Ciro Immobile (19 Viewers)

[Bjerknes]

I just don't understand economics and accounting.

I was told that selling Immobile for 9,59m euro in 1 installment, allows us to buy a player for 28,77m eur in 3 installments, without even feeling it. I get that. This financial year it will be like that... but what about the next two years when we'll have to pay the other two installments? I asked the question, and I was told that it's all about this year for now.

Then there is the plusvalenza, or the capital gain from this transfer. I read so many times how important this is, especially with the FFP regulations in place. Selling Immobile for 9,59m euro reduces our red. If we didn't sell him, or better, if we bought him back for, say, 9,59m eur, we'd have registered a minusvalenza (make a loss) of 7m euro, because we'd buy a player's half for 9,59, after initially selling this half for 2,75m euro. That would have put us further in red, and in danger of breaching the FFP rules.

I don't get this $#@! completely, but I'm told that this is the main reason why we were so eager to sell Immobile. As a matter of fact, we were the ones who pushed for this transfer, and it was Torino who needed to be convinced to sell.

That's simply a load of accounting fraud, you must know someone who works for Goldman Sachs. It doesn't matter whether you owe 20M in installments or now, it's still deducted from your income statement eventually. The fraudster accountants sole responsibility is to make the books look better per quarter or per annum, so that's why they would concoct that response. But it all comes from the sale year over year budget.

And of course not buying his half saves us from going further "in the red." That's the way buying and selling works. Of course they won't mention it when we buy the garbage players we'll purchase this Summer.

 

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[jukazem]

I was told that selling Immobile for 9,59m euro in 1 installment, allows us to buy a player for 28,77m eur in 3 installments, without even feeling it. I get that. This financial year it will be like that... but what about the next two years when we'll have to pay the other two installments? I asked the question, and I was told that it's all about this year for now.

this part is incorrect, but it does help Juve's from a cashflow perspective, which is different from income and expense. from profit perspective you have to match reduction in expense(amortisation cost) with increase in expense.

Then there is the plusvalenza, or the capital gain from this transfer. I read so many times how important this is, especially with the FFP regulations in place. Selling Immobile for 9,59m euro reduces our red. If we didn't sell him, or better, if we bought him back for, say, 9,59m eur, we'd have registered a minusvalenza (make a loss) of 7m euro, because we'd buy a player's half for 9,59, after initially selling this half for 2,75m euro. That would have put us further in red, and in danger of breaching the FFP rules.

this part too, the buying cost would be capitalised and amortised over the life of his contract. for instance if he was signed for €10m on a 4 year contract, then expenses in each of those 4 years would go up by €2.5m

my opinon about the accounting treatment of co-own is that it gives a misrepresentation of income and expense (fraud-ish).

for instance,

Year 1: Immobile(half)- Boakye(half) exchange for €4m means
year 1: plusvalenze(profit on disposal) of €4m (Immobile sale), expense €4m/5=€0.8m (Boakye buy): net: +€3.2m (profit)

Year 2: Marrone(half)- Berardi(half) exchange for €4.5m means
year 2: plusvalenze(profit on disposal of €4.5m (Marrone sale), expense €4.5m/5=€0.9m (Berardi buy), expense €0.8m (Boakye buy): net: +€2.8m (profit)

Year 3,4,5: expense 0.9m (Berardi buy), expense €0.8m (Boakye buy): net: -€1.7m each year (loss)

Year 6: expense €0.9m (Berardi buy): net: -€0.9m (loss)

so while Juve write a profit on disposal(plusvalenze) in the initial years, if the co-owns are not sold then Juve will have losses in the later years. the profit of year 1 &2 will cancel out with losses of year 3,4,5 &6.

 

[Bjerknes]

this part is incorrect, but it does help Juve's from a cashflow perspective, which is different from income and expense. from profit perspective you have to match reduction in expense(amortisation cost) with increase in expense.

this part too, the buying cost would be capitalised and amortised over the life of his contract. for instance if he was signed for €10m on a 4 year contract, then expenses in each of those 4 years would go up by €2.5m

my opinon about the accounting treatment of co-own is that it gives a misrepresentation of income and expense (fraud-ish).

for instance,
Year 1: Immobile(half)- Boakye(half) exchange for €4m means
year 1: plusvalenze(profit on disposal) of €4m (Immobile sale), expense €4m/5=€0.8m (Boakye buy): net: +€3.2m (profit)

Year 2: Marrone(half)- Berardi(half) exchange for €4.5m means
year 2: plusvalenze(profit on disposal of €4.5m (Marrone sale), expense €4.5m/5=€0.9m (Berardi buy), expense €0.8m (Boakye buy): net: +€2.8m (profit)

Year 3,4,5: expense 0.9m (Berardi buy), expense €0.8m (Boakye buy): net: -€1.7m each year (loss)

Year 6: expense €0.9m (Berardi buy): net: -€0.9m (loss)

so while Juve write a profit on disposal(plusvalenze) in the initial years, if the co-owns are not sold then Juve will have losses in the later years. the profit of year 1 &2 and cancel out with losses of year 3,4,5 &6.

Exactly right, it's all fraudulent accounting. But pretty much everyone does it and nobody cares. Enron did it, too, with their contracts.

