Shels players not getting their wages?

[Bald Student]

It's 12 years since I sat in an economics lecture myself, and 13 for an Accountancy one, but I still wouldn't be able to use chronology to explain away such a basic misunderstanding.

I think you've all learned not to cite Student Mullet as an expert witness so.

[ColinR]

It's 12 years since I sat in an economics lecture myself, and 13 for an Accountancy one, but I still wouldn't be able to use chronology to explain away such a basic misunderstanding.

i think the length of time since your last accountancy lecture has caused time to confuse you on the meaning of certain accountancy terms. i think your best bet is to use chronology to explain it

anyway, on the p&l account, all operating income/revenue is reported under the term 'turnover' in accordance with FRS 3 - Reporting Financial Performance. (international financial standards have come in for listed companies, however as all eL clubs are unlisted than FRS, which are merging with IFRS, still remain approriate.) The basis of the make up of this turnover figure then has to be disclosed within the accounting policies in the notes to the accounts within the financial statements.

The figure would basically incorporate all income the club (company) receives (including sponsorship, merchandise, gate receipts etc), and the turnover policy should also declare this. As i have siad previously in this thread, this figure then becomes very important, and is the most realistic simple figure to obtain a cap. If you can only spend 65% of your turnover on wages, no football club in the country should find themselves in financial difficulties.

profit is not a feasable figure to use at all, because a club is doing very well if it is breaking even. a hybrid figure composing balance sheet items, should definately not be used, as this would be open to manipulation.

[anto eile]

Elaborate please?
We can all make remarks and then not back them up!

I happened to use a nightclub because the person i was specificly refering to was called Dr Nightclub or something along those lines!!

Anto Eile,almost everytime you post,you insult someone,i dont know if its jealousy because the club you support is sh*t,be it in the control of the 400 club or anyone but whatever it is,it doesnt add to any of the points you make!

your nightclub analogy is stupid. comparing your club to a nightclub is stupid.if you dont see that then god love you, thats all i can say.
why would i be jealous?i support the most successful team in the EL

[Anto McC]

your nightclub analogy is stupid. comparing your club to a nightclub is stupid.if you dont see that then god love you, thats all i can say.
why would i be jealous?i support the most successful team in the EL

So Basically,you cant elaborate!! Its stupid because you say so and thats enough,is it

And God does love me,thanks for your concern

[dcfcsteve]

The figure would basically incorporate all income the club (company) receives (including sponsorship, merchandise, gate receipts etc), and the turnover policy should also declare this. As i have siad previously in this thread, this figure then becomes very important, and is the most realistic simple figure to obtain a cap. If you can only spend 65% of your turnover on wages, no football club in the country should find themselves in financial difficulties.

I beg to argue the opposite.

Turnover is basically 'all the money that comes into a company'. That's the basic concept.

It therefore doesn't in any way reflect how much of that money is actually the company's own money, or indeed how much of that income/revenue is being paid straight back out again in costs.

Contrary to your assertion that a salary cap based on turnover should prevent financial difficulties - such an approach could actually create them. If a club has higher non-salary expenses/costs than its turnover - i.e. they are already paying out more than they bring in - why should they then be allowed to sink even further into debt by spending up to 65% of their turnover figure on salaries ?? This just doesn't make any sense whatsoever, and for some clubs would eb a recipe for further debt/bankruptcy. Do you see the limitation in the approach your suggestion ?

profit is not a feasable figure to use at all, because a club is doing very well if it is breaking even. a hybrid figure composing balance sheet items, should definately not be used, as this would be open to manipulation.

Nonesense. Firstly, you're saying that we should accept that Irish football will always involve debt, poor financial practice and shoddy accounting. All clubs should at the very least be breaking even - not at the very best. I can't believe that you're supporting the use of untenable financial practices. Secondly, a number of our clubs already make a profit at the moment. Not a spectacular one, but some money left in the piggy bank come season's end nonetheless.

What exactly is "a hybrid figure composing balance sheet items".....?

If you're worried about any figures being used for manipulation, then using turnover as your base figure will not only fail to tackle this - it will leave it more open to manipulation. The more gross the figure you use, the more room there is for that figure to not be a true snapshot of a club's financial situation - and turnover is the grossest financial figure there is.

There shouldn't even be a debate about club's only breaking even at best. A salary cap will aim to stop this tin-pot, mediocre, financial mismanagement of clubs spending what they want regardless of their income. It will only achieve this if it is based on a sensible measure of a club's financial performance - and as I've exemplified above, turnover is simply just not such a figure.

[ColinR]

I beg to argue the opposite.

