The Championship FFP Thread (Merged)

[downendcity]

13 minutes ago, Mr Popodopolous said:

I struggle though to understand why you refuse to accept- you've overspent and you've been looking at any and every loophole to try to get out of it. From Sevco 5112, to this, to the residual value- I struggle to see your argument other than it just being a technicality.

Sevco 5112 Limited takes non footballing wages off the wage bill, does it not?

Judging by some of the criticism oaths forum of our own club's transfer activity - selling key players and not spending big in January on a top striker - it shows that many of our fans still don't fully understand or "get' ffp and the effect it has on a club's operation, and we know that it has taken SL 5 years to change the club's way of operating in order to be able to comply with ffp requirements.

For club's like Derby, Wednesday and Villa, it is therefore hardly surprising that they do not want to accept limitations that will adversely affect their aim  of gaining promotion back to the premier league, which is what ffp does. As a result,  if, as seems the case with Derby and their stadium sale, they will only see it from a selfish point of view ( perhaps understandably) and will argue every which way to justify the course of action taken, no matter every argument given to the contrary.

 

[Mr Popodopolous]

21 minutes ago, downendcity said:

 Judging by some of the criticism oaths forum of our own club's transfer activity - selling key players and not spending big in January on a top striker - it shows that many of our fans still don't fully understand or "get' ffp and the effect it has on a club's operation, and we know that it has taken SL 5 years to change the club's way of operating in order to be able to comply with ffp requirements.

For club's like Derby, Wednesday and Villa, it is therefore hardly surprising that they do not want to accept limitations that will adversely affect their aim  of gaining promotion back to the premier league, which is what ffp does. As a result,  if, as seems the case with Derby and their stadium sale, they will only see it from a selfish point of view ( perhaps understandably) and will argue every which way to justify the course of action taken, no matter every argument given to the contrary.

 

Yeah, agreed- think we could have pushed it Jan 2019 on a higher calibre striker but I do agree most certainly. I don't think a lot of fans per se fully understand, or 'get' FFP- across the board. Or think it's a daft invention. Definitely it has been a long road but while we're here now- isn't always the best received.

Well said. I can accept the Sevco 5112 thing I suppose- legal and lots of companies probably do it. I can accept the residual value- short term gain v long term risk- that's fine to an extent.

What I cannot accept is how shuffling a transaction worth £81.1m from club to company owned by owner- whether it's real cash or paper I don't know but it'd show on the balance sheet- to not only avoid FFP sanctions but to provide a bit of a base to spend again moving forward. Is wrong- cheats the competition, and as you say getting back to the PL is their big aim so they will come up with ever more creative arguments, while avoiding the crux of the issue- their overspending and their *punishment dodging.

*-To date- wouldn't mind being a fly on the wall in that Portugal meeting!

Edited June 3, 2019 by Mr Popodopolous

[Rudolf Hucker]

2 hours ago, DerbyFan said:

I'm female 

[Guest DerbyFan]

5 minutes ago, Mr Popodopolous said:

I don't think much of the EFL- the fact they bottled in-season penalties on Birmingham in 2017/18 and Aston Villa, Sheffield Wednesday this season shows what they are all about- Shaun Harvey is not terribly capable, our own Mark Ashton IMO would have seen to it that the right punishments would have been handed out in a timely manner. I think it simply flummoxed a less than capable organisation- Birmingham's case was nailed on, look how long it took them to get sanctioned!

We'll see- no smoke without fire. If you aren't then you should be IMO while EFL investigate properly. Would make sense...I believe you can sign within certain conditions loans and frees under a soft embargo but it's a good holding position I think to prevent major signings.

The rules also refer to "Fair Market Value" and related parties- this will perhaps form part of Gibson's legal argument. I would also consider putting the golden share in EFL as a matter on table for clubs that take it to an external court personally- put that to a vote of member clubs, see how you like that!  In short, the risk of suspension of membership from the EFL. Putting aside that nuclear option, the other way of looking at it is that if infrastructure expenditure does not count towards expenses, nor should income of this nature count towards income. Now it isn't wholly a view I agree with, but the clause should read "Third and unrelated party or sale of a ground as moving to a new one" Words to that effect but much more legal language etc. Do you think the other 21 clubs at this meeting in June in Portugal are going to take it well from yourselves, Sheffield Wednesday and though they have gone up, trying to push for the deductions for Aston Villa? Tell me why they should...I'd be furious if I was a chairman who had played by the rules and the spirit as most had. Or for that matter, Birmingham getting punished as they did.

Yes, for FFP purposes. Johnson seems a decent player in any case agreed. The situation you are in- and why are you in it? You overspent! Badly...to me you should be docked 10-11 points as per the formula, EFL has provision to punish historic breaches within the rules- well if they bother to enforce that is. UEFA does I know that. These rules are based to varying levels on UEFA's. If they have nothing in the regs about it, that is another huge fuckup on their part but they must have as QPR got punished for offences in 2013/14. Not punished enough granted, but they were punished.

Wonder if Carson, Davies, Anya, Thorne, Martin will incur a loss- well Martin won't but he should therefore be up for sale- pure profit and wages off?

