The Daily ITK Discussion Thread - 10th August

[mil1lion]

I just don't see what club is going to want to sell a key player with so little time left in the window.

No doubt it'll be some opportunistic gambles now.

I really don't think we're looking to sign 3 key players though. I think they're very much squad players. We've already made the key signings. No doubt people would focus on the ones made after Kane went rather than the ones before though.

 

[Whitey]

Can't winner this enough. Take what you can fucking get. It is simply a false economy to have multiple players on £80-120k a week running down contracts, playing about 10 minutes this season taking up foreign player spots. Unless the player is a disruptive influence, all avenues necessary should be explored apart from full pay off contract cancellations.

I don't mean this disrespectfully, but Dier, Lloris, Reguilon, Tanguy, Japhet are of no use to us in a season without European football. We should be open to low offers on Sanchez as well, considering his contract situation. The only players we should be holding out for reasonable fees on are Spence, Bryan & PEH. And even with PEH, he's most definitely a player who will only go down in value after this summer.

I totally agree.... But unfortunately for Ange and the fans.... What's being suggested means that Levy has failed! The man has an ego to manage, it not in his makeup to entertain the slightest drop in (his) valuation... Until he's gone, this is how it works and there's no changing that ..... Apologies for straying off topic.

 

[yido_number1]

I really don't think we're looking to sign 3 key players though. I think they're very much squad players. We've already made the key signings. No doubt people would focus on the ones made after Kane went rather than the ones before though.

Kane's replacement should be a key signing. Very unlikely Richarlison is going to deliver.

 

[Trix]

3 in 3 out in a week seems extremely unlikely in my opinion

Need more than 3 out mate, and you don't need ITK to work that out. Squad size is way over what we need.

 

[nickspurs]

I take D1’s ITK with the a pinch of salt. Often a bit of intel with opinion mixed in and I’m not entirely sure he understands the financials (to be fair why would most supporters understand the complexities of negotiating complex multi-million pound contracts with multiple parties - we’re all here as we like football first and foremost!).

I think WLB info makes more sense. On the outs, it’s 100% rational for THFC to wait until the end of the window. The WORST case scenario is that you buy them out in full. There’s literally no point doing that until the window closes (despite what many are arguing for). Either a club comes in with a transfer fee (money in, no more wages) or a loan (maybe a loan fee in and probably saving at least some of the wages if we we subsidise). As others have said, players may be incentivised to not sit on their contracts as they can get a signing-on bonus as a free agent and get to play football if they accept a move, or compromise on the buy-out of contract for a % of what they are owed.

So I don’t think the ins are really that dependent on the outs and we are just waiting to improve on our worst case scenario.

On wages and FFP I imagine we’re in a good place. Kane alone saves huge wages and is £100m+ pure accounting profit for FFP this year. That helps if we are booking a loss on contracts cancelled/free transfers for those with non-amortised value on the balance sheet. If most of Kane few is upfront, I think we’re probably in a good place on cash flow too. This helps if we end up cancelling contracts and paying more upfront than planned.

What WLB implies is that we have ins lined up. If I was running the club, I’d seek to have contracts in hand, signed by the other parties and I just need to execute. However that might not be possible in practice as it leaves the other sides exposed if we pull out. In which case I’d hope they are ‘done’ but not announced (most clubs, including us, are not obliged to announce signed deals). That’s hard as no one can keep a secret!

That leads us to the scarier scenario which is that the ins are not still really secured as we’re still haggling (or holding out for a unexpected better option) and we leave it too late in the window as counterparties need certainty/get replacements. If that plays out and we miss out on a good forward and a very good CB, the pitchforks can rightfully be out and I don’t think it can be blamed on the outs.

 

[Sandro30]

My frustration with this process is for someone like Lloris, we are probably looking for a couple of million as a token transfer fee. Assuming he is on say £150k p/w, If we let him go for nothing in the middle of June, we wouldn't have paid the 10 weeks wages up to now of £1.5m, which is probably around the transfer fee we are trying to recoup.

I appreciate this reflects differently on a balance sheet as per the previous couple of posts talking about amortisation and wages but going by what D1 has said r.e wages, that's a big annoyance.

 

[Trix]

I totally agree.... But unfortunately for Ange and the fans.... What's being suggested means that Levy has failed! The man has an ego to manage, it not in his makeup to entertain the slightest drop in (his) valuation... Until he's gone, this is how it works and there's no changing that ..... Apologies for straying off topic.

He's got no choice now if he wants them gone and off the wage bill. I'm far from Levy's biggest fan but I'm confident he understands this and will lower his expectations. Whether it will be enough or in a timely enough manor to get any more business incomings wise is the question now imo.

 

[Rob]

That leads us to the scarier scenario which is that the ins are not still really secured as we’re still haggling

You don't need to be ITK to know this is the case...

 

[HobbitSpur]

If you buy out his contract he is a free agent and nothing to do with you so you have no call on anything he does when he signs for another club.

and if we start buying/tearing up contracts that in itself sets a dangerous precedent.

If players knew they were surplus to requirements for whatever reason they could refuse any potential move knowing that we would tear up their contract and they could go anywhere they chose in a free and all the financial benefits that brings.

We have got ourselves in a pretty shitty situation that again goes back to our very poor purchases over the past few seasons.

 

[THOWIG]

You don't need to be ITK to know this is the case...

This just seems inevitable to me. We’ve been down this path so many times.

