Speculation The hysterical and annoying, but traditional, totally unfounded summer 2022 rumours thread

[FrenchFox]

I have no idea about accounting but my neighbour is an accountant and she one day explained to me how a coffee chain worked.
They open offices around the world depending on what they are buying and what the tax rate is for example the lowest tax country for Coffee beans think it was Switzerland so they open an office in Zurich and the whole chain buys all its beans from there even though obviously not one single bean go's there, that Zurich office charges extortionate fees for its beans to each shop, they open another office in say Holland that has the lowest tax for paper cups and then repeat the same process as with the beans, the shops never make any profit and operate at a loss so the tax liability is zero, all the profits are made in the countries that have whatsoever low tax for the products they buy.

The company I work for is DCC and it has its head office in Dublin, purely because it has the lowest corporation tax in Europe.
DCC buys its LPG from one of its companies in America at a huge inflated cost it ships it over to the UK and sells it almost at a loss, I'm not sure but I think its UK branch makes a loss each year but we all get profit related bonuses that go into thousands and the last tax year was our largest ever
I gave up trying to understand it but wished I'd gone into accounting when I was younger.

What is really interesting is that the issue of transferrable costs is not that difficult, given the political will. You take the global net profit margins and apply them to the individual country sales, then the company pays the appropriate corporation tax on the applied revenue for that financial year in that country.

As with most things, politicians try to make things more complicated than than they need be to make them seem more intelligent, and we, the electorate, dumber than we are.

All problems are solvable, given the political will, but corruption and the self interest of the powerful lobbies will always win out, unfortunately.

Here endeth the lesson. Good night all. The world is blue, and don't forget it!!!!!!!!!!!!!!!!!!!!

 

[fitz]

I gave up trying to understand it but wished I'd gone into accounting when I was younger.

Most of us are looking at that story of the guy getting £200k compo for farts after having a dodgy sandwich and wondering why we're in accounting.

 

[glyn]

Our transfer rumours thread is now full of posts on accountancy and tax. What a summer.

 

[tedfoxxx]

Our transfer rumours thread is now full of posts on accountancy and tax. What a summer.

Do they play for Southampton?

 

[fitz]

Our transfer rumours thread is now full of posts on accountancy and tax. What a summer.

Excuse me....the seasons should be referred to as quarters in this thread. Q2 please.

 

[FryattFox]

But with player amortisation being by contract length?

In summary, yes, it's by contract length.

The complexity for FFP (both in the PL and the FL) was regarding all of the subjective aspects of a player's contract, and the effective likelihood of these being achieved.

So, for example, we sign Daka for £23 million on a five year contract. That fee is broken down as £15 million upfront, and then a number of conditional amounts totalling £8 million.

The £15m is amortised across the five years at £3m per year. Easy.

If we then have a clause that says we owe Red Bull Salzburg another £5m if Daka scores 20 goals and a further £3m if Daka scores 50 goals (lolz...), that's where clubs have various options:

1. At one end of the scale, LCFC could argue that we signed Daka to score goals, so it's highly likely he'll score 50 goals in 5 years. So we capitalise the full £8m and have an additional amortisation of £1.6m per year (£8m / 5 years).
2. The alternative view is that when we signed Daka, there's no certainty that he scores any goals, and so we don't capitalise anything. We therefore have £nil amortisation charge in the first year, but would get hit with a larger amount in future years if Daka scores 20 or 50 goals.

Depending on current circumstances, option 2 may be better for the earlier seasons (with a lower expense in earlier years), or retrospectively at the end of the seaon when finalising our accounts, we may decide that we would rather take the expense now (theoretically within the realms of our accounting policies...).

Pretty quickly, across 10 or 15 signings, all of the goal / appearance / European clauses can become a very material number and they're all subjective. There's also clauses that players will be given contract extensions after a certain number of appearances, which again is subjective. And that's before we start talking about impairments of player values (which LCFC did a whole load of a decade ago in the Championship).

Ultimately, it's all a big game as these are simply accounting metrics that are open to significant manipulation, which are very different to cash flows (which are far more important fundamentally).

 

[alex]

Newcastle are keen on Leicester winger Harvey Barnes but the Foxes want £50m for the 24-year-old Englishman. (Sun)

 

[Rock Fox]

Yep. It's definitely a system fit for purpose. Send the inexperienced kids to check that the people with 30 years accounts experience don't know the tricks. Depending on the size of the company being audited....some aren't even university graduate age.

