Liverpool related transfer speculation

[Beamrider]

See bolded bit above.

Is this how FSG roll? They have been exceedingly prudent up until now. I can't believe they would suddenly say 'fuck it' and throw cash around willy nilly UNLESS they knew how they were going to bankroll it (WCC, sponsorship or whatever).

I honestly don't know. The reality is that revenues will grow, and maybe they've factored in CWC (although I personally hope it dies a death because it's a stupid idea). They'd expect some degree of inflation in wage costs, but this summer's spending is a whole different magnitude.
I'd like to think they've gamed it out and think it's a calculated risk, but it just look reckless to me. We're basically following the pattern that got Villa into such a mess, but from a higher starting point. The lesson is right there in plain sight.
And the extra income isn't going to come from performance. Our media revenue from EPL has little scope for meaningful growth, upside from CL is significant but we'd need to go deep every year, and commercial growth could be approaching saturation point.
Still, they could always put the ticket prices up a few quid a game, that always goes down well.

 

[Modo]

am i fuck learning how to pronounce that, he’d better be fourth choice

I'm guessing you didn't bother with this guy:

 

[bluebell]

I honestly don't know. The reality is that revenues will grow, and maybe they've factored in CWC (although I personally hope it dies a death because it's a stupid idea). They'd expect some degree of inflation in wage costs, but this summer's spending is a whole different magnitude.
I'd like to think they've gamed it out and think it's a calculated risk, but it just look reckless to me. We're basically following the pattern that got Villa into such a mess, but from a higher starting point. The lesson is right there in plain sight.
And the extra income isn't going to come from performance. Our media revenue from EPL has little scope for meaningful growth, upside from CL is significant but we'd need to go deep every year, and commercial growth could be approaching saturation point.
Still, they could always put the ticket prices up a few quid a game, that always goes down well.

I don't get it, probably because I am thick
We had a net spend of 0 last season. This season its going to be £150-200m and next season 0 again. I don't see where the alarm bells are?

 

[Markeh]

I'm guessing you didn't bother with this guy:

i called him the greek like everyone else

 

[Modo]

I don't get it, probably because I am thick
We had a net spend of 0 last season. This season its going to be £150-200m and next season 0 again. I don't see where the alarm bells are?

According to transfermarkt, we're currently about £215 mill in the red.
Selling Diaz, Nunez, Elliott and a few more will probably get us to net zero
But buying Isak, Guehi and possibly a winger will pit us back in the red again by about £200 mill.
I'm not totally sure how it works with PSR, but I think selling homegrown players gives us some leeway and we've already sold Quansah, with Elliott, Morton and few others next.
So, I think we're fine with spending £200 mill.

 

[StevieM]

To be available when we need him.

That’s kind of my point - we don’t require him to dry often - ideally not at all outside of early domestic cup ties or when the league is already won.

 

[StevieM]

Let me put this bluntly, using my numbers as I've previously set them out (adjusted for a lower fee for Lucho as announced today) and I've also done a bit of finessing on wages:

Impact of this summer's dealings on FFP profits (assuming we sell Darwin, Elliot, Doak, Kostas, Chiesa, Morton) and buy Isak and Guehi (or Fofana instead of Guehi, if that's how you roll).

I've also assumed a deduction for full wages of the guys sold (i.e. I assumed that instead of replacing them, we extended their contracts out 5 years on existing terms). In that context, what I'm presenting here is the incremental cost of the new additions over the status quo.

These are individual annual results:

25-26 plus £129m
26-27 minus £84m
27-28 minus £117m
29-29 minus £105m
29-30 minus £94m

Impact on FFP (UEFA target €5m loss over 3 years) - these are the impact on three-year results:

25-26 plus £129m
26-27 plus £45m (£129m - £84m)
27-28 minus £72m (£129m - £84m - £117m)
28-29 minus £306m (-£84m - £117m - £105m)
29-30 minus £316m (-£117m - £105m - £94m)

Seriously, look how fucked that is in 28-29 and 29-30. We could even fail Premier League targets.

