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✍️ OFFICIAL Nicolas Pepe (Out)

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Taylor Gang Gunners

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To understand this loan, we need to think in terms of how accounting/FFP works here:

We signed Pepe for a reported 72m, wages of 7m per year for 5 years. The important part here is that the 72m is amortised over the length of the contract - i.e. 14m a year or so.

There’s two years left, so from an accounting and FFP view, we allocate 14m+7m for this season and next.

Let’s look at two scenarios - one where we loan Pepe and another where we sell:

If we loan, we save up to 7m this season.
However, if we sold, Pepe goes off our books, meaning that we cannot book the original transfer fee to next season - say we sold for 10m, we would end up taking an immediate loss of 28m minus 10m = 18 million this year. Given this, a loan is significantly better than a sale for this years finances.

While 7m doesn’t seem like a lot of money, given amortisation again, we can spread the cost of a transfer - 7m this year means that we can buy a player on a 5 year contract up to 7*5=35 million.

Note here this is very different to Auba where we’ve already fully booked his transfer fee, so any savings goes directly to the transfer fund.

Very nicely summarised. Respect.
 

slam1986

Member
To understand this loan, we need to think in terms of how accounting/FFP works here:

We signed Pepe for a reported 72m, wages of 7m per year for 5 years. The important part here is that the 72m is amortised over the length of the contract - i.e. 14m a year or so.

There’s two years left, so from an accounting and FFP view, we allocate 14m+7m for this season and next.

Let’s look at two scenarios - one where we loan Pepe and another where we sell:

If we loan, we save up to 7m this season.
However, if we sold, Pepe goes off our books, meaning that we cannot book the original transfer fee to next season - say we sold for 10m, we would end up taking an immediate loss of 28m minus 10m = 18 million this year. Given this, a loan is significantly better than a sale for this years finances.

While 7m doesn’t seem like a lot of money, given amortisation again, we can spread the cost of a transfer - 7m this year means that we can buy a player on a 5 year contract up to 7*5=35 million.

Note here this is very different to Auba where we’ve already fully booked his transfer fee, so any savings goes directly to the transfer fund.
To clarify a bit:

Costs for the 2022-2023 season:
No sale or loan: 14+7=21m
Sale for 10m: 14+14-10=18m
Loan, full wages paid: 14m
Cancel contract with no fee: 14+14=28m

There’s probably more that goes into the sums but this hopefully gives a rough approximation.
 
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