Beg to differ, Aski. My figures were a guess - I made that clear at the time, however, 2 of your points are quite wrong.
VAT is effectively payable on anything that is not exempted. And footballers are not exempted. Indeed, they couldn't be closer to the term 'luxury goods'. There is no doubt about this in my mind.
Also, 48 months is very, very common - in fact, almost bog standard for these transfers, unless stipulated otherwise, of course. Very few clubs have large chunks of money lying about, and most prefer to spread the cost as far as they can.
I concede that I've probably got it wrong with both agents being paid out of the pot. But then I was probably underestimating what they were being paid anyway.
Firstly I wasnt arguing over your exact figures, they actually dont matter, what I was pointing out, is in my opinion, you had two payments that don't have to be made, ie one to an agent and one to the VAT man. The actual figures are inconsequential, those payments do not have to be made. Regarding your estimation about the level of the agent fee, on the figures you used, I dont think you were far off. I know I made a post when at the end of last season, the fees paid to agents by all clubs was listed, and seem to recall that we paid about 16%, with the average being around 15.4%, so maybe the agents fee should be 1.2m instead of 1m.
Secondly here's a copy of an answer from a tax accountant friend of mine, who deals in the entertainment sector
The transfer of footballers is subject to VAT in the same way as any other goods or services. Domestic transfers in the UK are taxable at the 20% standard rate. However, transfers between football clubs in the EU are relieved of VAT. Sales from a UK club to a buyer outside the EU are also free of VAT, although if a UK club buys a player from outside the EU it must account for VAT on the purchase.
The transfer window has no real effect on the VAT position. If a club has a December VAT period, but wants to buy a player in the first week of January it could bring the tax point forward by requesting a VAT invoice from the selling club on 31 December. Of course, this might meant that the selling club has to pay its VAT three months earlier.
So in a way we are both correct and wrong, it all depends who we sell too. However, what I would say is that the VAT element on any transfer sale, would be offset by the VAT paid by ourselves. Again whilst this offset may not take place straight away, from a share holder within the club point of view, an additional investment of the sum that will be offset against that VAT payment, could be made. The way your post reads is that any money paid for VAT is lost from the club, when in actuality it wouldn't be, and again if we sell overseas, then the VAT question doesnt even arise. I would imagine that the amount the club is able to reclaim from VAT purchases over a 3 month period would be more than enough to offset what we may have to pay from any proposed sale. In addition, if we purchase a replacement player from within the UK, then we would also be able to offset the VAT paid on the element of that transfer fee
On the second point I will disagree to some extent. Yes possibly your view point could be a worse case scenario, and when club has to sell then yes I can imagine the buying club, doing everything possible to get favourable terms with regards to payment, but unless a club had to sell, why would they agree to such draconian terms
Chelsea have since finalised a deal for Willian, with the winger set to complete the move in the next few days pending a successful work permit application.
It is understood that Chelsea will pay the £30million transfer fee in two installments over the next 18 months.
http://metro.co.uk/2013/08/24/willi...ea-after-snubbing-tottenham-transfer-3936168/
Manchester United confirm Real's one-off £80m payment for Cristiano Ronaldo
http://www.theguardian.com/football/2009/jul/01/cristiano-ronaldo-one-off-payment-real
When Mata signed the five-year deal, the £23.5m transfer fee was amortised over the life of the contract for accounting purposes. If you've been reading our various financial analyses during this transfer window, you're likely already well-aware of the concept of amortisation by now. However, for newcomers (welcome!), amortisation is the process by which an expenditure is paid off over time on the books, and it is a uniform accounting practise employed by football clubs (i.e. it's not just something Chelsea decided to do on its own to make the books look better).*
* Note that this is just an accounting practise. In reality, Chelsea likely paid Valencia the full £23.5m immediately. Similarly, Manchester United will likely be paying Chelsea the full £37m immediately or in a few installments over the next few months.
Mata's transfer fee, then, is reduced to £4.7m annually (£23.5m spread evenly over five years).
Ok the above deals involve wealthy clubs, who can afford to make shorter term payments,but the sums involved are also substantial, but I'm sure all the purchasing clubs would have preferred to make their payment in installments, you have to presume the selling clubs were not agreeable to this. I know Real Madrid wanted to pay Spurs the Bale money over 5 installments but no term of payment was reported, again I dont think Spurs would accept that over a 4 year period.
http://weaintgotnohistory.sbnation....a-transfer-manchester-united-chelsea-finances
However lets find evidence of a more reasonable transfer
Oldham Athletic have reported West Ham to the FA in relation to the signing of Cristian Montano as the League One club believe they were sold the Colombian without being told he had been arrested on suspicion of a serious offence.
The Latics signed Montano for around £50,000 in August 2012 without knowing that the player had been arrested just a month earlier.
Although the player is yet to be convicted of the offence, Oldham have withheld handing over the final installment of the transfer fee after learning that Montano is due in court in March which had triggered an automatic transfer embargo on the club.
Read more:
http://www.dailymail.co.uk/sport/fo...ing-Colombians-arrest-2012.html#ixzz32PPQTcnT
Follow us: @MailOnline on Twitter | DailyMail on Facebook
http://www.dailymail.co.uk/sport/fo...o-despite-knowing-Colombians-arrest-2012.html
So we have Oldham buying a player for £50k in August 2012, and withholding the final payment in January 2014, a period of 16 months.
Whilst it is hard to gather actual evidence, I would anticipate that most transfer installments would be paid over a period of 12 to 24 months, unless the selling club was desperate for an immediate cash injection
In addition found this blog on the subject of transfer fee installments, and again this is how I would imagine payment to be made. The blog is by Chris Bailey is a former finance director at Watford and Fulham FC, so I imagine he has a good idea how transfer installments normally work.
http://bornoffside.net/2011/03/the-cost-of-a-player-is/
On acquisition it would appear to be fairly simple to ascertain the value, however there are many factors to take into account. As an example let’s consider the acquisition of Player A for which the transfer details were:
Transfer Fee £12m
Payable by installments of £6m on acquisition, £3m in six months, £1.5m in 12 months, £1.5m in 18 months.
So I refute your claims WJ, over to you to convince me otherwise
