Player Amortisation

[Chali 2na]

I'm not sure if this subject is a little too dry, but it's pre-season, so everything's a little dry really.

Naturaully, we all report the cost of transfers as the fee paid to the selling club (e.g. Brooks: £12m) but this isn't the way the club's accountants see it.

The club will divide the fee over the length of players contract, and then add this fee to the players wages, giving you the cost to the club for the season. (E.g. if Brooks signed a 4 year deal, the yearly cost would be £3m, on top of his yearly wage.)


Here is a video explaining this better than I ever could. (Check out some of their other videos too)

The reason why I thought this was poignant, is because it puts into perspective the true cost of our targets, as well as illustrating why it's important to sign players who will increase/maintain their value.

With all that said, I thought I'd compile some of our rumoured transfer targets and make some estimations* about what they may cost us:

Player (weekly wage/fee/contract length)
McGoldrick (£10,000/£200k**/2y)
Gallagher (£18,000/£5m/4y)
Gallagher*** (£15,000/£1m/1y)
Hogan*** (£20,000/£1m/1y)
Eisa (£8000/£1.5m/4y)
Marriot (£10000/£5m/4y)
Bradshaw (£10000/£1.5m/4y)

Player (Yearly cost/Likely to have resale value?)
McGoldrick (£620k / No)
Gallagher (£2.19m / Yes)
Gallagher*** (£1.78 / No)
Hogan*** (£2.04 / No)
Eisa (£791k / Yes)
Marriot (£1.77m / Yes)
Bradshaw (£895k / Yes)

So, if you don't dispute the figures I've used, the most "expensive" signing would be Gallagher on a permanent - though this could be offset by his future sale. It does go to show the lack of value of loaning someone like Gallagher or Hogan.

I'm not advocating any signing, I'm confident Wilder will identify someone, I'm just (hopefully) illustrating the true cost of some of our rumoured targets.

*An estimation is all it can ever be. If you disagree with my estimation, try doing the same process with your own figures, and post the results on this thread.
**Likely Signing on fee
***Loan

 

[PeterNdlovu081]

You're calculations fail to factor in the contribution the player could make.

For example, on paper our signing of Billy Sharp in 2015 would have looked like a bad one (high wages and no resale value).

In reality he was worth his weight in gold with the contribution he made in preventing our relegation and then ultimately getting us promoted.

 

[Chali 2na]

You're calculations fail to factor in the contribution the player could make.

For example, on paper our signing of Billy Sharp in 2015 would have looked bad (high wages and no resale value).

In reality he was worth his weight in gold with the contribution he made in preventing our relegation and then ultimately getting us promoted.

I obviously can't factor in their contribution to the team, as transfers are generally a gamble, and it's hard to say what contribution they might make.

I've simply provided the cost of the transfer, if you want to "factor in the contribution the player", and apply it, you're welcome to.

 

[Jan Age]

I obviously can't factor in their contribution to the team, as transfers are generally a gamble, and it's hard to say what contribution they might make.

I've simply provided the cost of the transfer, if you want to "factor in the contribution the player", and apply it, you're welcome to.

Drama queen

 

[Chali 2na]

Drama queen

I see you've been stewing. Don't take things so personally

 

[Jermyn]

Are any agents fees incorporated into the equation?

 

[PeterNdlovu081]

I obviously can't factor in their contribution to the team, as transfers are generally a gamble, and it's hard to say what contribution they might make.

I've simply provided the cost of the transfer, if you want to "factor in the contribution the player", and apply it, you're welcome to.

But the best players generally cost the most money.

So by trying to calculate it like you're doing it'll always look like the quality players are bad signings.

 

[stringer]

But the best players generally cost the most money.

So by trying to calculate it like you're doing it'll always look like the quality players are bad signings.

Will it? If Brooks has a good first season for Bournemouth they’ll see £4.5m as a bargain surely

 

[Chali 2na]

But the best players generally cost the most money.

