Paul Pogba (76 Viewers)
- Thread starter Lo-Pan
- Start date
Khedira+120M for Pogba.
-Khedira has no book value, so assign him a value of 30M (for accounting purposes, yes I know it's very generous). His fee would be payable in 2 financial years.
-Put Pogba on a 1 year loan @ 20M, with obligation to buy for a fee of 130M (his D&A) expense.
-Khedira fee of 30 and Pogba fee of 150 = 120 total cost in cash + Khedira
Not including wages:
Year 1 - Capital Gain on Khedira of 30M, loan fee of 20M, = 10 million surplus
Year 2 - 6 - Depreciation expense of 26M
The effect is positive in year 1. And with wages, it is probably neutral.
-Khedira has no book value, so assign him a value of 30M (for accounting purposes, yes I know it's very generous). His fee would be payable in 2 financial years.
-Put Pogba on a 1 year loan @ 20M, with obligation to buy for a fee of 130M (his D&A) expense.
-Khedira fee of 30 and Pogba fee of 150 = 120 total cost in cash + Khedira
Not including wages:
Year 1 - Capital Gain on Khedira of 30M, loan fee of 20M, = 10 million surplus
Year 2 - 6 - Depreciation expense of 26M
The effect is positive in year 1. And with wages, it is probably neutral.
What's biting the bullet? I'm not disputing paying United a huge fee. We will have to.
It's close the PL season, so they'll want a replacement. Khedira knows Mourinho's tactics. He would be a throw in, help United in the near term, and help us with the accounting. The question is what fee would be required? 120M, 130M, 140M? Regardless, all I'm saying is we should use whatever accounting maneuvers that we have to our disposal. If that involves a loan with an obligation to buy, in order to stretch his depreciable value over an extra year, great. If it involves being generous with a player we are sending the other way? great.
If we buy him I'm completely cognizant that he will be expensive. If he costs 150M, make it 150M + Khedira. Why? because you can attribute whatever value you want to Khedira, within reason. 20-30 probably is reasonable, and recognize that capital gain immediately, because it was a free transfer. You also lose his wage. You then make the first year a loan, in order to take that 150, and spread out those charges over more years - ie: more time to grow/ more revenue to match that cost against. On a cash flow basis, it should be favourable for United. But on an accounting basis, we would want to spread out that accounting charge over as much time as possible.
It's close the PL season, so they'll want a replacement. Khedira knows Mourinho's tactics. He would be a throw in, help United in the near term, and help us with the accounting. The question is what fee would be required? 120M, 130M, 140M? Regardless, all I'm saying is we should use whatever accounting maneuvers that we have to our disposal. If that involves a loan with an obligation to buy, in order to stretch his depreciable value over an extra year, great. If it involves being generous with a player we are sending the other way? great.
If we buy him I'm completely cognizant that he will be expensive. If he costs 150M, make it 150M + Khedira. Why? because you can attribute whatever value you want to Khedira, within reason. 20-30 probably is reasonable, and recognize that capital gain immediately, because it was a free transfer. You also lose his wage. You then make the first year a loan, in order to take that 150, and spread out those charges over more years - ie: more time to grow/ more revenue to match that cost against. On a cash flow basis, it should be favourable for United. But on an accounting basis, we would want to spread out that accounting charge over as much time as possible.
Financially you are completely correct in how we can both profit. The question is image-wise.
Manchester United will look like our B team if we made this deal. And them(along with the EPL morons) went a long way on the lie they are the premiere club/competition. Admitting that even stratospheric wages cannot keep a player there and taking Khedira would be ... well, NOT good for the PR machine.
They would want something to show they got the upper hand. I don't know what, but playing to our tune is not that. Especially when you have Mino's mouth involved.
Manchester United will look like our B team if we made this deal. And them(along with the EPL morons) went a long way on the lie they are the premiere club/competition. Admitting that even stratospheric wages cannot keep a player there and taking Khedira would be ... well, NOT good for the PR machine.
They would want something to show they got the upper hand. I don't know what, but playing to our tune is not that. Especially when you have Mino's mouth involved.
That money does need to come in, but it doesn't need to be in 2 years or 3 years. The short term gap can be bridged with debt or equity. Either Exor can inject some capital, or the company can leverage non-existant interest rates. Think about it. We have 355M in debt. And we pay 6M in interest.
With the growth that underpins the sports business and the value of sports content, that cash can arrive in 3-4 years.
Obviously, it needs to be financially feasible from a cash flow perspective as well.
That being said Juventus has an enterprise value of EUR1.145B. That for a business that has burned through 68M in cash flow over the last 4 years. In that time? The value of the equity (stock) increased from 227M to 874M. Debt is only 23.5% of the total capital structure. There is no rational valuation there. If they can make the accounting work through FFP, cash flow deficits are NOTHING to worry about in this business, assuming we want to win now, we can buy, and then if needed, we sell players.
I have no issue with short term reckless spending. Why?
1) Every 4-5 years, the value of sports rights deals increase by 100%.
2) We're selling out our stadiums, and there is considerable more room for price increases.
3) Football is increasingly global, and for that sponsorship opportunities continue to grow, beyond the limitations of the league.
4) If we get really unlucky and don't make champions league, we have enough players who we can sell to bridge the gap.
This is a very important window right now. Barcelona has an aging Messi, Ronaldo left Madrid with no replacement, United is crap right now. This is a huge growth opportunity.
That being said: there needs to be some discipline. You don't want to be burning to through 50M in cash per year without an escape. But if you burn cash for 2 years, and use debt or equity to bridge the gap, and grow into your revenues, that certainly isn't an issue.
Look at AS Roma: this company burned through 202M euro in cash over the last 5 years. The stock in that period went from 52.6M to 320.7M. That investor just increased his investment by 6x!
Our debt to capital is 23.5%, Porto? 75%. Roma? 48% Manchester United? ~17%.
With the growth that underpins the sports business and the value of sports content, that cash can arrive in 3-4 years.
Obviously, it needs to be financially feasible from a cash flow perspective as well.
That being said Juventus has an enterprise value of EUR1.145B. That for a business that has burned through 68M in cash flow over the last 4 years. In that time? The value of the equity (stock) increased from 227M to 874M. Debt is only 23.5% of the total capital structure. There is no rational valuation there. If they can make the accounting work through FFP, cash flow deficits are NOTHING to worry about in this business, assuming we want to win now, we can buy, and then if needed, we sell players.
I have no issue with short term reckless spending. Why?
1) Every 4-5 years, the value of sports rights deals increase by 100%.
2) We're selling out our stadiums, and there is considerable more room for price increases.
3) Football is increasingly global, and for that sponsorship opportunities continue to grow, beyond the limitations of the league.
4) If we get really unlucky and don't make champions league, we have enough players who we can sell to bridge the gap.
This is a very important window right now. Barcelona has an aging Messi, Ronaldo left Madrid with no replacement, United is crap right now. This is a huge growth opportunity.
That being said: there needs to be some discipline. You don't want to be burning to through 50M in cash per year without an escape. But if you burn cash for 2 years, and use debt or equity to bridge the gap, and grow into your revenues, that certainly isn't an issue.
Look at AS Roma: this company burned through 202M euro in cash over the last 5 years. The stock in that period went from 52.6M to 320.7M. That investor just increased his investment by 6x!
Our debt to capital is 23.5%, Porto? 75%. Roma? 48% Manchester United? ~17%.