Turnover is basically 'all the money that comes into a company'. That's the basic concept..

ok apologies in advance for i'm going to sound condescending, but i do understand where your coming from, but your are simply misunderstanding accountancy terms

Turnover is not basically 'all the money that comes into a company'. turnover is the total income rec'd from the sources which are disclosed in the accounting policy on turnover in the company's accounts. all other income that a company receives is shown as 'other operating income' further down the p&l.

therefore as long as the fai issue an agreed and strict turnover policy for all clubs to follow, it is not an issue where the club is acting as an 'agent' as such.

Nonesense. Firstly, you're saying that we should accept that Irish football will always involve debt, poor financial practice and shoddy accounting.
..

where am i saying that????? i have consistantly said that a wage cap should be based on a % of turnover. turnover, as i have now explained to you, is not simple all the money that a company receives, but the money that it receives from specific sources which are detailed in the company's accounting policies in their financial statements, which can be set an agreed to by the fai and clubs.

a number of our clubs already make a profit at the moment. Not a spectacular one, but some money left in the piggy bank come season's end nonetheless. ..

i know some clubs are making a profit, whilst others are making a loss, but my point that profit level should never be used as a basis for a wage cap, simply because it is not a comparable figure, e.g if kilkenny make a €10k profit, whilst cork make a €5k profit, who should be allowed the greater wage budget?

What exactly is "a hybrid figure composing balance sheet items".....? ..

that point is simply that a wage cap should not be based on % of net assets, net current assets or even cash at bank, as believe me these are easier to manipulate than turnover

[SeanDrog]

I agree completely with ColinR

[higgins]

So can any UCD Bohs or Rovers fan let me know what the wages situation is now ???

Ive been away for the last few days and missed out on who walked out and who didnt get paid

[dcfcsteve]

Turnover is not basically 'all the money that comes into a company'. turnover is the total income rec'd from the sources which are disclosed in the accounting policy on turnover in the company's accounts. all other income that a company receives is shown as 'other operating income' further down the p&l.

Firstly, you're being very pedantic with your definition. In reality, most organisations treat turnover as the money/revenue they receive from their activities. As I stated before, that is the core of the concept. In practice, there are accounting conventions which ensure that the vast majority of organisations use comparable definitions of turnover. Otherwise, comparison between company's accounts would be meaningless (thereby impacting the ability to compare for investment purposes).

Secondly, saying that turnover is determined by each individual club themselves suggests that it isn't a level playing field from the start. The FAI may decide to legislate how a club should define its turnover - but that would take the FAI's involvement one step deeper, which I am personally not convinced they'd have an appetite to do.

therefore as long as the fai issue an agreed and strict turnover policy for all clubs to follow, it is not an issue where the club is acting as an 'agent' as such.

Sorry, but it is, and I'll give you an example. Derry City pay tax on gate receipts, whilst no clubs in the Republic do. Therefore, how would this be reconciled within the Turnover figure ? Unless you're making the relevant tax deduction from the attendances element of City's turnover, you'd in-effect be treating them more favourably by assuming they had more net-income than they do. That's the problem with Turnover - it's the 'Top Line' figure, after which deductions are made. It therefore doesn't reflect the individual reality at clubs.

where am i saying that?????

Here :

profit is not a feasable figure to use at all, because a club is doing very well if it is breaking even.

You're basically accepting financial mismanagement in Irish football (i.e. clubs living beyond their means and making a loss), by saying that rather than regulate against/prevent that, the FAI should instead just recognise it and alter their approach to the league to take it into account. That is completely the wrong way round of doing things.

i have consistantly said that a wage cap should be based on a % of turnover.

No you haven't. You've said it should be based on turnover - not a percentage of. This is the first time you've qualified and suggested distilling turnover down somewhat. What percentage are you suggesting should be used (i.e. what activities should be excluded from the Top Line) ?

i know some clubs are making a profit, whilst others are making a loss, but my point that profit level should never be used as a basis for a wage cap, simply because it is not a comparable figure, e.g if kilkenny make a €10k profit, whilst cork make a €5k profit, who should be allowed the greater wage budget?

That question answers itself. If Kilkenny City can run their football concern in a way that, once all moneys paid out are reconciled versus money coming in, they make twice the profit of Cork City, then of course Kilkenny should be allowed a higher wage cap ! Because they are in better financial shape ! The fact that they're lowly Kilkenny is irrelevant ! And how is profit not comparable ?? The principle here should be to recognise financial competence and prevent financial mismanagement, and as your example here suggests, turnover wouldn't in any way reflect the differing financial competence/management levels at Cork and Kilkenny in your given example. Until you factor-in the costs a club has faced in generating its turnover, you have no idea of how financially prudent that organisation is. If you do start to factor in those costs, then the figure you're dealing with is no longer 'turnover'. That is why it would be a disaster to focus a wage cap solely on turnover.

that point is simply that a wage cap should not be based on % of net assets, net current assets or even cash at bank, as believe me these are easier to manipulate than turnover

Who's mentioned assets ? A figure could be very easily used that didn't factor in assets - focusing instead more on operational/trading income, for example. All I've said is that Tuirnover is not the right figure - I haven't said which alternative is.