I am most certainly not a finance person and you may have covered this earlier - but why do those number jump up so drastically from 28/29?

Is it a case of having to balance it by future sales - like Gakpo or some of the kids coming through and high earners like Mo, Virgil, Ali & Robbo coming off the wage bill?

 

[Dirty Sanchez]

Don’t worry. We’re selling Mo next year.

Nah - Chelsea and 115 showing us the way. We will sell the women's team to ourselves for a tidy profit.

 

[keniget]

The other week we were fine to spend and now we’re staring into the abyss.

Is it just the prospective signing of Isak that’s changed the outlook?

 

[bazazaba]

@Beamrider -- if we were to (more heavily) front-load the payments for the first 2 seasons of a purchase, taking advantage of the lower spend the last 2 seasons + the higher volume & value of sales this season, we should then be able to lower the payments for the remaining years thereafter, shouldn't we?

It would then be a matter of finding the balence point between how much front-loading we can do before we skirt dangerously close to violations in these first couple of seasons.

Does this make sense and is that allowed anyway? Or do the rules require the costs to be spread over the contract years evenly, regardless of the payment schedule?

 

[tombrown]

I think (but I'm probably wrong) its all about asset depreciation rather than schedule of payments

 

[peterhague]

@Beamrider -- if we were to (more heavily) front-load the payments for the first 2 seasons of a purchase, taking advantage of the lower spend the last 2 seasons + the higher volume & value of sales this season, we should then be able to lower the payments for the remaining years thereafter, shouldn't we?

It would then be a matter of finding the balence point between how much front-loading we can do before we skirt dangerously close to violations in these first couple of seasons.

Does this make sense and is that allowed anyway? Or do the rules require the costs to be spread over the contract years evenly, regardless of the payment schedule?

Yeah it's got nothing to do with when you actually pay the money.

 

[MomoWASright]

That’s kind of my point - we don’t require him to dry often - ideally not at all outside of early domestic cup ties or when the league is already won.

That’s what makes keeping Gomez around stupid. We know from how Slot treated Quansah last season a kid won’t be used as 4th choice CB. That makes me think going down the old time route is better overall. Getting someone English in, like Dunk, makes sense because he’s not going to “lose those battles” and be happy at the chance to get a few medals along the way.

 

[peterhague]

That’s what makes keeping Gomez around stupid. We know from how Slot treated Quansah last season a kid won’t be used as 4th choice CB. That makes me think going down the old time route is better overall. Getting someone English in, like Dunk, makes sense because he’s not going to “lose those battles” and be happy at the chance to get a few medals along the way.

It's always a tricky balance. Gomez would be ideal because he's versatile so can get time elsewhere, but he's always injured. But yeah overall an older CB is probably a better solution than a young one like Quansah who needs minutes.

 

[Hansern]

We'll have to win the CL or be on of the eight highest ranked teams in the competition over the next years.
There is a decent chance we'll be in it.
Its sadly a shitshow of a tournament, and when its Infantino's precious baby its definitely one thing you hope will fail miserably.

Anyone follow the FIFA vs FIFPRO discussion over player welfare? Basically FIFA had a key meeting regarding player welfare and didnt invite FIFPRO (which is the global union for football players, 66 000 members). Pretty insane as always when it comes to FIFA. The FIFPRO president has gone to war against Infantino, and the latest statement from FIFA is that they are accusing FIFPRO of not being honest about their financial results and accounting.
You nearly have to admire the piss taking from the most corrupt organization ever.

 

[Beamrider]

I am most certainly not a finance person and you may have covered this earlier - but why do those number jump up so drastically from 28/29?

Is it a case of having to balance it by future sales - like Gakpo or some of the kids coming through and high earners like Mo, Virgil, Ali & Robbo coming off the wage bill?

In the first three years the losses are offset by the (much higher than normal) profit on sale of players this summer. Once that drops out in year 4 then we are exposed to the full extent of the costs.
Same happened with Villa. They were fine running losses while they had the Grealish profit to offset them. Once that dropped out they were in trouble.

