[Albion] Panic Ye Not on the finances.

[AZ Gull]

(no disrespect to @El Presidente ) I [expletive] hate the "dont worry ... amortisation" view on the finances. it is short-termism, that would make the average financial shenanigans of the CEO finagling his bonus blush.

that amortisation basically means that in 2025, through 2029 we have 32m less per year that we can spend according to PSR, and imagine we do the same the next year, it's 64m less we can spend.
eventually it piles up. Am I correct in thinking you can choose how you amortize (so long as it's not more than 5 years), so it may be in our advantage to take the hits early in order to put ourselves in a position in 3 years time when loads of amortizing clubs realize they have to sell and cannot buy because they have 3 years of amortisation piled up.

* note - I'm not an accountant, in fact I failed my accounting exams, so I am probably wrong about this. but the viseral feeling I have is still there.

I must admit, I'm struggling to follow your logic here. You are basically saying:

We shouldn't spend money, because it will ....... restrict how much money we can spend.

 

[Jim in the West]

So in effect our spending allowance os 85% of Revenue + Player profit in the past 12 months.
But you have to use that profit in the next window.

If we're thinking of competing in Europe, the limit is 70% rather than 85%. This might have been a bit of a squeeze this year, but presumably next year (allowing for one or two large player sales) won't be an issue (obviously won't be an issue either way if we're not in Europe).

 

[warmleyseagull]

Not next season they don't.

My question is about what this season's increase in amortisation will have against next season's rules (85% of annual revenue).

You didn’t make that clear.

The spending cap rules for 25/26 haven’t actually been ratified. Villa, and the Manchester clubs voted against, and I have an instinct they may be changed. Whatever, we can only assume that the £30-40m amortisation has been included in the club’s forecasts; it would be strange if not, as it would be contrary to Albion’s reputation as one of the best run clubs in the country.

Ironically, there may be a bigger risk if we qualify for Europe as the UEFA spending threshold of 70% is 15% below that for clubs not in Europe and subject only to PL rules.

 

[huzzah]

I must admit, I'm struggling to follow your logic here. You are basically saying:

We shouldn't spend money, because it will ....... restrict how much money we can spend.

My apologies for not being clear, communication is not my strongest trait. I was not attempting to say that. what I, perhaps unclearly, was trying to say, is that people are talking about amortization as if it is beneficial, but it is net zero.

If we buy a player for 100m and sell a player for 100m. We've made a net profit of zero.
If do the same, but amortized it over 2 years, then in year 1 we make a profit of 50m and in year 2 a loss of 50m (assuming all other things equal). Which is also net zero.

All the mentions of amortization I hear in the media never mention the future losses

So what I was trying to say was all the usage of amortization by Chelsea and their like are just kicking their psr/ffp problems down the road, which could lead to another buying opportunity for a financially well run club, such as us, in the future.

 

[Weststander]

My apologies for not being clear, communication is not my strongest trait. I was not attempting to say that. what I, perhaps unclearly, was trying to say, is that people are talking about amortization as if it is beneficial, but it is net zero.

If we buy a player for 100m and sell a player for 100m. We've made a net profit of zero.
If do the same, but amortized it over 2 years, then in year 1 we make a profit of 50m and in year 2 a loss of 50m (assuming all other things equal). Which is also net zero.

All the mentions of amortization I hear in the media never mention the future losses

So what I was trying to say was all the usage of amortization by Chelsea and their like are just kicking their psr/ffp problems down the road, which could lead to another buying opportunity for a financially well run club, such as us, in the future.

It’s more complicated than that.

For example, how much did the player sold for £100m cost originally, how far has his contract run down?

 

[dazzer6666]

My apologies for not being clear, communication is not my strongest trait. I was not attempting to say that. what I, perhaps unclearly, was trying to say, is that people are talking about amortization as if it is beneficial, but it is net zero.

If we buy a player for 100m and sell a player for 100m. We've made a net profit of zero.
If do the same, but amortized it over 2 years, then in year 1 we make a profit of 50m and in year 2 a loss of 50m (assuming all other things equal). Which is also net zero.

All the mentions of amortization I hear in the media never mention the future losses

So what I was trying to say was all the usage of amortization by Chelsea and their like are just kicking their psr/ffp problems down the road, which could lead to another buying opportunity for a financially well run club, such as us, in the future.