As for manipulation - if we go into this exercise assuming club's will manipulate it, then is there much point in doing it ? I expect independent auditing to be mandated by the FAI at some point as part of ensuring financial prudence and sensible management anyway. But if someone is absolutely determined to cook the boioks, they'll do it no matter whether a salary cap is based on turnover or not. If Enron could pull the wool over the eyes of a nation, I'd fancy my chances at leading the FAI a merry dance if I was so minded, regardless of what accounting definitions I was being asked to work within....

[pineapple stu]

Just a couple of observations without wanting to get too much into the debate.

Sorry, but it is, and I'll give you an example. Derry City pay tax on gate receipts, whilst no clubs in the Republic do. Therefore, how would this be reconciled within the Turnover figure?

Turnover is always exclusive of VAT and other tax. A better example of turnover causing problems would be Monaghan, who run a bar which probably brings in more than the football club (i.e. gate receipts, sponsorship, etc) - should this count as turnover? Should the profits from the bar count as turnover? How then do you split costs - such as rent - which are split between the bar and the football club?

If a club has higher non-salary expenses/costs than its turnover why should they then be allowed to sink even further into debt by spending up to 65% of their turnover figure on salaries ??

I assume (and knowing the FAI, it's a big assumption) that someone has looked at figures across football and across Ireland and determined that 35% of turnover is a reasonable figure to use to cover non-wage costs, which would be the highest cost by far for clubs. In that case, your argument has effectively been covered at the planning stage.

There's a bit in When Saturday Comes this month about wage caps, and it makes the point that a wage cap based on turnover can be circumvented by asking sponsors to pay part of a player's wages instead of giving the money to the club, who then pay the player. A wage cap is a good idea in principle - indeed, is vital if clubs keep on going the way they are - but is likely to be very hard to implement in practice.

[ColinR]

Firstly, you're being very pedantic with your definition. In reality, most organisations treat turnover as the money/revenue they receive from their activities. ....

sorry for being pedantic, but i am an auditor, if the organisations i'm auditing treat revenue which is not in agreement with the turnover accounting policy as turnover, then i raise an potential journal. if it is material and the client disagrees with this, it would lead to the qualification of the audit report. what other companies do does not concern me. if most organisations treat money/revenue they receive from their activities, then their accounting policy must allow them to do it. that is why i said earlier that it was important that the accounts were prepared and audited properly. you disagreed.

Sorry, but it is, and I'll give you an example. Derry City ...
....

irrelevant - turnover is VAT excl

You're basically accepting financial mismanagement in Irish football (i.e. clubs living beyond their means and making a loss), by saying that rather than regulate against/prevent that, the FAI should instead just recognise it and alter their approach to the league to take it into account. That is completely the wrong way round of doing things.
....

i fail to see where i am accepting financial mismanagement, your point makes no sense to me

No you haven't. You've said it should be based on turnover - not a percentage of. This is the first time you've qualified and suggested distilling turnover down somewhat. What percentage are you suggesting should be used (i.e. what activities should be excluded from the Top Line) ?
....

go to the start of the thread, see my original post: (you quoted this in your original reply - maybe you didn't read it close enough.)

the only way its sustainable for us is if the directors keep putting the money into the club.

the only way that it will be allowed under a 65% of turnover rule would be if the money is invested in the club as a donation/sponsorship etc (a form of income for the club) rather than a directors loan (debt!!).....

the 65% of turnover came from Galway Harps post, two posts earlier.

Until you factor-in the costs a club has faced in generating its turnover, you have no idea of how financially prudent that organisation is. If you do start to factor in those costs, then the figure you're dealing with is no longer 'turnover'. That is why it would be a disaster to focus a wage cap solely on turnover.

again i come back to limiting turnover to certain items based on a accounting policy. if the accounting policy limits turnover to gate receipts, advertising and sponsorship, prize money and merchandise sales. There is very little scope for expenses to be incurred in generating turnover. all other income such as bar profits, raffle income etc etc could be included in 'other operating income'. the costs of generating the turnover is simple administration expenses. they should be similar across most clubs.

Who's mentioned assets ? A figure could be very easily used that didn't factor in assets - focusing instead more on operational/trading income, for example. All I've said is that Tuirnover is not the right figure - I haven't said which alternative is.

i simply mentioned that i certainly wouldn't want balance sheet items being used. I know you you didn't say it. you are wrong IMO to dismiss turnover - (i believe a more complex formula would be better, but going into that would just lead to a long thread about accountancy issues, and i wouldn't want that )

If Enron could pull the wool over the eyes of a nation, I'd fancy my chances at leading the FAI a merry dance if I was so minded, regardless of what accounting definitions I was being asked to work within....

well the FAI could be tricked no doubt (rovers licence application last season comes to mind), but i would hope that auditors would be slightly more thorough than Arthur Anderson were at Enron.

