Jay Mehta

@jaymehta_18

Supply Chain || (Re)Tweets about football, Manchester United, business and books

India

Joined February 2012

1.8K Following

279 Followers

629 Posts

jaymehta_18 retweeted

Ajoje⚽⚖️

@israel_ajoje

4 months ago

In January 2018, Manchester United signed Alexis Sanchez from Arsenal. No transfer fee changed hands. It was a swap deal with Henrikh Mkhitaryan going the other way, so United fans celebrated what felt like a free signing of one of the Premier League's best players at the time. Here is what it actually cost them. Sanchez's base salary was reported to be £391,000 per week. On top of that, he received a £75,000 bonus for every game he started, plus a £6.7 million signing-on fee. United also paid £5 million in agent fees to his representative. By the time United paid him £9 million just to rip up the final two years of his contract and make him go away, the total bill for a player who scored five goals in 45 appearances came to over £66 million. The "free" transfer ended up costing more than most actual transfers. That is part 3 of many, and that is exactly what we are unpacking today. The wage bill. Are you with me? Good. The transfer fee of a player is never the full picture. Not even when you add it to the base salary.. When you read that a player earns £200,000 a week, that figure is almost always the gross amount before tax. Premier League players pay income tax at 45% on all earnings above £125,000. But it is not just the player paying. The club carries employer National Insurance contributions on top of the gross salary, currently at 13.8% with no upper cap for high earners. So a £200,000 per week salary is not a £200,000 per week cost to the club. It is closer to £228,000 per week once employer NI is factored in. If you run that across a full year and over a year, you have added over £1.4 million to the cost of one player's salary before a single bonus has been paid. The country a player is in makes this even more complicated. In Spain, for example, the top income tax rate sits at 52%, which is why Real Madrid had to pay approximately £600,000 per week just to put £288,000 per week in Cristiano Ronaldo's pocket during his final years at the club. The player takes home less than half of what the club actually spends on wages. This is one of the structural reasons why clubs in France and Spain have historically struggled to match Premier League offers pound for pound. The tax environment is not just the player's problem. It is built directly into the competitive landscape of every league. Clubs suffer it too. Now let us get into the extras, because this is where the real money hides from the headlines. Sign-on fees are paid upfront, sometimes before the player has kicked a single ball for the club. They compensate for the absence of a transfer fee in situations of free transfer , or simply reward the player for choosing one club over competing offers. Signons are usually huge. They sometimes are as high as transfer fees. Over the course of his four and a half year contract at United, Sanchez was expected to earn £108 million in wages alongside a reported £20 million signing-on fee. That is a combined commitment north of £125 million on a player who arrived for “free”. Then there are appearance bonuses, which clubs use to incentivise performance but which can spiral out of control when a player underperforms. Sanchez reportedly received a £75,000 bonus for every game he started at United, on top of his base salary of £391,000 per week and an annual signing-on fee of £1.1 million for every year of his contract. When you give a player such a contract and he is underperforming, what you are basically doing is paying for presence, not impact. And when a player of that calibre delivers five goals in 45 appearances, every single one of those appearance bonuses feels like money poured directly into a drain. Let us do the full cost calculation of a transfer together. I want to show you something. Take a £50 million signing. He demands £150,000 per week. That is about £7.8 million per year in base salary. Add employer NI and you are at roughly £9 million per year. Over a five year contract that is £45 million in wages, already almost matching the transfer fee. Add a £8 million signing-on fee, realistic appearance bonuses over the contract totalling maybe £3 million, agent fees on both sides of the deal at roughly £6 million combined, and you are already past £110 million on a player whose headline cost was £50 million. The number in the press was less than half the story. This is why the clubs that win long term are not always the biggest spenders. They are the ones who read the full cost of every player before a single decision is made, not just the fee, but the wages, the tax environment, the bonus structure, and the five year total commitment attached to every name on the shortlist. Part 4 is next. We will be getting into agent fees and commissions, who really pays them, how they are structured, and why the same agent can legally represent both the player and the buying club in the exact same deal. It will be up by 12pm WAT today. Don’t miss it. My name is Ajoje. I am a FIFA Licensed Agent and International Sports Lawyer. I write on the Law and Business of Football, a lot. Repost and Follow if you want to read more posts like this.

israel_ajoje's tweet photo. In January 2018, Manchester United signed Alexis Sanchez from Arsenal. No transfer fee changed hands. It was a swap deal with Henrikh Mkhitaryan going the other way, so United fans celebrated what felt like a free signing of one of the Premier League's best players at the time.

