Club Assets

[1 valve]

12 hours ago, enotian said:

The IPL in cricket is an interesting comparison.  Ben Stokes went for £1.4m in one of their auctions.  Who received the £1.4m??  Durham CC?  the ECB? Ben Stokes? I'm not sure who can claim to 'own' him?

 

The player receives all of the money which they pay tax on. So Stokes would have netted circa £800k. 

Edited July 3, 2021 by 1 valve

[IainB]

Didn't you used to get a percentage of a transfer fee depending on whether you asked for a transfer or not? Or have I just made that up?

[HGould]

Asked this at a fans forum a few years ago now.

Answer I was given-:

Each Club has an asset list and riders have notional values.

Each Club has to have a certain target within that asset list if above it it's fine, if below it they have to top it up each year with a cash payment to BSPL. 

That's why some Clubs sign young assets, adds value to their list and reduces cash payment to top that list up to required level.

Before Covid Clubs pay loan fees based on a % of rider average.

So if a Poole Asset (Poole have by far biggest asset base allegedly) with an average of 5 is loaned to another Club annual loan fee is about 1.5 x that...so about £750 a year the loaning club has to pay the lending club. Higher the average higher the fee.

NDL Clubs get a "training fee" again based on NDL average if a rider they have signed is given contract by a CL/PL Club (at time i was told that NDL Clubs could not sign assets, I think that changed though in 2018 or 2019) 

(this was correct as I understand it in 2017 not sure if still the case)

 

[Gordon Pairman]

23 minutes ago, HGould said:

Asked this at a fans forum a few years ago now.

Answer I was given-:

Each Club has an asset list and riders have notional values.

Each Club has to have a certain target within that asset list if above it it's fine, if below it they have to top it up each year with a cash payment to BSPL. 

That's why some Clubs sign young assets, adds value to their list and reduces cash payment to top that list up to required level.

Before Covid Clubs pay loan fees based on a % of rider average.

So if a Poole Asset (Poole have by far biggest asset base allegedly) with an average of 5 is loaned to another Club annual loan fee is about 1.5 x that...so about £750 a year the loaning club has to pay the lending club. Higher the average higher the fee.

NDL Clubs get a "training fee" again based on NDL average if a rider they have signed is given contract by a CL/PL Club (at time i was told that NDL Clubs could not sign assets, I think that changed though in 2018 or 2019) 

(this was correct as I understand it in 2017 not sure if still the case)

 

To pick up on this topic, clubs were required to have a retained list - I have always disliked the term “asset” - with a minimum value plus a cash or bank secured bond. BSP valued the list and, if it fell below the minimum, a club had to lodge additional cash to make up the minimum. An example of this was in 2013 when Glasgow changed ownership, BSPA advised that the rider value was insufficient. We challenged this and asked for the Management Committee’s valuation but they wouldn’t tell us. Instead we had to find the extra cash. 
A rider on a club’s retained list can be loaned out for a fee which was calculated as a rate per point multiplied by their average. There was a sliding scale so the higher the average, the greater the rate. I don’t remember the numbers, but my recollection is that a reserve or second string in the lower league would be a few hundred whereas a heat leader in the top league would be many thousands. 
Purchasing a rider would then either save you a loan fee or allow you to lend him out. The “value” of a rider could therefore be assessed as what you might save or earn from the rider over how many years you might expect him to ride for you. That’s it at its most simplistic, of course - having first call on a rider might be beneficial in team building, but how do you value that?

One of the benefits of the system was that being able to sell riders helped to balance the books and some teams, like Scunthorpe and Edinburgh have been particularly good at unearthing riders with potential that they could nurture for future sale. 
For rider values to keep increasing, then so do loan fees but they have remained static for many years and, in hopefully a one-off for this year, have been reduced to very little. This then means that the transfer market has been largely inactive for some time - why pay thousands for a rider when you can loan him for a few hundred?

