The AVFC FFP / PSR / SCR thread

[Czarnikjak]

18 minutes ago, Tayls said:

Sooo, does this mean we are poor again? 

We are not poor. We are restricted.

[paul514]

21 minutes ago, Tayls said:

Sooo, does this mean we are poor again? 

No

[Follyfoot]

What happens if you take Felix out of the equation?

[thabucks]

Please can someone enlighten me what would selling Archer means for PSR - I guess he’d be treated as any other player and not homegrown and not that pure sweet PSR profit? 

[OutByEaster?]

1 hour ago, thabucks said:

Please can someone enlighten me what would selling Archer means for PSR - I guess he’d be treated as any other player and not homegrown and not that pure sweet PSR profit? 

I tried to understand this one a while back, it's baffling - just trying to get some idea of what we 'book' sold him for and 'book' bought him back for and what actual monies changed hands is difficult enough, let alone trying to figure out what that means to his current value and amortisation. He's contracted for another three years I believe.

[CVByrne]

9 hours ago, OutByEaster? said:

I tried to understand this one a while back, it's baffling - just trying to get some idea of what we 'book' sold him for and 'book' bought him back for and what actual monies changed hands is difficult enough, let alone trying to figure out what that means to his current value and amortisation. He's contracted for another three years I believe.

What we sold him for is irrelevant to the current book value as that was booked as profit last season.

Our buyback was for a lower price than we sold him for. I would assume we set it as his remaining book value which was around £14m based on a sale price of £18.5m. 

So for us if we sell him for £14m or more this summer we book a profit. If we sell for £14m we are scratch and less than £14m we book a loss.

His wages will have incr from those he was on previously. Though as a young player they won't be too high. 

So to our accounts if we keep him, he'll cost £3.5m per year (assuming he's on a 4 year contract) in amortisation + £1.5m or so in wages. 

If we Loan him we'll need to take in £5m fee. Not something a championship club can afford. 

Edited August 5 by CVByrne

[OutByEaster?]

3 hours ago, CVByrne said:

What we sold him for is irrelevant to the current book value as that was booked as profit last season.

In terms of how that works, when we sell him, do we bank the arranged fee or the money we received? I mean, it's not like we can predict the future.

If we arranged a fee of £18.5m and have so far received say £8m, do we book the £18.5m or the £8m as incoming? Surely we don't initially record the incoming as a little each year over the course of the contract? When we buy him back for £14m does that all go down as having been spent or only the instalments we've already sent. Do we write off the £10.5m we're owed from the £14m we pay so that we only register a £3.5m fee? How does it work in terms of the book values versus the actual transfer of monies?

In terms of his contract, it weirdly looks like he's still on the contract and the terms he was on when we sold him (its rolled on with the buyback clause in it) so it's the same one he signed in 2022 and has three years left - in terms of how we amortise that, I'd assume we start from this summer rather than the initial contract signing - so with three years left, he could be anything from the £4.6m a year to £1.2m a year depending on the way we register the fee when we buy him?

If it's the latter, and we sold him for £18.5m, received a chunk of that (lets say £10.5m to keep the numbers easy) then when we bought him back for £14m, we wrote off the £8m we're owed and effectively paid £6m, then his book value per year would be £2m wouldn't it - and we could make a PSR profit by selling him for £2.5m?

 

[CVByrne]

19 minutes ago, OutByEaster? said:

In terms of how that works, when we sell him, do we bank the arranged fee or the money we received? I mean, it's not like we can predict the future.

If we arranged a fee of £18.5m and have so far received say £8m, do we book the £18.5m or the £8m as incoming? Surely we don't initially record the incoming as a little each year over the course of the contract? When we buy him back for £14m does that all go down as having been spent or only the instalments we've already sent. Do we write off the £10.5m we're owed from the £14m we pay so that we only register a £3.5m fee? How does it work in terms of the book values versus the actual transfer of monies?

In terms of his contract, it weirdly looks like he's still on the contract and the terms he was on when we sold him (its rolled on with the buyback clause in it) so it's the same one he signed in 2022 and has three years left - in terms of how we amortise that, I'd assume we start from this summer rather than the initial contract signing - so with three years left, he could be anything from the £4.6m a year to £1.2m a year depending on the way we register the fee when we buy him?

If it's the latter, and we sold him for £18.5m, received a chunk of that (lets say £10.5m to keep the numbers easy) then when we bought him back for £14m, we wrote off the £8m we're owed and effectively paid £6m, then his book value per year would be £2m wouldn't it - and we could make a PSR profit by selling him for £2.5m?

There are two things to consider the book value which relates to the accounts and cashflow which is in relation to running a business, we pay salaries we get income and we are owed and receive money at different times. 

The former is what matters for PSR a player is an intangible asset and the transfer fee is amortised over the life of the contract. The book value is the remaining fee left. So if we had player who's feeling was 20m on a 4 year contract his fee amortised at £5m per year.

When it comes to cashflow this is what is the structure of the deal. If they agree to pay £20m up front or if we pay £10m up frot and £5m next year and £5m year after. That has no impact to the PSR calculation but does matter for running the club. This is because money has a time value, so £5m I received in a years time is worth less than £5m received today. This is because of I received it today I could earn interest on the money in a deposit account or park in government bonds etc. 

The flip to that is if I pay the fee up front and don't have all the cash on hand I'll need to borrow it from my bank or somewhere. However this doesn't impact the PSR accounts other than the cost of the interest on money borrowed.

 

[blandy]

1 hour ago, OutByEaster? said:

If we arranged a fee of £18.5m and have so far received say £8m, do we book the £18.5m or the £8m as incoming?

This is where it gets messy.

