No it's like a house, your house is destroyed by a earthquake, you buy another house, you 'lost' the value of your old house and spent the value of your current house.
De Gea Contract Situation
- Thread starter Sassy Colin
- Start date
-
In the latest episode of the United Hour Podcast, Nik (@Rood) is joined by CEO Duncan Drasdo and Financial Director Andy Green from the Manchester United Supporters Trust for a special episode on all things behind the scenes at Old Trafford including a brief history of MUST and their aims today, views on INEOS and Sir Jim Ratcliffe so far, and the Old Trafford regeneration.
- Status
No it's like a house, your house is destroyed by a earthquake, you buy another house, you 'lost' the value of your old house and spent the value of your current house.
Agreed!
Though surely Lindegaard and Valdes will be off the books by the end of this window?
Though surely Lindegaard and Valdes will be off the books by the end of this window?
Be consistant, it's either right or wrong.
Basic economics or not, it doesn't apply. Do you think our transfer strategy is based on economics?
Got a feeling a deal will be done for around £30M. If Real still low ball, threaten to sell De Gea to Barca for cheap lol.
Clowns. De Gea here for a season is worth 25m, so him staying and playing for a season before leaving on a free is not losing 25m.
Clowns
Clowns
We should pay Barca to take him from us.
Okay since you're clearly not understanding this I googled opportunity cost for you:
"The loss of potential gain from other alternatives when one alternative is chosen".
To make it even simpler, look at it this way you have a bank account which holds 25 million, Every month you're losing about 2 million. By the end of the year you'll have 0 million.
Ignore the wages and everything else for simplicity.
Exactly, it is basic arithmetics and you are still somehow making errors.
Spending money on a new keeper is a constant. That doesn't differ if we sell De Gea or lose it on free.
The difference is selling De Gea for X money, or losing it for free. On other words the losses are -X money if we lose him for free. That doesn't take into account the value of De Gea (call it Y). So, in reality it is -X + Y.
The idea of his post is right. The values may be wrong (maybe we don't get 25 million for him.. maybe he is worth more by staying here). It does apply. Of course we use economics. All economics is about is making the right choices. Everyone uses it.
Someone close this god damn thread
It's not correct. You're just mixing together accounting and maths.
Source: I'm an economist (seriously. Probably not a very good one, but still).
Now we've finally gone full reddit.
Bro, it's not basic arithmetic. It's a real life problem that involves values of your assets. I explained it in my other post.
I have things to do. I expect Revan to be a quivering wreck by the time I next check this thread.
Great. And lets asume that we have 25m in bank (in order to sign a new keeper). For simplicity lets not account for his wages.
Scenario 1) Sell De Gea for 25m, sign the new keeper for 25m. Total cost is 0m.
Scenario 2) Lose De Gea on free (i.e sell him for 0), sign a new keeper for 25m. Total cost is 25m.
The difference is 25m.
If the first scenario happened, we would still have 25m on the bank. If the second happened, we would have 0m in the bank.
Real question is, is De Gea worthy 25m (again, not counting wages and an another year to spend for a new keeper) for a single season?
You're a terrible economist then because I'm not applying any accounting here (and I'm a mathematician
)By the time De Gea actually joins Real, FSW might have already been sacked.
Okay I'll explain this one more time:
In the bold part, you are also losing a potential gain of 25 million. Again, "the loss of potential gain from other alternatives when one alternative is chosen". You chose the second alternative (scenario 2) in which you have lost that 25 million you would've gained. Now please don't be stubborn and say something ridiculous.
Its basic stuff, I think you think you're talking to idiots. It's hardly calculus...
The point is it doesn't apply. You can clearly tell that our transfer policy isn't governed by economics just by the signings we've made over the last few seasons. How do you put a value on potential? Temperament? Age? Etc...
Okay, lets say something.
On first scenario, we still have 25m on the bank (we had it before too).
In the second scenario, we have nothing on the bank (we had 25m before).
In both scenarios, De Gea is on Real Madrid.
How on earth the difference can be 50m instead of 25m. The only way for that to happen is if De Gea is so shit that keeping him would be worthy -25m. I.e if De Gea was Roy Carroll.