The reason behind clubs having to have a minimum value in their retained list was, in the case of a financial default, the riders could be sold to cover some or all of the deficit. The flaw in that is that, as only clubs can buy the riders, then the deficit is covered within the system - no new money comes in  

A solution would be to wind down loan fees and wind up bond amounts. That way, cash would be available instantly rather than there having to be an auction of riders.

Now to the accounting procedures: firstly, the answer to whether you buy the riders registrations when you buy the licence is yes. You are purchasing something that will either earn you or save you money, so why should you get it for nothing?

And now to assets. The best definition I can find is:

As holding a rider’s registration does provide a future benefit, then, if you believe that benefit will last more than one year, it is reasonable to capitalise the purchase cost and write the value off over a period  The question then is what period? My guess is that the maximum should be four years but, as accounting rules mean that you have to consider values annually, then the period chosen could be shortened or increased.

My final point - the above is based on how things were when I was a promoter. I handed my licence back in 2018 and many things have changed since then. Whether the rules on retained lists are part of the changes, I know not

 

 

 

[IainB]

4 minutes ago, Gordon Pairman said:

To pick up on this topic, clubs were required to have a retained list - I have always disliked the term “asset” - with a minimum value plus a cash or bank secured bond. BSP valued the list and, if it fell below the minimum, a club had to lodge additional cash to make up the minimum. An example of this was in 2013 when Glasgow changed ownership, BSPA advised that the rider value was insufficient. We challenged this and asked for the Management Committee’s valuation but they wouldn’t tell us. Instead we had to find the extra cash. 
A rider on a club’s retained list can be loaned out for a fee which was calculated as a rate per point multiplied by their average. There was a sliding scale so the higher the average, the greater the rate. I don’t remember the numbers, but my recollection is that a reserve or second string in the lower league would be a few hundred whereas a heat leader in the top league would be many thousands. 
Purchasing a rider would then either save you a loan fee or allow you to lend him out. The “value” of a rider could therefore be assessed as what you might save or earn from the rider over how many years you might expect him to ride for you. That’s it at its most simplistic, of course - having first call on a rider might be beneficial in team building, but how do you value that?

One of the benefits of the system was that being able to sell riders helped to balance the books and some teams, like Scunthorpe and Edinburgh have been particularly good at unearthing riders with potential that they could nurture for future sale. 
For rider values to keep increasing, then so do loan fees but they have remained static for many years and, in hopefully a one-off for this year, have been reduced to very little. This then means that the transfer market has been largely inactive for some time - why pay thousands for a rider when you can loan him for a few hundred?

The reason behind clubs having to have a minimum value in their retained list was, in the case of a financial default, the riders could be sold to cover some or all of the deficit. The flaw in that is that, as only clubs can buy the riders, then the deficit is covered within the system - no new money comes in  

A solution would be to wind down loan fees and wind up bond amounts. That way, cash would be available instantly rather than there having to be an auction of riders.

Now to the accounting procedures: firstly, the answer to whether you buy the riders registrations when you buy the licence is yes. You are purchasing something that will either earn you or save you money, so why should you get it for nothing?

And now to assets. The best definition I can find is:

As holding a rider’s registration does provide a future benefit, then, if you believe that benefit will last more than one year, it is reasonable to capitalise the purchase cost and write the value off over a period  The question then is what period? My guess is that the maximum should be four years but, as accounting rules mean that you have to consider values annually, then the period chosen could be shortened or increased.

My final point - the above is based on how things were when I was a promoter. I handed my licence back in 2018 and many things have changed since then. Whether the rules on retained lists are part of the changes, I know not

 

 

 

Brilliantly explained, Thanks!

All sounds a bit "Fantasy Speedway League" like to me, but if it works, which it seems to do then great. Looks like the day of the "big" transfer fee are over, for a while at least.

[Gordon Pairman]

1 minute ago, iainb said:

Brilliantly explained, Thanks!