Let's say, as an example, we sold a player (say, in January) for 10 million, with a further 2 million to be paid if/when the buying club stays up. Let's say that the payment is structured so that they pay 8 mill at the date of sale, and 2 million (to make 10) after 6 months (So July).

For PSR, we book 10 million straight away, for the financial year in which the sale occurred. Even though the income is received across 2 different financial years (the second 2 million is after the PSR deadline for that year, or could have been, 'til we moved the accounting date to into June, from May). Suppose the team also stayed up - the 2 million extra payment (to make 12 million total) does/would count as income for PSR purposes for the second year.

With Cameron, if He was sold for 18.5 million (with no other caveats or clauses on the fee), then that's what we'd have booked for last year's PSR. But then because they got relegated and had (hypothetically) only actually paid us (say) 8 mill, and still owed us the other 10.5 mill, and then we buy him back for (say) £16 million - it's that 16 million that goes into the next (say 4 year contract length) as 4 million per year amortisation.

But we don't actually "send" Sheff U the 16 million, because they owed us 10.5 mill, and we owe them 16 mill, so we send them 5.5 mill (16 - 10.5) as the overall balance due to them, from our bank.

[sne]

But where does all of this leave us in regards to loaning Januzaj?

[OutByEaster?]

21 minutes ago, blandy said:

With Cameron, if He was sold for 18.5 million (with no other caveats or clauses on the fee), then that's what we'd have booked for last year's PSR. But then because they got relegated and had (hypothetically) only actually paid us (say) 8 mill, and still owed us the other 10.5 mill, and then we buy him back for (say) £16 million - it's that 16 million that goes into the next (say 4 year contract length) as 4 million per year amortisation.

But we don't actually "send" Sheff U the 16 million, because they owed us 10.5 mill, and we owe them 16 mill, so we send them 5.5 mill (16 - 10.5) as the overall balance due to them, from our bank.

And that's where it gets confusing, because there's a separation isn't there between our registered accounts and the make believe of PSR?

[bobzy]

55 minutes ago, CVByrne said:

There are two things to consider the book value which relates to the accounts and cashflow which is in relation to running a business, we pay salaries we get income and we are owed and receive money at different times. 

The former is what matters for PSR a player is an intangible asset and the transfer fee is amortised over the life of the contract. The book value is the remaining fee left. So if we had player who's feeling was 20m on a 4 year contract his fee amortised at £5m per year.

When it comes to cashflow this is what is the structure of the deal. If they agree to pay £20m up front or if we pay £10m up frot and £5m next year and £5m year after. That has no impact to the PSR calculation but does matter for running the club. This is because money has a time value, so £5m I received in a years time is worth less than £5m received today. This is because of I received it today I could earn interest on the money in a deposit account or park in government bonds etc. 

The flip to that is if I pay the fee up front and don't have all the cash on hand I'll need to borrow it from my bank or somewhere. However this doesn't impact the PSR accounts other than the cost of the interest on money borrowed.

Presumably clubs don't have to amortise over the life of the contract?

[ender4]

8 minutes ago, bobzy said:

Presumably clubs don't have to amortise over the life of the contract?

Yes you do have to. Unless there is a specific reason to write-down the full value of the contract such as a major injury.

[bobzy]

1 minute ago, ender4 said:

Yes you do have to. Unless there is a specific reason to write-down the full value of the contract such as a major injury.

That can't be the case as there was fairly recently a cap on 5 years of the contract.  So if you bought a player on a, say, 10 year contract you can only amortise over 5 years max.  Presumably you could choose to amortise over 2 years only?

[ender4]

5 minutes ago, bobzy said:

That can't be the case as there was fairly recently a cap on 5 years of the contract.  So if you bought a player on a, say, 10 year contract you can only amortise over 5 years max.  Presumably you could choose to amortise over 2 years only?

Yes, max of 5 years. But you can't just choose a different number of years unless you have a specific reason for it. 

[bobzy]

Just now, ender4 said:

Yes, max of 5 years. But you can't just choose a different number of years unless you have a specific reason for it. 

"I WANT TO" not being good enough?  

[CVByrne]

47 minutes ago, bobzy said:

Presumably clubs don't have to amortise over the life of the contract?

They do, it's how accounting works for asset depreciation. 

[CVByrne]

51 minutes ago, OutByEaster? said:

And that's where it gets confusing, because there's a separation isn't there between our registered accounts and the make believe of PSR?

Well kind of. We get deductions from our costs before they become PSR accounts. Like youth, womens, community etc..

Our accounts state our annual amortisation cost in them. We also have profit from disposal of player registration. We include loan fees under commercial income etc..

Our accounts are real but it's the deductions we are missing from them before we get the PSR value.

[blandy]

1 hour ago, OutByEaster? said:

there's a separation isn't there between our registered accounts and the make believe of PSR?

Yeah, totally. But not that much. There's basically Inland Revenue HMRC accounting law and rules, and then on top there's the PL PSR rules. As Connor says, there's a load of stuff which has to go into the accounts, but which is excluded from PRS calcs. Basically you have to tell the tax man all the stuff and on top of that you have to run your club so that you're not overspending on men's playing and associated costs, but you can spend and so on on facilities and youth football and the women's team without the PL beasting you.

[CVByrne]

28 minutes ago, blandy said:

Yeah, totally. But not that much. There's basically Inland Revenue HMRC accounting law and rules, and then on top there's the PL PSR rules. As Connor says, there's a load of stuff which has to go into the accounts, but which is excluded from PRS calcs. Basically you have to tell the tax man all the stuff and on top of that you have to run your club so that you're not overspending on men's playing and associated costs, but you can spend and so on on facilities and youth football and the women's team without the PL beasting you.

Exactly because remember we have to pay corporate tax on our profits and hence we have to file them with HMRC etc.. 

So there are real accounts and the PL PSR accounts. 

Edited August 5 by CVByrne