Boehly is going to ruin Chelsea (hopefully)

It's a loophole like any other loophole.

The tax is full of them which tax advisors utilise to help their clients avoid paying tax. Tax avoidance isn't illegal, tax evasion is. The Government bring in rules to close up the loopholes so that the tax can't be avoided.

This is player amortisation avoidance, using the rules to their advantage. The PL have simply closed up the loophole to stop teams exploiting it.
 
Wait, what? We hate Chelsea now and want it to be ruined?

I am rather them be decent and we beat them than we beat them only because they turned into garbage? Or have we given up on us being decent, ourselves?

I know why I hate Liverpool, Arsenal, and City. When did Chelsea thing happen?
 
Surely that's daft on his part? 68m in ten years time will not be worth the same as it is during his contract, there must be some kind of stipulation in that contract?
 
yumtum said:
Surely that's daft on his part? 68m in ten years time will not be worth the same as it is during his contract, there must be some kind of stipulation in that contract?
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It's because he wants the team to sign other players so they are competitive. Also California has extremely high state income tax, so he could make up a significant portion by either moving back to Japan or to a state with a lower tax burden.
 
NewGlory said:
Wait, what? We hate Chelsea now and want it to be ruined?

I am rather them be decent and we beat them than we beat them only because they turned into garbage? Or have we given up on us being decent, ourselves?

I know why I hate Liverpool, Arsenal, and City. When did Chelsea thing happen?
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When we became title rivals in 2003.
 
yumtum said:
Surely that's daft on his part? 68m in ten years time will not be worth the same as it is during his contract, there must be some kind of stipulation in that contract?
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Are you saying due to inflation earning the better half of a billion will not be enough 10 years from now?
 
TheMagicFoolBus said:
It's because he wants the team to sign other players so they are competitive. Also California has extremely high state income tax, so he could make up a significant portion by either moving back to Japan or to a state with a lower tax burden.
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It was probably something like 450m for 10 years or 700m in years 11 to 20.
 
TheMagicFoolBus said:
It's because Shohei gets something like $40m per year in endorsements and doesn't want to use up the entire salary cap himself - and on top of that once he's done playing he can move out of California and not have to pay high state income taxes on the deferred part of his salary.
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That's a really good point - feels like Messi-level of tax dodge ;)
 
jadajos said:
Are you saying due to inflation earning the better half of a billion will not be enough 10 years from now?
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@TheMagicFoolBus that makes sense, but I can't see the IRS being happy with that

And jadajos, yes, 680m over the next 10 years will be worth much more than it would be in 19 years, not just in monetary value like compound interest, inflation etc, but also opportunity value too, finally, $2m a year isn't THAT much in L.A.
 
yumtum said:
@TheMagicFoolBus that makes sense, but I can't see the IRS being happy with that

And jadajos, yes, 680m over the next 10 years will be worth much more than it would be in 19 years, not just in monetary value like compound interest, inflation etc, but also opportunity value too, finally, $2m a year isn't THAT much in L.A.
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He gets something like 40m in endorsements per year. He'll be fine.
 
Acrobat7 said:
He gets something like 40m in endorsements per year. He'll be fine.
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Well, I'm not that clued up on how it works over there, but yeah, he'll be fine regardless, all I'm saying is that money today is worth more than money tomorrow.
 
Berbaclass said:
Of course you did, you are just arguing in bad faith.

You used the loophole to circumvent the FFP rules by amortizing your contracts over a longer period, clearly allowing you to spend more.
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Are you certain that it’s only Chelsea that have been doing it?

It’s hardly a “loophole” though. It’s standard accounting practice to write off assets over their expected useful life. If a club gives a player a seven year contract and is able to demonstrate that it’s reasonable to believe the player will be useful for seven years, then it seems the correct thing to do.

If the player turns out early on to be a bad fit for the club/league, or just shit, and with limited resale value, presumably an additional write down would need to be made there and then.
 
yumtum said:
@TheMagicFoolBus that makes sense, but I can't see the IRS being happy with that

And jadajos, yes, 680m over the next 10 years will be worth much more than it would be in 19 years, not just in monetary value like compound interest, inflation etc, but also opportunity value too, finally, $2m a year isn't THAT much in L.A.
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The IRS only does federal income tax - which would be the same everywhere. In the US, you pay both federal and state tax - the latter of which varies between states considerably (e.g. 12% in California versus 0% in states like Texas and Florida). It's been confirmed that any money paid post-deferral would be subject to the state tax rate wherever he'd be located in the future (or to no state tax if he lives in Japan).
 
MegadrivePerson said:
Not just Chelsea but the Dodgers too, he offered Shohei Ohtani a 10 year contract worth 700 million but has now changed it in to a 19 year contract as below.
2024-2033 $2 million a year
2034-2043 $68 million a year!

Ohtani 'to defer' £541m of historic Dodgers deal (msn.com)
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You could say it is pension. Just a way to stay on right side of economics. Problem in this case will be after 2033.

In Chelsea case with 8 year signings. They will have big problems in few years if they don't start winning or improve players with those big contracts so they can sell them.
 
TheMagicFoolBus said:
The IRS only does federal income tax - which would be the same everywhere. In the US, you pay both federal and state tax - the latter of which varies between states considerably (e.g. 12% in California versus 0% in states like Texas and Florida). It's been confirmed that any money paid post-deferral would be subject to the state tax rate wherever he'd be located in the future (or to no state tax if he lives in Japan).
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Well, that makes complete sense on his end then, fair play to him.

Wasn't there another baseball player who had a huge deferred contract in the 90s that recently came to an end? American sports have some weird contract situations.
 
yumtum said:
Well, that makes complete sense on his end then, fair play to him.

