The loan with an obligation to buy

[Marvin]

All Summer there's been talk of PSG buying Di Maria with a loan and an option to buy the following season. It didn't happen in the end.

Now we've just sold Negredo on a loan with an obligation to buy - which to me is just a transfer. This has been explained as a device to defer spending from one window to another helping clubs out with FFP

Now then what are UEFA going to do about this?

If MCFC had done this in this window then you can bet that Wenger would have been screaming and the papers would have been up in arms demanding that UEFA act

I know double-standards is nothing new in the game, but it is annoying when you see the reaction to Manchester United and Liverpool's transfer spend and you know how they responded when we did similar (but at a lower level) just a few seasons ago. Clubs have spent more in this window tha ever before, but at the same time City passing up on Falcao has been heralded as a success for FFP in bringing MCFC into line. Clearly FFP was not about controlling transfer spend per se, but about controlling certain clubs!

I look forward to future windows when MCFC are going to run amok

 

[alib]

not going to happen

we'll just doff our cap and meekly accept whatever UEFA tell us we can do

 

[aguero93:20]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

 

[Marvin]

not going to happen

we'll just doff our cap and meekly accept whatever UEFA tell us we can do

UEFA sanctions on City are effectively over now. It's back to the days of "excess" again now - if we want

But I refer to the media reaction and official reaction to some unprecedented spending from the likes of Man Utd.

bar charts and records are announced, but little in the way of censure

 

[Chippy_boy]

The thread title is perhaps misleading as this would appear to be another "Media bias" thread.

Still, I do agree that the press have been talking about United's spending as if it is in some way impressive and nothing whatsoever to be ashamed of - quite the contrary in fact. Whereas when we do it, there's definitely a tone of disapproval and what we are doing is wrong and we should be stopped and it's bad for the game and we are all cunts.

I am not really surprised, are you?

 

[Chippy_boy]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

Not necessarily. If completion is conditional on any events then you cannot account for it up front. It would be simple to put some nominal conditions in so that only the loan fee hits the p&l.

 

[Marvin]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

Not necessarily. If completion is conditional on any events then you cannot account for it up front. It would be simple to put some nominal conditions in so that only the loan fee hits the p&l.

It's been described as an obligation to buy so what is it conditional upon?

 

[aguero93:20]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

Not necessarily. If completion is conditional on any events then you cannot account for it up front. It would be simple to put some nominal conditions in so that only the loan fee hits the p&l.

If you are obliged to buy, with no break clause as Valencia are, then it becomes a cash flow issue only, not a p&l one, prudence requires you to recognise the expense.

 

[Marvin]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

Not necessarily. If completion is conditional on any events then you cannot account for it up front. It would be simple to put some nominal conditions in so that only the loan fee hits the p&l.

If you are obliged to buy, with no break clause as Valencia are, then it becomes a cash flow issue only, not a p&l one, prudence requires you to recognise the expense.

The entire transfer expense, or just the loan fee? So far I understand that clubs just put the loan fee as an expense in that year's FFP expenses but I don't see why it should be treated any differently to a permanent deal whose payments are spread over say 5 years. For FFP purposes that would involve a club immediately taking a full hit of the fee over the length of the players contract

 

[aguero93:20]

Not necessarily. If completion is conditional on any events then you cannot account for it up front. It would be simple to put some nominal conditions in so that only the loan fee hits the p&l.

If you are obliged to buy, with no break clause as Valencia are, then it becomes a cash flow issue only, not a p&l one, prudence requires you to recognise the expense.

The entire transfer expense, or just the loan fee? So far I understand that clubs just put the loan fee as an expense in that year's FFP expenses but I don't see why it should be treated any differently to a permanent deal whose payments are spread over say 5 years. For FFP purposes that would involve a club immediately taking a full hit of the fee over the length of the players contract

This is the silly part. If they're paying a £2m loan fee and £23m purchase for say a four year deal, it should be £6.25m a year on their books in amortisation plus wages, instead they're putting a £2m loan fee in 14/15 and £7.67m per year over the other three years, in effect they're ignoring a current recognisable expense in order to make their books look nicer, which is in violation of IASB guidelines. They're essentially robbing Peter to pay Paul. I'm not going digging through the FFPR but there are strict guidelines in them on amortisation of player registration fees and it seems to be the reason PSG couldn't sign di Maria in a similar deal.

 

[St Helens Blue (Exiled)]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

I thought they are assessed over a 3 yr period so even if they dont get in for the next few yrs it negates all the spending they have done. It's a bit bizarre. Have to spend heavy to get in C.League...When you get in if your sums don't ass up then you get sanctioned..

 

[remember arthur mann]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

They'll just ratify the 'never never', it'll be ok for the rags !!!

 

[aguero93:20]

Wheeling and Dealing at it's finest Marv, the rags will get away with it because they're not being assessed this year, same with Valencia, it'll be interesting to see how (or if) the CFCB deal with any clubs in the CL/EL that try it, under accounting law it is a purchase and should be counted as such.