Depreciation- like I say going to look through 10-15 years of accounts. Is this work done, or work that is and has been in the pipeline? To me planned work, counting as current value is a bit odd.

I struggle though to understand why you refuse to accept- you've overspent and you've been looking at any and every loophole to try to get out of it. From Sevco 5112, to this, to the residual value- I struggle to see your argument other than it just being a technicality.

I'm not saying we don't need to get our costs under control (I won't say overspent, as that means spending more than the rules allow in my eyes, and we haven't done that) I know this, the club knows this, they've been saying it for the past few years, which is exactly why we've been selling people (yes we have also been buying people, but the club obviously feel they can do this and who am I to think we can't, they're the ones in control of the finances, and they obviously want us to remain competitive) I guess it being my club, I see the comments they make where as you don't, and you assume that they think they can carry on as they are, they don't, Mel Morris has said himself, multiple times, that we need to make cuts to our costs, he went into it in quite some detail during one of our fan forums that was available to view on Rams TV. He went into how much of the wage bill was being used on players that were not playing, and how much we would lose of that amount this summer, I can't remember the figures now, but it was interesting.

We apparently made cuts to the academy last summer, I know that's FFP exempt, but it shows that we realised we needed to make cuts, the funny thing is, this has been a fantastic year for the academy, the U18's won the league, and then the national title, and as such are now in next seasons U19 version of the Champion's League, the UEFA Youth League, so maybe streamlining it has helped with the output, maybe it led to more focus from everyone involved. It does however, show that making cuts doesn't have to have a bad effect on the output.

My point is though that that is not what the rules state, so we cannot be punished on what you, or anyone else for that matter, thinks they should state. They simply don't, and therefore it is not against the rules, it can be changed so it is against the rules in the future, but for this season and every previous season, everyone knew exactly what rules they were working to, and they worked within them, or they knowingly didn't and knew that as such they could be punished accordingly in the case of Birmingham.

QPR weren't punished retrospectively, everyone knew they were going to be punished, they tried to put it off for as long as they could by taking it via the legal route, they knew, and everyone knew, what was coming, they couldn't have a points deduction, because that was simply not in the rules at the time, they could only be punished on the rules that they broke at the time, with the punishment that was in the rules at the time, even though everyone knew for future breaches points deductions would be relevant. Also, in case you don't remember, it was us that they beat in the Play Off final that year, they broke the rules, we didn't (that was before we started to spend anything significant, Mel Morris bought into the club the day before the final if I remember rightly, he took a gamble buying at, I believe, somewhere between what the club would have been worth if we went up and what it was worth when we stayed down) they got the riches by winning that game and we didn't. I've seen your posts in this thread suggesting before the Play Off final that both us and Villa should have been stripped of it because we 'broke the rules' and it should have been someone else that had the chance to go up. Well if that was the case this time, then that should have been the case last time, and that would have been us, the team that didn't cheat the rules, the team that finished in third in the league (I saw something I think in this thread about another time when it defaulted to the team that was next in line, hence us being in third were next in line), that would/could in the case of a game against another team that didn't breach the rules have gone up and got the riches of the Premier League and we probably wouldn't be having this conversation now.

But we didn't, we had to suck it up and get on with it, which is exactly what we did.

Of course Martin would have been available for sale, but you can only sell someone if there is a buyer, there wasn't as his wages are said to be high, therefore no one wants to buy him, or pay his full wages, and he went out on loan instead. Yes this is a problem the club caused, but once done, it cannot be fixed.

In the case of George Thorne, there was no way he ever should have been worth less than we spent on him, he was a fantastic player, the best defensive midfielder in the Championship by a mile, he got injured (ACL - not the leg he'd done before, I seem to remember) I think it was 3-4 days after we bought him, in a pre season friendly. Then he finally came back and played most of the season after, and was having a good season and in the last game (before the Play Offs that we were in) an Ipswich player makes a horrendous challenge on him and snaps his leg in two. Such awful luck for both him and us (it definitely affected us for the first game of the Play Offs, and we lost heavily and although we put in a hell of a fight in the second leg, dubbed 'Istanhull' by our fans, it was too much to come back from) he came back during the season before the one just ended, and he just didn't look the same player, it was such a horrible thing to see, him looking a shadow of himself, I'm not sure he will ever be the same, too many terrible injuries, we ended up loaning him out to Luton in January, and then a few days later Jones goes to Stoke, and so Thorne plays only a few minutes in his time there. So we'll have to make a loss on him, a loss that should never have happened, but it will, so we'll have to deal with it, but it just shows you how you cannot take for granted what you will get for a player, and as such it's really hard to deal with something like that when it comes to FFP. Then there's Will Hughes, he should have gone for a lot more too, but again, an ACL in the first game of the season under Clement, both him and Bryson (also his knee, also the same game) were out for most of the season. It was those two injuries that made us panic into buying Butterfield and Johnson, probably not helped by having Clement, a rookie manager, having to deal with such a crazy situation, that no one could have predicted happening, on the first day of the season. Not saying that we as a club deserve sympathy for any of this or anything, just saying how best laid plans can change in a single moment, and what you think you'll get for someone doesn't always come to fruition, that can happen regardless of what value a player is at on the books, especially in Georges case where it was as soon as we bought him that he got his first major injury (of the two in his time with us).

