SHA Small Heath Alliance

The last month has been a wild ride for Birmingham City fans. While Blues had to suffer the ignominious fate of being relegated to League One, the ambition of Knighthead to equip the squad with the best players possible remained front and centre with the hugely ambitious capture of Jay Stansfield on

[almajir.net]

Was interesting to see the Newcastle chief exec yesterday saying that other clubs were now trying to extort a “Newcastle premium” from inflated transfer fees when selling to Newcastle as they were perceived to have all that Saudi money and that they had had to draw the line on several transfers including Marc Guehi where they felt the fees were being over-inflated. Is the a risk going forward of clubs doing to the similar to us following the Stansfield transfer?

Southernblue

Was interesting to see the Newcastle chief exec yesterday saying that other clubs were now trying to extort a “Newcastle premium” from inflated transfer fees when selling to Newcastle as they were perceived to have all that Saudi money and that they had had to draw the line on several transfers including Marc Guehi where they felt the fees were being over-inflated. Is the a risk going forward of clubs doing to the similar to us following the Stansfield transfer?

Of course there is. Just have to handle it in our own way.

Southernblue

Was interesting to see the Newcastle chief exec yesterday saying that other clubs were now trying to extort a “Newcastle premium” from inflated transfer fees when selling to Newcastle as they were perceived to have all that Saudi money and that they had had to draw the line on several transfers including Marc Guehi where they felt the fees were being over-inflated. Is the a risk going forward of clubs doing to the similar to us following the Stansfield transfer?

Buying a star player from a Premier League rival is a laughably bad transfer policy.

Hi Dan,

Thanks for writing this. I know UEFA and the Prem have capped amortisation at 5 years, but do you know if this applies to the EFL? I had a look through the rules and couldn't specifically find anything.

Could we be spreading the £15m across the full 7 years, thus realising a cost of only £2.14m each year on his value amortisation?

Comanche

Hi Dan,

Thanks for writing this. I know UEFA and the Prem have capped amortisation at 5 years, but do you know if this applies to the EFL? I had a look through the rules and couldn't specifically find anything.

Could we be spreading the £15m across the full 7 years, thus realising a cost of only £2.14m each year on his value amortisation?

As far as I’m aware it is capped under EFL rules too

El Mayor

Comanche

Hi Dan,

Thanks for writing this. I know UEFA and the Prem have capped amortisation at 5 years, but do you know if this applies to the EFL? I had a look through the rules and couldn't specifically find anything.

Could we be spreading the £15m across the full 7 years, thus realising a cost of only £2.14m each year on his value amortisation?

As far as I’m aware it is capped under EFL rules too

That's going to be the next loophole to exploit. Can see it coming a mile off that it flies in the face of accounting standards of useful economic life and from the Leicester hearing the rules are written so poorly theres no way they can enforce a shorter amortisation period.

Stansfield for example would have a book value of £6m but an ffp of £0. Any sale in the final two years of his contract would all be profit?

That's without considering what happens if he gets a contract extension at some point. Does the period of amortisation increase again back up to 5 years?

Thank you Dan

Pedant alert (and knowing how meticulous you are in such matters!)

Know all TOO well

"east way" typo for easy way.

Everbluesince92

El Mayor

Comanche

Hi Dan,

Thanks for writing this. I know UEFA and the Prem have capped amortisation at 5 years, but do you know if this applies to the EFL? I had a look through the rules and couldn't specifically find anything.

Could we be spreading the £15m across the full 7 years, thus realising a cost of only £2.14m each year on his value amortisation?

As far as I’m aware it is capped under EFL rules too

That's going to be the next loophole to exploit. Can see it coming a mile off that it flies in the face of accounting standards of useful economic life and from the Leicester hearing the rules are written so poorly theres no way they can enforce a shorter amortisation period.

Stansfield for example would have a book value of £6m but an ffp of £0. Any sale in the final two years of his contract would all be profit?

That's without considering what happens if he gets a contract extension at some point. Does the period of amortisation increase again back up to 5 years?

I don't understand your point?
From the authorities' point of view what matters is that the transfer fee has scored within a reasonable period. I'd think, if they could, they would ban any amortisation from the calcs at all if they could.

Royale Blue FEA

"east way" typo for easy way.

Thanks, I’ll pick those up. I thought I’d caught them all this morning when I gave it a once over 🤦‍♂️

Snoop

Everbluesince92

El Mayor

Comanche

Hi Dan,

Thanks for writing this. I know UEFA and the Prem have capped amortisation at 5 years, but do you know if this applies to the EFL? I had a look through the rules and couldn't specifically find anything.

Could we be spreading the £15m across the full 7 years, thus realising a cost of only £2.14m each year on his value amortisation?

As far as I’m aware it is capped under EFL rules too

That's going to be the next loophole to exploit. Can see it coming a mile off that it flies in the face of accounting standards of useful economic life and from the Leicester hearing the rules are written so poorly theres no way they can enforce a shorter amortisation period.

Stansfield for example would have a book value of £6m but an ffp of £0. Any sale in the final two years of his contract would all be profit?

That's without considering what happens if he gets a contract extension at some point. Does the period of amortisation increase again back up to 5 years?

I don't understand your point?
From the authorities' point of view what matters is that the transfer fee has scored within a reasonable period. I'd think, if they could, they would ban any amortisation from the calcs at all if they could.

From Regs: (NO max period of amortisation mentioned).

"1.1.5 Amortisation must begin when the Player’s registration is acquired. Amortisation ceases when the asset is fully amortised or derecognised (i.e. the registration is considered as being permanently transferred to another Club or club or the Player is no longer registered with the relevant Club, whichever
comes first).

1.1.6 In respect of each individual Player’s registration, the depreciable amount must
be allocated on a straight-line basis equally over its useful life down to zero. Clubs may not use non-zero residual values or expected value of future sale.

1.1.7 Capitalised Player values must be reviewed each year by Club Officials for impairment. If the recoverable amount for the captialised playing squad is
lower than the carrying amount on the balance sheet, the carrying amount of the captialised playing squad must be adjusted to the recoverable amount and the adjustment charged to the profit and loss account as an impairment cost.

2 RENEWAL
2.1 If the period of a Player’s contract with the Club is extended or renewed, then the
intangible asset carrying value of the Player’s registration (if any) plus any additional
directly attributable contract negotiation costs (e.g. agent/intermediary fees) are to be
amortised equally over the extended period of the Player’s contract or over the
remaining period of the original contract."

This is very insightful for me, thanks for taking your time to write this article 👍🏻

There might not be a maximum period in the rules, but in practice no one in the EFL has given more than 5 year contracts so i hasn't been an issue.

I presume Blues are aiming to be in the PL within5 years so it is likely we will comply with PL rules from the start.
Also the difference in amortisation is £800,000 p.a. This is not a large amount. I can't see Blues playing with the rules for this. If we made more big signings it might be different.

The two main constraints in League One are the money supplied by the owners and the ability to attract good players. Lots of players don't want to go to League One if they have offers from Championship clubs.
Blues don't seem to have a problem with money from the owners.