City & FFP | 2020/21 Accounts released | Revenues of £569.8m, £2.4m profit (p 2395)

[Rammy Blue]

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Will all be forgotten when we ruin football again in the summer….

 

[MillionMilesAway]

They can have a ten year contract but amortisation has to be over 5 years

Yep, agreed. I think that's the suggested change.

It would even things between a country with a max 5 year contract limit and one that doesn't, as the amortisation would be the same for both.

 

[lancs blue]

They can have a ten year contract but amortisation has to be over 5 years

Yes, that's how I read it, clubs can offer a length of contract that complies with national limits but can only amortise the fee over 5 years.

 

[meltonblue]

Write off debt goes as a positive movement through p&l which increases profit. Profit means tax. Tax is a p&l hit/expense.

So in Leicester's case it will improve their reported profit (or loss) by £194m.

Whatever their final profit or loss position is in the year they do the write off they will have to pay tax on. Before 1 April 2023 its 19%/after 23%...

I could be wrong as there could be ways around it and also football sometimes seems to have its own rules. But that's the way it works for normal businesses.

It’s not a write off as such though, it’s a conversation to equity they’ve done so it’s just tidying up the balance sheet isn’t it?

 

[meltonblue]

I think the latter is likely - they can change the FFP rules without needing external agreement.

I wonder if some other countries have a limit of 5 years though, and this is more to level the playing field across UEFA rather than to stop some exploiting it.
They'll presumably have to allow Chelsea some leeway as the contracts are in place before the rule.

Not sure they can enforce an accounting change for assets that’s different to the law in that country though, if they could then I’m not sure why fifa would have the caveat in their own regulations already.

I’m not sure how they’d propose to treat renewed contracts either.

 

[WRicko]

They can have a ten year contract but amortisation has to be over 5 years

But accounting standard would be to do it over the life of the contract

 

[waspish]

But accounting standard would be to do it over the life of the contract

Yes but seems uefa will only take the five years into ffp accounting

 

[MillionMilesAway]

Yes but seems uefa will only take the five years into ffp accounting

Quite - it's not about changing accounting standards, it's saying that UEFA will set their rules that transfer fees will be assessed for amortisation based on a maximum of 5 years.

 

[MillionMilesAway]

Not sure they can enforce an accounting change for assets that’s different to the law in that country though, if they could then I’m not sure why fifa would have the caveat in their own regulations already.

I’m not sure how they’d propose to treat renewed contracts either.

The FIFA line just makes no sense, as it basically seems to say:

if it's illegal to have contracts longer than 5 years, then you can't have contracts over 5 years in length.
If it is legal to have contracts longer than 5 years, then you can have them.

I'm not sure what limitation the sentence adds!

 

[meltonblue]

The FIFA line just makes no sense, as it basically seems to say:

if it's illegal to have contracts longer than 5 years, then you can't have contracts over 5 years in length.
If it is legal to have contracts longer than 5 years, then you can have them.

I'm not sure what limitation the sentence adds!

Exactly! To me it reads like “this is what we’d like to happen, but we can’t actually make it happen”. Don’t bother writing it in the first place then!