Anya will more than likely incur a loss, Davies a very small one (unless we've put his value down to £0 already, as we only paid around £500k, his release clause at Hull), Carson - I'm sure theres some debate on whether he came on a free or for a small fee, either way, it won't be a lot as he came from relegated (at the time) Wigan.

[Mr Popodopolous]

1 hour ago, DerbyFan said:

I'm not saying we don't need to get our costs under control (I won't say overspent, as that means spending more than the rules allow in my eyes, and we haven't done that) I know this, the club knows this, they've been saying it for the past few years, which is exactly why we've been selling people (yes we have also been buying people, but the club obviously feel they can do this and who am I to think we can't, they're the ones in control of the finances, and they obviously want us to remain competitive) I guess it being my club, I see the comments they make where as you don't, and you assume that they think they can carry on as they are, they don't, Mel Morris has said himself, multiple times, that we need to make cuts to our costs, he went into it in quite some detail during one of our fan forums that was available to view on Rams TV. He went into how much of the wage bill was being used on players that were not playing, and how much we would lose of that amount this summer, I can't remember the figures now, but it was interesting.

We apparently made cuts to the academy last summer, I know that's FFP exempt, but it shows that we realised we needed to make cuts, the funny thing is, this has been a fantastic year for the academy, the U18's won the league, and then the national title, and as such are now in next seasons U19 version of the Champion's League, the UEFA Youth League, so maybe streamlining it has helped with the output, maybe it led to more focus from everyone involved. It does however, show that making cuts doesn't have to have a bad effect on the output.

My point is though that that is not what the rules state, so we cannot be punished on what you, or anyone else for that matter, thinks they should state. They simply don't, and therefore it is not against the rules, it can be changed so it is against the rules in the future, but for this season and every previous season, everyone knew exactly what rules they were working to, and they worked within them, or they knowingly didn't and knew that as such they could be punished accordingly in the case of Birmingham.

QPR weren't punished retrospectively, everyone knew they were going to be punished, they tried to put it off for as long as they could by taking it via the legal route, they knew, and everyone knew, what was coming, they couldn't have a points deduction, because that was simply not in the rules at the time, they could only be punished on the rules that they broke at the time, with the punishment that was in the rules at the time, even though everyone knew for future breaches points deductions would be relevant. Also, in case you don't remember, it was us that they beat in the Play Off final that year, they broke the rules, we didn't (that was before we started to spend anything significant, Mel Morris bought into the club the day before the final if I remember rightly, he took a gamble buying at, I believe, somewhere between what the club would have been worth if we went up and what it was worth when we stayed down) they got the riches by winning that game and we didn't. I've seen your posts in this thread suggesting before the Play Off final that both us and Villa should have been stripped of it because we 'broke the rules' and it should have been someone else that had the chance to go up. Well if that was the case this time, then that should have been the case last time, and that would have been us, the team that didn't cheat the rules, the team that finished in third in the league (I saw something I think in this thread about another time when it defaulted to the team that was next in line, hence us being in third were next in line), that would/could in the case of a game against another team that didn't breach the rules have gone up and got the riches of the Premier League and we probably wouldn't be having this conversation now.

But we didn't, we had to suck it up and get on with it, which is exactly what we did.

Of course Martin would have been available for sale, but you can only sell someone if there is a buyer, there wasn't as his wages are said to be high, therefore no one wants to buy him, or pay his full wages, and he went out on loan instead. Yes this is a problem the club caused, but once done, it cannot be fixed.

In the case of George Thorne, there was no way he ever should have been worth less than we spent on him, he was a fantastic player, the best defensive midfielder in the Championship by a mile, he got injured (ACL - not the leg he'd done before, I seem to remember) I think it was 3-4 days after we bought him, in a pre season friendly. Then he finally came back and played most of the season after, and was having a good season and in the last game (before the Play Offs that we were in) an Ipswich player makes a horrendous challenge on him and snaps his leg in two. Such awful luck for both him and us (it definitely affected us for the first game of the Play Offs, and we lost heavily and although we put in a hell of a fight in the second leg, dubbed 'Istanhull' by our fans, it was too much to come back from) he came back during the season before the one just ended, and he just didn't look the same player, it was such a horrible thing to see, him looking a shadow of himself, I'm not sure he will ever be the same, too many terrible injuries, we ended up loaning him out to Luton in January, and then a few days later Jones goes to Stoke, and so Thorne plays only a few minutes in his time there. So we'll have to make a loss on him, a loss that should never have happened, but it will, so we'll have to deal with it, but it just shows you how you cannot take for granted what you will get for a player, and as such it's really hard to deal with something like that when it comes to FFP. Then there's Will Hughes, he should have gone for a lot more too, but again, an ACL in the first game of the season under Clement, both him and Bryson (also his knee, also the same game) were out for most of the season. It was those two injuries that made us panic into buying Butterfield and Johnson, probably not helped by having Clement, a rookie manager, having to deal with such a crazy situation, that no one could have predicted happening, on the first day of the season. Not saying that we as a club deserve sympathy for any of this or anything, just saying how best laid plans can change in a single moment, and what you think you'll get for someone doesn't always come to fruition, that can happen regardless of what value a player is at on the books, especially in Georges case where it was as soon as we bought him that he got his first major injury (of the two in his time with us).

