Where’s all the money gone?

I’m gonna repeat a couple of posts I made on an earlier thread which might help (genuine apologies to those that have already seen these):

So, as an example … Aaronson’s original balance sheet value of £25m has already been written down to £21m. This suggests his market value is only going one way at present.

It is very dangerous, not to say foolhardy, to keep an asset on a balance sheet at a falsely inflated value. Who would pay £21m for Aaronson now? Nobody is my bet. Therefore, we’ve got ‘hot air’ on the balance sheet right now, and we’re relying on him having a ‘good season’ to bolster his value. Putting it another way, we’re taking a huge risk. This can also probably be repeated for some/most/all of the others who left on loan.

Part 2 to follow …

Part 2:

Why does this matter? A simple example. Say you own a house, and you want to believe it’s worth £500k. You run your life based on the fact that you have a £500k asset. However, when you come to sell it, you realise the true value is £250k. You then have to face the reality of that. By falsely maintaining the value of the asset at the inflated price only delays the pain. Of course, you only get that pain if you sell the asset.

Back to Aaronson, the only way we don’t get that pain is not to sell him until his market value improves. So we trust to luck that he somehow impresses this season and his value increases. This process would carry on until he retires, as which point we’d be forced to re-value his true worth on our balance sheet - i.e. £0.

Btw, many public organisations in history have gone into melt-down when it’s been realised that their balance sheet isn’t worth what it says on paper. A very dangerous, risky situation for any company or person to be in.

comment by The Light Brigade (U22847)
posted 9 minutes ago
Part 2:

Why does this matter? A simple example. Say you own a house, and you want to believe it’s worth £500k. You run your life based on the fact that you have a £500k asset. However, when you come to sell it, you realise the true value is £250k. You then have to face the reality of that. By falsely maintaining the value of the asset at the inflated price only delays the pain. Of course, you only get that pain if you sell the asset.

Back to Aaronson, the only way we don’t get that pain is not to sell him until his market value improves. So we trust to luck that he somehow impresses this season and his value increases. This process would carry on until he retires, as which point we’d be forced to re-value his true worth on our balance sheet - i.e. £0.

Btw, many public organisations in history have gone into melt-down when it’s been realised that their balance sheet isn’t worth what it says on paper. A very dangerous, risky situation for any company or person to be in.
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Spot on pal.

And we are now in a bad negotiation position because everyone knows these players wont be welcome back.

Take koch, a german international, surely we could have got over £5m for him from a german side.

Getting nothing for him.

a disgraceful

comment by LIW Rad a %#@% and so is Orta (U8453)
posted 5 hours, 10 minutes ago
comment by The Light Brigade (U22847)
posted 9 minutes ago
Part 2:

Why does this matter? A simple example. Say you own a house, and you want to believe it’s worth £500k. You run your life based on the fact that you have a £500k asset. However, when you come to sell it, you realise the true value is £250k. You then have to face the reality of that. By falsely maintaining the value of the asset at the inflated price only delays the pain. Of course, you only get that pain if you sell the asset.

Back to Aaronson, the only way we don’t get that pain is not to sell him until his market value improves. So we trust to luck that he somehow impresses this season and his value increases. This process would carry on until he retires, as which point we’d be forced to re-value his true worth on our balance sheet - i.e. £0.

Btw, many public organisations in history have gone into melt-down when it’s been realised that their balance sheet isn’t worth what it says on paper. A very dangerous, risky situation for any company or person to be in.
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Spot on pal.

And we are now in a bad negotiation position because everyone knows these players wont be welcome back.

Take koch, a german international, surely we could have got over £5m for him from a german side.

Getting nothing for him.

a disgraceful
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I think the questuion you have to ask is that....

If this is such a stupid position to have put ourselves in.....why are our current owners justifying it....using almost word for word a conveniently times Facebook post.

I genuinely can't help but think back to GFH and Salem Patel listening in on Leeds forums and direct messaging fan asking their opinions about managers.

We have been left up sh creek buy past owners and current owners who've been here for 4/5 years already and whose skillset that was brought the the party was "being able to negotiate deals in my sleep".

I'm also remind of Bates phrase of people with deep pockets and short arms.

49ers got the club for 170m instead of 400m, there really should be ni reason why there is not some funding available for players.

I think we need to make it clear the difference between value and book value.

Book value is all that matters for ffp (profit and sustainability now) and thats what was discussed above.

But this has no relation to the players actually value is not affected by any factors other than cost of purchase and time left on contract.

Eg. Raphinha would have had a book value of around £8m when he was sold. As he was half way through his contract so was worth half his transfer fee.
Obviously in the real world his value had massively increased.

Light Brigade is right to an extent, but there is no option to revalue assets in football. While in proper business there are many ways to depreciate and revalue assets, FFP (PnS) has set the rules for the only ways to ammortise player transfers.

Promotion to the premier league will make difference to the book value of the players out on loan, they would all be 'devalued' by 1 years worth whatever happens.

In the real world there value may increase slightly as we won't be as desperate to sell. But that's not really their value, that's the fact the club can hold out for a price closer to their value.

Unless someone plays so well on loan that a bidding war starts, we won't get true value for any of these players now. Everyone knows that it's almost impossible for them to play for the club again and so buying clubs will know we are in a position where we will be prepared to accept below market value.

This will be exaggerated without promotion. And is the case for any relegated club anyway, but we have definitely made it worse.

comment by HaveFaithInLeeds (U8688)
posted 1 hour, 2 minutes ago

… but we have definitely made it worse.

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Morning all🌞.

Yep, and for me, this is the crucial point.

Okay, that makes for thoroughly depressing reading this Sunday morning, the opening day of our season. Thank you very much everyone.

So the question that remains then is what was the extent of Marathe's knowledge of these relegation/loan clauses - because that implies a question as to his professional competence. Can't believe he would not have known about this - even more depressing.

Of course he's going to spin it, Jonty, because the entire project depends upon his (many) investors' confidence in the project itself and in his competence to manage it.

Is the inclusion of such relegation clauses a general practice or is it particular to shysters like Victor Orta? Koch was signed following promotion but he had that relegation clause in his contract then? Who else has them in our squad?

Seems to me the inclusion of such relegation/loan clauses is basically a general statement of no confidence in the club's potential. The club has been forced to suffer a loss aggravated by loans subsequent to their triggering. Do such clauses allow Marathe a choice between selling and loaning? If they do, why has he then chosen to loan rather than to sell, even at a loss?

It's nothing short of inviting catastrophe if we don't go up this season - breaking FFP = points reduction, ffs?

ARRRRRRRRRRRRRGGGGGGHHHHHHHHHHH!

You also need to consider the following:

Savings on salary - c£12m (assumption that each of the 8 loanees earns £30kpw)
Transfer / Loan fees received: We got £3m for Rodrigo, and we got £0.45m for Koch - and would be surprised if we did not get something for the rest.

So whilst amortisation will hit us for a hefty sum, which it would have anyway, these savings will offset that in this year.

Even if Paraag knew about these clauses what could he have done?..

Orta was doing the dealing and I don't think the 49ers had as much to say as some think!..

I'm now thinking did AR check these dealings before giving them the go ahead, because it seems there was a lot off odd deals being done in the time Orta was with us!..

If Orta's new bosses ain't keeping an eye on what is happening here, than maybe they'll get a little upset in years to come!..