CONFIRMED Cameron Archer signs for the Blades - 4 year contract

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Addison said:
The relegation buy back clause raises a number of issues for the EPL to consider when reviewing the terms of the contract drawn up by Villa and the Blades. Firstly that a compensation fee has been paid and it is not a loan in disguise. The terms of the contract should clearly state the initial down payment and payment terms thereafter.

The EPL rules require a compensation fee to be paid so despite some views to the contrary money will have to be exchanged between the Clubs. It can not be an accounting exercise as some are suggesting.

The deal is likely to be open to question across a number of fronts. As far as the big clubs are concerned it seems to be another attempt to avoid FFP requirements. This will raise concerns at the EPL, FA and FIFA. The EPL will have to assess if this work around impacts significantly on their loan process and potentially makes redundant the current clause that limits 2 EPL loans per EPL club.

Finally and possibly of more far reaching concern for the smaller clubs like SUFC there may be ramifications regarding the future payment of parachute payments. The whole idea of PP's are that they are a financial buffer for relegated clubs to stop them going under as a consequence of having to continue to pay high transfer fee installments and wages. There is an argument that by invoking relegation buy back clauses this negates the need for PP's in the future. It would be so Sheffield United to find a way to lose out on future PP's. The EPL have been very firm in their view that PP's stay to protect their members against relegation despite Rick Parry at the EFL fronting a campaign to remove them. If they see their own members finding ways to circumvent their existing rules they may not be as supportive in the future.

I suspect there will be a considerable amount of scrutiny concerning this deal with the usual suspects at the Daily Fail accusing the Club of foul play again. For all the reasons above I expect this loophole to be closed for future transfers.
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Surely they know this and a compensation clause fee will be paid
Lupa The Noa said:
We haven't got Archer, and as far as I know the deal is off.
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no it’s not off at all
 

gaffablade said:
Incorrect
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Villa or any other club can only put the contracted guaranteed sale price in their accounts. If the contract is 9m now and 9m if Blades stay up then Villa can only account for a 9m profit. If the contracted price is 18m and there is a clause saying we have to purchase Archwer back from Blades if you are relegated for 20m, then Villa can account for 18m profit this year. But if u are relegated we will have to have a separate transaction next year where we purchase Archer for 20m and will thus have a 20m loss on next year's account.
 
I should coco said:
Income/expenses go through the P&L to produce a net profit or loss. On the basis that Villa are only guaranteed £9m, that is all they can book as income and that income will then help to offset their cumulative FFP losses.
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Why are they only guaranteed £9m ?. They have sold him to us for £18m. Whether it transpires that they may or may not buy him back at some future date is surely a different transaction or its not a sale.

As I see it they have sold him to us and a payment plan will be in place. If they buy him back its a new transaction and a new payment plan the other way. It may involve some element of contra if our debt to them was not settled in full at any future buy back.
 

Begley said:
Villa or any other club can only put the contracted guaranteed sale price in their accounts. If the contract is 9m now and 9m if Blades stay up then Villa can only account for a 9m profit. If the contracted price is 18m and there is a clause saying we have to purchase Archwer back from Blades if you are relegated for 20m, then Villa can account for 18m profit this year. But if u are relegated we will have to have a separate transaction next year where we purchase Archer for 20m and will thus have a 20m loss on next year's account.
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Railway Blade said:
Why are they only guaranteed £9m ?. They have sold him to us for £18m. Whether it transpires that they may or may not buy him back at some future date is surely a different transaction or its not a sale.

As I see it they have sold him to us and a payment plan will be in place. If they buy him back its a new transaction and a new payment plan the other way. It may involve some element of contra if our debt to them was not settled in full at any future buy back.
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You said the same thing to me but I’m not sure if you’re unaware we’re responding to someone saying they get £9m straight up, and another £9m IF we stay up. That’s why they’re only guaranteed £9 million. The buy-back is irrelevant.

Although separately it seems like your video may answer whether it’s still fine to account for £18m CaptainMorgans? I’m at work so I’ll have to watch later.
 
I suppose one way of getting past the "is it a loan or not" argument would be if the players club registration changed from Villa to us... We could argue that he is actually or player? Therefor it isn't a loan?

Fwiw I'm not sure about Archer. Would rather an experienced PL striker be brought in. Origi fits that requirement perfectly.
 

I should coco said:
FFP is about cumulative losses over a period (3 years IIRC).

Income/expenses go through the P&L to produce a net profit or loss. On the basis that Villa are only guaranteed £9m, that is all they can book as income and that income will then help to offset their cumulative FFP losses.

If the £9m on staying up is true (seems too much for Villa to accept IMHO), that is a contingency and so does not form part of their accounts. It can't be just 'a balance sheet item', without having a corresponding P&L effect (debits and credits, innit).

If Villa want to, they could disclose it by way of a note to the accounts, but it would be just that; a note. It might make them look very silly, if we crash and burn and are down early next year.

In summary, they can only book £9m now, but if their accounts are for a period beyond the end of the season AND we have stayed up, they could book the whole £18m.
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Begley said:
Villa or any other club can only put the contracted guaranteed sale price in their accounts. If the contract is 9m now and 9m if Blades stay up then Villa can only account for a 9m profit. If the contracted price is 18m and there is a clause saying we have to purchase Archwer back from Blades if you are relegated for 20m, then Villa can account for 18m profit this year. But if u are relegated we will have to have a separate transaction next year where we purchase Archer for 20m and will thus have a 20m loss on next year's account.
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It's an £18m purchase with a £17m buyback if the numbers above are to be believed. It's fairly straightforward if you separate out the cashflow, balance sheet and P&L items. I've left out the balance sheet below as that gets messy with contingent liabilities.

Year ending June 30, 2024
P&L
Villa record a £18m profit on sale of an asset
United record an amortisation cost of £4.5m in the year (assuming a 4 year contract, £18m divided by 4 is £4.5m)
Cashflow
United remit £9m to Villa


Year ending June 30, 2025 if we stay up
P&L
United record an amortisation cost of £4.5m in the year (assuming a 4 year contract, £18m divided by 4 is £4.5m)
Cashflow
United remit £9m to Villa


Year ending June 30, 2025 if we go down this season
P&L
United record a £3.5m profit on sale of an asset (£17m income less £13.5m remaining value)
Villa record a £4.25m amortisation charge (again, assuming a 4 year contract)
Cashflow
Villa remit £8m to United
 
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