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Its all about money

Its all about money

The two current ongoing transfers the club is struggling to finalise are both, in different ways, all about money. 

In the case of Adebeyor its about a club being held to ransom, in the case of Modric it may be about exchange rates and the Spanish economy. I said all last season that whatever happened to Ade there was no way he was going to lose money on the deal. 

Now, it appears, having agreed a deal with Spurs Ade is demanding City's £5m transfer fee to make up the shortfall in earnings. The problem for City is there is no way out, £5m is 28 weeks wages, keep Ade another year and it costs them even more. Indeed keep him one more week, making 6 weeks of the transfer window, and it will have already cost them a million. 

Even if another club made a better offer it wouldn't necessarily help, Ade doesn't have to agree a move. If I was cynical I might think Levy was quite happy with the current situation, its hard to see how City can win and every week Ade remains on their books is a week off our wage bill. 

I have no sympathy for City, they didn't have to offer the player such an obscene amount of money. I do wish it would give some of our supporters pause for thought though before they moan about the club not giving players huge pay rises, wishful thinking I know. 

The Modric sage is confusing but one thing to note is that sometimes stories quote the fee in Pounds, sometimes in Euros. This doesn't matter as long as exchange rates are stable, only they're not, the Euro has dropped about 10% against the Pound over the past 12 months. That would still not be a problem in a cash up front deal, you know the exchange rate on the day. Problem is that Real want stage payments, which immediately means one side or the other has a currency risk. 

If the deal is in sterling then Real run the risk of the pound strengthening against the euro, if the deal is in euros then we run the risk of getting less than we thought. From Levy's behaviour I get the impression the deal would be in Euros. There is a further risk, what if Spain dropped out of the Euro altogether? It may seem a remote prospect but given the state of the Spanish economy (25% unemployment and a collapsing banking sector) it could happen. 

If you were owed money by a Spanish club in a currency that either they no longer belonged too or no longer existed would you ever get paid? 

To me it makes perfect sense for Levy to want to get paid for Modric up front, debts stretching out over several years are not a good idea in the present economic climate.

Written by jod

Click here to join in the debate on the club forum.

Date:Monday August 6 2012
Time: 8:54AM


06/08/2012 08:59:00
I'm one that believes the Chairman Will do the right thing for the club.
06/08/2012 09:01:00
Very god points!
Tactically Challenge
06/08/2012 09:15:00
Dear mr levy.... Buy Damiao! If we miss out on him, I'm going to be so *****ed off
06/08/2012 09:16:00
sell now 30 million then we can move on with profit
06/08/2012 09:23:00
Good article jod i think you have summarised both situations very well. Personally I'm beginning to think that we should drop Adebeyor, it's not as if he is poor is it yet he hasn't been prepared to reach a compromise with his current employers in order to be able to participate in our pre season training and tour. Just says to me that, as with most players now, it's all about greed and suggests he is not bothered whether he joins us or not.
06/08/2012 09:29:00
Danny_cypher has Damiao ever said he wants to play in the Europa League and not in the CL? In his shoes where would YOU go?
06/08/2012 09:31:00
Ade will come in, eventually. City are being held to ransom and that's simply too bad for them. They're going to have to cough up the cash and let him go and then just accept the fact that if you want to pay through the roof in order to poach the best talent from other clubs, AND THEN not play those players it will come back and bite you on the bum.

As for Modric...the situation has sort of changed in my eyes in light of Redknapp's recent comments. If he was in fact promised the chance to join Real this summer then I think he should be allowed to do that. Surely a deal can be struck where the reported £30m +£8m in payments deal is paid in pounds. This wont be like last summer where the club were able to say "give us one more year" and Luka got his head down and saw in out.
06/08/2012 09:37:00
A very interesting read jod and valid points indeed...
06/08/2012 09:47:00
The Adebayor numbers don't add up to me though. From City's point of view they are on the hook for £18m of salary going to him and then he walks after 2 years. This way they pay him £5m, save £18m in salaries and get £5m transfer fee from us. So it would cost them £8m but save them £10m.

For Spurs we would probably also pay a signing on fee in the region of £3m, would pay him £8m over 2 years and pay City £5m transfer fee. That is £16m over 2 years and if we put him on a 4 year contract it will cost us £24m.