So by trying to calculate it like you're doing it'll always look like the quality players are bad signings.

I did say in the post "I'm not advocating any signing" and when talking about the most expensive signing, Gallagher, I acknowledged due to his quality that the cost would be "offset by his future sale."

Why does it make you think the quality players are bad signings? All it "proves" is that the quality players are expensive and theres little value to be had by loaning a player.

 

[Chali 2na]

Are any agents fees incorporated into the equation?

No, I don't know nearly enough about how they work, so I've not included them.

 

[Old Programme seller]

A wage cap would be more beneficial to the smaller clubs and the working person

 

[PeterNdlovu081]

Will it? If Brooks has a good first season for Bournemouth they’ll see £4.5m as a bargain surely

But Brooks wasn't expensive in the first place.

 

[Dec]

I did say in the post "I'm not advocating any signing" and when talking about the most expensive signing, Gallagher, I acknowledged due to his quality that the cost would be "offset by his future sale."

Why does it make you think the quality players are bad signings? All it "proves" is that the quality players are expensive and theres little value to be had by loaning a player.

Think it's obvious permanent deals would be preferred to loan ones. Loans only happen if we can't or won't commit to that larger outlay over a longer period of time, but still feel that particular player can add better value for the coming season than any other more realistic permanent deal would.

 

[Jan Age]

I see you've been stewing. Don't take things so personally

Not really it was meant as light hearted banter/comaradory ....

 

[Chali 2na]

Think it's obvious permanent deals would be preferred to loan ones. Loans only happen if we can't or won't commit to that larger outlay over a longer period of time, but still feel that particular player can add better value for the coming season than any other more realistic permanent deal would.

Are you reffering to Gallagher when you say "that particular player"?

 

[Chali 2na]

Not really it was meant as light hearted banter/comaradory ....

Fair enough, I should've taken my own advice and not taken it personally

 

[Dec]

Are you reffering to Gallagher when you say "that particular player"?

Just saying in general... NITK

Good thread btw. They've got a couple of good videos about Wolves / Nuno Espirito tactics that were really interesting.

 

[Chali 2na]

Just saying in general... NITK

Good thread btw. They've got a couple of good videos about Wolves / Nuno Espirito tactics that were really interesting.

Yeah, I presumed so, just wanted to be clear. I'd be excited by him too, but I'm glad I'm not making the call because they're all a bit of a leap of faith if I'm honest.

Thanks mate, and you're right the other tifo videos are great. I particularly liked the "meet the owners" series they did.

 

[stringer]

But Brooks wasn't expensive in the first place.

You didn't say expensive, you said quality players. £12m isn't chicken feed either (I don't think it was enough for him, but it's not an inconsiderable amount)

 

[YES Blade]

But the best players generally cost the most money.

So by trying to calculate it like you're doing it'll always look like the quality players are bad signings.

It’s as simple as that, it’s always about how players perform.

I don’t think you need any fancy calculations or worry about how clubs show wages/fees in their accounts.

Sign a load of flops and you’re wasting money, sign a load of quality players and it’s money well spent.

 

[Chali 2na]

It’s as simple as that, it’s always about how players perform.

I don’t think you need any fancy calculations or worry about how clubs show wages/fees in their accounts.

Sign a load of flops and you’re wasting money, sign a load of quality players and it’s money well spent.

Its not that simple though, is it?
We paid a large (relative to the time) fee for both Sharp and Brayford, both were perceived as quality players. One, as PeterNdlovu081 points out is an astute signing, the other is a colossal waste of money.
On the other end of the scale we paid speculative amounts for both Che Adams and Florent Cuvelier - again, one gave us a 10X return on our money, the other flopped.

And the "fancy calculations" may not interest you, but they interest me.

 

[PeterNdlovu081]

You didn't say expensive, you said quality players. £12m isn't chicken feed either (I don't think it was enough for him, but it's not an inconsiderable amount)

£12m is chicken feed for a club like Bournemouth.

