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Tuesday, 5 July 2016

Spurs hands tied over transfer fees

Spurs hands tied over transfer fees


The latest ITK from the Spurs forums is that the Vincent Janssen deal is done and he'll be ours by the end of the week. That will then calm a few Spurs fans down who want everything now and lack any sort of patience or understanding it seems of how negotiations work.

We are not Chelsea, we don't have their money. We finished third last season because of our transfer policy, not in spite of it, so there is no reason to change it. It will always be more important to get the right player rather than the most expensive player. In any negotiation we, quite rightly, want to get the best deal for our club.

Daniel Levy does not conduct all the negotiations, nor does he determine what we will pay for a player, a committee does that, one that includes Mauricio Pochettino. They as a group determine what value we place on a player and that is the important aspect, it doesn't matter what other clubs value a player at, what we value them as is the key element for us.

Knowing how we value a player we then try to get them for less and virtually all transfers from all clubs in the top five leagues are in instalments, it isn't a Tottenham thing, it isn't a Daniel Levy thing. Unless you understand accounts then you're not going to understand how transfer payments work in accounting terms and thus what the Tottenham transfer budget is, or how that is used. It isn't like a wad of cash that you just go out and send.

Players are bought over the term of their contract in accounting terms, yet sales go straight into the books, less what you paid, plus what has already been accounted for. Buy a player for £25m and his fee is divided over the term of his contract, often 5 years. Sell him 3 years later for £30m and in accounting terms your profit is £30m - £25, + £15m (3 years at £5m in accounts) = £20m.

I'm no accountant, sounds nuts, but that's the way it's done as I understand it, I have left out all the fancy jargon terms they use. Our available transfer money is offsetting instalment expenditure against instalment income against a budgeted transfer figure. Depending upon what these payments are, will increase or decrease what we have available to spend and what we do have to spend is used on instalment payments for that year, as opposed to paying £25m in one lump for a player. Thus our hands are restricted in what we can offer, FFP restricts what can be spent in any one season too.

Fans complain Daniel Levy should just spend this or that don't really understand enough about business, understandably, why should they, on the surface it looks simple, underneath it isn't.

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8 comments:

  1. I am an accountant and you have worked out £20 million profit out correctly in your example - well done!

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  2. It has nothing to do with understanding accounting I understand we are building a new stadium and funds aren't as high ax the big boys but 20 mil is relatively low for a golden boot winner even in the everdise if west ham can meet the price we should to they want him the will get him but this back and forth crap has had us miss out on some top player fighting over peanuts in the grand scheme. I love the way he conducts transfer season just sometimes he needs the team needs to evolve jus a little but to avoid missing out on some if our top targets. If Jansen hadn't had his heart set on spurs he would already be in Paris. The only reason he's comin to north London is his love for poch not levy a shrewd transfer policy

    ReplyDelete
    Replies
    1. Wet spam can meet the price because now they don't have the stadium overheads we have. Only having to pay 2mil a year I believe they don't even have to pay for policing.

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    2. This comment has been removed by the author.

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  3. The other dangerous thing about just paying whatever the selling club wants is that in future dealings clubs can then hold us to ransom because we'll have a reputation for splashing the cash like Real Madrid or Chelsea. So while it would have been easy to just agree to AZ's terms and have this whole thing done with in a couple of days, Newscastle would demand £25 million for Wiljnaldum and we'd have no real leverage in any future deals.

    We are doing everything right in this transfer, we have ALL the leverage and we're using it the right way.

    ReplyDelete
  4. The other dangerous thing about just paying whatever the selling club wants is that in future dealings clubs can then hold us to ransom because we'll have a reputation for splashing the cash like Real Madrid or Chelsea. So while it would have been easy to just agree to AZ's terms and have this whole thing done with in a couple of days, Newscastle would demand £25 million for Wiljnaldum and we'd have no real leverage in any future deals.

    We are doing everything right in this transfer, we have ALL the leverage and we're using it the right way.

    ReplyDelete
  5. I fully understand how it works and why it's done the way it is. However I think sometimes we don't take into account the money that we could achieve by finishing higher or champions league. I:email 1.5 million extra for the player over 5 years against whatever money for the higher finish ...COYS

    ReplyDelete
  6. Thank-you Mr Accountant, it always nice to get something right. LOL

    ReplyDelete

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