As much as I'm frustrated with Arsenal's transfer business, that just isn't how it works.
How does it work may I ask?
comment by Lucasette NorthBank (U11643)
posted 3 minutes ago
How does it work may I ask?
----------------------------------------------------------------------
Ok, brace yourself for some basic accounting.
When a player is signed, their transfer fee isn't recorded as an expense, it's recorded as an asset, e.g. Liverpool by Ox for £40m than simplisticly they have and asset of £40m on their balance sheet.
Say the contract is 4 years, then the asset will be amortised over the course of the 4 years on a straight line basis. This basically means each year, £10m of amortisation would be charged as an expense, reducing the asset value. So basically:
End of year 1: Contract value £30m, expenditure for that year £10m
End of year 2: Contract value £20m, expenditure for that year £10m
End of year 3: Contract value £10m, expenditure for that year £10m
End of year 4: Contract value £0, expenditure for that year £10m
So basically the expense is recognised evenly over the course of the contract.
Say Liverpool sold Ox after 3 years when his contract asset value was £10m, for £30m. This would give them a profit of £20m which is recognised immediately.
Anyway, those are the basics.
It means that we may spent £50m on Lacazette's transfer fee this year, but if he's on a 5 year contract, that would only be £10m expenditure. The profit on the sale of the ox would be £40m, minus whatever his value his contract asset is current held at (likely low given he is in the last year of he deal, I'd imagine around £5m - £8m, but that's a guess.
Cheers. That was enlightening
Did an article like this this morning, but had a more realistic profit of £105m
comment by I'm a WOKO - thats Wenger out, Kronke out (U16927)
posted 2 minutes ago
Did an article like this this morning, but had a more realistic profit of £105m
----------------------------------------------------------------------
Not the case - please read my post above.
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
comment by Den Haag Gooner (U18553)
posted 5 minutes ago
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
----------------------------------------------------------------------
I didn't say it was interesting, just that most people don't seem to have a clue what they're talking about when it comes to the finances.
As for this summer, my guess is that wages are the issue - Lacazette coming in + Kolasinac will be on a wedge being on a free. We've just not been able to shift enough to make room in the budget.
Sorry, cheap shot. But this all implies some huge disingenuity on the behalf of the club, as these wages would not add up to the 'war chest' stories that Gazidis spouts. Something quite drastic has gone on behind the scenes, and it probably involves a Billionaire America wanting to keep the bottom-line looking healthy.
comment by Sömeday_693 - Elneny will be our salvation (U8892)
posted 12 minutes ago
comment by Den Haag Gooner (U18553)
posted 5 minutes ago
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
----------------------------------------------------------------------
I didn't say it was interesting, just that most people don't seem to have a clue what they're talking about when it comes to the finances.
As for this summer, my guess is that wages are the issue - Lacazette coming in + Kolasinac will be on a wedge being on a free. We've just not been able to shift enough to make room in the budget.
----------------------------------------------------------------------
quite possible but you can always release the likes of debuchy who can't even get a loan move.
Page 1 of 1
First
Previous
1
Next
Latest
Sign in if you want to comment
Net spend champions #2
Page 1 of 1
posted on 30/8/17
As much as I'm frustrated with Arsenal's transfer business, that just isn't how it works.
posted on 30/8/17
How does it work may I ask?
posted on 30/8/17
comment by Lucasette NorthBank (U11643)
posted 3 minutes ago
How does it work may I ask?
----------------------------------------------------------------------
Ok, brace yourself for some basic accounting.
When a player is signed, their transfer fee isn't recorded as an expense, it's recorded as an asset, e.g. Liverpool by Ox for £40m than simplisticly they have and asset of £40m on their balance sheet.
Say the contract is 4 years, then the asset will be amortised over the course of the 4 years on a straight line basis. This basically means each year, £10m of amortisation would be charged as an expense, reducing the asset value. So basically:
End of year 1: Contract value £30m, expenditure for that year £10m
End of year 2: Contract value £20m, expenditure for that year £10m
End of year 3: Contract value £10m, expenditure for that year £10m
End of year 4: Contract value £0, expenditure for that year £10m
So basically the expense is recognised evenly over the course of the contract.
Say Liverpool sold Ox after 3 years when his contract asset value was £10m, for £30m. This would give them a profit of £20m which is recognised immediately.
Anyway, those are the basics.
posted on 30/8/17
It means that we may spent £50m on Lacazette's transfer fee this year, but if he's on a 5 year contract, that would only be £10m expenditure. The profit on the sale of the ox would be £40m, minus whatever his value his contract asset is current held at (likely low given he is in the last year of he deal, I'd imagine around £5m - £8m, but that's a guess.
posted on 30/8/17
Cheers. That was enlightening
posted on 30/8/17
Did an article like this this morning, but had a more realistic profit of £105m
posted on 30/8/17
comment by I'm a WOKO - thats Wenger out, Kronke out (U16927)
posted 2 minutes ago
Did an article like this this morning, but had a more realistic profit of £105m
----------------------------------------------------------------------
Not the case - please read my post above.
posted on 30/8/17
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
posted on 30/8/17
comment by Den Haag Gooner (U18553)
posted 5 minutes ago
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
----------------------------------------------------------------------
I didn't say it was interesting, just that most people don't seem to have a clue what they're talking about when it comes to the finances.
As for this summer, my guess is that wages are the issue - Lacazette coming in + Kolasinac will be on a wedge being on a free. We've just not been able to shift enough to make room in the budget.
posted on 30/8/17
Sorry, cheap shot. But this all implies some huge disingenuity on the behalf of the club, as these wages would not add up to the 'war chest' stories that Gazidis spouts. Something quite drastic has gone on behind the scenes, and it probably involves a Billionaire America wanting to keep the bottom-line looking healthy.
posted on 30/8/17
comment by Sömeday_693 - Elneny will be our salvation (U8892)
posted 12 minutes ago
comment by Den Haag Gooner (U18553)
posted 5 minutes ago
Zzzzzzzzz. I think the point is, where the f**k has the money gone? Apparently we had millions to spend this summer, and it has not been spent, yet now it is not there.
----------------------------------------------------------------------
I didn't say it was interesting, just that most people don't seem to have a clue what they're talking about when it comes to the finances.
As for this summer, my guess is that wages are the issue - Lacazette coming in + Kolasinac will be on a wedge being on a free. We've just not been able to shift enough to make room in the budget.
----------------------------------------------------------------------
quite possible but you can always release the likes of debuchy who can't even get a loan move.
Page 1 of 1