Anya will more than likely incur a loss, Davies a very small one (unless we've put his value down to £0 already, as we only paid around £500k, his release clause at Hull), Carson - I'm sure theres some debate on whether he came on a free or for a small fee, either way, it won't be a lot as he came from relegated (at the time) Wigan.

I agree you are moving in the right direction- that much is fairly clear in some respects- like I say you're in some ways not flagrantly in breach- see those player sales- but in other ways you are. I would have had more respect and more expectancy of leniency- not being let off but leniency- if you had used those player sales in your defence i.e. an EFL hearing.

Perhaps you should use your academy more and put a bit of a self-imposed embargo on signings then- it sounds quite promising. In fact maybe you should have had a greater ratio of academy players vs signings this last couple of seasons. I do believe, possibly wrongly though, that Waghorn and Marriott on lower wages than Vydra and Weimann- but again both? Just one IMO. That would have been another way to show willing and prove it.

Hmm, you might want to read those rules in depth- there is scope for flexibility there! EFL commission has such powers- taken from another forum but here goes:

Quote

 

A Commission may issue a decision to:

·         order a party to do or refrain from doing anything;

·         order a specific performance;

·         make a declaration on any matter to be determined;

·         issue a reprimand or warning as to the future conduct of a party;

·         order the payment of compensation to The League, any Club, any other club, Player or other person;

·         order a suspension of membership of The League;

·         order a deduction of points;

·         impose a financial penalty payable to The League;

·         recommend expulsion from membership of The League;

·         order a withdrawal or loss of benefit otherwise available to members of The League e.g. basic award or ladder payment;

·         impose an embargo on registration of Players;

·         order any other sanction as the Disciplinary Commission may think fit; and

·         order that interest be payable on any sums awarded under this Regulation for such period and at such rates as the Disciplinary Commission thinks fit.

 

That to me, combined with related parties rules, fair market value, the quite likely anger of 20 or more Championship rivals- that gives enough scope for a review and punishment if found guilty. I particularly like the "Order any other sanction as the Disciplinary Commission may see fit". That gives ample scope to deduct points, refuse to register new signings etc. In fact as they see fit!

That was unlucky granted, losing to a side who broke it in such an egregious way as QPR, Nonetheless the old rules had major flaws...the new rules offer scope to demote from playoffs so this should've happened IMO. I think the other one you refer to was when Swindon a while ago got denied promotion out the 2nd tier after winning the playoffs for financial irregularities and actually demoted down to 3rd tier- assuming the next highest side went up.

The old rules were badly flawed- like history, can't necessarily judge by standards of today. QPR should've had a harsher punishment undoubtedly.

Can't fix it, but still did it- therefore should be punished I'd say.

That sounds bad but then we've had a loanee get injured first game on loan, other loanees get injured for the whole spell early in a game- it is bad but it is sadly a part of the game. Hard on the player and the club though and definitely can affect financial positions- but then you sell some more, or you show more restraint in the market- maybe use Martin and only sign one out of Waghorn and Marriott or better yet loan Martin out and only sign one of those 2, or sell Bogle- who would definitely have buyers. It's tough but there are still choices that can be made to mitigate!

Now how exactly does your player valuation model work? As in who decides it...the club? Well that's not open to abuse at all - to me such an outlier of Accounting amortisation of players model should be overseen by a proper external body- I would say the EFL but I have little faith in them!

Like I say if you expect the other 20 or so Championship clubs- maybe 21, 22 to just take this on the chin then I don't see why they would!

PPS

Swiss Ramble has broken down your position somewhat. Unsure what the wages adjustment means or is being adjusted for, but it shows you would have been £6-7m over without the owner selling the ground to himself. Can well see why Gibson is going after Derby given there was one point in it.

6 point deduction then one year rulings, assessments for the remainder of the period.

Edited June 3, 2019 by Mr Popodopolous

[bcfc01]

3 hours ago, DerbyFan said:

I'm female 

Never mind..

Thought you were very circumspect 

[Guest DerbyFan]

56 minutes ago, Mr Popodopolous said:

I agree you are moving in the right direction- that much is fairly clear in some respects- like I say you're in some ways not flagrantly in breach- see those player sales- but in other ways you are. I would have had more respect and more expectancy of leniency- not being let off but leniency- if you had used those player sales in your defence i.e. an EFL hearing.

Perhaps you should use your academy more and put a bit of a self-imposed embargo on signings then- it sounds quite promising. In fact maybe you should have had a greater ratio of academy players vs signings this last couple of seasons. I do believe, possibly wrongly though, that Waghorn and Marriott on lower wages than Vydra and Weimann- but again both? Just one IMO. That would have been another way to show willing and prove it.

