Maddison on the never, never

AlgarFox

AlgarFox

Roofer
Leicester City get £26m boost in fresh deal over James Maddison's Tottenham transfer.
City were not due to receive the funds until next year and the summer after, but have done the same deal they did with Riyad Mahrez and Wesley Fofana's
Leicester City have opted to bring in the £26.7m they are still owed by Tottenham for the transfer of James Maddison through Australian bank Macquarie, City have chosen to receive the money now, rather than wait for Spurs’ two remaining instalments, due next summer and the summer after.
Spurs paid £40m for attacking midfielder Maddison this summer in a deal many pundits are already calling a bargain after his fine start to the Premier League campaign.
City did receive a third of the fee, £13.3m, up front.

Apparently we owe Norwich 1.6 million according to the same press statement.
 
Am I missing something. Why wouldn’t we receive the money now rather than wait two years. It looks like the same amount overall.
Still galls me they got him for £40m when numpty Mount went for £60m+. Both had a year left on their contracts.
 
LGFOX said:
Am I missing something. Why wouldn’t we receive the money now rather than wait two years.
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The only reason you wouldn't want to is the interest payable but, no, I don't get why these arrangements on transfer fees receivable cause so much noise. If someone was to say Tottenham were going to pay the full amount up front nobody would bat an eyelid. As the provision dictates the balance is paid by Tottenham directly to the bank its not like LCFC are going to turn around to them and say sorry we cannot pay it back.
 
The thing is, will borrowing the money not effect our FFP, also why now after the window has closed. I am sure somebody can explain.
 
AlgarFox said:
The thing is, will borrowing the money not effect our FFP, also why now after the window has closed. I am sure somebody can explain.
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The FFP impact is the interest paid in any year as that is an outgoing on the P&L (so decreases profit/increases loss by the amount of that interest in that year) otherwise none.

Apart from that, when you get the money makes no difference to FFP, just to where it is reflected on the balance sheet. The profit on the sale (total transfer fee to be received - (total transfer fee paid for the player - amount of that fee subsequently amortised)) is the same regardless of when money is received.

And it has nothing to do with Transfer windows, they are just about the registration of players. When & how payment is made is completely separate and is just purchase agreements & accounting. So why now? The club will just be looking at how it services its cash requirements.
 
Anyway he's having prime time with the London Rags best thing in since sliced
Bread according to them, pity they didnt
Bum him.up before his transfer a steal at that price
 
But who pays the interest and fees? If LCFC then that reduces our profit/available funds. Hopefully it is paid by THFC. Basically it seems THFC could not afford JM.
 
newboldfox said:
But who pays the interest and fees? If LCFC then that reduces our profit/available funds. Hopefully it is paid by THFC. Basically it seems THFC could not afford JM.
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LCFC pay the interest (and, yes, as already mentioned it has the net effect of reducing profit) but it's LCFC's decision to get the money in early having agreed to the structure of the deal so not sure why THFC would pay it. Structured payments though are pretty much standard especially on larger deals (indeed all our big recent sales have been and equally the ones we pay - in the accounts for 2021/22 we owed about £85m in transfer fees, i.e. 2nd, 3rd etc. instalments of deals). There are not many clubs that hold the sort of reserves in the bank that would allow them to pay for all their transfer fees on completing their deals.
 
buz_not_buzz said:
LCFC pay the interest (and, yes, as already mentioned it has the net effect of reducing profit) but it's LCFC's decision to get the money in early having agreed to the structure of the deal so not sure why THFC would pay it. Structured payments though are pretty much standard especially on larger deals (indeed all our big recent sales have been and equally the ones we pay - in the accounts for 2021/22 we owed about £85m in transfer fees, i.e. 2nd, 3rd etc. instalments of deals). There are not many clubs that hold the sort of reserves in the bank that would allow them to pay for all their transfer fees on completing their deals.
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(Actually I should add that in effect THFC may pay some of the interest indirectly as I believe that usually the structure will include discounting for early payment - i.e. they may pay more for the privilege of delaying payments if that is what you mean?)
 
I suppose that is why relegation is such a disaster. Loss of income and big overhanging debts which soak up parachute payments mean any asset worth something has to be sold.
 
And the assets sold with a tiny deposit down with a club getting an income of £1.50 per week.
 
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newboldfox said:
I suppose that is why relegation is such a disaster. Loss of income and big overhanging debts which soak up parachute payments mean any asset worth something has to be sold.
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I think loss of income is the thing really. Even with the parachute payments it is substantial and has an immediate impact on P&L and by extension FFP which, given previous financial results, means that, yes, I think it is reasonable to assume a certain need to have cashed in on assets even if they had wanted to stay. Money owed to creditors is less of an issue whilst, if incomes stay low relative to expenditure, KP are prepared to keep supporting the club (of which they have to provide assurances every year). Overall, club assets are still substantial & the conversion to equity of most of the debt to KP last year significantly decreased the club's liabilities so the net position on the balance sheet should be reasonably healthy I would have thought.
 
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