Summer mercato 2020

[porcho]

@Nfermo, by saying using the credit card, I meant  banking your next year revenue on the current transfer campaign.

I should have explained it better, i.e. inter spent money they didn't have while basing it on a forecast that they'll make x amount. Now to illustrate my point, they bought luakaku and Barella on the credit card (their payment is due this year or the next), they planned to pay up based on many variables  (which it changed and it impacted their balance sheet). Guess who is in trouble when obligation gets activated?

I hope I made myself clear.

You give me the impression that football is an independent entity and it does not get affected if the onwer's main business isn't doing okay. Remember how the lawsuit on Silvio destroyed our club and we were never the same again? Football isnt self-sustaining and it won't be until something change with the way this industry is operating. When the onwer isn't doing OK the money fountain will run dry and the club will struggle.

Now outside of football, how do you see the impact of this world crisis?

Tv and Matchday money isnt the whole revenue of a football club, they are the main contributing inlets but not the whole thing. Sponsorship and commercial revenues are going to be significantly lower.

What you're saying is true. Lucky for inter, Suning is doing well... Except... it doesn't matter when it's the owner doing well and not the club because of FFP. They're stll overloaded. If the season gets cancelled I'd expect a huge push on trying to sell Icardi plus some others in the bid to get the money needed to pay for this seasons purchases.

your wording was wrong(credit card) but the idea was correct. we've done the same with many of our deals. look at Kessie for example. He was paid for start of the season because of the deal we made. Spreading the cost of players is smart, if you're basing it on current income. the Fact Inter overspent hoping for some success in CL and incoming revenue is risky. I mean they've still got Icardi to sell but not sure he'll now go for the 100m they were wanting and needing. so they will have to sell some other players in order to pay those guys off.

Gazidis knows where is the money in EPL, if Newcastle wants kessie then he's going for more than 40m straight sale.

Forget everton, they won't pay.

I get that but I'd rather not push it. jsut sell the guy. haha

[Hitman]

I could sit here and pull apart every piece of what you wrote but let me just say this. if you think that top clubs are that poorly organised that they can't take a hit without going bankrupt then you're living in a fantasy land. Just because Milan was run that way, does not mean that other clubs are. *1

On Suning... Sunings success has nothing to do with Inter's compliance with FFP. *2

On Gazidis and Poch. I really don't care what Gazidis did at Arsenal. At Milan he's stopped us spending on a top coach leading Maldini and Boban getting Giampaolo and Pioli. I'm not saying that it's not necessary. It is. Because so far we've got no new revenue streams so need to work on curbing spending. 

On your response to Nefremo. That first line says it all. It shows you do not understand how businesses run. They do not run on Imagination or hopes and dreams. They run on careful, calculated moves based on PAST HISTORY. *3

Also. There is no logic in your discussion. So... clubs will be that worse off that they'll be selling players off at 50% yet somehow Milan will be unaffected and will not have only 50% to spend? With all the FFP issues we've had. With no new incoming revenue. We'll somehow still have 100m to spend? And what? Use the money from selling Gigio, Suso, Kessie, etc for the same price Pre Covid. 




Calf Injury? WE shoul entertain keeping him around for depth and his leadership.
Achilles Injury? I'd put money on him retiring. Achilles injuries suck and take a long time to fully recover. At his age, it could well be something that could take him out for way too long.


Great! now we can make a move for him. 

*1 - I did not at any time say that the Top clubs will go bankrupt. I mentioned that clubs from the Top European Leagues will get hurt badly - but bankruptcy is the extreme case. Some clubs will face that reality but I reiterated that the most impacted clubs will be those outside the Top clubs. Everyone will take a hit and you’ll see that there’ll be budget costs announced after the season ends for almost all clubs. ‘Taking a hit’ could be a 20m loss or a 200m loss, the size of the hit isn’t the same for each club so we can’t generalize.

*2 - Correct - FFP and having the cash are two different things. I did not once claim that Suning’s (nor PSG’s nor City’s) FFP books will be healthy. I stressed that these ‘companies’ who have money incoming outside football will be likelier to survive than other ‘companies’ who are solely into football. In any case, UEFA has already officially announced that FFP for this year will be discarded or ‘ignored’ so that FFP isn’t the concern here nor was it the point I was making. It’s the actual survival of the clubs that’s in threat. The vast majority of these clubs can’t care less now about UEFA/FFP because 90% of these clubs don’t even make it to European football.

