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Higuain Move To Arsenal
Anton (Arsenal) 3 years ago
Guys let me tell you what I think about the Higuain deal....

For starters I think it is a done deal for multiple reasons. Juve's director stated that "To my knowledge, Higuain is already elsewhere". No.2 Djourou had number 20 at the club and he leaves number 20 vacant which is Higuains number(put two and two together). No.3 He has been seen in London multiple times. And finally Juve have now signed Tevez from Citeh.

The reason for it not being announced on arsenal.Com?

Basically the Arsenal financial year end is 30th of June each year. What that means is that any announcements of costs or expenses (e.G transfers) before that date, will HAVE TO be included in the June 2013 financial accounts as per international financial reporting standards.... Therefore a 22m transfer in that period significantly deteriorates our profit for the year, especially considering the transfers of Santi, Giroud and Monreal also fall in this period (total 30 million).

Now why would this be important? This coming season is the first season where financial fair play rules come into play.... If a club makes income statement losses for more than one year in three (on a rolling basis), it will not be allowed to participate in uefa competitions the following year. I think that our accounts are such that if the transfer is announced before the year end, we would show a loss which is pointless for only a few days delay.

Note that profit or loss has nothing to do with the cash balance. One affects the income statement, the other the balance sheet. FFP looks at annual performance so it looks at the income statement (year by year), not the balance sheet (which is cumulative). So all in all, yes we do have massive cash reserves, but most of those relate to income from prior years, so although we can spend all of them without affecting the balance sheet asset position too much, spending all of them would still result in a loss in the income statement for the year; therefore causing us to fail FFP compliance....

Now here is where it starts to come together: next June we are getting the official sponsorship deals from Puma and Emirates. This revenue will 'belong' to the financial year ending 30 June 2014, so even if we spend 60m on players from 1 July 2013 onwards (and given current spending and revenues being maintained elsewhere), this will be offset by thus income next summer, and we could still report a profit in the income statement next year and again comply with FFP.

Now why are those cash reserves so vital? Although the revenue from the sponsorship deals relates to the whole financial year end 2014, in cash terms it will be received in June NEXT year. No matter how you look at it in profitability terms, that wouldn't allow us to make transfers this year, simply because we wouldn't have the cash actually in hand to spend it. The only reason we can actually make these transfers is because of the massive cash saved up so far.

So basically what I am saying is that I don't expect transfers to be announced before July 1st NOT because of the official transfer window opening that day (podolski was announced in April anyway), but because it doesn't make financial sense for us to do so before our financial year end.

Case in point, Yaya Sanogo deal is widely reported to be complete, but that hasn't been announced either for the same reason. Although a free transfer, any signing on fees would have again impacted June 2013 accounts....

So yea... That's my two pence.... A few more days patience won't kill us lads. They are coming.

Long read but worth it

Sources for info:




Hikmat (Real Madrid) 3 years ago
Top quality post. Makes loads of sense.    +1

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