Different Kinds of Losses by Mike Thornton With the hoo-ha at Aston Villa just now the words “losses” and “losing” are being bandied about willy-nilly by journalists and fans alike, with little understanding of what they mean. Many people are confusing FFP losses with the losses being talked about at Aston Villa and others are still confused why FFP losses are different to losses published each year in the Club Accounts. This tries to explain the difference. Simple Club Accounts Let me imagine a simple Club. It has the following incomes and expenditures per year: Turnover income (tickets, shirt sales etc) — £10 Running costs — £5 Academy Costs — £2 Bank Balance — £nil Now buy a player Lets now add a player to the Club. We agree a transfer fee of £10 and agree to pay half of the fee in Cash immediately. We give the player a 4 year contract. Amortisation We need to add the cost of the player to our Club Accounts. Since we have agreed fees of £20 that is a cost to be taken off income to find profit or loss. However, this £20 buys us the player for 4 years and so the average cost per year is only £5. This is called Amortisation cost and is added each year for the next 4 years. Bank Balance Our Bank Balance started at Nil and then we had a Turnover Income of £10, which increased the balance, and also spent money on both running costs and Academy costs, which are taken out of the Bank Balance. Also, in the first year we took £10 from the Bank Balance to pay the 1st instalment of the transfer fee. Calculating Losses This chart shows the three different losses. please log in to view this image Accounts Loss The loss shown on the Club Accounts includes ALL costs and is a LOSS of £2. FFP Losses For FFP the Football League want to encourage clubs to spend on youth and so the costs of running the Academy are NOT included. Therefore, this example had a break-even FFP result. CASH Losses Since the amortisation used for the player purchase is over 4 years BUT the actual payments of CASH were over just 2 years there is a different CASH Loss.
Thanks for posting this Ell. I didn’t understand what appeared to be a bit of a scattergun approach to bringing in so many youngsters, maybe Rad is smarter than many of his detractors and that was his initial plan to get around FFP whilst still investing a sensible sum. In today’s gossip on the BBC, clubs are looking to buy Lascelles from Newcastle for £45 million I remember him being decent but £45M? Never! When you consider that Terry probably cost Villa more to run than our whole academy it makes total sense, find a couple of gems worth a fortune and avoid ridiculous wages, I would do the same. Having said that, I think he also learnt a bit of a lesson because the first team fell well short and it wouldn’t have taken huge sums to compete. When he had his spat with the EFL over the way Wolves did it I thought it was all a bit embarrassing, in hindsight, maybe he was upset that he tried to do things to comply with FFP as would seem sensible if you read the rule book and has realised he may have missed a trick. I know nobody is signed yet but can’t help but think the American investment and the coaches and players we are linked with now is no fluke. I’ve already admitted I had never heard of Bielsa until last week but, reading all of the comments about him, totally understand why Rads would think it could be extremely shrewd. Get links to top quality loans like Wolves did and use the new investment to change the wage structure to really challenge. For certain, if plan B works AND plan A (youth) comes to fruition, along with the backing of our amazing support, Rads may need to spend a small fortune in eggs that he can pass around
Just as I thought, no mention of a plan C This is probably best part of every season when everything is still possible
Talking about over priced players,stoke looking to buy Jordan Ibe for 12million off Wolves who only signed him about 2 weeks ago.He's a winger but has a terrible goal scoring record.Regards FFP yes I've seen before that buying players for the academy is a way around it,that the likes of City and Chelsea are exploiting,and I think that's Rads plan as well.Very clever,too clever for the likes of gloria to understand.
It’s ok, I’m sure you’ll have loads to moan about soon enough, in the meantime I’ll ponder what Plan C could be, enjoy the weather and cheer all of the British and Irish teams on in the World Cup
Someone said we were after Maddison. Don’t know on what basis as he is off to Leicester for £20milllion.
I’m sure Ortas we’ll on top of a plan C. I wasn’t aware there was a rugby World Cup this year. Must check that out
Nothing... Looking forward to watching the3 lions in their last warm up game tonight when the second string show how good a squad this young hungry bunch picked on form and not big club hysteria are.
Ireland history Football world cups won 0 Rugby world cups won 0 World wars won 0 Terror campaigns won 0 Very consistent
