PSR & Town, part two 15:59 - Jan 9 with 1162 views | itfc_bucks | Right, so we amortise the expenditure over the duration of the initial contract, ie £20mil on Delap over five years is only £4mil towards our spend for this year. Fine I get that. Signing longer term contracts leaves us at risk, should we be relegated and not able to offload the deadwood in the champ. PSR rules are actually a detriment to sustainability and risk management then...amiright? |  | | |  |
PSR & Town, part two on 16:08 - Jan 9 with 1078 views | Achane | Think I'm right in saying Ashton stated all new contracts include relegation clauses right down to league one. |  | |  |
PSR & Town, part two on 16:35 - Jan 9 with 973 views | Zx1988 |
PSR & Town, part two on 16:08 - Jan 9 by Achane | Think I'm right in saying Ashton stated all new contracts include relegation clauses right down to league one. |
That's fine from a wage perspective, but doesn't affect the amortisation of the fee. Just using some nice round figures, let's look at a player signed for £50m for five years on £100k a week, with a clause that halves the salary on relegation: Year 1 - EPL - £10m fee, £5.2m wages Year 2 - Champ - £10m fee, £2.6m wages Year 3 - L1 - £10m fee, £1.3m wages Year 4 - L2 - £10m fee, £650k wages Year 5 - NL - £10m fee, £325k wages Unless some of the pricier players can be offloaded, the amortisation of a big fee could be crippling under EFL financial rules. |  |
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PSR & Town, part two on 16:42 - Jan 9 with 905 views | bluefunk |
PSR & Town, part two on 16:35 - Jan 9 by Zx1988 | That's fine from a wage perspective, but doesn't affect the amortisation of the fee. Just using some nice round figures, let's look at a player signed for £50m for five years on £100k a week, with a clause that halves the salary on relegation: Year 1 - EPL - £10m fee, £5.2m wages Year 2 - Champ - £10m fee, £2.6m wages Year 3 - L1 - £10m fee, £1.3m wages Year 4 - L2 - £10m fee, £650k wages Year 5 - NL - £10m fee, £325k wages Unless some of the pricier players can be offloaded, the amortisation of a big fee could be crippling under EFL financial rules. |
There’s obviously a doomsday scenario where we go bust, but let’s be clear, no business investment is without risk. What’s on our side is the process we’re using and the people involved, who’ve demonstrated that they can make it work, (up to the point where we sell players, which to be fair, hasn’t yet happened). |  | |  |
PSR & Town, part two on 16:45 - Jan 9 with 864 views | Zx1988 |
PSR & Town, part two on 16:42 - Jan 9 by bluefunk | There’s obviously a doomsday scenario where we go bust, but let’s be clear, no business investment is without risk. What’s on our side is the process we’re using and the people involved, who’ve demonstrated that they can make it work, (up to the point where we sell players, which to be fair, hasn’t yet happened). |
That's the thing (so far, at least) - we appear to have signed well, and not ended up signing a basket full of flops that we'll never be able to shift upon relegation. |  |
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PSR & Town, part two on 16:45 - Jan 9 with 865 views | SmithersJones | You’re right. Clubs’ approach to PSR is basically kicking the can down the road. So let’s say a club spend £100m this season in total, amortise over 5 years so it costs them £20m. But then next season, before they spend a cent, they have a £20m bill. And the season after that. And the season after that etc etc. And all this is either publicly available information or pretty easy to estimate so if they need to sell to cover this they’ll be in a weak bargaining position. |  | |  |
PSR & Town, part two on 17:24 - Jan 9 with 775 views | Guthrum | Long contracts also secure us better fees than short ones should we wish/have to sell. The other club is effectively buying out our player's registration. If there's more of it remaining, the fee is higher. |  |
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PSR & Town, part two on 17:37 - Jan 9 with 703 views | Vic |
PSR & Town, part two on 16:08 - Jan 9 by Achane | Think I'm right in saying Ashton stated all new contracts include relegation clauses right down to league one. |
At last! Never have understood why this doesn’t happen more |  |
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PSR & Town, part two on 17:50 - Jan 9 with 669 views | Smoresy | Only in as much as PSR penalties may result in a club dropping down divisions, causing owners to incur further losses and perhaps lose interest / viability. PSR isn't about fairness but neither is it about promoting risky spending scenarios. Clubs manage their spending, and the recording of that spending through accounting practices like amortisation, at their own risk. PSR is about curtailing spending / losses. It sanctions those who attempt to reach financial parity through additional investment. It reduces club mobility. It supports status-quo league positions. It also protects clubs from needing to engage in unlimited, arms-race style spending / losses in order to compete with or ward off the next uber-rich investor (see Newcastle and what that would have resulted in, without PSR). Instead clubs are deploying crafty tricks to try to sneak in modest extra losses here and there. Solve the vast revenue inequality, between different rungs of the PL, between the PL and the Championship, and PSR becomes a good thing for all. No appetite for that though obviously, so instead PSR increasingly threatens to create the 'closed shop' that we're battling against today. |  | |  | Login to get fewer ads
PSR & Town, part two on 17:51 - Jan 9 with 661 views | berkstractorboy |
PSR & Town, part two on 16:35 - Jan 9 by Zx1988 | That's fine from a wage perspective, but doesn't affect the amortisation of the fee. Just using some nice round figures, let's look at a player signed for £50m for five years on £100k a week, with a clause that halves the salary on relegation: Year 1 - EPL - £10m fee, £5.2m wages Year 2 - Champ - £10m fee, £2.6m wages Year 3 - L1 - £10m fee, £1.3m wages Year 4 - L2 - £10m fee, £650k wages Year 5 - NL - £10m fee, £325k wages Unless some of the pricier players can be offloaded, the amortisation of a big fee could be crippling under EFL financial rules. |
Which is where the parachute payments come in to help with some of the impact of lost income and still the wages to be covered. I think amortising the fee is just part of the whole risk vs reward balance and clubs being very aware of the financial impacts of relegation. Would love to see the spreadsheet that war games on the scenarios when deciding what fee/wages we can afford! |  | |  |
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