6 Nov 2010

LFC transfer spending: Proof from DELOITTE that the figures I use are *correct*

I regularly post articles examining Liverpool's transfer spending in relation to other clubs, and despite always backing up my figures with documentary evidence, I still get people refusing to accept the figures, arguing that they are incorrect, trying desperately to prove that I've got it wrong. This sometimes even involves people deliberately spreading lies about the figures in a warped bid to discredit me. Well, I will now prove once and for all that the figures I use are correct.

Why do I feel compelled to write this article? I'm sick of people spreading lies and misinformation across the net, falsely arguing that I get the figures wrong. I don't have time to respond to every person trying to discredit my figures, so I will respond with this post. Then in future, I can just refer naysayers to this post instead of having to endlessly waste my time.

Just this week, I was in a discussion with a few people on the messageboards of the official Liverpool website, and they were adamant that the figures I was using to calculate LFC's transfer spending under Benitez were wrong. I explained over and over why the figures were correct but they just wouldn't have it.

There was another time recently where a poster on this site was arguing with someone on another site about the veracity of figures I'd compiled from the club accounts. The poster on the other site refused to believe that the evidence I posted from the accounts was real, even going so far as to argue I must have created the snippets myself (!).

Anyway, let's get down to it.

* Every analysis of transfers spending that I conduct uses figures from club accounts.

* Transfer spending is recorded in the accounts of ALL Premier League clubs in the 'Intangible Fixed Assets' section.

Here are a couple of examples:

Liverpool: 2006-7



Man United: 2003-4



THE ULTIMATE PROOF: DELOITTE

* Deloitte is one of the largest accountancy firms in the world. One of its specialisms is football finance, and over the years, the company has regularly audited the accounts of the UK's top clubs.

* Every year, Deloitte publishes its 'Annual Review of Football Finance', which is widely known as the the definitive guide to European football finance.

* I know my method of calculating transfer fees is correct because Deloitte - the world renowned experts on the subject - use the same figures. To illustrate my point, consider the following snippets from the accounts of Spurs and Man City:

Spurs Accounts: 2009



Man City Accounts: 2009



Note the highlighted figures:

* Spurs have have a gross spend of 119m for 2008-9.

* Man City have a gross spend of 138m

The following is a snippet from Deloitte's 2010 Annual Review of Football Finance:



My detractors can attack the figures I post all they like; they can choose to believe in subjective systems based on supposition and guesswork if they like (i.e. Paul Tomkins method of 'calculating' transfer spending) but none of that will change one simple fact: the only accurate analysis of transfer spending is that which uses figures take from club accounts.

Any other method/set of figures is, quite simply, wrong.

It's not about me proving that I am right - it's not me who's right; it's the CLUB that's right. I merely present the figures. Since there is so much false information out there, it's important that fans have the right information to hand in order to make informed decisions. One of the goals of this site is to reject supposition, guestimation and biased 'estimates' and provide these facts.

Despite this proof though, I'm sure my detractors will now question the veracity of Deloitte's figures (!). Or maybe Deloitte doesn't exist; maybe it's a company I made up...?

Click here for articles on transfer spending.

Jaimie Kanwar


23 comments:

  1. I'm sure there is a lot of research put into Tomkins analysis. I think what you miss is that Paul is trying to put spending into context and not just reporting figures, which let's be honest, anyone can do if they want to put time into it.

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  2. Jaimie is a weapon10:17 pm, November 06, 2010

    Get a girlfriend, stop this verbal masturbation you will go blind, or your Tongue will fall out

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  3. No - no one is reporting the *correct* figures, that is the point. Not one LFC source has got the figures right. If anyone could do it then why has no one done it?!  I don't have a problem with Tomkins analysis per se; however, he holds his figures out as factual; he has denigrated my figures before (!) yet his are all based on guesswork and mine are facts!  And then we have people going around spouting his figures as fact when it's just not true.  Accuracy is important.

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  4. You really are well up your own behind aren't you!
    I'n sure your a manc or a bitter who posts in disguise.
    Oh & predicting your reply-yes you obviously are THE most astute finacial analyst of LFC, so much so that NESV must hang on your every word...............believe that to the same level most people believe your ramblings.