Hmm, you might want to read those rules in depth- there is scope for flexibility there! EFL commission has such powers- taken from another forum but here goes:

That to me, combined with related parties rules, fair market value, the quite likely anger of 20 or more Championship rivals- that gives enough scope for a review and punishment if found guilty. I particularly like the "Order any other sanction as the Disciplinary Commission may see fit". That gives ample scope to deduct points, refuse to register new signings etc. In fact as they see fit!

That was unlucky granted, losing to a side who broke it in such an egregious way as QPR, Nonetheless the old rules had major flaws...the new rules offer scope to demote from playoffs so this should've happened IMO. I think the other one you refer to was when Swindon a while ago got denied promotion out the 2nd tier after winning the playoffs for financial irregularities and actually demoted down to 3rd tier- assuming the next highest side went up.

The old rules were badly flawed- like history, can't necessarily judge by standards of today. QPR should've had a harsher punishment undoubtedly.

Can't fix it, but still did it- therefore should be punished I'd say.

That sounds bad but then we've had a loanee get injured first game on loan, other loanees get injured for the whole spell early in a game- it is bad but it is sadly a part of the game. Hard on the player and the club though and definitely can affect financial positions- but then you sell some more, or you show more restraint in the market- maybe use Martin and only sign one out of Waghorn and Marriott or better yet loan Martin out and only sign one of those 2, or sell Bogle- who would definitely have buyers. It's tough but there are still choices that can be made to mitigate!

Now how exactly does your player valuation model work? As in who decides it...the club? Well that's not open to abuse at all - to me such an outlier of Accounting amortisation of players model should be overseen by a proper external body- I would say the EFL but I have little faith in them!

I need to check the accounts, but basically we started to spend more on players in the summer of 2015, when we appointed Clement, we bought Thorne before that, in summer 2014, but I seem to remember it being mentioned that he was basically paid for with what we earned from the Play Offs in 2014.

I've found this in the accounts for this year about how we value players:

Quote

Player registrations, levies and associated costs

The costs associated with acquiring players' registration, inclusive of EFL levies, or extending their contracts, including agent fees, are capitalised and amortised over the period of the respective players' contracts after consideration of their residual values.

Where a contract is renegotiated, the unamortised costs, together with the new costs relating to the contract extension, are amortised over the term of the new contract. Residual values are reviewed by the board on an ongoing basis over the course of the season by reference to active market values.

Under the conditions of certain transfer agreements, further fees may become payable in the event of players or the Company achieving specified outcomes. Costs are capitalised at the date of the achievement with any future costs considered to be contingent liabilities.

The profit or loss on sale of players' registrations represents the proceeds of sale less the net book value of the registration, levy and associated costs.

The Company undertakes annual impairment reviews for player registrations.

 

I forgot to mention, things that have happened to the stadium (that I can remember) since the 2007 valuation, I've no idea how much these affect the valuation, but they have been done, and surely can only affect it in a positive way:

• big screen inside
• 2 big screens outside
• new hybrid pitch that included new full undersoil heating and all of the works and the artificial pitch perimeter (included digging it all up rather than making the pitch higher as some do, not sure when the last major pitch works was before that)
• new led perimeter boards (they're all led now, including the top of the stand facing part, I think there was also a previous set of led boards since 2007)
• new PA system (it was said at the time to be the best one you could get)
• new led floodlights
• painted the entire roof steel black (it was previously white)
• all the other painting works and general tidying up
• the club took back space that had been let out and made a new restaurant (The Yard)
• then took back what was a Starbucks and made an in house coffee shop (The Back Yard)
• full overhaul of the ticket office (I think this has been done a few times)
• we have our own Rams TV studio in the stadium (not the one for Sky)
• we use a 10 camera mix for Rams TV broadcasts, so theres been work done to make all of the camera locations - I believe this also includes basically the stuff that's in the portable vans that Sky use in a room near to the Rams TV studio - so all the camera views and all the technology that that requires
• major overhaul of the directors box area
• major overhaul of the boxes and hospitality area
• heating in the concourse
• 8 small screens (making 2 big screens of 4 each) in both the ticket office window and the megastore windows.
• new screens in all of the concourses and hospitality areas

that's just the things I can remember, and the vast majority is very recent, ie. since Mel Morris.

Re. The disciplinary commission, that's only a problem if you've broken the rules, they can investigate but if the rules are not broken they have no mandate to punish. As the EFL already okayed the sale before it happened I don't see how the commission can find we've done anything wrong, there would surely be comeback on the EFL if that was the case.

Edited June 3, 2019 by DerbyFan
Adding

[Guest DerbyFan]

1 hour ago, Mr Popodopolous said:

Swiss Ramble has broken down your position somewhat. Unsure what the wages adjustment means or is being adjusted for, but it shows you would have been £6-7m over without the owner selling the ground to himself. Can well see why Gibson is going after Derby given there was one point in it.

6 point deduction then one year rulings, assessments for the remainder of the period.

Am I missing something, how can 5+5+5=14, and (3)+(5)=(9)? 

