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Other Club Transfers 2022

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Some FFP rules getting rinsed here aren't they...

Mudryk - 8 year contract
Badishale - 7 year contract
Fofana - 7 year contract.

£160mill over 8 years really

They'll just have wages to worry about
 
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kenada_blue said:
Some FFP rules getting rinsed here aren't they...

Mudryk - 8 year contract
Badishale - 7 year contract
Fofana - 7 year contract.

£160mill over 8 years really

They'll just have wages to worry about
Click to expand...
Amortising the cost of an asset over the lifetime of the asset is a standard accounting practice across all businesses. This is not FFP specific, it just happens that the asset is the player that is being amortised and not a company van or a piece of machinery. By giving long contracts Chelsea is also liable for wages for that period of time and they have to add each year of amortisation value to their financial calculations year year
 
Villa_Fan said:
Amortising the cost of an asset over the lifetime of the asset is a standard accounting practice across all businesses. This is not FFP specific, it just happens that the asset is the player that is being amortised and not a company van or a piece of machinery. By giving long contracts Chelsea is also liable for wages for that period of time and they have to add each year of amortisation value to their financial calculations year year
Click to expand...

No other club has done this especially with a £300mill+ outlay.

It's farcical. But can get away with it due to how much they turnover. If you can name another club who have signed a player on an 8 year contract...let me know. Even Messi was offered 10 years.

Biggest clubs have the best accountants and lawyers. See Man City.
 
kenada_blue said:
No other club has done this especially with a £300mill+ outlay.

It's farcical. But can get away with it due to how much they turnover. If you can name another club who have signed a player on an 8 year contract...let me know. Even Messi was offered 10 years.

Biggest clubs have the best accountants and lawyers. See Man City.
Click to expand...
You don't need a highly paid accountant nor lawyer to understand basic accounting rules. Assets can be written off over the lifetime of their asset. There is nothing wrong nor illegal nor surprising with what Chelsea is doing. It is not a loophole, it is how amortisation works. A loophole and highly paid lawyers and accountants do things like sell the ground/stadium to themselves and register the money as profit, albeit this loophole has now been closed. From a financial perspective it is more prudent to have shorter contracts as the company is just pushing more debt to future accounting windows with longer ones. Clearly, Chelsea don't have as much FFP headroom as they would like hence the longer contracts. There is nothing more cynical in doing this as there is getting a player on loan, why should a club be allowed a player of higher value for a small loan fee and partial wage payments?

In the UK, the clubs are strictly only permitted to determine the lifetime of the asset (player) based on the duration of the contract, this is why clubs renew player's contracts early during their contract as it reduces the annual amortisation cost.

Barcelon's accounting practice has long been to amortise their payers for periods longer than their contract, this was / is permissible in the Spanish league. So they get the benefits of lower annual payments without the detriment of having to commit to wages for a prolonged period of time. This is not allowed in the UK and this is one of the reasons Derby Co failed FFP and got points deduced as they were amortising for periods longer than the player's contract term.
 
Villa_Fan said:
You don't need a highly paid accountant nor lawyer to understand basic accounting rules. Assets can be written off over the lifetime of their asset. There is nothing wrong nor illegal nor surprising with what Chelsea is doing. It is not a loophole, it is how amortisation works. A loophole and highly paid lawyers and accountants do things like sell the ground/stadium to themselves and register the money as profit, albeit this loophole has now been closed. From a financial perspective it is more prudent to have shorter contracts as the company is just pushing more debt to future accounting windows with longer ones. Clearly, Chelsea don't have as much FFP headroom as they would like hence the longer contracts. There is nothing more cynical in doing this as there is getting a player on loan, why should a club be allowed a player of higher value for a small loan fee and partial wage payments?

In the UK, the clubs are strictly only permitted to determine the lifetime of the asset (player) based on the duration of the contract, this is why clubs renew player's contracts early during their contract as it reduces the annual amortisation cost.

Barcelon's accounting practice has long been to amortise their payers for periods longer than their contract, this was / is permissible in the Spanish league. So they get the benefits of lower annual payments without the detriment of having to commit to wages for a prolonged period of time. This is not allowed in the UK and this is one of the reasons Derby Co failed FFP and got points deduced as they were amortising for periods longer than the player's contract term.
Click to expand...

So you're saying it's nothing to get around FFP to pad out the £300mill they've spent?

If its not...why don't other clubs do the same?

We have a glorified billionaire accountant on our books who's not done it...
 

kenada_blue said:
Some FFP rules getting rinsed here aren't they...

Mudryk - 8 year contract
Badishale - 7 year contract
Fofana - 7 year contract.