*3 - No past history has ever taken into account the current existing conditions of today’s market which leads to the sensible conclusion that his analysis isn’t based on actual contextual data. His ‘historical data’ is out of context in this case as it never accounted for a stop in football due to viruses. You’ll need to go back to 1940s and 1920s to get more relatable data if you want to compare consequences, but that was such a long time ago that the market was completely different... leading us to the main bottom line - we have never faced a situation like this before and no one really knows that impact of it. People are just speculating on what may happen. Everyone will have an opinion these days, that’s what the internet’s for. There are however opinions that are just simply blatantly impossible and that’s very clear to see.

While my opinion may be completely wrong, it’s simply a discussion. I share my insight based on my experience in the world and it might shed some light for the others. How the majority of football clubs will survive the next 2-3 seasons is a huge cloud. Their struggles will inevitably be reflected in the transfer market I believe.

Let’s say for example that Man United has debt of $250m (number inaccurate, just for example) today that’s meant to be paid over 5 years. The EPL revenue package today for the 4th-7th club in EPL will earn the club around $150-160m a season. They also have match day revenue of at least $6m per match. For the remaining 10 matches in the league, they’ll lose out on $60m that was projected and if the league doesn’t continue - they would not have a huge chunk of the $150m. That’s $210m in one season only taking into account the match revenue + TV rights. If they don’t make their debt payment this year, Man Utd can also face a future that Milan faced, it can go to whoever lent them the debt. How do you think they’d be able to afford that payment without the TV rights deal? 

Not sure what line of work you are in, but it's clearly not finance/accounting/acquitisons/etc. 
"Some creditors may be lenient and some won't"??? 
This is simply NOT how things work.

You are comparing Milan's/Lee's situation with Elliot with Manchester United. This could not be any further away from reality. Lee left the club as collateral. When he defaulted on the repayment of the loan, Elliot could legally come in and repossess the club. These types of loans (ones that have collaterals like this) are very very very very very very rare and Lee was stupid enough to do it, simply because he had NO business owning Milan. He didn't have the means nor the money. He was in too deep. You can bet your ass United does not have the club as a collateral for ANY of their debt. How do I know that? They are publicly traded. There is ZERO chance this is the case. So, NO, their creditors can NOT repossess the club. They can put liens on assets, etc....but these are things that sometimes take years to materialize through courts. It is in nobody's interest to do this. Not for the club and not for the creditor. 

In United's case (and I know you only used them as an example, so I'll just continue with it)....IF United defaults on their loan repayments (including the interest payments), several things can/will happen:
1) United will negotiate to restructure the debt. 
This option is THE #1 option for EVERYONE, including the creditor. Believe it or not, Elliot (who you used as an example) is the odd example here. 99.99999% of creditors don't want to own football clubs or repossess these clubs (EVEN if they could do it, and i'll tell you that most of them can't legally do it anyway without a provision like Elliot's). This costs a TON of money and time and even more and more investment. Just "ask Paul Singer" as you say as Milan currently is costing him a shit ton more than he lent Lee...and the value of the club is still not where he wants it to be in order for him to make money worthwhile. 
So, chances are that United will be able to restructure their debt.....and listen to this......even borrow MORE MONEY from the same creditor even...hence at a higher interest rate and more strict commitments. This may sound crazy...but they'll be able to pay off the old debt, with NEW debt. Why? Because it's in the creditor's interest for the club to keep moving as a "going concern" and NOT, (this is very important), NOT devalue the club by selling off it's most prized assets. 

2) IF #1 doesn't work (99% of the time it does work since it's in the best interest of everyone concerned)....than you go to court. This is a process that can take a long time and nobody really wants to go through...but it's necessary sometimes. Mediation will happen and the parties will negotiate how to restructure the debt. (similar to #1, but this is done with outside parties and actuaries) Assets will be valued and at this point...it's all up in the air and anybody's guess. But more often than not...creditors will be ok with companies to keep moving forward and operate as normal, as long as they get a large chunk of the "new shares". Now...again, very important....these shares are only worth a lot (and worth enough in order to return the money lent) if assets keep operating and keep providing revenue. In other words...it would not make sense for United to sell off their most prized assets since the new shares given to the creditors will be worthless at that point anyway. 

3) Liquidation...


I'm sorry man...but you are just completely wrong and talking out of your ass on this one. 

*1

Now think of the pressure that the management is enduring to pay their debts this year. Do you think they’ll continue paying Alexis Sanchez $20m a season? Do you think they’ll continue to splash $80m on a Maguire kind of player? They’ll be under pressure to get rid of unwanted players with high expenses and they’ll want to sell ASAP. Of course now losing that TV rights revenue is unlikely now given that the EPL realized that it is inevitable and necessary to finish the season. Ligue 1 for example will not get their TV rights deal in full because they finished the season abruptly.