I thought they are assessed over a 3 yr period so even if they dont get in for the next few yrs it negates all the spending they have done. It's a bit bizarre. Have to spend heavy to get in C.League...When you get in if your sums don't ass up then you get sanctioned..

By the time they're being assessed the transfers will have been made permanent and will probably get ignored.

 

[Marvin]

If you are obliged to buy, with no break clause as Valencia are, then it becomes a cash flow issue only, not a p&l one, prudence requires you to recognise the expense.

The entire transfer expense, or just the loan fee? So far I understand that clubs just put the loan fee as an expense in that year's FFP expenses but I don't see why it should be treated any differently to a permanent deal whose payments are spread over say 5 years. For FFP purposes that would involve a club immediately taking a full hit of the fee over the length of the players contract

This is the silly part. If they're paying a £2m loan fee and £23m purchase for say a four year deal, it should be £6.25m a year on their books in amortisation plus wages, instead they're putting a £2m loan fee in 14/15 and £7.67m per year over the other three years, in effect they're ignoring a current recognisable expense in order to make their books look nicer, which is in violation of IASB guidelines. They're essentially robbing Peter to pay Paul. I'm not going digging through the FFPR but there are strict guidelines in them on amortisation of player registration fees and it seems to be the reason PSG couldn't sign di Maria in a similar deal.

Thanks I understand that it would not have helped City or PSG.

Who do you think it benefitted to see the payment pushed through the 2015-16 accounts? Could be a useful buffer for City that season. It would not have benefited City to put it through this season as we did not have time to spend it in this window so perhaps this is a clever trick in City's interest....to effectively increase our spending power next season?

 

[aguero93:20]

The entire transfer expense, or just the loan fee? So far I understand that clubs just put the loan fee as an expense in that year's FFP expenses but I don't see why it should be treated any differently to a permanent deal whose payments are spread over say 5 years. For FFP purposes that would involve a club immediately taking a full hit of the fee over the length of the players contract

This is the silly part. If they're paying a £2m loan fee and £23m purchase for say a four year deal, it should be £6.25m a year on their books in amortisation plus wages, instead they're putting a £2m loan fee in 14/15 and £7.67m per year over the other three years, in effect they're ignoring a current recognisable expense in order to make their books look nicer, which is in violation of IASB guidelines. They're essentially robbing Peter to pay Paul. I'm not going digging through the FFPR but there are strict guidelines in them on amortisation of player registration fees and it seems to be the reason PSG couldn't sign di Maria in a similar deal.

Thanks I understand that it would not have helped City or PSG.

Who do you think it benefitted to see the payment pushed through the 2015-16 accounts? Could be a useful buffer for City that season. It would not have benefited City to put it through this season as we did not have time to spend it in this window so perhaps this is a clever trick in City's interest....to effectively increase our spending power next season?

Probably, having that transfer fee go through next season when we don't have a spending cap makes more sense as it gives us more leeway in the 2015-2018 monitoring period. The only reason I can think of it benefiting Valencia and the rags is if they were on the brink of sanctions in their 2012-15 monitoring period which will be assessed next season, in which case they'd be moving the expense to 2013-16 and erasing any losses from 2012-13. Essentially the rags are hoping to amortise Falcao's fee in seasons covered by the BT and Adidas deals and Valencia must have something similar in place with regards sponsors.

 

[aguero93:20]

To add to above, rags could be thinking about the effects of this years accounts on the NYSE as well, big charges to the accounts wouldn't look as bad to investors if CL related money was coming in also.

 

[forevermancity]

slightly off topic, but has the ffp sanction now been lifted from us? can we go and spend 100m in jan or is it a season long sanction?

 

[aguero93:20]

slightly off topic, but has the ffp sanction now been lifted from us? can we go and spend 100m in jan or is it a season long sanction?

Personally I've never seen the logic behind believing it wouldn't apply to January as well. We should be completely free from sanctions next summer, in the meantime the sanctions still allow us to spend around £40m in January if we feel we have any issues within the squad to address.
Last time we signed anyone in January was the loan deal for Pizarro though, so it's doubtful we'll see much activity barring serious injuries to key players.

 

[Nixon_The_Bike_Thief]

I was of the understanding that this is nothing to do with FFP ?

Valencia currently have no money to speak of for a large outlay, however they are in the final stages of being taken over by Peter Lim (tried to buy scousehampton in 2010) who does indeed have cash and has been the driving force behind wanting Negredo. By doing business this way Lim and Valencia have there man and once all the paperwork has been completed then Lim will be investing enough that the transfer can be paid as permanent. Until then the loan was the only option as Lim cannot invest until all the I's are dotted and the T's are crossed.

 

[cleavers]

So is united's loan of Falcao the same then, I must have missed that yesterday ?