I think the £5m is an arbitrary figure for having a Cat 1 academy, not the exact amount that would be excluded for FFP purposes, I'm not sure how the accounts are interlinked, but the most recent accounts for the academy show a loss of around £12m, the ones from the year before showing a loss of around £6m I think it was. I believe this to have increased due to a lot of work being done on the academy, it has expanded to include around 5 or 6 more pitches but I can't be sure when exactly that work took place.

Edited June 3, 2019 by DerbyFan
Adding re. academy

[Mr Popodopolous]

 

19 minutes ago, DerbyFan said:

I need to check the accounts, but basically we started to spend more on players in the summer of 2015, when we appointed Clement, we bought Thorne before that, in summer 2014, but I seem to remember it being mentioned that he was basically paid for with what we earned from the Play Offs in 2014.

I've found this in the accounts for this year about how we value players:

 

I forgot to mention, things that have happened to the stadium (that I can remember) since the 2007 valuation, I've no idea how much these affect the valuation, but they have been done, and surely can only affect it in a positive way:

• big screen inside
• 2 big screens outside
• new hybrid pitch that included new full undersoil heating and all of the works and the artificial pitch perimeter (included digging it all up rather than making the pitch higher as some do, not sure when the last major pitch works was before that)
• new led perimeter boards (they're all led now, including the top of the stand facing part, I think there was also a previous set of led boards since 2007)
• new PA system (it was said at the time to be the best one you could get)
• new led floodlights
• painted the entire roof steel black (it was previously white)
• all the other painting works and general tidying up
• the club took back space that had been let out and made a new restaurant (The Yard)
• then took back what was a Starbucks and made an in house coffee shop (The Back Yard)
• full overhaul of the ticket office (I think this has been done a few times)
• we have our own Rams TV studio in the stadium (not the one for Sky)
• we use a 10 camera mix for Rams TV broadcasts, so theres been work done to make all of the camera locations - I believe this also includes basically the stuff that's in the portable vans that Sky use in a room near to the Rams TV studio - so all the camera views and all the technology that that requires
• major overhaul of the directors box area
• major overhaul of the boxes and hospitality area
• heating in the concourse
• 8 small screens (making 2 big screens of 4 each) in both the ticket office window and the megastore windows.
• new screens in all of the concourses and hospitality areas

that's just the things I can remember, and the vast majority is very recent, ie. since Mel Morris.

Re. The disciplinary commission, that's only a problem if you've broken the rules, they can investigate but if the rules are not broken they have no mandate to punish. As the EFL already okayed the sale before it happened I don't see how the commission can find we've done anything wrong, there would surely be comeback on the EFL if that was the case.

The amortisation thing is interesting, because the way I've read it it is about residual value, yet that sounds a lot like standard amortisation to me! Revaluation through the year, definitely open to abuse and manipulation as a tool.

I've looked through some of your accounts and the Net book value of "Freehold Property" by 30th June 2017 was £51.6m. Presumably that represents Pride Park and would have taken into account all of the improvements that you list- and there have been many! 

Derby 2017/18 accounts,

11. Tangible Fixed Assets. 

You disposed of under Leasehold property & improvements assets to the value of £56,205,091.

However once Depreciation factored in, this value surely drops. Under Depreciation, it said Disposals (£14,523,854). That'd be the depreciation on Pride Park I believe- unless you disposed of any other Tangible Fixed Assets in 2017/18 period.

So yes, £41-42m seems about right for Pride Park. Based on those accounts.

Possibly the EFL screwed up- again- by seemingly just waving it through and instead not putting approval on hold while they conducted a thorough investigation, plus hiring truly independent surveyors and valuers.

11 minutes ago, DerbyFan said:

Am I missing something, how can 5+5+5=14, and (3)+(5)=(9)? 

Am assuming it was after rounding it up or having rounded it up or down, as in a number £x rather than £x.y- would have to look at the figures in all depth though to work out whether it should be rounded up or down.

[martnewts]

Not an area in which I have massive expertise but is the required stamp duty land tax being paid over on these “sales” eg on an £80m sale of non residential property there is approximately £4m of stamp duty due

[Mr Popodopolous]

Oh yeah just seen your academy post.

Well it's funny you should mention that. Sevco 5112 for 2017/18 season shows Academy Expenditure to be £4,624,162 and for 2016/17 to be £3,961,509. The one that is missing- is 2015/16...Derby's accounts actually are relatively transparent in some respects unlike a fair few clubs it seems, but could that missing number be squaring the circle- neither Derby County or Sevco 5112 accounts though show Youth Expenditure in 2015/16- but then your Sevco accounts for that season were made up until until 31st August 2016 so that could have affected it!

Your Global Derby accounts for that season don't show it either.

Would be amusing if Mel Morris sold you but kept the ground though- maybe you could share with Coventry!

Edited June 3, 2019 by Mr Popodopolous

[Guest DerbyFan]

4 minutes ago, Mr Popodopolous said:

Am assuming it was after rounding it up or having rounded it up or down, as in a number £x rather than £x.y- would have to look at the figures in all depth though to work out whether it should be rounded up or down.