 

[nickspurs]

You don't need to be ITK to know this is the case...

Indeed. I just pray that he’s learned his lessons and set a deadline not too close to the window closing. And that must be about now for the ins….

Pay up now or move on to the next options and conclude. The risk of missing out on any signing now outweighs any possible saving from haggling.

 

[worcestersauce]

Since we're talking football finance, Inc the Boss, a little explainer below. (Wouldn't normally dare to post in this thread. But on topic, thanks WLB, Trix, Herc et al for the ITK; the news is largely positive; the signings so far are encouraging; Ange has been great)

I think there's one other element. Possibly 2 items conflated in the post above (or I may be misreading)

Using Ndombele as an example:
1. Transfer fee reported was £55m when he signed at start of 19/20 (+ £9m potential add ons, let's assume for simplicity the prerequisites for these haven't been met). We don't know the payment terms, but since Aulas was President let's assume favourable to Lyon, say 50%, 25%, 25% over 3 years. In any case, 4 full seasons have noe passed so the liability on the balance sheet (money owed to Lyon) is likely zero at this stage.

2. Separate to how we pay Lyon is how the player, as an asset, sits on the Balance Sheet. This is where amortisation comes in. If Ndombele signed a 5 year contract, then, assumed a straight-line approach (equal each financial year), then his value as an asset decreased 20% each full year, so right now, his value on the balance sheet would be £11m (£55m reduced by 11m or 20% each year of his contract).
This element is what counts for FFP. His book value is £11m, if we transfer him out on a free, we make an £11m accounting loss. (This is how Chelsea can game the system, I.e. they paid no fee for Mount as an academy player, so he is sold at pure profit for FFP).

3. Ndombele's wages are an operating cost and don't affect the balance sheet. Of course, we still have to budget fo the expenditure being incurred, as it's a contractual obligation and a known cost. Various figures are reported, but let's say he's on a basic wage of £125,000 pw (the other amounts beyond that being incentive-related and not met). That's £6.5m per season. (So 6.5 total, or 13 if he has 2 years left)

So, if we "tore up his contract", we pay him £6.5 (or 13m if 2 yrs) hard cash. We're committed to paying this anyway. We'd make an £11m loss on the balance sheet.
In such a scenario (see Aurier and Doherty recently), it is likely a legal settlement would be reached where the player gets less than this, perhaps 6months pay rather than a full 12. There could also be clauses whereby, they get paid up to the full amount (or even more, with a specific severance payment), if they don't take up other employment. This scenario can be good all round- player gets security of pay, can negotiate to sign elsewhere with a nice singing bonus as no transfer fee, club potentially spends less than they would have done on wages (club makes a balance sheet loss by writing off the £11m asset either way).

Other scenarios could include loaning the player out with part wages paid by loaning club, a sale now at whatever fee and savjng the wages.

Wages still affect the balance sheet as costs and I think your assumption on buying out payment is in reverse, they are due their full contract value unless they agree to waive that, there is no legal agreement that a club can pay less, no player would sign up to a contract like that.
We have a level of wages that we need, or perhaps want, to keep to and as the ITK says that is important to Levy so it really is as simple as that, we need to get the wage bill down to build it up again with new players.
Whether or not we ought to be like that is open to opinion but that's how it is.

 

[Col_M]

On the plus side, all this misery to shift deadwood on big money and long contracts is going to be tenfold for Chelsea fans in 4+ years time.

 

[lukadownthelane]

On the plus side, all this misery to shift deadwood on big money and long contracts is going to be tenfold for Chelsea fans in 4+ years time.

Except the Saudi’s will buy them all up for double what they’re worth.

I really hope we see some outgoings soon as our incomings tend to drag on and we need at least 2 players that will challenge for the starting XI.

 

[kd2000]

Its a bit of a double edged sword.
The longer we leave it, the more likely we are to sell our players.
But, the less time other clubs have to replace players, the clubs could be less inclined to sell and those that do might demand even higher transfer fees knowing they are likely to have to spend more to replace them so late in the window.

 

[Flobadob]

I can accept that we need players out, it’s a pretty fair reason to delay incomings as our squad is waaaay too big. I just hope when we get one out we get one of the top priority ins through the door off the back of it and don’t leave all of our business to the last minute and leave it vulnerable to mishaps

 

[jazz15c]

Except the Saudi’s will buy them all up for double what they’re worth.

I really hope we see some outgoings soon as our incomings tend to drag on and we need at least 2 players that will challenge for the starting XI.

But do the other teams want to lose players of that calibre with 8 days left of the window?

 

[WiganSpur]

I can accept that we need players out, it’s a pretty fair reason to delay incomings as our squad is waaaay too big. I just hope when we get one out we get one of the top priority ins through the door off the back of it and don’t leave all of our business to the last minute and leave it vulnerable to mishaps

I fail to see a scenario now where the looming rush and panic doesn't lead to some of the planned incomings going to shit.

 

[mil1lion]

Kane's replacement should be a key signing. Very unlikely Richarlison is going to deliver.

Should be but I don't think it will be. At best someone like Orban who has the potential to be is more likely. No doubt we'll flirt with better options but no star striker gets sold this late.

 

[mattspur1986]

3 in 3 out in a week seems extremely unlikely in my opinion

I’d go as far as, nigh on impossible with the way we go about things and overpricing our deadwood, I know I sound like a broken record - but genuinely believe we’re done for the window, and all we will see is a few outgoings next week.