I don't disagree here. But there are several different things we're talking about. Alexis Sanchez was not needed in United prior to Covid-19 anyway. So, in other words, he is NOT an asset that's bringing revenue in. Why would they keep him. In their restructuring of their expenses, Alexis will FOR SURE be the first one to go. BUT, if we are talking about an asset that's central to their plans and has been on the forefront of their team helping bring in revenues...than no, they will not just let them go or sell at huge discounts (Neymar being an example).

*2


Saying ‘unless teams are forced to sell’ indicates that you’re of the opinion that these clubs will be the exception. What we’re trying to tell you is that the vast majority of clubs will be forced to sell to stay afloat. Only the top 10-20 clubs in world football will be able to sustain this... The top clubs in turn will take advantage of this situation and buy from other clubs at bargains. If the PSG bid of 50m for Icardi is true, then that is evident of what I’m implying. Firstly, both of these clubs would be considered in the ‘healthy tier’ of clubs and PSG bidding 30m less than the option price of 80m shows you that PSG believe in Icardi and are testing Inter’s financial resolve with a cheeky bid. This of course is only a rumor. My main points though are about how difficult this crisis will be for the other 98% of the market.

Again, not correct. Majority of the clubs will NOT be forced to sell to "stay afloat". NOT in the top 5 European Leagues. Therefore, those that might be (and i'm sure there will be some...but there are always some every summer, Covid or not) forced to sell WILL be the exception. The notion that "majority of clubs will be forced to sell to stay afloat" is simply not correct. Selling isn't the be all end all of staying in business. Who are you going to sell to?????? Who, if everyone else (majority, as you say) is in the same situation as you? Who will have the money to buy and to provide these salaries and transfer fees???? 
What you are suggesting is unrealistic!

What you are not understanding is that selling top players at discounts is THE ABSOLUTE WORST way for clubs in financial hardship to get away from it. Not when this is an EXTERNAL factor and yes, believe it or not, things will eventually get back to normal. So the first things that clubs facing financial hardship will do, at least in this first transfer window or two, is going to be to restructure and renegotiate their debt and expenses. 

*3

You are also assuming that Milan is just OK. That others will be in financial hardship while we can just go in like a bunch of bosses and buy up their most prized assets at discounts. Completely unrealistic. You are unaccounting for the fact that Milan is also going to struggle financially. Elliot is not here to burn money. They've already done that. They are here to get the club to be self sustaining, raise revenues (build a stadium at that), and therefore raise the value of the club. 

So while you are right that the entire market will adjust and that we will not see 100+ mil transfer fees for a little while....the market will adjust across the board due to everyone's revenues shifting in a downward trend. So the simple way to think of this is....if we couldn't afford player X prior to the pandemic...chances are we can't afford player X now either, devalued or not. 

*1 - You are correct about Man Utd’s actual situation. I only used them as an example when in fact Man United is only one of a few football clubs worldwide that is publicly traded. So Man United as a company in itself is an outlier so their situation is different. However for other clubs who are owned privately, it all depends on who the creditors are whether they are banks or private companies. You then mentioned three points as possibilities if a club couldn’t pay. My argument was solely based on #2. Some clubs who are facing tough creditors, will struggle to pay back. Their assets will be stripped off (whether it is the club’s assets or the ownership’s private assets, whoever took the debt basically). These assets outside football also impact the football ownership. Ask Silvio Berlusconi. 

The end of his era at Milan all started with that fine of ~585m euro. Nothing related to football right? But look at how Milan badly bled since then. Sold Ibra + T.Silva and the rest is history. Berlu’s fine has nothing to do with the lack of debt repayment though, I’m just showing you how a single fine to a company can destroy a legacy like Finninvest’s Milan. 


*2 - Well why was Alexis bought in the first place? Why was Maguire signed for 80m? Because the market at that time allowed them to make those kind of investments. Today, after this crisis, the market will be impacted and these kind of deals will not be made anymore - agreed? Buying players like Joao Felix for 120m, Dembele and Coutinho for 130m+ will not be happening for the next few transfer markets. 

Offloading these players even at low prices will be important for survival. These ‘assets’ aren’t directly revenue generating, however they come with tremendous amounts of fixed expenses. Holding on to these assets means also holding on to their expenses. It would be wiser to just get rid of those expenses and get whatever they can for those players and raise cash to be able to invest in a more functional player to the squad. What prevented distressed clubs doing that at a loss more regularly was FFP - which has been scratched for 2020.

What impact do you think those things will have on the transfer market? It should drop it down don’t you agree?