Maybe, but when all the other figures seem to add up it was a tad confusing, especially when I think I've seen the various finance people say that a figure of £5m is normally assumed for a Cat 1 academy.

In reply to your earlier comment about us using the academy, that has always been the long term plan, Mel Morris has been working on improving it since he took control, it's been something of a pet project for him I think, it's just that it takes time for the best ones to come through, we do have some good players at U23 level who may also see game time, some of the ones who have been out on loan such as Max Lowe (as we have released Cole and Olsson - although we have Forsyth he has become sadly very prone to ACL injuries - up to 3 now I think), Luke Thomas and Kyle McAllister, but it is quite obvious that our U18's are where they're starting to really show some promise, that has taken some time to come to fruition, but now looks very good indeed, hopefully some will be involved next season.

I think if you asked most of our fans, they would say the same thing, that we are really looking forward to having these lads break through into the team. I don't think as a fanbase we have ever been so enthused with the academy as a whole, most of us don't want to sign players just for the sake of it as it blocks their pathway, the only reason I could see us signing some is if either a lot of our older players go and we want some experience (not quite as old as the ones leaving) to help them out, or we think ours are not quite ready, so we sign some who are that can play immediately and hopefully turn a quick profit on them when ours are ready, or we sign loanees than are slightly older for the season to bridge the gap.

We'll see, I guess.

[Guest DerbyFan]

15 minutes ago, Mr Popodopolous said:

Would be amusing if Mel Morris sold you but kept the ground though- maybe you could share with Coventry!

I keep seeing other clubs fans saying this! 

He may well keep the ground if he sells us, it may depend on who buys us and whether they want the ground as part of the sale, there are lots of clubs that rent their stadium, including a lot of the big boys, so they may not care, we have a long term lease, and it's owned by a fan, I'm not sure it really matters.

[Mr Popodopolous]

7 minutes ago, DerbyFan said:

I keep seeing other clubs fans saying this! 

He may well keep the ground if he sells us, it may depend on who buys us and whether they want the ground as part of the sale, there are lots of clubs that rent their stadium, including a lot of the big boys, so they may not care, we have a long term lease, and it's owned by a fan, I'm not sure it really matters.

Yeah, ultimately you're right. It is the case that he owns it, he is a fan- fans who own grounds even if they sell up club, don't tend to leave their club in the lurch with nowhere to play!

Banter aside it's actually not an issue I make light of.

[Guest DerbyFan]

1 minute ago, Mr Popodopolous said:

Yeah, ultimately you're right. It is the case that he owns it, he is a fan- fans who own grounds even if they sell up club, don't tend to leave their club in the lurch with nowhere to play!

Banter aside it's actually not an issue I make light of.

I know what you mean, some clubs have been left in a right mess with theirs, Coventry as you mentioned, I wouldn't like to be in their situation, it can't be fun not knowing where you're playing next season, every season as it now seems.

I do think the EFL can do more to help clubs who are genuinely in a mess, owner wise, that is definitely where the focus needs to be in my opinion.

As long as an owner can prove they will continue to fund every piece of business they do, fee and wages, I can't see the problem personally, although that should maybe be within reason, as fees and wages are already sky high (is it just me or has this gotten WORSE since FFP came into play? I presume as everyone wants to maximise fees due to FFP, and as wages are generally connected to the size of the fee, they naturally go up too) even if that means putting the funds for this in a holding account prior to the season. Surely it is more damaging for football as a whole when clubs go out of business (or close to) because they are spending money their owners aren't prepared to fund. Then there was the situation with Bolton and FGR to do with Doidge, that should never have been allowed to happen, I presume that really messed up FGR's budget, it was a huge amount of money for a club at their level.

[Guest DerbyFan]

6 hours ago, Mr Popodopolous said:

Interesting- Derby related- tweet.

Any ideas on this one @DerbyFan ?

I mentioned earlier that I thought this could be to do with their residual values and FFP and that I expected the release of them to be into July, whilst it could still be that, at least partly, I've just seen a tweet from a local journalist saying that the protecting their value part was down to sending them out on loan or in Johnson's case him becoming quite important for us at the end of the season. If they impressed, they would at least have value for us to utilise, rather than being out of contract, and therefore having no value to us. I can see the logic given they were 'vastly reduced terms', it will be interesting to see when they get released. In Johnson's case I still expect him to stick around, unless someone makes us an offer we can't refuse.

[Mr Popodopolous]

10 hours ago, DerbyFan said:

I know what you mean, some clubs have been left in a right mess with theirs, Coventry as you mentioned, I wouldn't like to be in their situation, it can't be fun not knowing where you're playing next season, every season as it now seems.

I do think the EFL can do more to help clubs who are genuinely in a mess, owner wise, that is definitely where the focus needs to be in my opinion.

As long as an owner can prove they will continue to fund every piece of business they do, fee and wages, I can't see the problem personally, although that should maybe be within reason, as fees and wages are already sky high (is it just me or has this gotten WORSE since FFP came into play? I presume as everyone wants to maximise fees due to FFP, and as wages are generally connected to the size of the fee, they naturally go up too) even if that means putting the funds for this in a holding account prior to the season. Surely it is more damaging for football as a whole when clubs go out of business (or close to) because they are spending money their owners aren't prepared to fund. Then there was the situation with Bolton and FGR to do with Doidge, that should never have been allowed to happen, I presume that really messed up FGR's budget, it was a huge amount of money for a club at their level.