For Adebayor he gets £8m in his pocket, another £8m wages and a guarantee of another £8m for 2 more years taking him to 32 years of age. That would imply that everyone is happy. However, clearly it isn't as they are still quibbling over the detail. It's difficult to knock Adebayor though as City were stupid in the first place to guarantee him that money. He is protecting what is contracted to him.
06/08/2012 09:58:00
First paragraph makes no sense. It should just be cost them £5m but get £5m from us which means they save £18m.
06/08/2012 10:02:00
Ade will come but Damiao would send notice of intent to other teams and Spurs supporters. Keeper position we can live with. Modric/Mountinho is final piece to resolve - I think Modric makes us tick and would not want anyone else if he was !00% Spurs committed - sadly I think that has run its course
06/08/2012 10:05:00
In previous articles I have stated we should take the money and run. The quicker we get Modric out, the quicker we can get new players in. This is going to affect our pre season and the stability of the team. Anything over 30m is a huge profit on a player that does not want to play for us. Get him out and get a striker in.
06/08/2012 10:07:00
Damiao has said that he will only leave if a decent offer for him and his club came in?! If levy would take a chance, then we wouldn't keep missing out on players... Look at falcao, we could've bought him for 25 mil, he's worth about 40 now! Sandro said about Damiao before and we just dragged our heels
06/08/2012 10:23:00
A thoughtful article with an interesting analysis of problems that are not usually laid out for consideration in this way. Thank you, Jod.
06/08/2012 10:56:00
wat the annoying thing is we have plenty of money from sales in the last 2yrs PLENTY SO WHY ARE WE not looking for a bloody striker and we have been looking at Damiao for 2bloody yrs defoe not good enough and Kane to inexperienced and seems to quick for him Redcrapps comments are rubbish if you remember correctly redcrapp was in the papers bleating about that we must sell him not to Madrid to the chavs!!! last season Daniel Levy stance has always been the same 40mill so what is different apart from 19m We end up half way if LEVY doesnt reverse redcrapps decisions to sell all our bloody forewards and the fans will turn very quickly! because some them thought redcrapp was the bee all to end all
06/08/2012 11:42:00
Great article. My question is, if we know that Luka will never play for Spurs again and that we are just digging our heals for those few extra coppers, why not buy his replacement now? Yes Real will know that we are then desperate to sell, but it simply means that buying Moutinho or whoever will be slightly cheaper so either way it works out the same plus we then get Moutinho now rather than standard Spurs on last day of the window with no pre season prep etc.
06/08/2012 11:44:00
The stalling can only work in spurs interest if they have a plan, to play not relying on Modric or Ade- at the moment, we don't have like for like players. Ade needs to be concluded soon, and same with Modric. The only saving grace is Bale maybe used as a striker/winger with either VDV or Siggurdson just behind. There is no excuse not to add to the forward line, because this shouldn't weaken our position, but its clear we need to wait for Modders deal, before a goalie & quality midfied player is bought. Sell Modric for the £30m and be done with this nonsense.
06/08/2012 11:48:00
Good article JOD except the one thing not mentioned anywhere is "football", that's what we do, what we are, a football club. The Adebyor deal either needs sorting in the next 48-72 hours, or kicked into the long grass, and we need to look elsewhere. The Modric deal needs sorting NOW, especially if, as alleged, we require the Modric money to finance any other tranfers. In case it has escaped the attentions of our global financial whizz kid Mr. Levy, while he is deeply involved in his game of Monopoly, we are going to Newcatle a week on Saturday, with a side that is in no way competitive, we have 1 striker in Defoe who is hardly good enough, plus GDS and two kids available to play up front. We have pratted about trying to get Ade in, and followed our usual "Forsyth Saga" method of selling Modric, whilst all the time the clock is ticking, players are signing elsewhere, and we are nowhere nearer to solving problems that have existed for at least 2 seasons, and have been exaserbated by the sale of Crouch and Pavyluchenco, and the end of Adebayor's loan period. Only an idiot would argue that we can compete without quality up front, so rather than worry about the Euro crisis, something that even Levy as clever as he allegedly is, cannot effect, and waiting for City and Adebayor to stop playing silly buggers, would he please, please get his arse into gear and go out and get at least 1, ideally 2 strikers in. Yes it will cost a few quid, something that goes against the Lewis/Levy grain, but in the real football world that's how it is, if they don't like the heat I wish to Christ they would get out of the kitchen, and sell the club to someone with some ambition, and determination to succeed, things that we have lacked right from th beginning o the ENIC tenure.
06/08/2012 11:52:00
As to the exchange rate problem, RM and Spurs could work out a deal that is paid half in pounds sterling and half in euros over some specified time. If the pound increases or decreases in value, one half of the value of the payments rises and the other half falls. In the end, the fluctuations all come out in the wash. I worked for a while getting paid half in American currency and half in Brazilian currency, and it matters not to me at that time whether the dollar rose or fell in relation to the Brazilian real. Not that difficult for a decent accountant to figure out the details of such a deal.
Total knobhead
06/08/2012 12:07:00
Fair points Jod, though I don't buy the whole exchange rate thing. Parties do not have to be restricted by the actual rate, they can set and agree their own internal rate - yes it means someone may loose out, but it also means the other party is guaranteed an acceptable minimum, basically it has a built in floor that regardless of the RoE the bottom line never falls lower. Many companies that do global business fix exchange rates with partners, especially in times of volatility in the markets
Cape Town Spurs
06/08/2012 12:09:00
Interesting article jod and nice to hear things from a business perspective and not an emotional one which I think we're all guilty of at times. I'm confident Ade will join us and as you and many others mention who can blame him for standing strong when he already has a contract. I do think that if football was his priority he would have a somewhat different approach though. As for the exchange rate issue with Modders, I work in finance and there are mechanisms available to counter any flexibility in rate changes over time. Essentially you place a bet on movement in each direction so that any potential losses can be countered. Hedge Funds use them extensively hence the term "Hedging your bets". Still an important factor though and well pointed out.
06/08/2012 12:13:00
@ Frank, I have a lot of respect for Levy and the way he runs the club and for one do not hope ENIC sell any time soon as I believe he does have a vision and it is edging nearer in a stable way. I'm not going to be the idiot that argues about the striker situation though. I've said myself in numerous posts, we sold Berbatov, Pav, Keane, Crouch, have seen the end of loan deals for Saha & Adebayor and brought in, well, ABSOLUTELY NO-ONE. It does boggle the mind and is starting to boil the blood!
Cape Town Spurs
06/08/2012 12:15:00
Good article jod, I think that's the most objective piece ive seen on the Adebayor issue, better than the predictable rubbish the media produce. Adebayor is doing what every player, agent and club have done to City since the Arabs came in, try to get as much out of them financially as possible.
06/08/2012 12:34:00
spu 4 life
06/08/2012 14:01:00
Adebayor is being such a dick i don`t know if i want him to be a Spurs player anymore .Imagine 4 years of his constant mood swings ,lack of effort ,greed & bad attitude ? .

