I think there seems to be some general confusion on transfers at the moment and how these work from an accounting perspective, particularly in view of UEFA’s FFP requirements, so wanted to share my take on the situation.

Accounting in football is done on an accrual basis and not on a cash basis. So while as rumoured even if we did make USD 31mn from the sales of Banega, Caprari and co., given these sales were all tied to the 2016/17 Serie A season, they have absolutely no bearing on the 2017/18 accounting statement and in particular FFP calculations for the current season.

In addition, continuing on from the points on accrual accounting this would also apply to each new player that we buy with the cost of the player plus their annual salary accrued across the life of the contract. In the event the contract is renegotiated that extends the length of the original contract the remaining book value of the transfer fee is amortized over the life of the new contract.

Finally, FFP does not only deal with net spend on transfers but overall net income. As per UEFA’s guidelines clubs are allowed to spend up to €5million more than they earn per assessment period (which is basically the last three seasons). There is flexibility to exceed this level to a limit of €30m for assessment periods 2016/17 and 2017/18 if it is entirely covered by direct contributions by the club’s owner or a related party. The prevailing rumour is that this number will come down further for future assessment periods as UEFA further clamps down on clubs ability to ramp up debt.

So let us look at how Inter would’ve accounted for some of the recent sales and how these would’ve factored into our FFP calculations:

Ever Banega

Transfer-In Nil

Amortized Book Value N/A

2016/17 Salary -€3,000,000

Transfer-Out +€9,000,000

Net Impact +€6,000,000

Gianluca Caprari

Transfer-In -€8,500,000 (Transfermkt.com has this as €8.25mn, others as €5mn plus 50% of profit, I went with the higher figure)

Amortized Book Value -€6,800,000 (1-year into a 5-year contract)

2016/17 Salary -€750,000 (again this is an estimate based on what I could find from the net and assuming Pescara didnt pay anything towards the salary as part of the loan deal with them)

Transfer-Out +€12,000,000

Net Impact +€4,450,000

Juan Jesus

Transfer-In -€3,800,000

Amortized Book Value -€690,000 (4.5-years into a 5.5-year contract)

2016/17 Salary N/A (assumed Sampdoria were paying the full salary)

Transfer-Out +€8,000,000

Net Impact +€7,310,000

Saphir Taider

Transfer-In -€7,500,000

Amortized Book Value -€1,500,000 (4 years into a 5-year contract)

2016/17 Salary N/A (assumed Bologna were paying the full salary)

Transfer-Out +€4,000,000

Net Impact +€2,500,000

Sales for players such as Miangue (€3.5mn), Dimarco (€4.0mn) and Eguefi (€1.5mn) represent 100% gains since they came through the youth system, collectively contributing €9.0mn to the bottom line for this period assuming there wages were fully paid by their respective teams during their loan spells.

So adding in the €750k gain on Erkin’s transfer this brings the impact of the total outgoing transfers on our 2016/17 budget to €30mn which is in line with the figure that was in the press we needed to raise before June 30th to comply with our FFP requirements. This obviously doesn’t take into account of the impact of earlier transfers on last year’s budget but assume that €30mn figure was the number we needed to raise to reduce the net loss for the period to €30mn (or lower) in line with FFP guidelines and hence should take account of all other revenues and expenses for the club.

Now taking a quick look at the existing and rumoured transfers for the current season, this is how these would impact FFP calculations for the 2017/18 season:

Confirmed Incomings

Borja Valero

Transfer-In -€5,500,000 (bonuses may need to be factored in if these are triggered)

Amortized Book Value -€1,833,000 (first year impact of a 3-year contract)

2017/18 Salary -€3,000,000

Net Impact 2017/18 -€4,833,000

Milan Skriniar

Transfer-In -€23,000,000 (bonuses may need to be factored in if these are triggered)

Amortized Book Value -€4,600,000 (first year impact of a 5-year contract)

2017/18 Salary -€1,300,000 (I can’t find a publicly reported figure so this could be well off)

Net Impact 2017/18 -€5,900,000

Daniele Padelli

Transfer-In NIL

Amortized Book Value N/A

2017/18 Salary -€750,000 (I can’t find a publicly reported figure so assuming same salary as Carizzo from 2016/17)

Net Impact 2017/18 -€750,000

Rumoured Outgoings

The below are all names that have been heavily linked with outgoing transfers in recent weeks.

Ivan Perisic

Transfer-In -€16,000,000 (I am being conservative and assuming the €3mn in bonuses on top of fee of €16mn are triggered)

Amortized Book Value -€12,600,000 (2-years in a 5-year contract; assuming we pay out full €3mn in bonuses to Wolfsburg)

Transfer-Out +€55,000,000 (yes I believe we will get the full figure)

2017/18 Salary +€3,000,000 (we will be saving this but obviously gets offset by salary paid to incoming wingers)

Net Impact 2017/18 +€45,400,000

Geoffrey Kondogbia

Transfer-In -€36,000,000,5

Amortized Book Value -€21,600,000 (2-years in a 5-year contract)

Transfer-Out +€18,000,000 (this is the number being associated with him at the moment)

2017/18 Salary +€3,500,000

Net Impact 2017/18 -€100,000 (loss not as painful as one would’ve thought)

Stevan Jovetic

Transfer-In -€13,500,000

Amortized Book Value -€10,800,000 (6-months into a 2.5-year contract)

Transfer-Out +€13,000,000 (assuming we stick to our valuation)

2017/18 Salary +€3,500,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€5,700,000

Andrea Ranocchia

Transfer-In -€18,500,000

Amortized Book Value NIL (already fully written off)