Here is what it actually cost them.

Sanchez's base salary was reported to be £391,000 per week. On top of that, he received a £75,000 bonus for every game he started, plus a £6.7 million signing-on fee. United also paid £5 million in agent fees to his representative.

By the time United paid him £9 million just to rip up the final two years of his contract and make him go away, the total bill for a player who scored five goals in 45 appearances came to over £66 million. The "free" transfer ended up costing more than most actual transfers. That is part 3 of many, and that is exactly what we are unpacking today. The wage bill.

Are you with me? Good.

The transfer fee of a player is never the full picture. Not even when you add it to the base salary.. When you read that a player earns £200,000 a week, that figure is almost always the gross amount before tax. Premier League players pay income tax at 45% on all earnings above £125,000.

But it is not just the player paying. The club carries employer National Insurance contributions on top of the gross salary, currently at 13.8% with no upper cap for high earners. So a £200,000 per week salary is not a £200,000 per week cost to the club.

It is closer to £228,000 per week once employer NI is factored in. If you run that across a full year and over a year, you have added over £1.4 million to the cost of one player's salary before a single bonus has been paid.

The country a player is in makes this even more complicated. In Spain, for example, the top income tax rate sits at 52%, which is why Real Madrid had to pay approximately £600,000 per week just to put £288,000 per week in Cristiano Ronaldo's pocket during his final years at the club.

The player takes home less than half of what the club actually spends on wages. This is one of the structural reasons why clubs in France and Spain have historically struggled to match Premier League offers pound for pound.

The tax environment is not just the player's problem. It is built directly into the competitive landscape of every league. Clubs suffer it too.

Now let us get into the extras, because this is where the real money hides from the headlines.

Sign-on fees are paid upfront, sometimes before the player has kicked a single ball for the club. They compensate for the absence of a transfer fee in situations of free transfer , or simply reward the player for choosing one club over competing offers. Signons are usually huge.

They sometimes are as high as transfer fees. Over the course of his four and a half year contract at United, Sanchez was expected to earn £108 million in wages alongside a reported £20 million signing-on fee. That is a combined commitment north of £125 million on a player who arrived for “free”.

Then there are appearance bonuses, which clubs use to incentivise performance but which can spiral out of control when a player underperforms. Sanchez reportedly received a £75,000 bonus for every game he started at United, on top of his base salary of £391,000 per week and an annual signing-on fee of £1.1 million for every year of his contract.

When you give a player such a contract and he is underperforming, what you are basically doing is paying for presence, not impact. And when a player of that calibre delivers five goals in 45 appearances, every single one of those appearance bonuses feels like money poured directly into a drain.

Let us do the full cost calculation of a transfer together. I want to show you something.

Take a £50 million signing. He demands £150,000 per week. That is about £7.8 million per year in base salary. Add employer NI and you are at roughly £9 million per year. Over a five year contract that is £45 million in wages, already almost matching the transfer fee.

Add a £8 million signing-on fee, realistic appearance bonuses over the contract totalling maybe £3 million, agent fees on both sides of the deal at roughly £6 million combined, and you are already past £110 million on a player whose headline cost was £50 million. The number in the press was less than half the story.

This is why the clubs that win long term are not always the biggest spenders. They are the ones who read the full cost of every player before a single decision is made, not just the fee, but the wages, the tax environment, the bonus structure, and the five year total commitment attached to every name on the shortlist.

Part 4 is next. We will be getting into agent fees and commissions, who really pays them, how they are structured, and why the same agent can legally represent both the player and the buying club in the exact same deal. It will be up by 12pm WAT today. Don’t miss it.

My name is Ajoje. I am a FIFA Licensed Agent and International Sports Lawyer. I write on the Law and Business of Football, a lot. Repost and Follow if you want to read more posts like this.