All sounds a bit "Fantasy Speedway League" like to me, but if it works, which it seems to do then great. Looks like the day of the "big" transfer fee are over, for a while at least.

To be honest, I hope they are gone for good. They worked when overseas leagues were small or blocked to foreigners so UK riders mainly rode in UK.

Now, when they can ride all over Europe and, in some instances, in more than one league in the same country, then being “retained” for greater than the length of your contract makes no sense. 
This is an instance where “we’ve always done it like that” does not justify its continuing existence. 

[steve roberts]

John Berry wrote an excellent article in his book "More Confessions" (far too comprehensive to quote here) but essentially he was against the 'asset' business and felt that the whole structure regarding rider's commitments to any one club should be re-examined.

"Don't you think that there is something wrong with a system where a promoter can go and sign a foreign rider with the express intention, not of using him, but of renting him out until his value rises?"

Of course the book was published in 2006 but has anything changed since then regarding the composition of team make ups and rider availability?

[ch958]

if you haven't offered a contract to work, ie ride, I don't see how its lawful to have any hold at all over a person. I've decided to work for Tesco this year, not Morrisons but Tesco have to pay Morrisons all the time I'm there and if they don't I can't work at Tesco

[IainB]

6 minutes ago, steve roberts said:

Of course the book was published in 2006 but has anything changed since then regarding the composition of team make ups and rider availability?

I suppose the only thing that has changed is that the "big" transfer seems to be a thing of the past with the Lee Richardson one being the last one I can find.

I wonder if there is anything to stop a promoter going on a road trip of Europe and mopping up any unsigned rider on the off chance they may ride in Britain and can then charge loan fees... I presume Birmingham have the World Champion on their "retained list"

[steve roberts]

6 minutes ago, iainb said:

I suppose the only thing that has changed is that the "big" transfer seems to be a thing of the past with the Lee Richardson one being the last one I can find.

I wonder if there is anything to stop a promoter going on a road trip of Europe and mopping up any unsigned rider on the off chance they may ride in Britain and can then charge loan fees... I presume Birmingham have the World Champion on their "retained list"

If I remember the sum paid for Lee Richardson was decided on the toss of a coin as Swindon and Coventry couldn't agree on a fee?

[Gordon Pairman]

22 minutes ago, iainb said:

I suppose the only thing that has changed is that the "big" transfer seems to be a thing of the past with the Lee Richardson one being the last one I can find.

I wonder if there is anything to stop a promoter going on a road trip of Europe and mopping up any unsigned rider on the off chance they may ride in Britain and can then charge loan fees... I presume Birmingham have the World Champion on their "retained list"

The rules were (are?) that overseas riders had to ride a minimum number of times before they can be added to a retained list. Vaculik and Zmarzlik, and I think, Przedelski, didn’t do enough meetings. Interestingly, when Birmingham brought Zmarzlik in, then promoter, Alan Phillips thought he was just another foreign rider, and had no idea of what he’d got. Bartosz only rode one meeting for Birmingham before they sacked him for declaring himself ill and unable to travel. He was accused of pulling a sickie. 

[racers and royals]

33 minutes ago, Gordon Pairman said:

The rules were (are?) that overseas riders had to ride a minimum number of times before they can be added to a retained list. Vaculik and Zmarzlik, and I think, Przedelski, didn’t do enough meetings. Interestingly, when Birmingham brought Zmarzlik in, then promoter, Alan Phillips thought he was just another foreign rider, and had no idea of what he’d got. Bartosz only rode one meeting for Birmingham before they sacked him for declaring himself ill and unable to travel. He was accused of pulling a sickie. 

I think the truth was that Phillips and Zmarzlik  had not got official PZM start permission and paperwork- and quite a row it was.

[enotian]

8 hours ago, 1 valve said:

The player receives all of the money which they pay tax on. So Stokes would have netted circa £800k. 

interesting model.  presumably the auction is a pantomime with all deals having been sealed beforehand? still an interesting way to launch a season.