 

[Beamrider]

@Beamrider -- if we were to (more heavily) front-load the payments for the first 2 seasons of a purchase, taking advantage of the lower spend the last 2 seasons + the higher volume & value of sales this season, we should then be able to lower the payments for the remaining years thereafter, shouldn't we?

It would then be a matter of finding the balence point between how much front-loading we can do before we skirt dangerously close to violations in these first couple of seasons.

Does this make sense and is that allowed anyway? Or do the rules require the costs to be spread over the contract years evenly, regardless of the payment schedule?

To confirm what others have said, it's not about timing of payments. This is accounts-based so principles of spreading the costs apply regardless.
And we don't want to go all Barcelona here and try to be clever, only succeeding in making it worse.

 

[Hansern]

In the first three years the losses are offset by the (much higher than normal) profit on sale of players this summer. Once that drops out in year 4 then we are exposed to the full extent of the costs.
Same happened with Villa. They were fine running losses while they had the Grealish profit to offset them. Once that dropped out they were in trouble.

Villa are also one of the worst team in the league regarding wage to turnover if I remember correctly. For the 23/24 season it was 93% or something.

 

[Beamrider]

I don't get it, probably because I am thick
We had a net spend of 0 last season. This season its going to be £150-200m and next season 0 again. I don't see where the alarm bells are?

Timing is the issue.
Let me give a more simple example.
Let’s say we signed a player for £50m, 3 years ago. We’re now going to sell him for £50m and replace him with a new guy for £50m, 5 year deals all round. Ignore wages to keep it simple.
The old guy is on the books at £20m. We make a profit of £30m on sale. We save £10m amortisation in years 1 and 2.
So profit in year 1 of £40m, profit in year 2 of £10m. No impact in years 3-5 as his contract would have expired and he’d be fully written off at the end of year 2.
The new guy adds costs of £10m a year for five years.

So our profit / loss profile is:
+ 30m
Neutral
- 10m
- 10m
- 10m

With the FFP 3 year count-back, that comes to:
+ 30m - no problem
+ 30m - no problem
+ 20m - no problem
- 10m - problem
- 20m - problem

Now imagine the new guy costs £120m and is on £250k a week, and has some mates…

 

[Beamrider]

And this is all made worse by the timing of the sales. Normally we-d make £30-50m profit on sales each summer. Which means we have a rolling £90-150m for FFP which never drops out. This year we might make £200m profit but then not be able to sell next year because under your thinking we’ll have no net spend (which practically means we’d probably keep everyone we’re left with this summer). But some of those guys won’t work out and will need replacing.
And in 2 year’s time we need to replace Mo and Virgil, for whom we’ll get nothing then they leave. Ibou might not sign a new deal and leave in a free.
A lot rides on the new guys working out and us making some good money on youth / commercial; deals to fund a patch-up next year and replacing two legends the year after.
It’s a huge gamble.
We should be lining up freebies for the next two years. Which means shafting (for example) Palace for Guehi on a free next year, doing to them what Real did to us on Trent. You can decide for yourselves on the ethics of that.

 

[tomasjj]

Mo goes to Arabia in a year and a half.

 

[peterhague]

And this is all made worse by the timing of the sales. Normally we-d make £30-50m profit on sales each summer. Which means we have a rolling £90-150m for FFP which never drops out. This year we might make £200m profit but then not be able to sell next year because under your thinking we’ll have no net spend (which practically means we’d probably keep everyone we’re left with this summer). But some of those guys won’t work out and will need replacing.
And in 2 year’s time we need to replace Mo and Virgil, for whom we’ll get nothing then they leave. Ibou might not sign a new deal and leave in a free.
A lot rides on the new guys working out and us making some good money on youth / commercial; deals to fund a patch-up next year and replacing two legends the year after.
It’s a huge gamble.
We should be lining up freebies for the next two years. Which means shafting (for example) Palace for Guehi on a free next year, doing to them what Real did to us on Trent. You can decide for yourselves on the ethics of that.

