The AVFC FFP / PSR / SCR thread

[OutByEaster?]

27 minutes ago, CVByrne said:

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. 

So here's what I don't get - we sell Archer for £18m and for PSR purposes, when that happens, we book the £18m in full immediately - but in reality, we receive maybe a third of that in that financial year - does only that third go into our 'actual' accounts as money that has (actually) been received or do our actual accounts show an income of £18m at that point?

Does that £18m then count as a whole as income for PSR purposes even though we haven't yet received it?

When we then don't end up receiving half of that money because we buy the player back - don't we have to adjust our accounts for the £9m we're not going to get? Surely you can't declare income to HMRC in your accounts then not make an adjustment when that income never arrives?

 

[Czarnikjak]

16 minutes ago, OutByEaster? said:

So here's what I don't get - we sell Archer for £18m and for PSR purposes, when that happens, we book the £18m in full immediately - but in reality, we receive maybe a third of that in that financial year - does only that third go into our 'actual' accounts as money that has (actually) been received or do our actual accounts show an income of £18m at that point?

Does that £18m then count as a whole as income for PSR purposes even though we haven't yet received it?

When we then don't end up receiving half of that money because we buy the player back - don't we have to adjust our accounts for the £9m we're not going to get? Surely you can't declare income to HMRC in your accounts then not make an adjustment when that income never arrives?

 

But this income will arrive, regardless if we bought him back or not. Separate transactions. They pay us, we pay them.

[Sam-AVFC]

23 minutes ago, OutByEaster? said:

So here's what I don't get - we sell Archer for £18m and for PSR purposes, when that happens, we book the £18m in full immediately - but in reality, we receive maybe a third of that in that financial year - does only that third go into our 'actual' accounts as money that has (actually) been received or do our actual accounts show an income of £18m at that point?

Does that £18m then count as a whole as income for PSR purposes even though we haven't yet received it?

When we then don't end up receiving half of that money because we buy the player back - don't we have to adjust our accounts for the £9m we're not going to get? Surely you can't declare income to HMRC in your accounts then not make an adjustment when that income never arrives?

 

I may be well off base here, but I'm pretty sure for actual accounts it would count as nothing as you'd just be moving £15m cash into a £15m asset, which then depreciates at £3m a year.

In terms of the add ons and buying back I don't have a clue.

All PSR income is considered up front with it simply being a difference between remaining book value and the realised price.

[OutByEaster?]

19 minutes ago, Czarnikjak said:

But this income will arrive, regardless if we bought him back or not. Separate transactions. They pay us, we pay them.

So we'll still be receiving income next (financial) year from Sheffield United for Archer?

Does transferring him back not end that?

[Czarnikjak]

13 minutes ago, OutByEaster? said:

So we'll still be receiving income next (financial) year from Sheffield United for Archer?

Does transferring him back not end that?

I wouldn't think so. They will keep paying us upto full £18m or whatever it was and we will keep paying them upto £14m or whatever. Two separate transactions. It's really simple.

Edited August 5 by Czarnikjak

[OutByEaster?]

8 minutes ago, Czarnikjak said:

I wouldn't think so. They will keep paying us upto full £18m or whatever it was and we will keep paying them upto £14m or whatever. Two separate transactions. It's really simple.

Well, that seems both simple and bizarre, but it makes sense - I'd discounted the idea of them paying for something they've already sold whilst also receiving payments for that same thing - but I guess they just time them so that ultimately they pay us on the 1st and we give it back to them on the 2nd or whatever. 

[tomsky_11]

20 minutes ago, OutByEaster? said:

So we'll still be receiving income next (financial) year from Sheffield United for Archer?

Does transferring him back not end that?

Accrual accounting

[CVByrne]

1 hour ago, OutByEaster? said:

So here's what I don't get - we sell Archer for £18m and for PSR purposes, when that happens, we book the £18m in full immediately - but in reality, we receive maybe a third of that in that financial year - does only that third go into our 'actual' accounts as money that has (actually) been received or do our actual accounts show an income of £18m at that point?

Does that £18m then count as a whole as income for PSR purposes even though we haven't yet received it?

When we then don't end up receiving half of that money because we buy the player back - don't we have to adjust our accounts for the £9m we're not going to get? Surely you can't declare income to HMRC in your accounts then not make an adjustment when that income never arrives?

The value of the deal goes into both official and PSR in the same way. We agreed to sell an intangible asset for £18m and the book value of the asset was 0 so we book a profit of £18m. 

The calculation for official accounts and PSR are the same. 

