United Thread - 2022/23

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hammocity said:
This is the FFP rules before being amended from next season.

City borrow a further billion pounds on a soft loan and don’t pay back a penny but it sits there on the balance sheet as a debt. That money is then spent over a period of years on wages and transfers A new owner comes along, pays off the debt and we start again, that’s not what FFP was supposed to be there for.

Why should accumulated debt be allowed to be written off, especially how Chelsea did it? They circumnavigated FFP by funding the spending, it wasn’t income, it’s turned out to be a gift.
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I feel like I’m trying to explain financials to a kid with a crayon - how thick actually are you? If the billion quid was spent without a billion quid in income that would result in what we in the trade call a “loss”. Regardless where the cash came from this would blow apart ffp. Think you’re still confusing cash with profit and loss mate and I’d let those of us who do understand it tell you, with all due respect, that you’re talking out of your arse.
 
hammocity said:
This is the FFP rules before being amended from next season.

City borrow a further billion pounds on a soft loan and don’t pay back a penny but it sits there on the balance sheet as a debt. That money is then spent over a period of years on wages and transfers A new owner comes along, pays off the debt and we start again, that’s not what FFP was supposed to be there for.

Why should accumulated debt be allowed to be written off, especially how Chelsea did it? They circumnavigated FFP by funding the spending, it wasn’t income, it’s turned out to be a gift.
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But then they'd make a huge loss?

Loan is on the balance sheet as a loss, but in spending the cash from the loan you're reducing your retained earnings.

Not sure if you know how accounting works, but in balance sheet terms if you reduce net assets, then you reduce debt and equity (retained earnings), obviously vica versa.

In your example, the loan can sit there in debt all it wants, but in spending the loan you're reducing retained earnings, and therefore shareholder wealth (debt and equity).
 
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