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  5. Jamie your articles are facinating and i hope you continue to blog and express your thoughts.   Thoroughly agree with all your Benitez spending thoughts and comparison with Manu and Arsenal.  The problem with liverpool the past 20 years has been ineffecitve management. We have spent more net and gross yet we have no titles to show for it. Enough said. Nobody can deny the facts Jamie

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  6. he loves the how many goals man u have scored in injury time stat the best,manc

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  7. Hi Jamie, 

    Keep it up what you do, i've always known the amount spent has been a joke over the years, and i've said countless times its because of very poor management. If people want to be blind to the figures and to whats going on in the real world then fine, let the idiots live in fantasy land :) . They only live behind their stupid posts on lfc boards. I wouldnt even waste my breath. 

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  8. As a qualified financial accountant, I can tell you definitively you cannot absolutely state the complete transfer dealings from the financial statement of a company as you are trying to do. You are half right in the approach you are taking, but you are not familiar with finanial standards and the purpose of accounts to analyse them correctly. The only way you can state the absolute details of a contract is by looking at it. Deloitte may have that access, but I am afraid that the financial statements only provide the true and air position at a date in time, and there are rules to how and when income can and should be presented. There are strict rules governing revenue recognition and how and when to present assets in the financial accounts. If you want to gain a better understanding, look at preovision, contingent liabilities and contingent assets. Whilst I dont always agree with your approach to writing articles and the tone you take in them, I appreciate that you do put a lot of time and effort into them, but you are wrong in saying that you are using the "correct" figures. Even your argument above is incorrect. If you look at the figures in the deloitte information, the gross spend is £138m, and net is £125, but you the method that you are promulgating as correct, additions less disposal = net gives a net of £109m. I am not starting an argument here, I am stating fact based on my professional knowledge.

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  9. I think Tomkins' analysis method is an interesting tool for comparison of older and newer transfers; no-one would argue that Dean Saunders was a good signing even though his transfer fee now looks relatively small compared to more recent signings. However Jamie is clearly correct that the media often reports erroneous transfer fees and these fees are often assumed to be correct even though they are quite easy to check.  It appears Tomkins has fallen foul of this trap too on a number of occasions (Krompkamp is an excellent example that almost everyone seems to get wrong). Definitely Tomkins' transfer index would benefit greatly from better accuracy in the original transfer fees, especially as these fees are often multiplied many times by inflation for comparison purposes in his index.

    Jamie I think the example you give of Man City and Spurs raises an interesting question: In 08-09 both clubs had relatively similar gross spends, but I'm sure Man City had a much greater net spend.  Could this be an example of a case where net spend gives a better reflection of the ability to strengthen the squad and backing given to the manager compared to gross spend?

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  10. Hey Jamie,

    Forgot to thank you for your Arsenal - Liverpool comparison.

    Just wondering - any chance you could do an overall spending comparisons from 1990-2010 of, say the top 5 clubs in Europe and compare them to Premier League clubs that you've already done?

    In particular I'm thinking Real Madrid, Barcelona and the two Milan Clubs. I dont know if you can get hold of their accounts, but even if you can base it on reliable figures that would be awesome.

    I used to have a VERY different opinion of your website in times gone by, but I very much admire the work you do now, always unique, original and very interesting.

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  11. Hi Jamie I always love your articles because you bring up some very interesting points that can lead to good debates. The only problem is you get alot of dimwits replying back to you who disagree with you but cant back them up with valid points.

    Going back to your argument regarding money spent..which is what this article is really about. I would like to give another perceptive on it, but before I do I would like to say I trust your figures are correct.....Plus I dont agree with your notion of disregarding net spending but I will even let that go to and ultimately it is a known fact which no one can argue with there has been alot of money spent unwisely by our previous managers.

    But to the defence of these managers I would like for you to look at the other side of the coin for once. Liverpool are not the only team in the league to spend big money over the years other teams are guilty of this to from the top four teams to teams lower then giving leeds, newcastle and tothenam as only few examples.

    It is true point that we could have done better over the years but we could have done alot worse to. So all the fans slating liverpool management and board, you have been looking up to much it is wise to look down sometimes to.

    And Jamie can you please do me analysis of a average league finish of the top teams in the premiership over the past ten years and trophy won. I think if you link that to money spent then you get a better picture of success rate of a manager.

