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Eviltwinz93

Financial Fair Play

Started by Eviltwinz93,

374 posts in this topic

According to Jake Cohen, specialist in those kind of things, the £40M swing in profit/losses (£18M profit last year and £23M loss this year) comes down to:

- £11M less in transfer sale profit

- weaker CL performance

- Increase in player costs (Costa at £16M/accounting year, Fabregas 13.8, Luis 9,...)

Anyway, with the Yokohama deal kicking in this year and the future TV deal, the financial outlook is looking good.

would those player costs include writing off 15m plus with Torres?

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would those player costs include writing off 15m plus with Torres?

Yes the remaining cost of Torres accounted for this period:

"Torres will now cost £18.2m in 2014/15, but will be completely off the 2015/16 books."

Here is the source if you want to get more into details ;)

http://weaintgotnohistory.sbnation.com/2014/12/27/7455227/fernando-torres-sale-ac-milan-chelsea-finances-ffp

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Yes the remaining cost of Torres accounted for this period:

"Torres will now cost £18.2m in 2014/15, but will be completely off the 2015/16 books."

Here is the source if you want to get more into details ;)

http://weaintgotnohistory.sbnation.com/2014/12/27/7455227/fernando-torres-sale-ac-milan-chelsea-finances-ffp

thanks....so he basically cost us the loss for this accounting period.

Healthy looking figures considering then and better ones to look forward too

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thanks....so he basically cost us the loss for this accounting period.

Healthy looking figures considering then and better ones to look forward too

Yeah Torres was a dead-weight for quite some time, glad he'll finally be off the books :getin:

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5 hours ago, OhForAGreavsie said:

I understand amortisation perfectly well and it makes not the slightest difference to the logic here Chou.

If we are not paying wages and amortised fee for a new CB over, say, four years, starting in July this year, then we'll be doing that starting in July next year. Such a player will very likely be needed and so the money will have to be spent, and accounted for, at some time. In any case, amortisation is just an accounting practice. It almost never reflects real cash flows. The real amount of money leaving one club's bank account and arriving in another's also has to be budgeted. You sign a player this year or next year, he still has to be paid for.

For example, I imagine we are still showing the last dribbling of Mikel Jon Obi's transfer fee on our FFP accounts despite the fact that United and Lyn Oslo danced off into the night with their swag many moons ago. (Not sure how much of their booty Lyn got to keep by the time the legal processes worked themselves out.)

 

@OhForAGreavsie I didn't want to derail an already 'rampant' JT thread further, so I'll reply here if you don't mind.

Let me give an example:

Scenario A: JT leaves, we sign a back up CB for say 10m on a 4-year deal (assume same wages) then next year we sign another player we need for 10m on a 4-year deal as well. The extra cost on the FFP budget for the next 5 seasons will be:

2016/17: 10m/4 = 2.5m

2017/18: 2.5 + 2.5 = 5m

2018/19: 2.5 + 2.5 = 5m

2019/20: 2.5 + 2.5 = 5m

2020/21: 2.5m

 

Scenario B: Terry renews and we sign back up CB next season instead and the other player we need this season instead of next. The FFP budget would look like:

2016/17: 2.5m

2017/18: 2.5 + 2.5 = 5m

2018/19: 2.5 + 2.5 = 5m

2019/20: 2.5 + 2.5 = 5m

2020/21: 2.5m

 

Exactly identical. Do see what I mean now?

Yes, I know it's a lot more complicated and the fees will likely be different and the wages play a role and then of course the contracts of the signed players will not be left to run out and instead will be renews, but the idea is basically the same.

Yeah, obviously the actual cash flow and budget will be different, but I don't think we (the club) really care about that nearly as much as FFP. 

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2 hours ago, CHOULO19 said:

 

 

@OhForAGreavsie I didn't want to derail an already 'rampant' JT thread further, so I'll reply here if you don't mind.