£160mill over 8 years really

They'll just have wages to worry about
Click to expand...
They must surely have plenty of clauses in the players' contracts. Assuming Mudryk is on a paltry £150k (must be more for a £90m player though), that's a guaranteed salary of £62m over an 8-year contract. But he could and probably is on substantially more, so we can assume he's guaranteed at least £85m over 8 years unless there are clauses in there if he needs to retire due to injury, etc. That's an almost £200m outlay on a single player!
 
kenada_blue said:
So you're saying it's nothing to get around FFP to pad out the £300mill they've spent?

If its not...why don't other clubs do the same?

We have a glorified billionaire accountant on our books who's not done it...
Click to expand...
In part it is to stop them falling afoul of FFP, but the point is that they're doing nothing wrong.

Every single club spreads the purchase cost over the course of the contract period. If you're signing a young player you think will be a world beater, it makes sense to spread the high cost over a longer duration, which protects your investment so that if he DOES come good and the big(ger) guns come calling after a few years, they can still demand a high price because he's still tied down to a lengthy contract.

Don't forget that, for their part, they're committing to 8.5 years of his wages. If he stinks the gaff out that's a huge financial outlay for not much reward.
 
kenada_blue said:
So you're saying it's nothing to get around FFP to pad out the £300mill they've spent?

If its not...why don't other clubs do the same?

We have a glorified billionaire accountant on our books who's not done it...
Click to expand...
It is just basic accounting and there is nothing wrong with it. Why do u think Everton gave McNeil a 5 year contract and not a 3 or 4 year contract? It will be because its keeps his annual cost down to about 3m plus wages.
The reason other clubs do not do it is because of the higher risk and the deferment of debt. Look at Lukaku, he cost Chelsea 100m, he is out of favour at the club after 1 year. If Chelsea want to sell him they would have to account for the remaining 4 years of his contract is this financial year, which is 80m. There is no club that pay anywhere near that so Chelsea are stuck with him for a few more years. The only option they have is to loan him out and as clubs will employ an accountant, even the most inexperienced accountant will be able to advise that they have Chelsea by the short and curlies as they can't sell him so they will only pay a portion of his salary. It was the same with Tevez at Man City, they couldn't afford to sell him or pay him off as once the player leaves the club permanently the entire amortisation costs must be accounted for in the financial window that the player leaves the club
 
Brett Angell Delight said:
In part it is to stop them falling afoul of FFP, but the point is that they're doing nothing wrong.

Every single club spreads the purchase cost over the course of the contract period. If you're signing a young player you think will be a world beater, it makes sense to spread the high cost over a longer duration, which protects your investment so that if he DOES come good and the big(ger) guns come calling after a few years, they can still demand a high price because he's still tied down to a lengthy contract.

Don't forget that, for their part, they're committing to 8.5 years of his wages. If he stinks the gaff out that's a huge financial outlay for not much reward.
Click to expand...

Never said there was wrong doing. Only pointing out the mockery made of FFP due to how these deals are being conducted.

Yet, us and Leicester get hamstrung by the same restrictions that could've possibly been curtailed by creative accounting.

Mentioned before about the wages which will be "offset" by revenue. Unless they fall foul, they don't have a rich russian to bail them out as they did prior.
 
Villa_Fan said:
It is just basic accounting and there is nothing wrong with it. Why do u think Everton gave McNeil a 5 year contract and not a 3 or 4 year contract? It will be because its keeps his annual cost down to about 3m plus wages.
The reason other clubs do not do it is because of the higher risk and the deferment of debt. Look at Lukaku, he cost Chelsea 100m, he is out of favour at the club after 1 year. If Chelsea want to sell him they would have to account for the remaining 4 years of his contract is this financial year, which is 80m. There is no club that pay anywhere near that so Chelsea are stuck with him for a few more years. The only option they have is to loan him out and as clubs will employ an accountant, even the most inexperienced accountant will be able to advise that they have Chelsea by the short and curlies as they can't sell him so they will only pay a portion of his salary. It was the same with Tevez at Man City, they couldn't afford to sell him or pay him off as once the player leaves the club permanently the entire amortisation costs must be accounted for in the financial window that the player leaves the club
Click to expand...

Again, I've never said there was wrong doing. I was stating how the whole FFP can be navigated around to become farcical.

I see what Chelsea are doing as a huge gamble unless they sell players for big money. If I can recall, they been bought out by £3.1billion, clearing £1.5billion of debt, then have leveraged £900million of debt back on to the club (well, Chelsea holding company) ...and are now spending £300+million on transfers.

The idea no one bats an eyelid when it's well know club's like City have been pulled for financial doping in the past completely baffles me.

Yet the league will wave a stick at us and Leicester.
 

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