Transfer-Out +€5,000,000 (assuming we stick to our valuation)

2017/18 Salary +€2,400,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€7,400,000

Marcelo Brozovic

Transfer-In -€5,000,000

Amortized Book Value -€5,000,000 (1-year into a 5-year contract)

Transfer-Out +€20,000,000 (rumoured range is €15-25mn so going for the middle)

2017/18 Salary +€1,500,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€16,500,000

Gary Medel

Transfer-In -€8,000,000

Amortized Book Value -€2,000,000 (3-years into a 4-year contract)

Transfer-Out +€5,000,000 (this is the number that is being bandied around the most)

2017/18 Salary +€1,600,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€4,600,000

Yuto Nagatomo

Transfer-In -€4,500,000

Amortized Book Value NIL (already fully written off)

Transfer-Out +€5,000,000 (last rumour was €7.5mn figure from Leverkrusen but although even €5mn for him sounds too much he has a lot of marketing value in Asia or so we have been told for a number of years)

2017/18 Salary +€1,300,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€6,300,000

Jonathan Biabiany

Transfer-In Free

Amortized Book Value NIL

Transfer-Out +€4,000,000 (while numbers in the rumour mill closer to €7mn going with his value as per Transfermarkt.com)

2017/18 Salary +€1,600,000 (we will be saving this but obviously gets offset by salary paid to incoming transfers)

Net Impact 2017/18 +€5,600,000

Rumoured Incomings

The below are all names that have been heavily linked with incoming transfers in recent weeks and will address key areas we need to fill including DM, LW, LB, RB and CB. I don’t include ‘Mister X’ here as that is pretty much in air for the moment.

Matias Vecino

Transfer-In -€24,000,000

Amortized Book Value -€4,800,000 (first year of a 5-year contract)

2017/18 Salary -€2,000,000 (this a complete guesstimate)

Net Impact 2017/18 -€6,800,000

Keita Balde Diao

Transfer-In -€20,000,000

Amortized Book Value -€5,000,000 (first year of a 5-year contract plus €1mn in triggered bonuses; being a bit optimistic here)

2017/18 Salary -€3,000,000 (in line with the number out in the press)

Net Impact 2017/18 -€8,000,000

Dalbert

Transfer-In -€23,000,000 (assuming we reach a middle ground on final transfer figure)

Amortized Book Value -€4,600,000 (first year of a 5-year contract)

2017/18 Salary -€2,000,000 (I believe this figure has been touted in the press)

Net Impact 2017/18 -€6,600,000

Issa Diop (represents the most likely candidate for DC role in my opinion from both cost and non-EU status perspective)

Transfer-In -€20,000,000 (this is the figure that is most commonly being touted in the press)

Amortized Book Value -€4,000,000 (first year of a 5-year contract)

2017/18 Salary -€1,200,000 (would be in line with what other young CBs are getting at Inter)

Net Impact 2017/18 -€5,200,000

Serge Aurier (it is either him or Darmian for RB but assuming we don’t use non-EU spot elsewhere he would be my pick)

Transfer-In -€20,000,000 (assuming we reach a middle ground on final transfer figure)

Amortized Book Value -€4,000,000 (first year of a 5-year contract)

2017/18 Salary -€3,000,000 (I believe this figure has been touted in the press)

Net Impact 2017/18 -€7,000,000

Summary Table

So let us take a look on what that these transfers imply in terms of Inter’s FFP and cash flow positions:

Player Net FFP Impact (€) Cashflow Impact (€) Confirmed Incomings Borja Valero (4,833,000) (5,500,000) Milan Skriniar (23,000,000) (5,900,000) Daniele Padelli - (750,000) Sub-Total (27,833,000) (12,150,000) Rumoured Outgoings Ivan Perisic 45,400,000 55,000,000 Geoffrey Kondogbia (100,000) 18,000,000 Stevan Jovetic 5,700,000 13,000,000 Andrea Ranocchia 7,400,000 5,000,000 Marcelo Brozovic 16,500,000 20,000,000 Gary Medel 4,600,000 5,000,000 Yuto Nagatomo 6,300,000 5,000,000 Jonathan Biabiany 5,600,000 4,000,000 Sub-Total 91,400,000 125,000,000 Rumoured Incomings Matias Vecino (6,800,000) (24,000,000) Keita Balde Diao (8,000,000) (20,000,000) Dalbert (6,600,000) (23,000,000) Issa Diop (5,200,000) (20,000,000) Serge Aurier (7,000,000) (20,000,000) Sub-Total (33,600,000) (107,000,000) Aggregate Total €29,967,000 €5,850,000

Looking at the numbers above I guess I could be guilty of being a bit optimistic on the outgoing transfers, particularly on the figures for Kondogbia, Nagatomo and Brozovic but do believe that these could be achievable in the current inflated market environment.

The one that sticks out in particular is Kondogbia, but I really do think we can sell him for a value close to or around the numbers factored above.

So assuming the above numbers hold, on a net basis we would still end in the black both from the FFP and cash flow perspective if the above transfers were to take place. This obviously leaves a lot of room for Sabatini and Ausilio to play with, particular if the rumours of a €150mn war chest from Suning on top of net transfer spend are to be believed.

We would still need to be careful from a FFP perspective but assuming we continue to see an uptick on the revenue side on the back of Suning’s marketing efforts and success in bringing in fresh sponsors, we may well have flexibility to spend big on ‘Mister X’ without completely derailing the UEFA FFP process.

FORZA INTER!!! BLACK AND BLUE FOREVER!!!