Let me give an example:

Scenario A: JT leaves, we sign a back up CB for say 10m on a 4-year deal (assume same wages) then next year we sign another player we need for 10m on a 4-year deal as well. The extra cost on the FFP budget for the next 5 seasons will be:

2016/17: 10m/4 = 2.5m

2017/18: 2.5 + 2.5 = 5m

2018/19: 2.5 + 2.5 = 5m

2019/20: 2.5 + 2.5 = 5m

2020/21: 2.5m

 

Scenario B: Terry renews and we sign back up CB next season instead and the other player we need this season instead of next. The FFP budget would look like:

2016/17: 2.5m

2017/18: 2.5 + 2.5 = 5m

2018/19: 2.5 + 2.5 = 5m

2019/20: 2.5 + 2.5 = 5m

2020/21: 2.5m

 

Exactly identical. Do see what I mean now?

Yes, I know it's a lot more complicated and the fees will likely be different and the wages play a role and then of course the contracts of the signed players will not be left to run out and instead will be renews, but the idea is basically the same.

Yeah, obviously the actual cash flow and budget will be different, but I don't think we (the club) really care about that nearly as much as FFP. 

Thank you Choulo and good idea to move the conversation. :)

Forgive me but you are being patronising. I understand all you have said perfectly well and have done since long before The Football League, followed by UEFA and then The Premier League introduced regulations which made it relevant to discuss this basic accounting principle in football conversations. I don't know your age but I was dealing with amortisation in my working life before most users of this forum were born.

Your key point is about a question of timing and I'll talk about that next but I'd like to quickly observe that the example given supports my suggestion that the decision about when to purchase a new CB is a nil item in FFP terms. Whether that player is bought this summer or next, your example shows that we end up at exactly the same place five years from now. The same new players, the same cost. I'll stick with those sample figures in the rest of this.

You are arguing that it makes a difference in timing; that, by renewing JT, we can spend £2.5m of the FFP budget on a player for another position of need this summer, instead of waiting until next summer. There is an assumption there that I'll come to in a minute, but my case is that this saving is balanced out by the fact that we then have to use £2.5m of FFP money for a new CB next season. If buying a new CB now restricts our ability to strengthen a different position in 2016, then buying him next year will likewise restrict our spending in summer 2017.  Whether we start paying for a new CB in 2016 or in 2017, he will still cost £10m over four years. £10m = £10m no matter how you slice it. Whenever we sign him, the new CB comes at the opportunity cost of buying someone else instead.

I'd say this hints at a possible reason it has taken so long for a new contract to be offered to JT. It will have been necessary for the new boss to make a serious assessment of which existing squad members he can rely on, which development players he can integrate, if any, and which players he'd like to sign. He and the club will then have investigated whether those players are likely to be available to Chelsea this summer, and if not, whether Conte would be prepared to wait for a particular individual for a season. All of these plans will then have had to be costed in FFP terms and decisions made about what money would be spent and when. That really is a complicated process.

The assumption I spoke about plays in to all of this as well. Would it be right to assume that JT can offer the side as much as we need next season, or is CB a position of urgent need right now? That decision does not come down to money. You have shown that in FFP terms it makes no difference, the costs are the same (As I said :)). What it comes down to is an assessment of the needs of the team. We all have thoughts on this but it's Antonio's opinion that matters.

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2 hours ago, OhForAGreavsie said:

Thank you Choulo and good idea to move the conversation. :)

Forgive me but you are being patronising. I understand all you have said perfectly well and have done since long before it became popular to discuss this basic accounting principle in football conversations. I don't know your age but I was dealing with amortisation in my working life before most users of this forum were born.

Your key point is about a question of timing and I'll talk about that next but I'd like to quickly observe that the example given supports my suggestion that the decision to purchase of a new CB this season or next, is a nil item in FFP terms since we end up at exactly the same place five years from now whichever route we take. The same new players, the same cost. I'll stick with those sample figures in the rest of this.

