15 responses

  1. walter
    16/07/2010

    Phil,

    I just wanted to bring up the idea that GF60 brought up in the other article on tottenham.

    Is it possible to know how much taxes clubs pay on their profit? Because this is maybe the ultimate answer to how a club really is doing. If they make a profit they will pay tax over that profit (I guess this is the way it works also in the UK?) and if they make a loss they don’t pay tax.

    But I don’t know if this is something that can be found easily.

  2. Dark Prince
    16/07/2010

    Doesn’t the concept of amortisation seem little bizarre? Buying a player for £10 mil on a four year deal and selling him for £6 mil after 2 years gives them a profit of £1 million? Obviously this concept of amortisation has a serious flaw. Players are not like machinery, whose values get depreciated every year and by the end of the contract, their sale like scrap value brings profit. The wages the clubs pay their players represent payment for their professional services but when they are payin another club to break their contract, it has to be included in the player trading books rather than dividing it on the number of contract years. Surely, an amount a club pays is not the value of the player, but the value of the contract. And mostly such an amount is paid in a single amount, so how can it be divided in the number of contrav years or ‘amortised’??

  3. Dark Prince
    16/07/2010

    If Arsenal sells a player for £20 million and buys 3 players for £20 million on a four year deal, then, in the first year, by the amortisation concept, arsenal will hav a profit of £5 million rather than a loss of £40 million in their player trading accounts. Why is it that only the amount used to purchase a player gets divided?? Then the selling value should also be divided. Or else the whole concept of amortisation should be scrapped and the whole amount of the purchase should be debited in the accounts in one year.

  4. sam
    16/07/2010

    A simple thing has been made very complicated by accounting methods just to confuse everyone. Easy way to do would be, “total money received on selling players minus total money spend in buying players in that financial year”. This would create a profit or loss on player trading in that year. Why make it complicated by using amortization on each player for a squad of 25/30 at each club. This leave a very clear picture of profit and loss on player trading.

  5. Petey
    16/07/2010

    Does anyone think that the Spuds will get thier new stadium built, i’m not so sure.

  6. WalterBroeckx
    16/07/2010

    The most important thing about accounting is to make things difficult, Sam. 😉
    It has all to do with the clearder accounts are, the easier it is for the taxman to see what he must charge.
    So the more difficult the rules and the more confusing it all is, the more a company can try to fool the taxman. Well that is how I have experienced it.

  7. Shard
    16/07/2010

    as regards commercial revenue Spurs have actually been quite active( and smart) in building their brand in Asia. The tours aside, they provide equipment and kits(perhaps coaches too) to semi professional and amateur teams in India and sponsoring the Indian team at something called the homeless world cup(check it out). They also provided kits to a small island nation (link below)… its a small drop in the ocean but it is a clever marketing strategy.

  8. Shard
    16/07/2010
  9. Phil
    16/07/2010

    Dark Prince: I agree with you. Amortisation is very linear, whereas players hold their value over a period and then it falls off dramtically near the end of their contract.

    One point I’d like to emphasise that I don’t in the article is that amortisation is included in the accounts, so the perhaps unrealistically quick fall in value of the asset is a cost paid by the club over a number of years, whereas the windfall of the profit on its sale is all in a single set of accounts, so the issue is one of a large distortion of the bottom line in a single set of accounts, hence why I tend to stick to operating profits as a guide which are unaffected by this.

  10. dilshan
    16/07/2010

    great article, surely such deceiving acts will catch up with them sooner or later.

    Would like to ask have to thought about writing in match fixing in football. I know Germany is investigating over 200 games and with the increased influence of bookies in the game there is always that threat. It has happened in other sports such as cricket and some of those implicated in that instance are anything to go by no one is immune from falling to the offers.

    also, if I may, we have a face book group going that plans to write to Barca, FIFA and UEFA regarding the Cesc tapping up and we have nearly 1000 members and would like more to join us. You can find us in the link below
    http://www.facebook.com/#!/group.php?gid=116042895106146&v=wall

  11. Phil
    16/07/2010

    Walter: I’m unsure on that. You can find out the amount paid in tax, but I’d have to do more research to see if that is solely a tax on profits as I’m not particularly familiar with UK taxes and the like.

  12. Lanz
    16/07/2010

    Dilshan, Pls be careful. A UEFA intervention may not quite favour Cesc!

  13. A Casual Observer
    16/07/2010

    Hi Dilshan,

    There is also a Match Fixing group on Facebook:

    http://www.facebook.com/group.php?gid=16323460287

    Worth a look?

  14. A Casual Observer
    16/07/2010

    Oh yeah – Sorry Phil,

    Yet another fantastic article – always look forward to your posts!

    🙂

  15. Adam
    22/07/2010

    I think you will find that amortising players is extremely common and very much in line with recognised accounting principles, and also, that Arsenal do it to.

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