07 Sep 2020 10:00:20
Question for Ed2 if your about (understand if you don’t want to delve too far in to finances) . Understanding player amortisation is spread out over a players contract and is listed as an expense line item with the clubs P&L. Question is are the majority of transfer fees paid upfront when a player is purchased (thus the expense is a non cashflow item) or are these also spread over a number of years (meaning cash flow is impacted yearly as instalments are due) . Not specific to Liverpool however I have a long term finance background and am interested in how the club accounts work.

{Ed002's Note - Any larger transfer fees are normally spread out over two or more payments but not the amortisation, which (for those clubs that take that approach), is typically spread over the length of the contract - and the residual amounts spread over any extention period when new contracts are signed. As such, cash flow is impacted each year by the amortisation.}

1.) 07 Sep 2020
07 Sep 2020 10:38:35
Thank you for the response Ed, much appreciated. I had assumed player amortisation is treated much the same way as depreciation, with a clubs EBITDA (including add back of player amortisation) providing an accurate picture of cash available. This cash would then need to service and debt repayment, transfer instalments due from previous purchases, new player acquisitions and CAPEX. In Liverpool’s case it can be easily seen how a reduction in revenue due to C.V. and the lack of a large transfer fee received (ie Coutinho) has effected the ability to purchase without first selling. It seems the club is operating in a sustainable manner.

{Ed002's Note - Typically the cash available at anyone time is not clear. The repayments of debts/loans, transfer fees and CapEx (which will be lower going forward) are built in to the predictions and nothing to do with cash flow.}

2.) 07 Sep 2020
07 Sep 2020 10:47:01
Thanks again Ed2, appreciate the insight!

{Ed002's Note - You are welcome.}

3.) 07 Sep 2020
07 Sep 2020 11:38:49
These concepts are dull (I know, I do it for a living) but very useful learning for anyone who doesn't understand how the cost of players and their wages, sign-on fees, etc are treated in the club's accounts!

4.) 07 Sep 2020
07 Sep 2020 15:27:00
If anyone wants to have a good read of where Liverpool’s finances currently start the Swiss ramble has done a great thread on twitter outlining where we truly stand vs the other clubs.

5.) 07 Sep 2020
07 Sep 2020 17:59:11
Hello Ed, another quick one on liverpools finance if that's okay. with it being a couple of seasons now since we spent big on players are we far off now from paying off all that money as I see from a previous awnser that clubs tend to spread out the cost of high transfer fees. And also the way you see the some owners like at city having other teams and having overall sponsorship do you think that will work as a model for the league. So if all the leagues from the championship down joined up with the Premier league and the money split between all leagues obviously the higher the league the bigger the share do you think that will be a way of saving the lower league teams from the risk of going out of business.
Thanks again.

{Ed002's Note - I am not 100% sure I know what you mean, but: (a) Liverpool have manageable costs facing them but the fans focus on transfers and not running the busienss - living close to the financial edge means the pandemic has hit hard. (b) I think you are talking about the City Football Group haveing quite a few sides - the concept is growing but it will not be something for Liverpool - unless I missed the point. (c) No - there are far to many professional sides in England already.}