Personally i think Adebayor played so well last season because he had a point to prove .Now he`s proved i think we`d be better off looking elsewhere .He doesn`t want to play for Spurs he just wants to get stupidly rich ,no respect for him .
big cockeral
06/08/2012 14:28:00
TQSpure - said the same last week.

Ade is not bothered about playing for us he just wants to maintain his current salary or be compensated if he has to take lower wages.

Rather we pull the rug from under his feet and get a younger more enthusiastic player that WANTS to play for us - what is it with players we are a top four club challenging a new regime and great facilities.

The articel makes good points and Levy I believe will do what is best for the club and I respect him for that and I agree we need to resepct what Levy does with regards keeping us afloat in this mad world of football and awful uncertain economy. Fans on here sometimes are niave - when your running a business no matter what your feelings for the club are you cannot allow your emotions to rule.

How many people on here have allowed their emotions to rule usually when 'love' is involved and they have lost money or their decisions have cost them dearly probably everyone - Levy cannot do that he has to keep his accountant business hat on regardless of his feelings or love for the club.

As for all this media gossip and spouting off about who said this and who said that I take it with a pinch of salt. Like Levy is going to make any promises to anyone that could be detrimental to our club what do people think - that he is stupid - come on fams give him vredit he didn't get where he is now by making false promises and neither do I believe any player would agree on a 'word of mouth' or 'hand shake' promise - their agents wouldn't let them and although some footballers are known to have little between their ears I doubt they have NOTHING between their ears they wouldn't accept a promise in their world of football unless it was clearly set out on paper.

When will people realsie that 99.9% of all this talk and accusations is paper talk or bitterness or revenge.

Just let the management and board get on with things and apply patience - we are going in the right direction.
06/08/2012 15:16:00
It's not clear to me that Adebayor is being a dick to Spurs, but is trying to get more money out of City. He might have them at a disadvantage. They give him more money or he stays there and collects his salary without having to play. If they are desperate to offload him, they might need to buy him off. But is there any indication that he's trying to extort anything from Spurs? Tell me if you know of it.
Total knobhead
06/08/2012 15:48:00
TK, there is no evidence of Ade trying to extort anything from us, so as usual some will just fill the forum with conjecture. Let's jump on everyone involved, Ade is a helm, Levy is tight, AVB should be sacked this week, Harry was the messiah who's achievements put him in the pantheon of greatest ever managers, and Gold, Sullivan and Brady should be coerced on board to lead us into a bold new era.
06/08/2012 15:59:00
lol chrissybwoy. lol
Total knobhead
06/08/2012 17:34:00
TK.......I'm not sure if anyone has suggested that Ade is being a dick to Spurs as such, certainly not me, but I do question his commitment to playing for our great club because he has been unwilling to reach an agreement/compromise with Citeh so that he could train and have a pre season with us, if the deal does eventually go through late in the transfer window he will not be match fit and we will already be a couple of weeks into the season. It's not as if the blokes hard up is it, he needs to accept that he was on artificially high wages at Citeh and no other club are going to pay the same.
06/08/2012 17:58:00
I'm waiting for the headline 'exchange rate scuppers player move shocker'
06/08/2012 22:15:00
You are getting closer to the "gambe" zone when you'll either have players available on the cheap or you won't have decent talent to buy, the way you going about your transfer business. Sell Modric for the 30Mil + add on's and secure a replacement earlier
07/08/2012 14:57:00
Oh, and have faith in AVB about talent identification (Oscar) and buying (Mata) because he knows what he's doing in that department
07/08/2012 14:58:00
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