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jaymehta_18 retweeted

Ajoje⚽⚖️

@israel_ajoje

4 months ago

This one is a football accounting gem. I promise you will love it. In January 2023, Chelsea signed Mykhailo Mudryk from Shakhtar Donetsk for £88.5 million. The deal was jaw dropping on its own. But what really made the football world stop and stare was not the fee. It was the contract length. Eight and a half years. The longest contract in Premier League history at the time. Journalists questioned it. Rival clubs complained about it. And most fans had absolutely no idea what Chelsea were actually doing. But let me tell you. They were not being reckless. They were doing math. Very clever, very deliberate, very legal math. And the tool they were using is called amortisation. This is part of what football insiders consider during transfers. Are you with me? Good. Here is the simplest way to understand amortization. When a club signs a player, they spread the accounting of the cost of the transfer fee over the period of the contract signed by the player. So for example, when Harry Maguire signed for Manchester United in 2019 for £80 million on a six year deal, that did not show up as an £80 million expense in year one. It worked out as an annual amortisation cost of £13.3 million per year. That is the entire concept. Think of it the same way you think of a mortgage. You do not pay the full value of a house on the day you move in. You spread it. Football clubs do the exact same thing with players, and it is not a trick or a cheat. It is standard accounting practice used across every industry in the world. Check it. It's International Standard 38- used for accounting for intangible assets. The reason it matters so much in football is because of Financial Fair Play and Profitability and Sustainability Rules, which regulate how much clubs can lose in any given period. Amortisation costs are added to the profit and loss account each year, so the lower your annual amortisation figure, the healthier your books look. And here is where contract length becomes a weapon. Now let us do the math together. By using amortisation to complete Mudryk's transfer, Chelsea were able to record his £80 million fee as just £9.41 million per year for UEFA's FFP calculation. Had they signed Mudryk to a four year deal instead, his fee would have been recorded as £20 million per year. Same player. Same fee. More than double the annual accounting cost just by changing the contract length. That is the power of what Chelsea figured out. They did the same with Enzo Fernandez, signed for a then-British record of £106.8 million on an eight and a half year deal, which translated to an annual amortisation expense of approximately £13.4 million. And Moises Caicedo for £115 million on eight and a half years. And Wesley Fofana for £70 million on seven years. Repeat this across an entire squad and a billion pounds of spending starts to look manageable on paper. Did you get that? Now let's look at another part of amortization- the book value piece, because this changes how you think about every transfer you have ever watched. Book value is the difference between the transfer fee spent on a player minus what has already been amortised. For example, after two years, a £50 million player signed on a five year deal has a book value of £30 million. Any sale above £30 million is recorded as a profit. Anything below is a loss. This is why clubs can sell a player for what looks like a loss and still report a gain in their accounts. Take this example: a player is signed for £40 million on a five year contract. He is not a success and is sold two years later for £26 million. At the point of sale, his book value is £24 million, meaning the club actually books a £2 million profit on the deal. Fans see terrible business. The accountants see a gain. Same transaction, completely different reality. Manchester City lived this with Robinho. He was bought for £32.5 million on a four year deal in 2008, with annual amortisation of £8.1 million. He was sold after two years, leaving a book value of £16.3 million. City sold him for £18 million and claimed a £1.7 million profit on the sale. Supporters spent years calling it a disaster. The finance department called it a profit. There is one more trick worth knowing: contract extensions. If a player signs a new contract during their existing deal, the remaining unamortised value is spread over the length of the new contract. So if you bought a player for £60 million on a five year deal and after two years you extend his contract by three more years, the remaining £36 million book value is now spread across five new years instead of three. That reduces the annual amortisation cost and can reduce FFP losses by millions per year. Extending a contract is not always about keeping a player happy. Sometimes it is purely a financial decision dressed up as a vote of confidence. Back to Chelsea. Other clubs eventually complained loudly enough that UEFA had to act. UEFA amended its Financial Sustainability Regulations in July 2023, introducing a rule that limits the amortisation of player registrations to a maximum of five years, regardless of how long the contract actually runs. The Premier League followed in December 2023, when shareholders voted to apply the same five year maximum to all new or extended player contracts going forward. The loophole was closed. But crucially, the rule could not be applied retrospectively, meaning every player Chelsea signed on those long contracts before December 2023 continues to be amortised over the full contract length. Chelsea were already finished with their biggest spending windows by the time the door was shut. The timing was not a coincidence. As I conclude, always remember this- the contract is never just a contract. It is an accounting instrument. And the clubs that understand that are always three moves ahead of the ones that do not. I hope you enjoyed this. Tomorrow, by 7AM WAT, We get into the wage bill, and why a £50 million transfer can quietly become a £150 million commitment before you have blinked. Thanks for reading. My name is Ajoje. I am a FIFA Licensed Agent and International Sports Lawyer. I write on the Law and Business of Football, a lot. Repost and Follow if you want to read more posts like this.

israel_ajoje's tweet photo. This one is a football accounting gem. I promise you will love it.