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  12. The shame is that Liverpool missed out by 4 points for that title. If benitez had just got those extra points no one would give a crap about these figures. Interesting to compare other clubs including arsenal. Doesn't really matter how much they spent they've not really won anything at all since Benitez won the CL. I wonder if arsenal fans would care about net/gross spending had they won it? Wonder if any club really cares about it? Benitez's spending seems to be the only one anyone cares about. What abou spurs' shocking bad spendin and management for example? Or city's?

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  13. Deloitteful figures!

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  14. I still believe Houllier was the one primarily responsible for the clubs woes sure his squad won a C.L. title but many of those players had no real sell on value or depth.
    I think the majority of Benitezes spending originally was to replace gaping holes and many of his cheapies because of lack of funding ended up costing the club large amounts.
    The side is really where it is because of the departures of Alonso and Mascherano and four windows operating at a profit.
    I would have thought after the 2008/2009 season topping up with an extra quality striker was a mere formality but even now that extra player has failed to emerge.
    I like some fans do believe these new owners will spend wisely but with the current predicament can the club attract talent without paying overs ala Man City though not to that extent obviously.
    No champions league will hurt and though i will give credence to your figures but i do ask 1 question that is how much of the talent chased by Liverpool were not interested and did god forbid the club have to settle for what they could get?
     Being fans many of us still believe many of the best have ambitions of wanting to come to Liverpool maybe that is not so and has not been for a while.

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  15. Can only speak for myself, but I am not interested in the other clubs you mention, hence I don't search for reports about these clubs. There may well be reports and/or blogs out there highlighting the bad spendings of those clubs, but as we support Liverpool we won't automatically come across those.

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  16. ;) :'( 8-) :( :* :* :* :-D =-O =-X :-$ :-P :-E *DONT_KNOW*

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  17. Delliotte are a limited liability partnership and not a company. It's you interpretation of the 'facts' that is incorrect

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  18. Yes accuracy is important, but its something you continually fail to produce.

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  19. Hey Jamie,

    I've gone thru your articles about the gross and net spend issues, and especially the ones when it comes to Benitez transferspendings. Now I do agree with you that gross spend is "real" money and that there is many issues as when PT and others mentioning the fact of netspending.
    As an example used with an property in one of the articles, you buy a house for 100K and after 6months time you can sell that property for say 130K, you still need a new house to live in so you buy a house for 180K. A total netspend of 50K.
    Problem with Benitez spending was that yes he sold his "house" and due to market value in the transfermarket he had to buy a players at 130K bracket. This is also called netting in the financial world.

    So since a players value is going up and down due to performances on the pitch, example: Alonso - LFC wanted to sell him in 2007/08 for £20m, but no one wanted to pay that amount for him. Next season after he was sold for about £30m? Because he had a tremendous season behind him - there is still no argue that Alonso was a worse player the year before no is there? But still his value raised with £10m during a season.

    Your own articles show that during the era of H&G reign at Anfield a netspend of £7-10m has been spent - which means that the club was being kept alive, but not allowed to develop. A real bad business decision because if they would have kept spending money on LFC - i think in the end they would have made so much more money than they now did and at the same time been remembered much better.

    Problem with any sport but football in particular, it's a business like a cardealer - a very few people make money out of selling cars - Because the same second you ignite the engine and drive of the cardealer you lose value.
    You can try to enchance the value of the car, by tuning, buying rims, adding a audiosystem, re-conditioning the car, etc etc.. but in the end it is a losing end.

    I am not trying to defend Benitez in this post or so, because I wanted him out more than anyone else - he wasn't spending the money wisely anymore and always complaining in the media with things that should have been dealt within the boardroom, and the results wasn't really getting better and better a season, it was the opposite.
    But if you can't add value when you buy prospects and keep in tail with the market value - you'll start with a castle and end up with a barn!

    Peace and keep up the good work!

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  20. What about net spend? Why havent you made that comparison? The issue I have seen raised with your analysis is on amount recouped.

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  21. What about net spend?  Every transfer spending comparison includes net spend figures.  What's your point?

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  22. you said that deloitte and you concurred on gross.

    What about net spending (or money recouped)

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