 

[jukazem]

Exactly right, it's all fraudulent accounting. But pretty much everyone does it and nobody cares. Enron did it, too, with their contracts.

imo that's why SerieA will get rid of it before people/FFP figure it out.

 

[Bjerknes]

imo that's why SerieA will get rid of it before people/FFP figure it out.

I don't know about that. They seem to love it in Italy.

 

[Deep C]

I don't know about that. They seem to love it in Italy.

If you're addressing co-owns specifically here, it has already happened.

 

[Bjerknes]

If you're addressing co-owns specifically here, it has already happened.

If so, that is great news. I haven't had time to keep up to date.

How about loans?

 

[Alen]

That's simply a load of accounting fraud, you must know someone who works for Goldman Sachs. It doesn't matter whether you owe 20M in installments or now, it's still deducted from your income statement eventually. The fraudster accountants sole responsibility is to make the books look better per quarter or per annum, so that's why they would concoct that response. But it all comes from the sale year over year budget.

And of course not buying his half saves us from going further "in the red." That's the way buying and selling works. Of course they won't mention it when we buy the garbage players we'll purchase this Summer.

I truly don't get it.

Apparently, if we buy player X for 10 million on one year contract, our books are clean when he leaves for free after that year. But if we buy him for 10m on 2 year contract and sell him for 4m after the first year, we register a 1 million euro loss, which is bad.
We get 4m, we don't get to pay his wages, but it's worse than letting him go for free in the first example. Why is getting 4 million worse than getting zero?

This explains those stupid situations, like the case with Jorge Martinez. We bought him for 12m eur on a 4 year contract in 2010. Up till now (his contract finally expires on July 1st), we preferred to loan the shit out of him so we'd be on 0 this summer, instead of selling him for as little as 1 million euro, and register a loss (his annual value was 3 million euro, so if we sold him for 1 million in 2011, we'd register a pretty big 8m euro loss).
Can someone explain the logic behind this?

 

[Bjerknes]

I truly don't get it.

Apparently, if we buy player X for 10 million on one year contract, our books are clean when he leaves for free after that year. But if we buy him for 10m on 2 year contract and sell him for 4m after the first year, we register a 1 million euro loss, which is bad.
We get 4m, we don't get to pay his wages, but it's worse than letting him go for free in the first example. Why is getting 4 million worse than getting zero?

This explains those stupid situations, like the case with Jorge Martinez. We bought him for 12m eur on a 4 year contract in 2010. Up till now (his contract finally expires on July 1st), we preferred to loan the $#@! out of him so we'd be on 0 this summer, instead of selling him for as little as 1 million euro, and register a loss (his annual value was 3 million euro, so if we sold him for 1 million in 2011, we'd register a pretty big 8m euro loss).
Can someone explain the logic behind this?

Think of each fiscal year as separate from others, that's what the accounting fraudsters do. It is all about dividing revenue and expenses between segments of time. Even though the example you provided is a loss mathematically, they can twist it into whatever they want by using tiered segments of reporting. This is how companies go under as the amounts still exist year over year.

There is no logic behind it other than covering up losses for investors.

 

[Dostoevsky]

Exactly right, it's all fraudulent accounting. But pretty much everyone does it and nobody cares. Enron did it, too, with their contracts.

Lehman brothers did it, HSBC did it, Barclays did it.

They all do it.

 

[Alen]

If so, that is great news. I haven't had time to keep up to date.

How about loans?

Yeah, co-ownerships were abolished. Any current co-own contract can be renewed for 1 more year, but from the next transfer window these deals won't be allowed. The decision was taken some days ago by the FIGC, despite the fact that only 9 serie A teams (Juve among them) were pro-abolishing the co-owns. The smaller teams wanted to keep the co-ownerships.

The loans remain for now, but other reforms are expected in calcio, so one day the loans might become history too.

 

[Bjerknes]

Yeah, co-ownerships were abolished. Any current co-own contract can be renewed for 1 more year, but from the next transfer window these deals won't be allowed. The decision was taken some days ago by the FIGC, despite the fact that only 9 serie A teams (Juve among them) were pro-abolishing the co-owns. The smaller teams wanted to keep the co-ownerships.

The loans remain for now, but other reforms are expected in calcio, so one day the loans might become history too.

Thanks, lets hope loans will be illegal as well. It's nothing more than human trafficking glorified into "helping" the player, but it doesn't really help us at all.

- - - Updated - - -

Lehman brothers did it, HSBC did it, Barclays did it.

They all do it.

They did it with structured finance derivatives backed by nothing. I guess that is even worse than co-owns since at least you have the player to back the investment.

Co-owns and loans are just slave trading, really.

 

[Dostoevsky]

Agreed.

I'd like to see the "B" league as a solution.

 

[jakku7]

Agreed.

I'd like to see the "B" league as a solution.

Reserve teams

 

[Ocelot]

Reserve teams would open the gap between big and small clubs immensly though. Loans are fine imo.

 

[Deep C]

I'm not sure I'd agree with abolishing loans. What would be the reasons for it (apart from the "human trafficking" bit, which I don't really see)?

 

[Pirlo's Beard]

Immobile been by far the worst player in the Italy - ROI game

 

[Ocelot]

Aquilani.

 

[AFL_ITALIA]

Immobile been by far the worst player in the Italy - ROI game

It's not as if he's had any real service.

 

[Suns]

So no sale?