In January 2023, Chelsea signed Mykhailo Mudryk from Shakhtar Donetsk for £88.5 million. The deal was jaw dropping on its own. But what really made the football world stop and stare was not the fee. It was the contract length. Eight and a half years. The longest contract in Premier League history at the time.

Journalists questioned it. Rival clubs complained about it. And most fans had absolutely no idea what Chelsea were actually doing.

But let me tell you. They were not being reckless. They were doing math. Very clever, very deliberate, very legal math. And the tool they were using is called amortisation.

This is part of what football insiders consider during transfers.

Are you with me? Good.

Here is the simplest way to understand amortization. When a club signs a player, they spread the accounting of the cost of the transfer fee over the period of the contract signed by the player.

So for example, when Harry Maguire signed for Manchester United in 2019 for £80 million on a six year deal, that did not show up as an £80 million expense in year one. It worked out as an annual amortisation cost of £13.3 million per year.

That is the entire concept.

Think of it the same way you think of a mortgage. You do not pay the full value of a house on the day you move in. You spread it. Football clubs do the exact same thing with players, and it is not a trick or a cheat. It is standard accounting practice used across every industry in the world. Check it. It's International Standard 38- used for accounting for intangible assets.

The reason it matters so much in football is because of Financial Fair Play and Profitability and Sustainability Rules, which regulate how much clubs can lose in any given period.

Amortisation costs are added to the profit and loss account each year, so the lower your annual amortisation figure, the healthier your books look. And here is where contract length becomes a weapon.

Now let us do the math together.

By using amortisation to complete Mudryk's transfer, Chelsea were able to record his £80 million fee as just £9.41 million per year for UEFA's FFP calculation. Had they signed Mudryk to a four year deal instead, his fee would have been recorded as £20 million per year. Same player. Same fee.

More than double the annual accounting cost just by changing the contract length. That is the power of what Chelsea figured out. They did the same with Enzo Fernandez, signed for a then-British record of £106.8 million on an eight and a half year deal, which translated to an annual amortisation expense of approximately £13.4 million.

And Moises Caicedo for £115 million on eight and a half years. And Wesley Fofana for £70 million on seven years. Repeat this across an entire squad and a billion pounds of spending starts to look manageable on paper.

Did you get that?

Now let's look at another part of amortization- the book value piece, because this changes how you think about every transfer you have ever watched.

Book value is the difference between the transfer fee spent on a player minus what has already been amortised.

For example, after two years, a £50 million player signed on a five year deal has a book value of £30 million. Any sale above £30 million is recorded as a profit. Anything below is a loss. This is why clubs can sell a player for what looks like a loss and still report a gain in their accounts.

Take this example: a player is signed for £40 million on a five year contract. He is not a success and is sold two years later for £26 million. At the point of sale, his book value is £24 million, meaning the club actually books a £2 million profit on the deal. Fans see terrible business. The accountants see a gain. Same transaction, completely different reality.

Manchester City lived this with Robinho. He was bought for £32.5 million on a four year deal in 2008, with annual amortisation of £8.1 million. He was sold after two years, leaving a book value of £16.3 million. City sold him for £18 million and claimed a £1.7 million profit on the sale. Supporters spent years calling it a disaster. The finance department called it a profit.

There is one more trick worth knowing: contract extensions. If a player signs a new contract during their existing deal, the remaining unamortised value is spread over the length of the new contract.

So if you bought a player for £60 million on a five year deal and after two years you extend his contract by three more years, the remaining £36 million book value is now spread across five new years instead of three.

That reduces the annual amortisation cost and can reduce FFP losses by millions per year. Extending a contract is not always about keeping a player happy. Sometimes it is purely a financial decision dressed up as a vote of confidence.

Back to Chelsea. Other clubs eventually complained loudly enough that UEFA had to act. UEFA amended its Financial Sustainability Regulations in July 2023, introducing a rule that limits the amortisation of player registrations to a maximum of five years, regardless of how long the contract actually runs.

The Premier League followed in December 2023, when shareholders voted to apply the same five year maximum to all new or extended player contracts going forward. The loophole was closed. But crucially, the rule could not be applied retrospectively, meaning every player Chelsea signed on those long contracts before December 2023 continues to be amortised over the full contract length.

