Summer 2017 Window Thread

[Deutsch Wolf]

We have to write off whatever's left on the contract as a loss, that's the bit I didn't phrase very well. But we book the £20m straight in as income.

 

[Trips]

So there really isn't much issue. Either get promoted so the EFL rules are irrelevant anyway (obviously preferable) or sell the players like Costa or Neves on for what we paid, or even higher.

Not really sure how people who are paid to have some understanding of this (as they write/talk about it they should) don't really get it, but someone like me can pick it up in relatively no time.

 

[Deutsch Wolf]

There is no issue.

Obviously I don't know what I'm talking about, I've only been talking about football finance for a decade.

 

[Deutsch Wolf]

Believe me, if Fosun were mortgaging the club to the hilt and killing us financially, then you'd have an article a day off me. That's my whole area. They aren't though.

 

[wordsleywolf]

It only becomes an issue if Neves and Costa bomb this season and lose value. Which they surely won't.

 

[Tredman]

Just had a read of fielden’s tweets - rather disappointingly he just comes across as a bit thick and hides behind ‘someone told me something’

 

[Penk Wolf]

He set his stall out early and just trying to justify his stance. I have no problem with him having a different stance to most, although I don't agree.

He's clearly spoke to someone about it, but more likely to be a journalist from the London area rather than someone with connections at the club.

 

[wolvesjoe]

Just had a read of fielden’s tweets - rather disappointingly he just comes across as a bit thick and hides behind ‘someone told me something’

If anyone remembers, there were some ferocious debates about amortisation back on the old Molineux Mix, when it was first introduced as the accounting standard for football clubs. Its always been a difficult issue to grasp, imo, as it allows for some presentational trickery by club CEOs when they want to present the board's spending in as positive light as possible. This applies to a lot of clubs, and not just Moxey's time at Wolves. So the actual books will present transfer fees amortised over the length of the player's contract, while publicly the transfer fee will be presented as one off payment in a particular season, or close season.

There's a sound logic, of course, that amortising a player's fee is a superior way of presenting a club's finances, and not just an accounting manoeuvre to get around spending caps. Football clubs, as businesses, develop and succeed over a period of years, and investments need time to bear fruit. FFP is designed to simply set a limit factor on the degree of risk in investment, and has been calibrated and recalibrated several times after discussion to better reflect the competitive realities of the various leagues. The Championship is the most contentious both because of the extravagant rewards for success and the growing advantage granted by parachute payments to relegated clubs, (which, nevertheless, remain highly elusive to realise). The constant inflation of transfer fees, itself generated by the constant growth of broadcasting incomes for the Premier League, means, however, that even the new fairly loose limits of 39 million losses over three years already looks to be lagging behind the new normal.

I generally agree with DW's take on all this: Fosun are highlyh sophisticated operators who fully understand the environment they are working in. Buying young saleable assets is the best way to copperbottom the risk factor in their spending. It was also noteable this summer that they chose to loan out Iorfa rather than sell him, as his value may well significantly increase if he has a storming season at Ipswich. This looks like a decision made directly with FFP in mind. Likewise with the extensive use of the loan market.


Costa's injury does, however, underline how even the best laid plans may be undermined. Without tracking the levels of spending too closely, as we dont yet have the figures at our disposal, it may well be that Wolves will need at least one big sale next summer to comply with FFP the following season if we are not promoted this year. That one big sale could have been Costa moving onto the bigger stage he deserves and everyone could feel happy. But a year where he cant shake off a persistent ankle injury, one of the most difficult to clear up for a pro footballer, and his transfer value will shrink to probably less than we paid for him. So risk can only be managed, never eliminated.

I wouldnt underestimate the malicious character of the discussion about Fosun's spending, which will only worsen if we are successful. Wolves are not plucky Bournemouth, or even, for that matter, Lineker cosy Leicester. When we are not being patronised, we are, for whatever reason, quite disliked.

 

[Tony Towner]

It only becomes an issue if Neves and Costa bomb this season and lose value. Which they surely won't.

The beauty of them being Mendes clients is that can't happen, a home will always be found for them that gets us our money back as a worse case. If we were to get to the PL that's when I'd imagine we would have to pay back our debt to him with some more questionable signings

 

[Penk Wolf]

FFP was brought in to stop clubs getting in big debt like Bolton. It shouldn't be there if the owners are prepared to write off the debt.

 

[wolvesjoe]

FFP was brought in to stop clubs getting in big debt like Bolton. It shouldn't be there if the owners are prepared to write off the debt.

But then we are just back to square one, where the only real thing that matters is which club has the richest benefactor. FFP is trying to strike some kind of balance to ensure that spending levels dont become all decisive, however flawed that project may be.

 

[Penk Wolf]

But then we are just back to square one, where the only real thing that matters is which club has the richest benefactor. FFP is trying to strike some kind of balance to ensure that spending levels dont become all decisive, however flawed that project may be.

Which it never will unless they put a cap on transfers and wages.

 

[wolvesjoe]

Which it never will unless they put a cap on transfers and wages.

I agree. But overall the current version of FFP has probably limited the worst excesses of inequality at Championship level, which I see as a good thing, even though Wolves now have the richest owners at this level.

 

[AndyWolves]

I like that DW asked fielden to correct him a number of times and fielden didn't. I'm 100% certain that if fielden had anything concrete he'd have said but he doesn't so he's trying to appear to protect his source - whatever that means re FFP

 

[nimrod]

FFP was brought in to stop clubs getting in big debt like Bolton. It shouldn't be there if the owners are prepared to write off the debt.

i haven't read the FPP rules for ages, but are shareholder loan "write offs" ignored (ie excluded from income) under FPP?

 

[Penk Wolf]

i haven't read the FPP rules for ages, but are shareholder loan "write offs" ignored (ie excluded from income) under FPP?

No. A club can only make a £15m loss over 3 seasons if the owner doesn't inject cash.

 

[nimrod]

No. A club can only make a £15m loss over 3 seasons if the owner doesn't inject cash.

meaning that if the loss over the 3 years is above £15m owners have to fund the excess via "equity" (shares or does this include loans?)

I suppose my question was slightly different. if an owner had built up shareholder loans from past funding (eg how we had built up substantial loans payable to SJH) then an amount he forgives is "income" in the books of the club. so unless this is excluded from the calculation of loss, a rich owner could use that to manipulate the assessment.

 

[The Saturday Boy]

Mendes has probably mitigated any risk from FFP because he can just move on players for a hugely inflated price.

 

[Deutsch Wolf]

I don't think I'm going to get my rebuttal

 

[Johnny75]

Mendes has probably mitigated any risk from FFP because he can just move on players for a hugely inflated price.

Ssh, don't tell James. He'll tell you his sources know.