If Brooks flops they won't be damaged by the £12m loss in any way shape or form.

 

[YES Blade]

Its not that simple though, is it?
We paid a large (relative to the time) fee for both Sharp and Brayford, both were perceived as quality players. One, as PeterNdlovu081 points out is an astute signing, the other is a colossal waste of money.
On the other end of the scale we paid speculative amounts for both Che Adams and Florent Cuvelier - again, one gave us a 10X return on our money, the other flopped.

And the "fancy calculations" may not interest you, but they interest me.

It really is that simple, it’s about signing good players and getting the most out of your budget.

 

[Sean Thornton]

I'm not sure if this subject is a little too dry, but it's pre-season, so everything's a little dry really.

Naturaully, we all report the cost of transfers as the fee paid to the selling club (e.g. Brooks: £12m) but this isn't the way the club's accountants see it.

The club will divide the fee over the length of players contract, and then add this fee to the players wages, giving you the cost to the club for the season. (E.g. if Brooks signed a 4 year deal, the yearly cost would be £3m, on top of his yearly wage.)


Here is a video explaining this better than I ever could. (Check out some of their other videos too)

The reason why I thought this was poignant, is because it puts into perspective the true cost of our targets, as well as illustrating why it's important to sign players who will increase/maintain their value.

With all that said, I thought I'd compile some of our rumoured transfer targets and make some estimations* about what they may cost us:

Player (weekly wage/fee/contract length)
McGoldrick (£10,000/£200k**/2y)
Gallagher (£18,000/£5m/4y)
Gallagher*** (£15,000/£1m/1y)
Hogan*** (£20,000/£1m/1y)
Eisa (£8000/£1.5m/4y)
Marriot (£10000/£5m/4y)
Bradshaw (£10000/£1.5m/4y)

Player (Yearly cost/Likely to have resale value?)
McGoldrick (£620k / No)
Gallagher (£2.19m / Yes)
Gallagher*** (£1.78 / No)
Hogan*** (£2.04 / No)
Eisa (£791k / Yes)
Marriot (£1.77m / Yes)
Bradshaw (£895k / Yes)

So, if you don't dispute the figures I've used, the most "expensive" signing would be Gallagher on a permanent - though this could be offset by his future sale. It does go to show the lack of value of loaning someone like Gallagher or Hogan.

I'm not advocating any signing, I'm confident Wilder will identify someone, I'm just (hopefully) illustrating the true cost of some of our rumoured targets.

*An estimation is all it can ever be. If you disagree with my estimation, try doing the same process with your own figures, and post the results on this thread.
**Likely Signing on fee
***Loan

Amortisation isn't included in the wage bill detailed in the accounts. Its reported as a separate charge.

 

[mosbolad]

Amortisation isn't included in the wage bill detailed in the accounts. Its reported as a separate charge.

Here's a formula where P = Brookes R = Bournmouth m = McCabe r=Royal Highness and mt is short for empty.

Hope that helps.......

 

[Chali 2na]

It really is that simple, it’s about signing good players and getting the most out of your budget.

Like Brayford?

 

[Chali 2na]

Amortisation isn't included in the wage bill detailed in the accounts. Its reported as a separate charge.

I'm obviously not an accountant, and no doubt I'm over-simplifying it, so what's the significance of them being detailed in the accounts separately?

 

[Sean Thornton]

I'm obviously not an accountant, and no doubt I'm over-simplifying it, so what's the significance of them being detailed in the accounts separately?

Just Companies Acts requirements. Write off of transfer fees isn't a parole or remuneration item.

 

[Sean Thornton]

Here's a formula where P = Brookes R = Bournmouth m = McCabe r=Royal Highness and mt is short for empty.

Hope that helps.......

That old chestnut.

 

[Chali 2na]

Just Companies Acts requirements. Write off of transfer fees isn't a parole or remuneration item.