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Potential Suarez profit for Liverpool
Liverpool originally purchased Suarez on a 5.5 year deal from Ajax in the January 2011 transfer window for a reported £22.8m. Suarez’s transfer fee was amortised to around £4.1m annually (£22.8m / 5.5 years).
Suarez then signed a (presumed) new 5-year contract in August 2012. The remaining book value of the transfer fee at the time of his new deal was £16.65m as around 1.5 years of the original transfer fee (£6.15m) had been amortised. Therefore £16.65m amortised over the new 5-year deal meant a new amortisation cost of £3.33m per season.
Then in December 2013, he signed a new 4.5 year deal. Almost 1.5 years of his re-amortised total figure of £16.65m had been amortised which reduced his total unamortised value by £4.99m (£3.33m x 1.5 years) to £11.66m His annual amortisation cost became £2.57m (£11.6m / 4.5 years) or £214,000 per month.
If you are still with me (!), depending on the exact figures that Barcelona are willing to pay for Suarez, an initial conservative £70m transfer fee minus the remaining £8.89m (£11.6 – £1.71m) which is 8 months further amortisation (£214,000 x 8 months December ’13 to July ’14 inclusive) gives Liverpool a total accounting profit on the Suarez sale of £61.11m. Therefore, with £9.6m in lower wages [1], £2.57m lower amortisation costs and £61.11m estimated profit on the sale, Liverpool may show an annual profit improvement of around £73.2m.
http://tomkinstimes.com/2014/07/ffp-...ion-of-suarez/
Liverpool originally purchased Suarez on a 5.5 year deal from Ajax in the January 2011 transfer window for a reported £22.8m. Suarez’s transfer fee was amortised to around £4.1m annually (£22.8m / 5.5 years).
Suarez then signed a (presumed) new 5-year contract in August 2012. The remaining book value of the transfer fee at the time of his new deal was £16.65m as around 1.5 years of the original transfer fee (£6.15m) had been amortised. Therefore £16.65m amortised over the new 5-year deal meant a new amortisation cost of £3.33m per season.
Then in December 2013, he signed a new 4.5 year deal. Almost 1.5 years of his re-amortised total figure of £16.65m had been amortised which reduced his total unamortised value by £4.99m (£3.33m x 1.5 years) to £11.66m His annual amortisation cost became £2.57m (£11.6m / 4.5 years) or £214,000 per month.
If you are still with me (!), depending on the exact figures that Barcelona are willing to pay for Suarez, an initial conservative £70m transfer fee minus the remaining £8.89m (£11.6 – £1.71m) which is 8 months further amortisation (£214,000 x 8 months December ’13 to July ’14 inclusive) gives Liverpool a total accounting profit on the Suarez sale of £61.11m. Therefore, with £9.6m in lower wages [1], £2.57m lower amortisation costs and £61.11m estimated profit on the sale, Liverpool may show an annual profit improvement of around £73.2m.
http://tomkinstimes.com/2014/07/ffp-...ion-of-suarez/
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