[passerrby]

I cant believe their are people who go on to foot.ie to discuss accountancy, amazing debate ,and for the record in dublin a turnover is a loaf of bread.

[pineapple stu]

Just had a read of the thread in more detail there and had to point out the numerous absurdities in this post.

Turnover would be a ridiculous figure to base any salary cap on, because it would be frankly an irrelevant one.

Turnover is neither a ridiculous nor an irrelevant figure to use to decide top spending. Almost all major P&L ratios are based on turnover. Gross margin, nett margin, % of wages to turnover (a very common one)... Nothing is based on profit. Profit is one of the most useless and manipulatible figures going. In fact, in smaller companies (which all eL clubs would be), it's rarely used for any sort of ratio. Your problem seems to be that you have no concept of the idea "turnover", as demonstrated by...

An Irish football club could turnover €10m a year - but a large chunk of that might be money it is effectively collecting for other people (e.g. merchandise manufacturers, tax man, ground rent/gate-share etc etc). Why should they therefore be allowed to pay players more on the basis of money that isn't theirs ?

This makes absolutely no sense. Sure all money goes somewhere. By that logic, a club shouldn't be allowed spend money on wages because it's not theirs to begin with.

Also - if such a club's non-salary costs were higher than their turnover e.g. €11m, that would show the absurdity in using that figure.

If a club's non-wage costs are higher than its turnover, it's got serious problems enough without worrying about a wage cap. Such a scenario is so utterly implausible as to be meaningless in this debate.

'Trading profit' would probably be the ideal figure to use to get round this problem - though football being the business it is, it would mean that a lot of teams would have a zero or negative salary cap !

Remarkable. One of the stupidest suggestions ever on foot.ie - and you've actually said why in the very same breath!! In any case, trading profit excludes expenses like interest. So if a club was limited to spending trading profit (which is actually after wages, so you'd get a circular calculation for a start) on wages, they would by definition be loss making!!

Maybe you're trying to suggest that clubs should be limited to spending on wages an amount equal to their entire income less all their non-wage income. In that case, I think that's exactly what UEFA Licencing calls for at present (i.e. clubs shouldn't be making cumulative losses when insolvent.)

Turnover is clearly the basis for any wage cap. It's a case of how best to use it and how best to overcome the avoidance hurdles that's the question. Audited gate figures are absolutely essential for a start, but we can't even get that far at the moment.

[Ronnie]

Wage cap, on whatever basis, needs to be transparent enough that clubs cannot circumvent it. Anytime it was informally tried before the clubs with the most money at the time was always able to get around it.

[Mr A]

The FAI needs to come up with a formula for turnover that is fair, transparent and that can be applied to every club. They also need to bring in a set of sanctions that mean clubs will think long and hard before breaking these rules. Clubs found to be paying under the table should be drop kicked out of the league or relegated. If the penalties aren't severe enough then the clubs will keep taking chances.

[Bald Student]

I cant believe their are people who go on to foot.ie to discuss accountancy, amazing debate ,and for the record in dublin a turnover is a loaf of bread.

It's been a while since I've eaten one but even then, I don't think I could make such a basic error. A turnover is not a bread but a type of fruit filled pastry.

[TheOwl]

I once thought about putting Econmics down on my CAO form, man am I glad I didn’t , it seems really boring!

Fair play though lads, you could all be talking ****** but all this econmic babble at least looks impressive (fu*ked if I’m reading it all though)

[TheOwl]

So can any UCD Bohs or Rovers fan let me know what the wages situation is now ???

Ive been away for the last few days and missed out on who walked out and who didnt get paid

Careful Higgins, your boostfulness scares me, don’t go tempting fate.

[WeAreRovers]

It's been a while since I've eaten one but even then, I don't think I could make such a basic error. A turnover is not a bread but a type of fruit filled pastry.

Typical student, not a bleedin' clue. Turnover is a form of batch loaf, beloved of generations of Dubliners. In fact I bought one the other day in that poncy supermarket in Smithfield.

This is from the Bread Prices Order of 1952 -

http://www.irishstatutebook.ie/ZZSI183Y1952.html

" two-piece batch bread " means batch bread the dough of which, in the process of manufacture, is moulded in two pieces ; " turnover " means batch bread commonly known as turnover, grinder, carrick or lump bread ;

KOH

[placid casual]

this discussion has gone from shelbourne with no dough to bread with different kinds of dough ?
only on foot.ie