Ed Thompson

How Leicester used 'creative accounting' to avoid an £8m charity bill and the odd role of Sir Dave Richards financialfairplay.co.uk/latest-news/le…

@israel_ajoje But 3 years in his book value is £50m+. And he's potentially worthless. So that £50m would get better a one off P&L loss in one tax year when they cancel the contract. They are committed to paying huge wages for another 5 years so the best they could hope for is a c£10m fee

This one is a football accounting gem. I promise you will love it. In January 2023, Chelsea signed Mykhailo Mudryk from Shakhtar Donetsk for £88.5 million. The deal was jaw dropping on its own. But what really made the football world stop and stare was not the fee. It was the contract length. Eight and a half years. The longest contract in Premier League history at the time. Journalists questioned it. Rival clubs complained about it. And most fans had absolutely no idea what Chelsea were actually doing. But let me tell you. They were not being reckless. They were doing math. Very clever, very deliberate, very legal math. And the tool they were using is called amortisation. This is part of what football insiders consider during transfers. Are you with me? Good. Here is the simplest way to understand amortization. When a club signs a player, they spread the accounting of the cost of the transfer fee over the period of the contract signed by the player. So for example, when Harry Maguire signed for Manchester United in 2019 for £80 million on a six year deal, that did not show up as an £80 million expense in year one. It worked out as an annual amortisation cost of £13.3 million per year. That is the entire concept. Think of it the same way you think of a mortgage. You do not pay the full value of a house on the day you move in. You spread it. Football clubs do the exact same thing with players, and it is not a trick or a cheat. It is standard accounting practice used across every industry in the world. Check it. It's International Standard 38- used for accounting for intangible assets. The reason it matters so much in football is because of Financial Fair Play and Profitability and Sustainability Rules, which regulate how much clubs can lose in any given period. Amortisation costs are added to the profit and loss account each year, so the lower your annual amortisation figure, the healthier your books look. And here is where contract length becomes a weapon. Now let us do the math together. By using amortisation to complete Mudryk's transfer, Chelsea were able to record his £80 million fee as just £9.41 million per year for UEFA's FFP calculation. Had they signed Mudryk to a four year deal instead, his fee would have been recorded as £20 million per year. Same player. Same fee. More than double the annual accounting cost just by changing the contract length. That is the power of what Chelsea figured out. They did the same with Enzo Fernandez, signed for a then-British record of £106.8 million on an eight and a half year deal, which translated to an annual amortisation expense of approximately £13.4 million. And Moises Caicedo for £115 million on eight and a half years. And Wesley Fofana for £70 million on seven years. Repeat this across an entire squad and a billion pounds of spending starts to look manageable on paper. Did you get that? Now let's look at another part of amortization- the book value piece, because this changes how you think about every transfer you have ever watched. Book value is the difference between the transfer fee spent on a player minus what has already been amortised. For example, after two years, a £50 million player signed on a five year deal has a book value of £30 million. Any sale above £30 million is recorded as a profit. Anything below is a loss. This is why clubs can sell a player for what looks like a loss and still report a gain in their accounts. Take this example: a player is signed for £40 million on a five year contract. He is not a success and is sold two years later for £26 million. At the point of sale, his book value is £24 million, meaning the club actually books a £2 million profit on the deal. Fans see terrible business. The accountants see a gain. Same transaction, completely different reality. Manchester City lived this with Robinho. He was bought for £32.5 million on a four year deal in 2008, with annual amortisation of £8.1 million. He was sold after two years, leaving a book value of £16.3 million. City sold him for £18 million and claimed a £1.7 million profit on the sale. Supporters spent years calling it a disaster. The finance department called it a profit. There is one more trick worth knowing: contract extensions. If a player signs a new contract during their existing deal, the remaining unamortised value is spread over the length of the new contract. So if you bought a player for £60 million on a five year deal and after two years you extend his contract by three more years, the remaining £36 million book value is now spread across five new years instead of three. That reduces the annual amortisation cost and can reduce FFP losses by millions per year. Extending a contract is not always about keeping a player happy. Sometimes it is purely a financial decision dressed up as a vote of confidence. Back to Chelsea. Other clubs eventually complained loudly enough that UEFA had to act. UEFA amended its Financial Sustainability Regulations in July 2023, introducing a rule that limits the amortisation of player registrations to a maximum of five years, regardless of how long the contract actually runs. The Premier League followed in December 2023, when shareholders voted to apply the same five year maximum to all new or extended player contracts going forward. The loophole was closed. But crucially, the rule could not be applied retrospectively, meaning every player Chelsea signed on those long contracts before December 2023 continues to be amortised over the full contract length. Chelsea were already finished with their biggest spending windows by the time the door was shut. The timing was not a coincidence. As I conclude, always remember this- the contract is never just a contract. It is an accounting instrument. And the clubs that understand that are always three moves ahead of the ones that do not. I hope you enjoyed this. Tomorrow, by 7AM WAT, We get into the wage bill, and why a £50 million transfer can quietly become a £150 million commitment before you have blinked. Thanks for reading. My name is Ajoje. I am a FIFA Licensed Agent and International Sports Lawyer. I write on the Law and Business of Football, a lot. Repost and Follow if you want to read more posts like this.