Wasn't there another baseball player who had a huge deferred contract in the 90s that recently came to an end? American sports have some weird contract situations.
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You may be thinking of Bobby Bonilla? From wikipedia:

After his subpar 1999 season, the Mets released Bonilla, but still owed him $5.9 million. Bonilla and his agent offered the Mets a deal: Bonilla would defer payment for a decade, and the Mets would pay him an annual paycheck of just over $1.19 million on July 1, starting in 2011 and ending in 2035, adding up to a total payout of $29.8 million.[20][21][22] Some fans refer to these payments on July 1 as "Bobby Bonilla Day". Mets owner Fred Wilpon accepted the deal mostly because he was heavily invested with Ponzi scheme operator Bernie Madoff, and the 10 percent returns he thought he was getting on his investments with Madoff outweighed the eight percent interest the Mets would be paying on Bonilla's initial $5.9 million. As a result, the payout was a subject of inquiry during the Madoff investment scandal investigation when it came to light in 2008.[23] Bonilla also has a second deferred-contract plan with the Mets and Baltimore Orioles that was initiated in 2004 and pays him $500,000 a year for 25 years.
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Berbaclass said:
Debateable. The fact that nobody else decided to follow suit says a lot.
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Because it's a stupendously high risk/reward. Most Chelsea fans are already fantasy selling half of the players they will still be paying for (on the books at least) another 7 years. It doesn't help, that unlike in the Roman era, they seriously overpaid for almost all of them too.

Stunned they voted against it. Just scared of anything unique sometimes. There's nothing here no other team couldn't do if they wanted to take that risk.
 
JPRouve said:
You undersold Othani. It's an elite slugger and pitcher, he is closer to Maradona than Mbappé.
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Yeah I was trying to use a current player as an example and Mbappe was the closest I could think of in terms of the best talent in the world. It’d be like if Chelsea signed Mbappe and he agreed to a 10k a week contract for the next 8 years but in that 9th year Chelsea would have to pay him £300m, or a staggered payments of £25m a year for 12 years after he’s left the club.
 
Revaulx said:
Are you certain that it’s only Chelsea that have been doing it?

It’s hardly a “loophole” though. It’s standard accounting practice to write off assets over their expected useful life. If a club gives a player a seven year contract and is able to demonstrate that it’s reasonable to believe the player will be useful for seven years, then it seems the correct thing to do.

If the player turns out early on to be a bad fit for the club/league, or just shit, and with limited resale value, presumably an additional write down would need to be made there and then.
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This. Anyone who says otherwise doesn't know a thing about basic accounting.
 
Revaulx said:
Are you certain that it’s only Chelsea that have been doing it?

It’s hardly a “loophole” though. It’s standard accounting practice to write off assets over their expected useful life. If a club gives a player a seven year contract and is able to demonstrate that it’s reasonable to believe the player will be useful for seven years, then it seems the correct thing to do.

If the player turns out early on to be a bad fit for the club/league, or just shit, and with limited resale value, presumably an additional write down would need to be made there and then.
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Every single club amortises their signings on their books. The difference is they just don't do it over 7-8 year deals like us but rather the more typical 4-5 years.

But yeah I don't think it counts as a 'loophole' to do it over a longer period. The only thing it's allowed us to do is frontload our spending and squad building but if every single penny of that money will still go on the accounts eventually anyway how can it be considered cheating/loopholing?

It's a risky strategy that might pay off or it might not but it's definitely not cheating. We're already seeing some of the risks in the strategy materializing with some of our long term signings not doing so well, not to mention already having been stuck with Kepa Arrizabalaga (signed a 7 year deal in 2018) for years with very little return and being impossible to sell him off due to the high remaining book value.
 
I mean, it's very obviously a loophole, it's the very definition of it. Dunno why people are getting annoyed by it - it's not cheating though, well not for such contracts made before said loophole was closed.
 
I don't see any talented players out there other than Palmer. How can you spend a billion and look worse than you did 18 months ago. They're the only club with worse recruitment than us.
 
I mean this truly from the bottom of my heart, feck this shit fecking team.
 
Gabriel Djemba-Bebe said:
I don't see any talented players out there other than Palmer. How can you spend a billion and look worse than you did 18 months ago. They're the only club with worse recruitment than us.
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It's very weird. Apparently Boehly did make signings by himself but eventually did get people in to handle the recruitment. I'm starting to wonder though if Boehly is still in charge and has just been signing people he thought seemed good.
 
Who's worse the Glazers or Clearlake?

The flaw at both clubs is they have no idea what they're doing.

Man, it's a tough one...
 
My kingdom for a Saudi bid for Sterling in January. Good fecking grief.

He's genuinely a worse version of Willian both in terms of actual talent and also decision-making, which is mind-blowing.
 
Tyrion said:
It's very weird. Apparently Boehly did make signings by himself but eventually did get people in to handle the recruitment. I'm starting to wonder though if Boehly is still in charge and has just been signing people he thought seemed good.
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I wondered if that was still the case, as there wasn't much of a shift towards sensible signings last summer.

Need an upgrade on Kepa? Sign Brighton's 3rd choice keeper.
Need a centre forward? Sign Nicolas Jackson for 20m and no one else in that position.
Already have Caicedo, Enzo and Gallagher? Sign Lavia for 58m.

All the signs in the summer pointed another dysfunctional Chelsea team and that's why I predicted them to finish outside the top 7. Another bottom half finish could be on the cards at this rate.
 
Mb194dc said:
Who's worse the Glazers or Clearlake?

The flaw at both clubs is they have no idea what they're doing.

Man, it's a tough one...
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To be fair we have won multiple leagues and a CL under the Glazers.
Somehow
 
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