When I invoice a client the date of the invoice is what years accounts it goes in. I give clients a period of time to pay the invoice. Often I've been paid months later than I should have. It doesn't impact the accounts filed. So when they money comes through isn't really relevant and you should just completely ignore that in relation to everything in football 

Edited August 5 by CVByrne

[blandy]

1 hour ago, OutByEaster? said:

So here's what I don't get - we sell Archer for £18m and for PSR purposes, when that happens, we book the £18m in full immediately - but in reality, we receive maybe a third of that in that financial year - does only that third go into our 'actual' accounts as money that has (actually) been received or do our actual accounts show an income of £18m at that point?

Does that £18m then count as a whole as income for PSR purposes even though we haven't yet received it?

That’s broadly right. The caveat is the third goes in one part of the tax accounts and the remaining ⅔ goes in to the net credit part - as in “we’re owed this much” 

[OutByEaster?]

11 minutes ago, CVByrne said:

When I invoice a client the date of the invoice is what years accounts it goes in. I give clients a period of time to pay the invoice. Often I've been paid months later than I should have. It doesn't impact the accounts filed. So when they money comes through isn't really relevant and you should just completely ignore that in relation to everything in football 

That makes sense, the bit that was missing for me is that I thought that once the deal was essentially overwritten with the new deal, the owed money would get dealt with in the new deal, but that's not the case - the two deals are completely separate - to an extent I should be thinking of it as two different Cameron Archers - the one that Sheffield United will be paying us for over the next couple of years and the one that we'll be paying Sheffield United for over the next  couple of years.

The money they owe us for him has no bearing on the money we owe them for him.

[CVByrne]

3 minutes ago, OutByEaster? said:

That makes sense, the bit that was missing for me is that I thought that once the deal was essentially overwritten with the new deal, the owed money would get dealt with in the new deal, but that's not the case - the two deals are completely separate - to an extent I should be thinking of it as two different Cameron Archers - the one that Sheffield United will be paying us for one the next couple of years and the one that we'll be paying Sheffield United for over the next  couple of years.

The money they owe us for him has no bearing on the money we owe them for him.

Yeah just ignore the cashflow. That's secondary to the deal price. So if money was owed they can net it off if they want etc.. 

[blandy]

1 minute ago, OutByEaster? said:

 

The money they owe us for him has no bearing on the money we owe them for him.

Well, maybe. If it was two PL clubs, they’d probably just cancel out the two parts, so if we owed them 10 mill and they owed us 5 mill, the two clubs would agree to 5 mill balance being paid pronto, and that’s it closed. But when it’s a lower league club, it might suit them to have a cash income over a period, so they might leave it as 2 separate lines and get the 10 mill and pay the 5 mill. Either way is possible.

[OutByEaster?]

One last time just so as I can make sure it's gone into my thick skull;

I'd always considered that if I buy a pencil from you for £1 on Monday because you owe your brother a pound and he's coming on Saturday, we can agree to let me pay for it at 20p a day.

And then that if on Tuesday night, you realise your brother isn't coming and would like the pencil back and will give me 90p for it we'd write off the 60p I owe you and you'd pay me 10p a day - but what you're saying is that in cases like Archer's, I'd still pay you 20p on Wednesday and on Thursday and Friday and you'd pay me 30p on each of those days too - because we'd already told your Mom you'd sold the pencil for a pound and I'd told my mom I'd sold the pencil for 90p.

 

[OutByEaster?]

And to carry that further - our moms were both aware we'd started selling small items and wanted to encourage our entrepreneurship, so both had said that whilst they wanted to make sure we saved some money just in case and that we couldn't spend our own money on sweets, we could spend 50% of everything we make from selling stuff on sweets - so in this case, you end up with 10p and a pencil, and you can spend all of that 10p on sweets and still look for someone else to give you a pound for the pencil and I end up with ninety pence instead of the pound I started with, but I can spend 45p of that 90p on sweets.

And that's PSR?

[MrBlack]

18 hours ago, OutByEaster? said:

One last time just so as I can make sure it's gone into my thick skull;

I'd always considered that if I buy a pencil from you for £1 on Monday because you owe your brother a pound and he's coming on Saturday, we can agree to let me pay for it at 20p a day.

And then that if on Tuesday night, you realise your brother isn't coming and would like the pencil back and will give me 90p for it we'd write off the 60p I owe you and you'd pay me 10p a day - but what you're saying is that in cases like Archer's, I'd still pay you 20p on Wednesday and on Thursday and Friday and you'd pay me 30p on each of those days too - because we'd already told your Mom you'd sold the pencil for a pound and I'd told my mom I'd sold the pencil for 90p.