Don’t think your example makes sense. If we bought a player for £100m amortised over 2 years and sold him for £50m in year 2, there wouldn’t be a loss. £50m would be amortised in year 1 (and hit the P&L) and the sale would be at book value.

 

[huzzah]

Don’t think your example makes sense. If we bought a player for £100m amortised over 2 years and sold him for £50m in year 2, there wouldn’t be a loss. £50m would be amortised in year 1 (and hit the P&L) and the sale would be at book value.

in my example we only buy and sell in year 1 and do nothing in year 2.
the only difference between the two examples is how we apply amortisation.

* my spiritual home of burgess hill!

 

[dazzer6666]

in my example we only buy and sell in year 1 and do nothing in year 2.
the only difference between the two examples is how we apply amortisation.

example 1 (amortised over 1 year)
revenue. cost profit/loss
---------|-----------|--------|--------------
year 1 | 100 | -100 | 0

example 2 (amortised over 2 year)
revenue. cost profit/loss
---------|-----------|--------|--------------
year 1 | 100 | -50 | 50
year 2 | 0 | -50 | -50


* my spiritual home of burgess hill!

Still doesn’t make sense……..to me anyway.

 

[Uh_huh_him]

How does the new PSR rules affect us?

I think Revenue last season was around £200m which under the new rules, would have given us £170m to spend on wages/fees/amortisation.
Last season we spent £128m on wages and £32m on amortisation.

On the face of things an extra £32m on Amortisation would push us pretty close to the limit, wouldn't it?

You didn’t make that clear.

The spending cap rules for 25/26 haven’t actually been ratified. Villa, and the Manchester clubs voted against, and I have an instinct they may be changed. Whatever, we can only assume that the £30-40m amortisation has been included in the club’s forecasts; it would be strange if not, as it would be contrary to Albion’s reputation as one of the best run clubs in the country.

Ironically, there may be a bigger risk if we qualify for Europe as the UEFA spending threshold of 70% is 15% below that for clubs not in Europe and subject only to PL rules.

Didn't I?

Good point about Europe.
Do they work purely off a single season too? or is it over a rolling 3 year period?

 

[dazzer6666]

The chances are that we

Not quite, as player sale profits are subtracted from amortisation and wages are those of players and coaches only.

For reasons best known to itself, the assessment is on a calendar year basis too.

So 22/23 we had revenue of c200m and player sale profits of c120m - aren the sale profits also counted as revenue for PSR purposes ?

 

[Right Brain Ronnie]

Tony’s not just a mathematician. He’s a magician too!

Thank god he isn't the son of a toolmaker, or we'd be fooked.

 

[Weststander]

So 22/23 we had revenue of c200m and player sale profits of c120m - aren the sale profits also counted as revenue for PSR purposes ?

Yep. Shirley it’s the £133m, plus the P&S allowed adjustments added back.

 

[Bodian]

This is almost as complicated as asking our Finance Team at work 'how much of my budget have I spent so far this year?' I never understand their answers either!

 

[dazzer6666]

Yep. Shirley it’s the £133m, plus the P&S allowed adjustments added back.

View attachment 187904

It’s revenue not profit…..

 

[Weststander]

It’s revenue not profit…..

Don’t PSR also specifically target profit/loss?
https://www.skysports.com/football/news/19530/13041990/p-s-explained-what-limits-clubs-spending-more

 

[dazzer6666]

Don’t PSR also specifically target profit/loss?
https://www.skysports.com/football/news/19530/13041990/p-s-explained-what-limits-clubs-spending-more

Not really….just limits on what a club can lose.

 

[warmleyseagull]

Didn't I?

Good point about Europe.
Do they work purely off a single season too? or is it over a rolling 3 year period?

No.

Don’t know

 

[Comrade Sam]

Was the question answered - what about amortisation from last year and the preceding years purchases? Verbruggen, Baleba etc.

 

[El Presidente]

Amortisation from previous years purchases is taken into account, but offset against player sale profits for current season

 

[Comrade Sam]

Amortisation from previous years purchases is taken into account, but offset against player sale profits for current season

What profit from this season?