- Thread starter
- #61
Undav £22m
Gross £8m
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[Albion] Panic Ye Not on the finances.
- Thread starter El Presidente
- Start date
Gross £8m
No.
In your example, you can only amortise in the 2nd year if you still own the player in the second year. So, if you buy for £100m in year 1 and sell for £100m in year 1, the profit (PSR) impact in year 1 is £100m - £100m = 0. The profit impact in year 2 is £0 - £0 = £0.
You have to still own the asset (player’s registration) in order to carry any net (book) value on your Balance Sheet.
As my failing accounting exam results from 30 years ago tell me, I should step out of any accounting discussion, as I will appear an idiot. but I will ignore good sense and continue here.
I was using one player to try and keep it simple. but perhaps that does not help here.
lets say I'm (picking a random club here) Chelsea.
for simplicity's sake I have made 0 profit from all other operations.
PSR says I am not allowed to make a loss off more lets say 99m.
I can't sell my players for reasons unknown.
I want to buy back Tariq Lampty.
Mr Bloom says that is 100m.
is it the case:
1) I think that's oh no, 100m is too much I can only lose 99m.
2) that's ok I can have them on my books for 20m (for each of the next 5 years)
(I don't know the answer - I had assumed it was the second, but if amortization only applies to when there are sales of assets then I guess it would be the first, or it could be a third that I am unaware of)
Stepping out was the better option
2), but only if you keep him for the 5 years. If you sell him during year three, the remaining £60m still on the balance sheet has to be taken as a cost in the P&L in year 3. That £60m cost would be mitigated by the sale proceeds (taken in full in year 3).
it was difficult for me to follow, but at one point in this I think the finance guy is saying what I was trying to say about the amortisation piling up and creating a problem down the road.
Dunno. Haven’t watched the video and don’t plan to, as I know that what I’ve told you about how amortisation works is completely correct.
If you have another, different, question about amortisation, I’ll happily answer that question too.
Nobby Cybergoat
Well-known member
- Jul 19, 2021
- 8,192
I think you raise legitimate questions about what our spending this summer means for our finances and PSR compliance now and in coming seasons.
The way I see it, this summer was about making up for the large losses in quality from the last few windows and some of the more mixed recruitment last summer.
I don't see us continuing to spend more than we sell going forward, I think we'll see more of a reversion to the mean. We'll continue to recruit young unproven players, but they will have to be augmented by larger sales of the players who do well this season.
I think PSR compliance will cramp our transfer behaviour in coming windows, but on the other hand the rules are likely to change and I guess the club are factoring that into their spending this summer.
More than PSR though I think the number one objective from the club remains sustainability. That doesn't mean we have to make a profit every season. £100m up one season, 100m down the next is still sustainable