Very true – I was in exploration for precious metals and an encountered an auditor (very junior as you point out) but keen. She wanted to know where was the proof that the drilling company we had paid over a million dollars had actually drilled the holes in Africa. I said that we had the metres of drill core to show for it.

‘Oh, where is this core?’

‘In Tanzania.’

‘You didn’t bring it back here?’ (meaning London)

‘No.’

‘I can’t see it? Then, how can I tell it was actually drilled? How do you know?’

‘I went to Tanzania to inspect it.’

‘Yes, but how do I know that you saw it?’ etc., etc.

Perhaps she thought she had uncovered a money laundering scheme to pay African Companies to drill non-existant holes in Africa and the money would be diverted elsewhere.

Anyway, slightly back to topic - I've enjoyed seeing watching the last 3 friendlies - even if included players from our bloated squad that nobody else wants to buy.

 

[Micky]

 

[Blue Maniac]

Very true – I was in exploration for precious metals and an encountered an auditor (very junior as you point out) but keen. She wanted to know where was the proof that the drilling company we had paid over a million dollars had actually drilled the holes in Africa. I said that we had the metres of drill core to show for it.

‘Oh, where is this core?’

‘In Tanzania.’

‘You didn’t bring it back here?’ (meaning London)

‘No.’

‘I can’t see it? Then, how can I tell it was actually drilled? How do you know?’

‘I went to Tanzania to inspect it.’

‘Yes, but how do I know that you saw it?’ etc., etc.

Perhaps she thought she had uncovered a money laundering scheme to pay African Companies to drill non-existant holes in Africa and the money would be diverted elsewhere.

Anyway, slightly back to topic - I've enjoyed seeing watching the last 3 friendlies - even if included players from our bloated squad that nobody else wants to buy.

Why didn’t she fly to Tanzania?

 

[londonfox]

Newcastle are keen on Leicester winger Harvey Barnes but the Foxes want £50m for the 24-year-old Englishman. (Sun)

Well selling Barnes would certainly add balance to the team. Then we’d have no threat from either the left or right.

 

[londonfox]

The guy is 22. He went on loan to Shrewsbury and played a grand total of 3 games. If he was going to make it to the first-team at Leicester he’d be a damn site closer now to it than he currently is. And if a permanent move away is being considered, why extend his contract?

 

[Biffa Bacon]

The guy is 22. He went on loan to Shrewsbury and played a grand total of 3 games. If he was going to make it to the first-team at Leicester he’d be a damn site closer now to it than he currently is. And if a permanent move away is being considered, why extend his contract?

They've extended the contract so that the club can negotiate a transfer fee when he goes, also KDH was a late bloomer although he did perform well whilst he was out on loan.

 

[parafox]

Well selling Barnes would certainly add balance to the team. Then we’d have no threat from either the left or right.

Looking at it charitably I suppose we could bring in lookman and then sign a right sided attacker if we shift Soumaré?

 

[camberwell fox]

We can’t sell our best players even for very good fees. Barnes is vital to our team.

I do of course accept that players who are surplus to requirements or have a year left on their contract can and may go.

 

[Lako42]

If we could get a genuinely stupid fee for Barnes I wouldn't be too upset.

Rather him than Maddison imo.

 

[DillyDing22]

Well selling Barnes would certainly add balance to the team. Then we’d have no threat from either the left or right.

We can’t sell our best players even for very good fees. Barnes is vital to our team.

I do of course accept that players who are surplus to requirements or have a year left on their contract can and may go.

50m for Barnes more than fair. I also think we are stronger playing through the middle, having Harvey means we are always imbalanced and he spends many many games totally lost.

A midfield of
Ndidi,
Tielemans, Praet,
KDH, Maddison

feels stronger for me than

Ndidi,
Tielemans, Maddison
Albrighton/Perez, Barnes

 

[TommyK]

50m for Barnes more than fair. I also think we are stronger playing through the middle, having Harvey means we are always imbalanced and he spends many many games totally lost.

A midfield of
Ndidi,
Tielemans, Praet,
KDH, Maddison

feels stronger for me than

Ndidi,
Tielemans, Maddison
Albrighton/Perez, Barnes

There is literally no pace or width in your preferred team.

 

[DillyDing22]

There is literally no pace or width in your preferred team.

Does there have to be?

 

[TommyK]

Does there have to be?

I think it would make us very easy to defend against