Presumably there'll be some pretty significant fees no longer (or barely) being written off in 3+ years though?

Big outlay on midfielders 2 years ago, plus Nunez and Gakpo (and Diaz, really) before that. Total in fees of about £300m by my workings, so over 5 years annual hit of £60m.

Plus whatever extra Annie Rd brings in...

Could make a significant difference I'd have thought?

 

[Beamrider]

Presumably there'll be some pretty significant fees no longer (or barely) being written off in 3+ years though?

Big outlay on midfielders 2 years ago, plus Nunez and Gakpo (and Diaz, really) before that. Total in fees of about £300m by my workings, so over 5 years annual hit of £60m.

Plus whatever extra Annie Rd brings in...

Could make a significant difference I'd have thought?

It all gets a bit circular.
Fee fully written off = player out of contract, needs replacing.
Contract extended = less amortisation but higher wages and related agent fees, only delays things as with Mo and Virgil, sooner or later they get too old and need replacing.
Annie Road isn’t bringing in huge returns, that’s why we had to self-fund it. It’s largely general admission, so low revenues. The Main Stand had a big return because of hospitality at premium prices, but even then it was less than £20m a year uplift and longer term returns relied on ticket price inflation - Spirit of Shankly kiboshed that.
And ultimately, whatever extra income goes into the game gets bled back out in wages and agent fees. The only clubs making profits are the Red Bulls and Brightons of the world who churn players. Everyone else is at best keeping their heads above water, most clubs are relying on shareholder investments / hidden subsidies to keep afloat.

 

[peterhague]

It all gets a bit circular.
Fee fully written off = player out of contract, needs replacing.
Contract extended = less amortisation but higher wages and related agent fees, only delays things as with Mo and Virgil, sooner or later they get too old and need replacing.
Annie Road isn’t bringing in huge returns, that’s why we had to self-fund it. It’s largely general admission, so low revenues. The Main Stand had a big return because of hospitality at premium prices, but even then it was less than £20m a year uplift and longer term returns relied on ticket price inflation - Spirit of Shankly kiboshed that.
And ultimately, whatever extra income goes into the game gets bled back out in wages and agent fees. The only clubs making profits are the Red Bulls and Brightons of the world who churn players. Everyone else is at best keeping their heads above water, most clubs are relying on shareholder investments / hidden subsidies to keep afloat.

Oh well, I suppose the amortisation not suffered on Nunez and Diaz at least can be counted as they've been (or will be) sold.

I'd be less concerned if it wasn't for Salah and VVD both needing to be replaced in 2 years. That looks like a bit of a time bomb.

 

[Beamrider]

Oh well, I suppose the amortisation not suffered on Nunez and Diaz at least can be counted as they've been (or will be) sold.

I'd be less concerned if it wasn't for Salah and VVD both needing to be replaced in 2 years. That looks like a bit of a time bomb.

I’ve factored in the lost amortisation from sales into my workings. That’s why the losses crank up more in the latter years - the amortisation from the new buys is constant for 5 years but the offset from sales drops out.

 

[peterhague]

I’ve factored in the lost amortisation from sales into my workings. That’s why the losses crank up more in the latter years - the amortisation from the new buys is constant for 5 years but the offset from sales drops out.

I'm probably being thick but I can't backwards engineer your figures. Just ignoring wages for now, I'm getting an annual increase in amort of £79m (395m spent by 5) less an annual saving of £23m on Nunez, Diaz, Chiesa, and Tsimikas. So hit to the accounts each year of £56m as compared with existing costs.

 

[MomoWASright]

Have you factored in the Jota payout?

 

[tombrown]

I just like to assume that FSG know what they are doing & have it all worked out

 

[Squiggles]

View: https://www.tiktok.com/@chris.thiscountry/video/7371090948157164832

 

[Fabio]

Fsg so far haven't really made bad business decisions.

I half wonder if they're thinking an explosion in the American market post world cup, and we need to be the established dominant English side for glory hunters. This potentially opens up a lot more sponsorship deals and a stronger negotiating position on that front