*3 - Selling players for discounts is the absolute worst thing for a club Even if that price already was overvalued? 

Let’s take an example of a realistic situation, not just theory.

You are the CEO of a club

Club currently doesn’t currently have enough cash to pay the salaries of their players, staff and workers. They can afford this month’s payment but not next month’s. They will not have match revenue until the end of the season due to closed stadiums (10 matches let’s say). These clubs already have enough debt and could not make those payments from next month onwards.

What will you do to offer your players and staff players for the upcoming months? How will you pay your existing expenses for the land/stadium? How will you continue to repay back your debts with projected revenues that’ll never come anymore?

A) Take more debt - which every club in world football will want. Will banks just agree to finance the crisis for the football clubs? Leads to a bigger question - if banks help support football, will they do the same for other sports? Food industries? Agriculture sector? What about the other affected industries?

A1 - Take debt from a new bank might be unlikely because everyone will want one
A2- Take debt from private sector who definitely will have tougher terms

In every case, to even sit down with the bank to restructure your debt will take a very long time because of the number of businesses worldwide affected and wanting to do the same. Until you meet with them, negotiate, agree, get the new funds, how long do you think that will take? Will your employees and staff be able to eat until then? Will they be kicked out of their homes because they cant pay rent? What will you do as a CEO for your employees?

B) If you’re Lyon, and you valued Depay for 40m, but now all you can get is a bid of 25m and no other player at Lyon can get this much.

If your annual wage bill is 12m, would you not accept sacrificing one player in order not to sell the other 4 who’s values may all increase in following years? 

As a CEO of this company, if sacrificing this one player could save you from getting new debts and save the insurmountable damages to the lives of the rest of your employees. Would you take it?


Why does any company in the world make a discount? Isn’t it the same concept? Raising much needed cash for other more necessary requirements.


The first players to have discounts and leave their clubs will be the overvalued ones. The players I mentioned in the first post, Dembele/Coutinho for example. The values I specifically mentioned are cheeky bids that we should make. Of course they would not accept it in hindsight, but it would test their financial resolve. The clubs who are more stressed financially will be the clubs likelier to accept discounts.

[Hitman]

Fiorentina CEO Joe Barone expects a different transfer market, full of loan and swap deals: “The smaller clubs will experience moments of difficulty.”

The Viola director spoke to Sportbusiness.com about the upcoming transfer market in Italy and a proposed salary cap, like in America.

“The introduction of a salary cap has been present in America for some time and our President [Rocco Commisso] has been talking about it,” Barone said.

“To see it in Europe too, FIFA must make a decision. It must be the same rules for all and not different for each League.”

He fears that the smaller clubs will be affected greatly due to the pandemic, that may lead to a decrease in value of their star players.

“Because of this crisis, we will have a completely different market. There will certainly be more loans and many exchanges of players.

“We will have to be careful because the players value might go down in this period. The smaller clubs will experience moments of great difficulty in this period and we must help the system, not exploit it.”

Football-Italia

[GeoTav]

The best players will still be out of our reach this summer (and the following ones), even with a discount.

But the best guys of the smaller clubs, guys like De Paul from Udinese, Boga or Berardi from Sassuolo, or even Tonali from Brescia (especially if they go to Serie B) should definitely be worth an offer, a smaller offer just to try these clubs. Taking this kind of players from smaller clubs is what Juventus used to do, but with higher prices compared to what could become this year.

If FFP is really cancelled this summer, we should also take profit of that just to reinforce seriously / wisely build our next team (without overpaying any player) ...

[nefremo]

@Lebanese

The situation (in and outside of football) is going to be (and already is) devastating. It's hard to tell how long recovery would take.....but that will depend on each individual government. Businesses will need governmental help. I think creditors and banks will be very lenient in this situation. Also because everyone is in the same boat. Some companies will go under, for sure. So far, those companies have only been ones that were struggling financially prior to this pandemic to begin with as well as the ones that had very little cash reserves. However, if this continues, even stable companies will struggle as they are burning through cash. 

In theory, things should return to normal quicker than after a "self-inflicted" economic recession for example. But that's never guaranteed. 

Governments will need to help out big time here. Banks/Creditors will only be willing to lend out more cash and restructure the current lent out amounts, if the government makes "cheap cash" available to them (low or in some cases no interest cash available to banks). It's all interconnected with governments at the forefront. It's going to be interesting where football is viewed in all this. I hope they don't make classify it as a "secondary" business because it provides so many jobs and it needs the same attention as factories and restaurants for example. 