Chelsea were already finished with their biggest spending windows by the time the door was shut. The timing was not a coincidence.
As I conclude, always remember this- the contract is never just a contract. It is an accounting instrument. And the clubs that understand that are always three moves ahead of the ones that do not.

I hope you enjoyed this.

Tomorrow, by 7AM WAT, We get into the wage bill, and why a £50 million transfer can quietly become a £150 million commitment before you have blinked.

Thanks for reading.

My name is Ajoje. I am a FIFA Licensed Agent and International Sports Lawyer. I write on the Law and Business of Football, a lot. Repost and Follow if you want to read more posts like this.

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Jay Mehta @jaymehta_18

over 1 year ago

@DeepDav51948709 @zerodhamarkets Even if they try this (let alone succeed), it is huge!

jaymehta_18 retweeted

Attacking Football

@AttackingFooty

over 1 year ago

🚨To You, Marcus Rashford: The Dreamer Who Made Us Believe ✍️@yassineihab93 pens a tribute to Marcus Rashford, amidst uncertainty around his future, to dispel some common myths Read the article below 👇 https://t.co/AvcLRI0rM8

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Who to follow

Ronak Mehta

@RonakMehta10

Manchester United ❤️ / Amature Pundit / Anime / Music / Movies

Yash Parekh

@yash_parekh_18

Chartered Accountant 🇮🇳 • Certified Public Accountant 🇺🇸 • Manchester United ❤️ • Mumbai Indians 💙

Viraj Doshi

@virajdoshi90

Manchester United❤ | Qualified Actuary.

jaymehta_18 retweeted

Premier League India @PLforIndia

over 1 year ago

🚨 GIVEAWAY 🚨 This Diwali, light up your home with this Premier League diya 🪔 To participate: - Like and repost this tweet - Tag three friends and follow @PLforIndia - User must be from India - Last day to participate is 23rd October We will be reaching out to 100 winners via DM. Good luck 🤝

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Jay Mehta @jaymehta_18

over 1 year ago

@PLforIndia @kushal0710 @virajdoshi90 @jatinsharma239

Jay Mehta @jaymehta_18

about 2 years ago

@RonakMehta10 lol

jaymehta_18 retweeted

UtdDistrict

@UtdDistrict

about 2 years ago

🎙️ | Casemiro: "Today, I played as a defender. We have six defenders. H [Harry Maguire] was injured. "He played injured this game. Since the beginning [of the game], he was injured. He played injured in the last match." [TNT Sports]

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jaymehta_18 retweeted

🌋

@UTD_Kem

about 2 years ago

Marcus Rashford, that run didn’t go for nothing ❤️ https://t.co/DRtmAaMsw1

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jaymehta_18 retweeted

@MarcusRashford

over 2 years ago

Few things I would like to say … https://t.co/aSqm8m3TXJ

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jaymehta_18 retweeted

Manchester United

@ManUtd

over 2 years ago

Richly deserved, @HarryMaguire93 👏🔴 #MUFC || #PL

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Jay Mehta @jaymehta_18

over 2 years ago

It just feels so great looking at this resurgence from HM. Also specially when you have absolutely backed him like always!! No matter what happens ahead this season, this feels like a big win for me ❤️

Fabrizio Romano

@FabrizioRomano

over 2 years ago

🔴 Harry Maguire is the Premier League Player of the Month for November.

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Jay Mehta @jaymehta_18

over 2 years ago

A must watch!!

पाटील™

@patilji_speaks

over 2 years ago

जगण्याचा एवढा निरागस आनंद लुटता यायला हवा❤️🙏

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Jay Mehta @jaymehta_18

over 2 years ago

The first line (‘reached an agreement in principle…’) sounds sooo like a football transfer announcement!!

OpenAI

@OpenAI

over 2 years ago

We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D'Angelo. We are collaborating to figure out the details. Thank you so much for your patience through this.

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Jay Mehta @jaymehta_18

over 2 years ago

@ManUtd 👀

Fabrizio Romano

@FabrizioRomano

over 2 years ago

🚨🇲🇽 EXCL — Chicharito Hernández on new challenge: “I’m evaluating projects in MLS, Europe, Mexico and also Saudi Arabia”. “I came back stronger, more resilient and eager to continue enjoying football. My knee is great”. Chicharito, available as free agent as he left LA Galaxy.