This just isn’t correct at all, and shows a really poor appreciation for how transfers are structured and where the capital comes from for the deals
Thiago.... Ja ????
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I didn't even comment on those things!
You said it’s far more reckless to increase the wage bill than it is to put money into transfer spend because of “ongoing liability”. That’s really badly thought out, and shows a poor appreciation for the structure of transfers
No, I said it's more reckless to fund an increase in the wage bill from outside investment, because wages are a revenue expense that should be funded through income.
A transfer is a one-off investment (albeit with an expected associated increase in wages), which is a more suitable use of a cash injection.
Neither situation is ideal, but it's definitely MORE worrying to be reliant on outside funding for sustaining your major operating cost.
2 things: FSG have been really clear that transfers need to be funded by the clubs income too. Also, Transfers aren’t a one off cash injection. Given that most of them have staggered, staged payments they are the worst of both scenarios right now because you need a certain amount of cash up front, and be prepared to fund ongoing future payments when the revenue streams are disrupted and resolution is still really unclear
Ah, so that's what you were getting at with your comments about my ignorance of the structure of transfers.
I know transfers are paid in stages.
But that actually bolsters my point. The structure of transfer payments just means some of that investment can be deferred. It's a benefit to cashflow, all things being equal.
Looking at your second point, are there any outgoings from recent acquisitions which are [now] due? Specifically thinking of van Dijk and Becker transfers.
Nobody has considered an alternative theory.
What if a lot of this (basically paper talk) is simply to ensure we get better deals on the select few players we do intend to get?
I have no doubt at least a bit of it is that, & if we have one player that will cost a bit more we'd be aiming to do it late instead of early.
What if a lot of this (basically paper talk) is simply to ensure we get better deals on the select few players we do intend to get?
I have no doubt at least a bit of it is that, & if we have one player that will cost a bit more we'd be aiming to do it late instead of early.
Good for cash flow in that you don’t have to pay the full fee up front, not good for cash flow when you have deals already in place that need funds and your revenue has completely dried up, and you want to add more deals on top in a uncertain market man
I genuinely don’t know for sure, but you’d assume so. Aside from the staggered payments, and players bonuses for CL and premiership wins, you’d have to think a few folks have performance related clauses on the guys they’ve sold to us too
Fair point in principle, but then there's also the aspect that our net spend has been minimal these last few years, which implies high sales revenue, which in turn implies.... instalments of deferred fees due from buying clubs. Which can be used to pay our liabilities.
I'd argue that £200m net profit over the past 3 seasons would indeed be funding any transfers.
Transfers are in fact a low cash outflow and a zero interest loan due to staging over 3-4 years. Can't get better from a bank !
In that case though we would just do what we've done over the past 1 ½ seasons - not dig deep into the market. That doesn't negate the need to refresh this aging squad sooner rather than later though.
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I'd not be surprised that Alcantara is one of those who, if we are genuinely interested, will be got at the last possible minuted. It's only Bayern which has been doing all the talking so far.
A transfer would typically be structured with payments over 3 annual instalments. I never saw a longer period but sometimes it would be shorter, usually with smaller deals.
So anyone we bought in Summer 2018 should have a final instalment due this year. The significant ones would be Alisson, Shaqiri and Fabinho. I'm assuming Keita would have been accelerated and the final payment due last year. Van Dijk was a January signing so he'd have been fully paid up.
Obviously we did no significant business last year so nothing to add from last summer and agent fees due on renewals won't be of the same magnitude as the fees above.
We'd likely be due some money in on Ings, Kent, Mignolet and Danny Ward, but there'd still be a significant net payment going out of the door.
I wouldn't bet on the transfer installments mate. Didn't we sell on the Coutinho fee to an investment bank so we could get the funds up front and have the cash to splurge? We may have done the same with the players you mentioned
According to Football Insider:
The report claims that Liverpool made an initial payment of £70m but there was also some add-ons that would still need ironing out. One of those involves a £4m payment when he reaches 150 Premier League appearances for the Reds.