@rrad907 @Breaking911 Ha, to a European it's like confusing Florida with Iowa

@Breaking911 I think we have all mixed up both of those countries once in a convo.

Sen. Tim Kaine on Trump's Davos speech: "[The] President repeatedly mistook Iceland for Greenland, right?" Sec. Rubio: "He meant to say Greenland. But I think we're all familiar with presidents that have verbal stumbles. We've had presidents like that before. Some made a lot more than this one."

@JasonMee20 @jdpoc You use to parrot: " they need us more than we need them " and "we'll get a good deal because of German cars". Rees-Mogg was the actual Minister for Brexit Opportunities and he couldn't find any. The idea 'Brexit is great but was done wrong' is just more guff to parrot

@jdpoc Come on John,you are better than this.Trump has stopeed murderes and rapists entering the country.Only loon would want the opposite.Brexit was not implemented correctly by the Tories.We are doing better than most EU countires

@VirtuaMcPolygon @bbcquestiontime 457 British soldiers died and 150,000 served. But you choose defend a man that says they stayed well away from the front line. Have a word with yourself

@bbcquestiontime Emily Thornberry must have spent all day preparing that hissy fit. Yes Trump is wrong but we all expect dramatics. But Trump has forced NATO members to spend more. That’s a fact Emily won’t acknowledge … weird #bbcqt

“How dare he say we weren’t on the frontline, how dare he?” Labour’s Emily Thornberry says Donald Trump’s claim European soldiers in Afghanistan avoided the frontlines was an “absolute insult”, and is “proud” the UK helped stand up to him over Greenland #bbcqt

@PaulSuttonKing A few (eg top left) are wearing a shirt that to me looks a bit like Aston Villa. So could B be Birmingham?

Oh well, after three weeks without broadband or data at my new place it’s been a case of trying to remember how life existed before it was online by default. Connection is restored so how about mystery #postcard Wednesday? Can anyone identify the location of the Old Boys?

@RedLipRiots @howardlweaver How about calling for speed limiters on cars so they can't be driven over the speed limit. The technology is already there but the car lobby actively campaigns it (and drivers push back). It's a car crime that is totally preventable. Or you could just bang on about race..

A three year old British girl is dead. Mowed down by a coked up van driver who took 20 lines of cocaine, mounted a pavement and smashed into her tiny body as she walked with her parents. Her name was Lulu Palmisano. She died in her parents’ arms. The man responsible? Rawal Rehman. High as a kite. Driving like a lunatic. Then he fled the scene and hid for two days. And yet where’s the outrage? Where’s the media hysteria? Where’s the race and religion breakdown blasted in bold on national headlines? You won’t see it. Because this time, the killer wasn’t white. He wasn’t a football fan. He wasn’t “far right.” So Lulu’s death becomes just another tragic accident, not a national crisis. If the roles were reversed if a white Brit had crushed a brown-skinned toddler after 20 lines of coke there’d be riots. There’d be think pieces. There’d be vigils and vigour and race baiting lectures for weeks. But when it's not? Silence. Soft language. The full system pulls the curtain. This isn’t about revenge. It’s about balance. It’s about recognising all victims not just the ones that fit a diversity checklist. We will not let Lulu be forgotten. And we will not stay silent when justice comes with a racial double standard.