On the rest of the conversation with Hitman....I wanna make it clear that I don't disagree completely. Clubs will struggle, sales will have to be made, revenues will be lost, etc, etc. Some clubs may even go under. I'm still of the opinion that clubs will be helped because it's in nobody's interest for them to sell off big assets at huge discounts or god forbid go under. Keep in mind....this is based on an opinion and an expectation that things will recover within a year or two. In that case, it's better to operate at a loss...but operate nonetheless...as the expectation is that the asset values will recover and revenue will be re-captured again. But that whole conversation took a separate turn and it kind of got away from the main points. 

The main part I was arguing was that we won't be able to make big acquisitions because we are more or less in that same boat. If possible, I'd love for us to take advantage of this....but I don't know. I'm not that hopeful. HOWEVER, in the situation that we are in (horrible situation for a club like Milan obviously)...we don't necessarily need to take top players from other clubs. Maybe we can take some of their "lesser" players for lower value and this could be possible. Let's take Dani Ceballos for example. Last summer Real demanded 40mil or something like that....I wouldn't be surprised if they'd be willing to sell 20 this summer. To be clear...I'm not saying we should go for him....but the point is that players of this standing are the ones we could possibly acquire. I still don't think we can acquire the top players, discount or not. 

We'll see what happens. I'd actually love to be wrong. It will mean that we'll sign Coutinho/Dembele this summer and I would absolutely LOVE that. But like I said...I'm not very hopeful and I don't believe we are able to sign players of that stature right now.

[nefremo]

The best players will still be out of our reach this summer (and the following ones), even with a discount.

But the best guys of the smaller clubs, guys like De Paul from Udinese, Boga or Berardi from Sassuolo, or even Tonali from Brescia (especially if they go to Serie B) should definitely be worth an offer, a smaller offer just to try these clubs. Taking this kind of players from smaller clubs is what Juventus used to do, but with higher prices compared to what could become this year.

If FFP is really cancelled this summer, we should also take profit of that just to reinforce seriously / wisely build our next team (without overpaying any player) ...

Agree.

[Lebanese]

This guy has "beyond the pitch" podcast, it was run by Rossoanto a famous rossonero. Now its solely dedicated to English football and united, here is something he tweeted about dembele and coutinho.

Everybody working in football seem to think that players will be sold for a breakeven value or even little loss.

If you consider the amortization for the contract of the player then they might be available for cheap.

P.s: this does not mean we will benefit from those cases as our next potential hire thrives for an unknown and under the radar players.

[nefremo]

If Dembele is available at 37mil pounds (41mil Euros) (I believe Mirror and The Sun, which are higly ubreliable I think, run this story last week) than it's a bargain. Seeing as Barcelona bought him for 100+mil plus add ons that would bring that price close to 140mil...I don't know that this rumour is true. What I could see is Barcelona loaning him out to get his salary expense off their books, depreciate him for another year on the books, and slap on some kind of buyout option that will bring the sale closer to at least a break even point a year from now.

As I said before...Ralf can actually help us with Dembele. Players that played in Germany have a high opinion of Ralf and they'd probably love to work with him in order to rediscover themselves. Dembele might be in this boat. I hope we can pull something like this off. I really don't think it's realistic seeing as other clubs will be very interested too...but who knows. I'd love to be wrong on this one.

1v1 Dembele is almost unplayable. Has the much needed pace that we need. The downside is the injuries....but Ralf is big on this and has a very good track record in keeping players fit and off the injury table. Maybe he can do magic with Dembele. A move like this would be massive for us.

[porcho]

The main part I was arguing was that we won't be able to make big acquisitions because we are more or less in that same boat.


I'd actually love to be wrong. It will mean that we'll sign Coutinho/Dembele this summer and I would absolutely LOVE that. But like I said...I'm not very hopeful and I don't believe we are able to sign players of that stature right now.

Dembele is pretty much the only bigger name I think is a possibility. Not because he'll come at a bargain basement price, but because, as you've touched on, Rangnick might convince him to come. Although I think it would end up being on a loan with option type scenario. I still can't see him going for 40m though. At 40m there would be plenty after him then why would he choose us? 
Same goes with most of those other players. IF they do go up for sale at super cheap prices, why would they choose us when there would be many other top clubs after them that could offer bigger Salaries and CL football.

My biggest issue with his whole comment is it's pretty much based on everyone else being hit and us somehow being exempt from that same economic hit.

Agree.

+1

[Sleeping Giant]

Even if Dembele/Coutinho are available at cheap rates, Milan can't beat the competition from other big clubs due to lack of UCL and these player high salary demands.

Don't chase the Mirage.