I've been looking at the Coutinho thing. Firstly, our accounts at 31 May 2019 show lots of debt due after more than one year, which would have to include Coutinho, so we hadn't sold it at 31 May. Barca's accounts for 30 June 2019 state that we had sold it, but the amount due is apparently €28m in the next twelve months and another €67m after more than 12 months (presumably paid over more than 2 years if paid at a consistent rate of €28m per year, meaning it would be 3.5 years before we got paid in full). No way we sign up to that when we sold him, we had the upper hand in that deal, hence the fee. The Suarez deal was paid in 5 instalments, so fully paid within 2 years and 1 day.
So what I think has happened is that Barca were struggling to pay the fee as scheduled, they approached a bank who agreed to buy the receivable off LFC and allow Barca more time to pay in exchange for fees and interest etc).
So yeah, maybe we sold that receivable between 31 May and 30 June, but I don't believe for one minute that we did so because we needed the cash. Rather, I think Barca needed more time to pay and if we agreed to help them out by assigning the debt we got our money earlier than planned, so why would we say no?
It wouldn't make sense to sell transfer receivables from UK Premier League clubs because we could recover the money directly from the Premier League if it was paid late (e.g. if Southampton defaulted on Ings, the Premier League would pay us directly out of their TV money). The others would be small change, relatively speaking.
Most of the UK clubs who are strapped for cash borrow against their future TV revenues as they can borrow more meaningful amounts at lower rates. I don't see any evidence that we've done this.
I have never seen a major transfer done other than by instalments. I've seen some where the first instalment has been a bit bigger than 1/3 (maybe as much as 40%) but nothing more significant than that.
The only exception I can think of would be something like the Werner deal where, allegedly, it was all due within 12 months, but that was because it was activating a release clause.
While the long term investment is welcome spending money short term from players should also be welcomed, and first should not take sole preference to the exclusion latter.... Any business model/stratagem should be flexible, and tweeked where needed
Interesting that, thanks.
I have always wondered about process of instalments and add-ons such as if they have a shelf-life (beyond the length of the initial contracts of the players etc.)
It will vary contract by contract but generally the basic fee will always be due in full but add-ons will usually only apply if they're triggered while the player is still contracted at the buying club (so if Barca sold Coutinho in the next few weeks and then won the Champions League, I'd expect we wouldn't get that add-on). There might even be a requirement for him to play for Barca in the competition for it to be triggered anyway.
They may also have a time limit as well - e.g. has to be in the first 4 years etc. They can be structured completely flexibly, no standard structure, but obviously clubs will try to strike a balance between them as to what is acceptable.
I did also once see a clause which accelerated payment of the basic fee if the player was sold at a profit before all the instalments would have been due.
Supposedly VvD was £70m up front. Maybe because of the acrimonious nature of the deal.
I think that's probably a mis-representation - I suspect it was £70m guaranteed (in instalments), with add-ons. Can't believe we'd have had £70m to spend in a single payment.
I doubt that we would have paid all that in one fell swoop, as well. The reports at that time claimed he was costing us £75 million. Newspapers always seem to report the headline figures. We reportedly sold Coutinho for £142 million but that figure must include add-ons which may never be triggered.
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Possibly dependent on what up front payment we got for Coutinho.
Should be titled "Advancing Accounting Theory by Amateurs"
Nice.
What would you like us to tag your thread contributions?
“I’m a bit convinced that we will sell Salah and Shaq (and Lallana going free) this summer to Madrid or Barca for £200M to fund 3 new and young attacking players. “
“6CM supports care in the community”?
Well I believe that if we want to sign someone like Sancho or Mbappe or whoever has that star status, one of Salah or Mane will have to go. It's going to be £100 mill in and £100 mill out.
Almost like Thiago vs Wijnaldum.
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