Steve Wigan
Player Valuation: £35m
Go back to advertising beer, Eric..............
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Go back to advertising beer, Eric..............
bring the ghost on
Player Valuation: £35m
Net spend is not as important as fans might think
Despite what you may have heard, “net spend” is completely irrelevant to how big clubs do business and is not something they consider when calculating player costs. Consider the following: Manchester United signed Henrikh Mkhitaryan from Borussia Dortmund for £35m. Mkhitaryan will likely be earning the equivalent of at least £180,000 per week over the length of his four-year deal.
In practice, clubs such as United, for whom cash flow is never an issue, often pay the entire transfer fee up front or in a few instalments over a short period of time (less than 12 months). This helps reduce the overall cost of the transfer, and most selling clubs will much prefer to see the entire fee paid quickly, as opposed to several instalments over two or three years.
However, on the books – and this is how clubs actually calculate player costs – United, like every single other football club in Europe’s top eight leagues, will record the transfer fee as £8.75m in each of the next four years, not £35m now.
This is a universal accounting practice called player amortisation, and it is fundamental to how clubs calculate player costs. Rather than recording the entire purchase when it was made, the club will spread the transfer fee over the length of the player’s contract.
Naturally, wages must also be included in the calculation of player costs. Ideally, agent fees and image rights payments will be included as well, but to keep things simple, we’ll focus on the two big expenditures: amortisation and wages.
With Mkhitaryan costing Manchester United £8.75m per year in amortisation and £9.36m in wages (£180,000 per week multiplied by 52 weeks), his overall cost to the club is just over £18.1m per year. That £18.1m per year is what clubs look at with regards to player costs, not just the transfer fees coming in and out.
Let’s compare the Mkhitaryan deal to that of another recent Premier League signing from the Bundesliga: Arsenal’s £30m purchase of Granit Xhaka from Borussia Mönchengladbach. Xhaka signed a five-year deal and will reportedly earn around £125,000 per week at Arsenal. The transfer fee will be spread out over Xhaka’s contract at £6m per year (£30m divided evenly over five years). So including Xhaka’s wages, the overall cost to Arsenal is £12m per year.
While the transfer fees for Mkhitaryan and Xhaka are similar, Mkhitaryan is costing Manchester United 50% more than Xhaka is costing Arsenal on an annual basis.
To further illustrate why net spend doesn’t tell you anything about how clubs do business, consider United’s signing of Zlatan Ibrahimovic on a free transfer. While the “net spend” on that deal is zero, he adds well over £10m to Manchester United’s player costs this year.
If those were the only transactions United and Arsenal made this summer, their “net spend” figures would be similar (£35m and £30m, respectively). However, after applying the business and accounting principles that the clubs themselves use, we see that Arsenal added £12m to its total player costs for the coming season, while United added over £28m. Rather than a difference of less than 20% in actual spending (which is what net spend would show), the actual difference is over 200%.
Clubs do not have transfer budget, war chests and kitties
If anyone tries to tell you “big club x” has “y amount” to spend they are likely talking nonsense. Ask them to show their work on how they arrived at that number.
As we just discussed, there’s a lot more that goes into player costs than transfer fees. Unless the number being offered up clearly includes wages (which is more than half of the equation), and ideally at least a nod towards agent fees and image rights payments, you can safely disregard it as not reflective of that club’s available resources to bolster its squad.
https://www.theguardian.com/football/the-set-pieces-blog/2016/aug/24/transfer-window-market-myths
Despite what you may have heard, “net spend” is completely irrelevant to how big clubs do business and is not something they consider when calculating player costs. Consider the following: Manchester United signed Henrikh Mkhitaryan from Borussia Dortmund for £35m. Mkhitaryan will likely be earning the equivalent of at least £180,000 per week over the length of his four-year deal.
In practice, clubs such as United, for whom cash flow is never an issue, often pay the entire transfer fee up front or in a few instalments over a short period of time (less than 12 months). This helps reduce the overall cost of the transfer, and most selling clubs will much prefer to see the entire fee paid quickly, as opposed to several instalments over two or three years.
However, on the books – and this is how clubs actually calculate player costs – United, like every single other football club in Europe’s top eight leagues, will record the transfer fee as £8.75m in each of the next four years, not £35m now.
This is a universal accounting practice called player amortisation, and it is fundamental to how clubs calculate player costs. Rather than recording the entire purchase when it was made, the club will spread the transfer fee over the length of the player’s contract.