 

 

18 hours ago, OutByEaster? said:

And to carry that further - our moms were both aware we'd started selling small items and wanted to encourage our entrepreneurship, so both had said that whilst they wanted to make sure we saved some money just in case and that we couldn't spend our own money on sweets, we could spend 50% of everything we make from selling stuff on sweets - so in this case, you end up with 10p and a pencil, and you can spend all of that 10p on sweets and still look for someone else to give you a pound for the pencil and I end up with ninety pence instead of the pound I started with, but I can spend 45p of that 90p on sweets.

And that's PSR?

It's impressive you've managed to take something I understand (PSR), simplify it with a playground analogy, and leave me confused.

 

[Frodo]

Talksport just had a football financial expert on (can't remember his name) say we have a £100 million hole to fill come June 2025,he then said that has been brought down by the Diaby sale to £75 million. You can see why now we're holding out for £40 million for Duran ... as it would definitely help towards June 2025 books .... in my head now I'm think have we really got the money for Felix ?? Suppose only if we sold Duran, but then the hole in the finances would go up, suppose there is one or two that could be sold this window still but wouldn't be of significant numbers ... so in a nutshell we look as though its another Dougie type sale end of season to balance the books.

[villanmac]

18 minutes ago, Frodo said:

Talksport just had a football financial expert on (can't remember his name) say we have a £100 million hole to fill come June 2025,he then said that has been brought down by the Diaby sale to £75 million. You can see why now we're holding out for £40 million for Duran ... as it would definitely help towards June 2025 books .... in my head now I'm think have we really got the money for Felix ?? Suppose only if we sold Duran, but then the hole in the finances would go up, suppose there is one or two that could be sold this window still but wouldn't be of significant numbers ... so in a nutshell we look as though its another Dougie type sale end of season to balance the books.

Listened to that. Not clear if he was taking into account the increase in revenue this year for champions league or not.

Also, it means that Felix has to be a loan with obligation to buy next season (in the new PSR window). 

 

[CVByrne]

22 minutes ago, Frodo said:

Talksport just had a football financial expert on (can't remember his name) say we have a £100 million hole to fill come June 2025,he then said that has been brought down by the Diaby sale to £75 million. You can see why now we're holding out for £40 million for Duran ... as it would definitely help towards June 2025 books .... in my head now I'm think have we really got the money for Felix ?? Suppose only if we sold Duran, but then the hole in the finances would go up, suppose there is one or two that could be sold this window still but wouldn't be of significant numbers ... so in a nutshell we look as though its another Dougie type sale end of season to balance the books.

Assume it's just someone pointing out 100m for Grealish has rolled off now. It's impossible to forecast what we need to do by end June 2025 without seeing the 24 accounts and after this summer window is closed. I'd say we'll have a few more sales/swaps lined up for June to keep in line with rules if needed.

[Frodo]

6 minutes ago, villanmac said:

Listened to that. Not clear if he was taking into account the increase in revenue this year for champions league or not.

Also, it means that Felix has to be a loan with obligation to buy next season (in the new PSR window). 

 

True our revenues this season will be alot higher, more seating more boxes, sponsors, Adidas etc did you here the bit regards Man utd ? Apparently skirted close to the June deadline but somehow got some special dispensation around PSR ...from Premier league ... was sort of vaguely listening but missed actually what they said ?

[nick76]

44 minutes ago, Frodo said:

Talksport just had a football financial expert on (can't remember his name) say we have a £100 million hole to fill come June 2025,he then said that has been brought down by the Diaby sale to £75 million. You can see why now we're holding out for £40 million for Duran ... as it would definitely help towards June 2025 books .... in my head now I'm think have we really got the money for Felix ?? Suppose only if we sold Duran, but then the hole in the finances would go up, suppose there is one or two that could be sold this window still but wouldn't be of significant numbers ... so in a nutshell we look as though its another Dougie type sale end of season to balance the books.

He also said before that Chelsea had £150m hole for June 2024 in his estimation but was at least £100-120m after the hotel sale.  Chelsea only sold less than £80m before June 30th.  These guys are guessing and can be multiplies of ten of millions out.  Last analysis at the end of the season was we had to find the whole for June 2024 plus an additional £40m for June 2025 yet with all the business shenanigans we did at the end of June I’m betting that £40m has reduced significantly.  Now I’m guessing that £40m was out but I doubt very much that the £100m is anywhere near it and I’m guessing he’s just referring to the £100m Grealish money falling off and not taking any the offsets over the last few years.