It does apply. Every transaction in the world is based on economics whether or not the person making the transaction is aware of it or not. In a transaction of such a high level, I'm quite sure the club would be aware of it.
Just so you know, I'm not arguing he should be sold now. I was just arguing the point that one poster made on here.
A potential gain that you do not gain is a loss. That is how.
25 million for the new keeper and 25 million for the potential gain we did not receive. It makes 50 million (again, figures will vary with his added value for staying here and what not)
Yes you are, you're relying on accounting principles such as alternative costs and book value to try to illustrate a calculation that's arithmetically wrong. And you're not even doing it right.You're a terrible economist then because I'm not applying any accounting here (and I'm a mathematician
In your example to Revan you state that the "cost" of keeping DDG for one season is 2M per month. This is based on the accounting principle of amortization, because in reality there is no cost because we've already paid to have DDG. In actual fact, the cost of keeping him is zero.
If you want to calculate the accounting cost on the books of keeping DDG for another season, you have to look at the books and see what his book value is at the start of the season, and find out how much it amortizes over the season. You also have to calculate a book value for his replacement, and figure out the cost of having him for a season, and offset that against the cost "saved" by selling DDG.
Or, you know, you could stick to what we can actually calculate, which is the arithmetic. The actual cash flow effect of keeping or selling DDG.
Otherwise, if you wish to continue the discussion, you should make the necessary assumptions and show us a proper calculation.
The bank account is changing for 25m though. And we are having a world class keeper for an another year. And an another year to scout for a new keeper.
Make it 5 billion loss if you want.
On the first scenario you have 25m in your bank account, and outside of your bank account you have an asset that could potential worth 25m (in 2015).
In the second scenario you have 0m in your bank account and lost the asset that could potentially have been sold for 25m (in 2015).
Ps: In reality you replace your asset with another asset for which the reselling value is unknown for the moment.
Understood, so you think that economics applies to football transfers? But not enough to inform a decision? Well tell the guy you're sticking up for then
You either misunderstood my post or you have no understanding of economics. I simplified it to 2M per month for his simplicity. The only thing we're discussing here is opportunity cost. This is a basic economics principle. The cost of keeping him is not zero. Before we even try to discuss further you need to understand that.
You can't just look at the bank account. I gave you the proper definition and explanation of this. Now if you think opportunity cost and economics is bullshit then fine by me.
Understood, so you think that economics applies to football transfers? But not enough to inform a decision? Well tell the guy you're sticking up for then
I don't even know that poster. It just kind of annoyed me that everyone was laughing at something that wasn't really wrong.
No, you don't. In both cases, the asset is now Real Madrid's asset. If the asset was still there, then we wouldn't get 25m from him on the first place, so in the bank we would have 0. On other words, the first scenario would have been transformed to the second scenario.
Come here thinking something has happened and people are arguing about economics
Somehow what Van Gaal said about 'we shall see the situation after September 1" makes me think David will be here for another year. I can only pray that if that happens he does a U-turn and signs a new deal.
Yep, that's true. So instead we look at the De Gea value. And the difference becomes.
difference = Delta v - 25m.
Delta v - the difference in worth between De Gea and the new keeper. Unless the new keeper is Neuer, that is positive. Impossible to quantify, anyway. But assuming that it is positive (new keeper won't be as good as De Gea), we can say that the upper bound of the difference is always less than 25m because a positive number - 25m is always greater than -25m.
Easy to understand?
My bad, I expressed myself very badly. It's before-after, not scenario1-scenario2.
Wasn't really wrong? It's just a made up equation based on assumptions... but I'll let him off as he doesn't seem to know where he went wrong. You've come in all 'I'm an economist I'll have you know' and backed him... but then it turns out you don't even really agree with him.
It was always scenario1 - scenario2. The difference on selling or losing De Gea on free.
On both scenarios De Gea was at Real Madrid, and United had a new keeper.
Oh my God, go make a thread in the general if you want to persist with this drivel, otherwise stick to the topic.Not in my post, In the first sentence there is 50m and in the second 0m. But that's virtual and useless.
We should stop.
To clarify, I was the one who said I'm an economist, and only as a reply to @shamans statement saying that he wasn't an economist or anything.
Economics is serious business brah.
Revan ftw...
Fair enough, I stand corrected
- Status