Naturally, wages must also be included in the calculation of player costs. Ideally, agent fees and image rights payments will be included as well, but to keep things simple, we’ll focus on the two big expenditures: amortisation and wages.
With Mkhitaryan costing Manchester United £8.75m per year in amortisation and £9.36m in wages (£180,000 per week multiplied by 52 weeks), his overall cost to the club is just over £18.1m per year. That £18.1m per year is what clubs look at with regards to player costs, not just the transfer fees coming in and out.
Let’s compare the Mkhitaryan deal to that of another recent Premier League signing from the Bundesliga: Arsenal’s £30m purchase of Granit Xhaka from Borussia Mönchengladbach. Xhaka signed a five-year deal and will reportedly earn around £125,000 per week at Arsenal. The transfer fee will be spread out over Xhaka’s contract at £6m per year (£30m divided evenly over five years). So including Xhaka’s wages, the overall cost to Arsenal is £12m per year.
While the transfer fees for Mkhitaryan and Xhaka are similar, Mkhitaryan is costing Manchester United 50% more than Xhaka is costing Arsenal on an annual basis.
To further illustrate why net spend doesn’t tell you anything about how clubs do business, consider United’s signing of Zlatan Ibrahimovic on a free transfer. While the “net spend” on that deal is zero, he adds well over £10m to Manchester United’s player costs this year.
If those were the only transactions United and Arsenal made this summer, their “net spend” figures would be similar (£35m and £30m, respectively). However, after applying the business and accounting principles that the clubs themselves use, we see that Arsenal added £12m to its total player costs for the coming season, while United added over £28m. Rather than a difference of less than 20% in actual spending (which is what net spend would show), the actual difference is over 200%.
Clubs do not have transfer budget, war chests and kitties
If anyone tries to tell you “big club x” has “y amount” to spend they are likely talking nonsense. Ask them to show their work on how they arrived at that number.
As we just discussed, there’s a lot more that goes into player costs than transfer fees. Unless the number being offered up clearly includes wages (which is more than half of the equation), and ideally at least a nod towards agent fees and image rights payments, you can safely disregard it as not reflective of that club’s available resources to bolster its squad.
https://www.theguardian.com/football/the-set-pieces-blog/2016/aug/24/transfer-window-market-myths
Ihaters
Player Valuation: £35m
Yeah but Spurs lost one of the world's best players... Net spend takes that into account
Dubai Blue
Player Valuation: £8m
how about now?
FIFA 17 Career mode still giving a bigger transfer budget to West Ham and Stoke.
http://www.express.co.uk/pictures/s...-budgets-leaked-sportgalleries/Burnley-161829
Says it all really. Moshiri Out.
http://www.express.co.uk/pictures/s...-budgets-leaked-sportgalleries/Burnley-161829
Says it all really. Moshiri Out.
Idiot
Coffee and TV
Player Valuation: £25m
Jim White and Moshiri are best mates
Why you texting cockwombles like Jim White lad
Librarian
Player Valuation: £70m
another space watcher
Duncan Disordely
Player Valuation: £35m
peatzwaterman
Player Valuation: £25k
@The Esk
The club has to file a Confirmation Statement by 31st August, for the position as at 17th August. Is this likely to reveal any changes in Moshiri's shareholding?
https://beta.companieshouse.gov.uk/company/00036624
The club has to file a Confirmation Statement by 31st August, for the position as at 17th August. Is this likely to reveal any changes in Moshiri's shareholding?
https://beta.companieshouse.gov.uk/company/00036624
ijjysmith
Calm
Waiting for it myself. Apparently a bulk list needn't be filed, but changes in shareholdings do,.
The Esk
Player Valuation: £70m
Hi mate, I doubt it's going to show any changes in shareholding as at 17th August.
Interestingly the following date 18th August, is the date of the land purchase (assuming that information is correct) which may be the trigger for the options agreement. If this is the case, I'd imagine it would be reported together when the club confirms the land purchase - until then I'm not expecting any changes to be announced.
It will show who FM acquired shares from and how many. From this, it will be possible to extrapolate his maximum holding post- options and may shed some light as to where the 1000+ shares to get him to 49.9% came from (assuming that the reported remaining shareholdings for BK and JW are correct)
The satisfaction of charges for the option agreement will suffer about 2 weeks time lag as IOM registry is mostly manual.