So how does loan with obligation to buy work? Is the obligation officially written in to the deal or is it dodgy gentleman's agreement stuff that only works because no one would dare piss off Mendes?
Manuel Ugarte | Romano - he’s signed | Awaiting Club announcement
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In the latest episode of the United Hour Podcast, Nik (@Rood) and Imran (@Annihilate Now!) are here to discuss three 1-1 draws.
The first got us knocked out of the FA Cup, the next puts us in a good position in our Round of 16 Europa League game, and the latest was an actual decent performance against Arsenal at Old Trafford.
All hopes for the season now rest on the Europa League - does Amorim have the squad to win it?
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Isn't it self explanatory ?
Well, not really, because why is it different to a normal deal with instalments?
OK fair will follow suit.
I know, that's why I said I would love it if it would have been loan with an option.
The fee gets booked next year as opposed to immediately
Loan with obligation to buy have always been a thing & it is self explanatory, and yes that can come with payment terms at the obligation stage
I would imagine there's a set of conditions for the obligation to trigger (or to negate it), though less so than an option.
Finance-wise I seem to recall UEFA count these pretty much the same as an actual transfer.
Finance-wise I seem to recall UEFA count these pretty much the same as an actual transfer.
Yes and why is this allowed to happen?
Florian wants to be that guy so bad
Because the asset is still owned by the parent club. In footballing terms it doesn’t have any real impact, but in financial terms it does.
Because there is no rule against it. Should there be?
Okay, I'm getting the impression here that these things aren't quite as self-explanatory as I'd been led to believe.
If it's just fiddling the books and there's no other purpose to it then surely it should be yes.
He's been really good for us this window.
I’m not sure ‘fiddling the books’ is the best way to describe it. It could often be because a club wants to sell a player, but the ideal buyer doesn’t have the funds immediately, so the clubs make some compromises to facilitate the deal.
I appreciate your point though. But I feel this is on the very ‘light’ side of financial manipulation, in the grand scheme of things.
I don't understand? I'm just saying if it was a loan with an option then we can send him back without buying him incase he flops like we did with Amrabat.
With an obligation, I'd imagine it would be some easy conditions which will make his move permanent next summer even if we don't want it.
55 to 60 minus the loan fee is more than enough. Cop on psg.
This could well be the case, to be fair. Perhaps we will become privy to this details later.
He has, been pretty early on as well with developments weeks before they're official.
He's proving to be quite solid these last 2-3 years
Can you not do all that with structured payments, with no need for any loan pretence?
If it gets accepted, then we're signing him permanently and the transfer will go through in June 2025. In the meantime, he's joining on loan. Does that help?
This is pretty common practice. You've heard of David Raya right? What about Cristian Romero? Still no? Okay, Kylian Mbappe, how about him?
I suppose so, yeah. I’m no expert, but I imagine there is some nuance between these two approaches, though. Accounting, taxes, wages etc. These transactions existed before the inception of FFP, though.
Blimey. Ok this does need repeating.
There is no way on earth they will give us the option clause.
The obligation maybe possible.
Romero or Raya wasn't an obligation. Both options.
It's officially written in and we must buy him on x date and until then it's a non-cancellable loan. Would basically be our player straight away but not technically. We'd probably still pay his full wages. So other than that technicality it'd be the same as normal deal with installments that are deffered for a year. It's just to balance the books. They charge a little bit more money but we don't have to pay til next year.
I'm not sure what part of my post made you think I didn't get that. The obligation bit is why it would be a transfer going through in a year, as with obligations the transfer is usually fixed for the end of the loan term.
They have hard balled all summer. There is no way they go for option instead of obligation. How can you not understand that?
Option does not equal obligation.
Off topic, but I have always wondered why transfers don’t go ahead became ‘the club won’t accept instalments - they want the fee up front’.
Why on earth wouldn’t the buying club just use a bank/financier to overcome this issue? Sure they would pay interest, but I imagine that instalment transfers cost more anyway.
Why on earth wouldn’t the buying club just use a bank/financier to overcome this issue? Sure they would pay interest, but I imagine that instalment transfers cost more anyway.
Just look at it like a regular transfer but pay later. It just helps with FFP.
Hopefully we aren‘t paying over 50.
Hopefully we aren‘t paying over 50.
Raya was halfway, it became an obligation due to appearances being triggered. That obligation clause was expected to be met from the off.
Fair on Romero.
Locatelli to Juve, Porro to Spurs, Nuno Tavares to Lazio and Kean back to Juve are recent examples of loans with obligations to buy
Are you reading posts before you respond to them? I have said obligation, I am explaining obligation. I have not mentioned option, I don't know why you're going on about option.
How can you not understand that?
Cheers, I dropped the ball with the Romero example as that was an option as pointed out. But as you've shown, it is common practice.
My apologies I thought I was replying to saik not didz. Saw the short name with no capitals
100% common practice and becoming more so because it's a good way of clubs still getting key targets in the short term while passing the buck in the books over to the next fiscal year instead.
The selling club still get their money eventually and the buyer gets the player earlier than when they realistically would have been able to
My apologies I thought I was replying to saik not didz. Saw the short name with no capitals
It seems like I confused a few posters in here. It was just my personal preference if that was a loan with option to buy so we can flog him back if he flops like we did with Amrabat. No way PSG would ever agree to that though.No worries, happens to the best of usMy apologies I thought I was replying to saik not didz. Saw the short name with no capitals
It's a binding agreement which allows the buying club to stagger the payments so it doesn't skew their spending for this season, whilst still enabling the selling club to account for the full value of the eventual sale in the immediacy.
PSG will be able to report the full fee of the eventual deal now, we can mark the fee of the loan for this season and delay full fee until he joins in a season's time. It will eat into our spending next summer though, unless we offset it with sales/similar outgoings.
If I'm reading correctly you are saying there is no downside for PSG? Why are not all transfers done this way then, if it makes one side's books look temporarily prettier at no cost to the other party?
I tried googling and I got PWC telling me they are just counted as normal transfers, which would surely make them pointless, so seems unlikely.
https://viewpoint.pwc.com/dt/gx/en/...hips-with-play/1-9-loans-with-obligation.html
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