How to solve a problem like Carlos
April 15, 2012Article published 28 Sep 2011
Following Tevez' refusal to come of the bench against Bayern, a number of pundits proposed that Tevez should be 'sacked' or be 'left to rot in the reserves' for the rest of his contract. Other than the employment law issues surrounding these two proposals, there would also be a FFP impact:
Sacking option
Tevez was signed two years ago for a reported fee of around £45m/£48. Under FFP rules, his value will have been 'amortised' or written-down and he now has a 'book value' of around £27m. If the club were to 'tear up his contract', City would immediately be hit by the 'loss' of all his book value in the current financial year. Whether they can still keep costs within the Break Even Deficit limit is debatable but a one-off 'loss' of this size would probably be too much for City.
Running down contract in the reserves
As Tevez was signed before 30 June 2010, his wages are not counted as an expense for the 2011/12 season. However his wages do have to be accounted in full for the 2012/13 season (at around £13m). The club would also have to amortise his purchase price for another year (costing around £9m for a full year). Again, City will be keen not to be impacted by £22m costs added to their Break Even Deficit.
Financially, the best option for City would be to sell him in Summer (or possibly January). However his value is probably greatly reduced and City would have planned to sell him for around £40m at the end of the season (making a profit of around £20m over his projected June 2012 book value). Unfortunately for City, they may struggle to raise much more than £20m for the player. Again, the absence of the planned book value profit on the sale of Tevez will hit the club's ability to meet the FFP criteria.
For more information on how contracts are 'amortised', click the Financial Fair Play Explained link above.
Posted by Ed Thompson.