You are arguing that it makes a difference in timing; that, by renewing JT, we can spend £2.5m of the FFP budget on a player for another position of need this summer, instead of waiting until next summer. There is an assumption there that I'll come to in a minute, but my case is that this saving is balanced out by the fact that we then have to use £2.5m of FFP money for a new CB next season. If buying a new CB now restricts our ability to strengthen a different position in 2016, then buying him next year will likewise restrict our spending in summer 2017.  Whether we start paying for a new CB in 2016 or in 2017, he will still cost £10m over four years. £10m = £10m no matter how you slice it. Whenever we sign him, the new CB comes at the opportunity cost of buying someone else instead.

I'd say this suggests a possible reason it has taken so long for a new contract to be offered to JT. It will have been necessary for the new boss to make a serious assessment of which existing squad members he can rely on, which development players he can integrate, if any, and which players he'd like to sign. He will have had to think about whether those players are likely to be available to Chelsea this summer, and if not, whether he would be prepared to wait for a particular individual for a season. All of these plans will then have had to be costed in FFP terms and decisions made about what money would be spent and when. That really is a complicated process.

The assumption I spoke about plays in to all of this as well. Would it be right to assume that JT can offer the side as much as we need next season, or is CB a position of urgent need right now? We all have opinions on this but only Conte's matters.

Obviously I wouldn't have known about your knowledge of accounting and of course I didn't mean to come off as patronizing. 

Yes, all that you said is true, but the key difference between the two scenarios, the one I've been trying to point out from the start is that in the one where JT signs (thankfully a reality now) and we sign an extra player this season we'll have that extra player and JT as a CB back up while in the other scenario we'll have the new back up CB but won't have the new other player till next season even though the FFP budget is exactly the same we'll get a new player a full season earlier.

I'm sorry, I'm not very good at expressing, I hope you can see the difference I've been trying to point out from the start... 

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29 minutes ago, CHOULO19 said:

Obviously I wouldn't have known about your knowledge of accounting and of course I didn't mean to come off as patronizing.

Having read many hundreds of your posts, I know that this is the case. It is not your style. I did however tell you that I understood the concept in a previous post during this conversation. :)

29 minutes ago, CHOULO19 said:

I'm sorry, I'm not very good at expressing, I hope you can see the difference I've been trying to point out from the start...

As I said, you are talking about a question of timing; sign the new CB now or sign him later. I never doubted that differences on this are a matter of legitimate football opinion. If we are unable to fill the position from in house, we will, sooner or later, need to sign a CB. I simply said that, given we are going to need to buy a CB anyway, it makes no difference financially if we do it now or next summer.

One possible reason that we appear to have been miscommunicating on this could be that you are talking about a backup CB whereas I thought we were discussing a first choice replacement for JT. That difference changes the priorities about if and when the purchase is required.

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FFP is a fucking joke so imagine the audacity of UEFA trying to do a 2.0.

They've let PSG get away with spending 400m on two players (Mbappe will obviously make the move, matter of when they announce it not if) after years and years of spending huge amounts of money anyway, let Barca get away with spending about 360m on 2 players (although they sold Neymar for like 200m) and Man City who've been spending about 250m each summer for the last 3 years now. Absolutely pointless. They should just abandon it because its clearly one set of rules for some clubs and not for others. UEFA are absolute worst cunts. Our board are worst cunts as well for trying to comply with FFP. Fuck it, get the cheque book out and go mental you daft cunts. 

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7 hours ago, OneMoSalah said:

UEFA are absolute worst cunts. Our board are worst cunts as well for trying to comply with FFP. Fuck it, get the cheque book out and go mental you daft cunts. 

Get off the fence bruv and tell us ho you feel 50dc1ff2d5fbd95fefd754bec3ed72f5.gif

Are we going to see a difference even with our ridiculous 1 out 1 in rule? I still dont think we spent Oscars money have we?

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