hackneyfox
Roofer
Leicester City take out posh payday loans for £8.3m of instalments due from Fulham for Castagne & £23m of instalments from Newcastle for Barnes from Macquarie bank.
Another loan against future transfer payments
- Thread starter hackneyfox
- Start date
JohnMitten
Registered
It's like paying off one credit card with another credit card.
hackneyfox
Roofer
Hopefully it's to buy extra talent for the PL in January rather than day to day running costs.
buz_not_buzz
Occasional Poster
Again, if Fulham & Newcastle had paid all the money up front then nobody would bat an eyelid.
ClaphamFox
Roofer
No it isn't.
newboldfox
Roofer
We are probably making our buys in instalments too, it seems to be common practice to spread the costs over several years.
LGFOX
Roofer
Unless you’re manure and you get scammed for the whole £80m for Maguire up front
buz_not_buzz
Occasional Poster
Not really, as mentioned before when you get the money makes no difference, this is more about cash flow. Only FFP impact is negative and that is the interest paid,
WillyWarpit
Here because I'm not all there
Given Macquarie were instrumental in making Thames Water the company it is today you would think only the naive or the desperate would deal with them. Lets hope I am totally mistaken.
Feckit
Roofer
I’ve heard Spurs paid the full amount for Maddison (bargain and surely we must have add on’s to come,)2 thirds of the Fofana money is owed (might be 1) Castagne & Barnes still owed, seems crazy when clubs raid the relegated teams for the players but pay on the knock, feckin mad world we live in, might go for a few beers and tell the landlord I will square up in January…
Yorkfox
Roofer
So the full transfer fee goes into that years accounts as a positive no matter when the club might receive it?
buz_not_buzz
Occasional Poster
Nope, payable in 3 equal instalments (plus/minus a pound), next in July 2024 and then July 2025. We have a loan for these.
Both made money from shifting shit
buz_not_buzz
Occasional Poster
Yes the transfer fee (not including any add-ons) is recognised in whole in the year in which the transaction is made. Whether it is profit or loss though depends on the book value of the player when sold (original cost of the player minus amortised value).
Say we sell player we bought for £20m 2 years into a 4 year contract for a fee of £25m with money paid all at once, the balance sheet will show:
Intangible asset is reduced by book value -£10m
Current Assets (cash) +£25m
Therefore Profit on sale (FFP impact) = +£15m
=======
If the money is paid £12m up front and £13m the following FY, for year 1:
Intangible asset is reduced by book value -£10m
Current Assets (cash) +£12m
Debtors +£13m
Therefore Profit on sale is still +£15m
In year 2, balance sheet will show
Current Assets (cash) +£13m
Debtors -£13m
No P&L effect
========
If the £13m is loaned in year 1 and subject to £0.5m interest
Intangible asset is reduced by book value -£10m
Current Assets (cash) +£25m
Debtors +£13m
Total Asset impact = £28m
Creditors +£13m (i.e. more credit but this is a minus)
Total Liability impact = £13m
Therefore Profit on sale is still +£15m but then we also have to include £0.5m in interest paid so net effect on P&L and FFP is £14.5m. Edit: actually missed to say that this also reduces current assets by £0.5m so...
Intangible asset is reduced by book value -£10m
Current Assets (cash) +£25m - £0.5m
Debtors +£13m
Total Asset impact = £27.5m
Creditors +£13m (i.e. more credit but this is a minus)
Total Liability impact = £13m
Year two there is no additional impact on Current Assets and the money from the debtor goes to the creditors so again no impact on P&L.
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