@justinaminute @_theawayends If your club had lost 10 play offs including 5 finals - you'd probably have learnt a lesson by now.

@_theawayends Poor effort - God knows, as a Saints fan, we all know that staying up would be tough but no excuses for that number of empty seats.

So many empty seats in that Sheffield United end today #TwitterBlades

@martynziegler @KieranMaguire Ha, it's so obvious that's CFC wishful thinking and them trying to put pressure on PL. You can't deliberately submit false financial returns to the PL and expect just a fine. 'Utmost Good Faith' and all that..

Exclusive: Chelsea talks to settle ‘secret payments’ case from Abramovich era with cash — not points deduction thetimes.com/article/8a482f…

@LufcInAHeelHook He'd be a free agent and would walk on a free if contact terminated. He cost £80m ish! But that would save the club £5ma year in wages

Biggest conspiracy I have in football is that Chelsea only signed Mudryk due to something to do with the war between Ukraine and Russia. Chelsea have probably just spiked him so they can now terminate his contract!

@TeaBar_CFC If contact is terminated he'd be a free agent. The tfr fee would be lost but that would save c£5m a year wages for rest of contact.

Presumably a positive drug test, would give #Chelsea the right to terminate #Mudryk’s contract. But doing so would create a massive PSR black hole. Unlikely that there are any easy solutions to this mess.

@NicholasTyrone When was the last time you went to see them?

If Starmer gives away the Elgin Marbles, he will lose the next general election, regardless of how bad the Tories continue to be.

@pokeefe1 @kanesho1337 You'd think as it's self reported and they've accepted UEFA sanction it'd not be so hard. But given potentially big sanction for 'upmost good faith failings' I can probably understand it. Cheers for replying

@edthompsn @kanesho1337 Depends if The Premier League don't cock it up. That's why they are looking to make it watertight first. It's with their legal

Rodrigo Bentancur will be hit with a domestic ban of 7 games by The FA

@pokeefe1 @kanesho1337 Do you feel it'll be done and dusted this season or that it'll drag on until next?

@kanesho1337 Legalities being checked before they charge them. A charge will happen though.

@MirrorPolitics It took a year for him to issue this apology - he even appealed despite the fact he later admitted telling the security guard to 'Fxck Off'.

Watch Lee Anderson make grovelling apology for swearing at security guard mirror.co.uk/news/politics/…

@BowTiedTurismo @Pingman28 @APPGCW Yep, carry on defending someone who was speeding, ran someone over and killed them, then just drove away rather than stopping and helping them.

@edthompsn @Pingman28 @APPGCW You presented no evidence. You presented a piece of text. Which is bullshit, because something like that can't be proven. It will make no difference to you or the court, of course.

A hit-and-run speeding driver who pleaded guilty to careless driving which caused the death of a pedestrian has been sentenced to 300 hours of unpaid work and a 27-month driving ban. bbc.co.uk/news/articles/…

@BowTiedTurismo @Pingman28 @APPGCW You "How do you know death was caused by speeding ?" Me "evidence presented at court" You: Oh, I didn't know that... Er I haven't seen the evidence but anyway I don't believe it

@edthompsn @Pingman28 @APPGCW What a nonsensical conclusion

@Pingman28 @BowTiedTurismo @APPGCW

@edthompsn @BowTiedTurismo @APPGCW Where is that please?

@Pingman28 @BowTiedTurismo @APPGCW The court heard evidence that death only happened because speeding. But you two go ahead and pretend that evidence wasn't presented

@BowTiedTurismo @edthompsn @APPGCW He doesn’t. Drunk pedestrian hit their head on the kerb. Would’ve likely died at speed limit hitting head on kerb.

@Jim_Cornelius Look at your spice jars I bet there's stuff there that's a decade old

I just found an unopened jar of horseradish sauce in the cupboard that was a year out of date, and an unopened jar of Bramley apple sauce that was 4 years out of date. - What’s the oldest thing you’ve found in the cupboard?