Agree on EFL oversight of owners. Coventry situation seems a shocker. Many bad EFL owners.

Don't agree on FFP- if the system changes in a few years, that is different. However as it stands now, can't see why there should be exceptions or mitigating factors for clubs- supposing the other 21 compliant clubs did not wish to play the ground sale clubs- just supposing an organised joint action- then the EFL would have to act on yourselves and if proven to have done the same, Birmingham and Sheffield Wednesday.

Hard to say- has it got worse because of FFP or despite it? If the rules were enforced correctly, with things like as promised in-season points deductions then we may see a different story. Another argument is that without some form of restraint the problem will be worse still- seems like limitation of losses than break even- if we want to go down that road, a breakeven requirement from footballing operations is the way to go- problem is what would it do to the Championship? Most clubs would have to have a firesale in the short to medium term but in the long term wage rationalisation would work. Simple solution- show proof of break even with zero owner investment or no license to play that season! Same goes for each and every season. There are arguments for and against FFP though granted and profit on transfers is an increasing factor which pushes wages up.

Again part 2 of that solution, clubs that look like breaking their own financial plans put in at start of season by sudden expansive player expenditure, soft embargo- no ifs, no buts, rule clear.

On the other hand, your solution also has its merits- that's for a future plan though, as of now I look at the Championship owners and they don't see the sort in many cases to take this lightly.

My idea of strict breakeven and automatic transfer embargoes- well it would financially stabilise but it would also likely wreck the 'product' though so it isn't feasible- though it is the most financially sane solution.

[Mr Popodopolous]

9 hours ago, DerbyFan said:

I mentioned earlier that I thought this could be to do with their residual values and FFP and that I expected the release of them to be into July, whilst it could still be that, at least partly, I've just seen a tweet from a local journalist saying that the protecting their value part was down to sending them out on loan or in Johnson's case him becoming quite important for us at the end of the season. If they impressed, they would at least have value for us to utilise, rather than being out of contract, and therefore having no value to us. I can see the logic given they were 'vastly reduced terms', it will be interesting to see when they get released. In Johnson's case I still expect him to stick around, unless someone makes us an offer we can't refuse.

Planning to watch some clips of Mel Morris now- your model doesn't sound like standard amortisation, the asset off the books incurring a big cost isn't usually the case? Sounds like keeping annual amortisation cost down is the upside, taking the hit the downside- not one that should be ducked through questionable asset sales from one hand to the other!

[Guest DerbyFan]

59 minutes ago, Mr Popodopolous said:

Agree on EFL oversight of owners. Coventry situation seems a shocker. Many bad EFL owners.

Don't agree on FFP- if the system changes in a few years, that is different. However as it stands now, can't see why there should be exceptions or mitigating factors for clubs- supposing the other 21 compliant clubs did not wish to play the ground sale clubs- just supposing an organised joint action- then the EFL would have to act on yourselves and if proven to have done the same, Birmingham and Sheffield Wednesday.

Hard to say- has it got worse because of FFP or despite it? If the rules were enforced correctly, with things like as promised in-season points deductions then we may see a different story. Another argument is that without some form of restraint the problem will be worse still- seems like limitation of losses than break even- if we want to go down that road, a breakeven requirement from footballing operations is the way to go- problem is what would it do to the Championship? Most clubs would have to have a firesale in the short to medium term but in the long term wage rationalisation would work. Simple solution- show proof of break even with zero owner investment or no license to play that season! Same goes for each and every season. There are arguments for and against FFP though granted and profit on transfers is an increasing factor which pushes wages up.

Again part 2 of that solution, clubs that look like breaking their own financial plans put in at start of season by sudden expansive player expenditure, soft embargo- no ifs, no buts, rule clear.

On the other hand, your solution also has its merits- that's for a future plan though, as of now I look at the Championship owners and they don't see the sort in many cases to take this lightly.

My idea of strict breakeven and automatic transfer embargoes- well it would financially stabilise but it would also likely wreck the 'product' though so it isn't feasible- though it is the most financially sane solution.

Of course I was talking about in the future, I know that is not currently how it works, just how I think it should work.

It's the only way I can see clubs not getting into situations such as Bolton, and the knockdown effect that produces to other clubs and to businesses in general who also lose money from the situation.

If the club (or rather the owner) cannot or will not put the money in then you cannot buy, as simple as that. However if they can, and they put that money aside, which cannot be used for anything other than it's intended purpose, ie. for player costs - that would be either until the player leaves 1. At the end of their contract (so all the money set aside is gone) or 2. Is sold (the remaining money set aside for them can then be repurposed) then you can go ahead and buy them without issue.

It's ok talking about a breakeven requirement, and that it would require firesales from most clubs to get into line, however, that doesn't leave many clubs to then actually buy the players that most clubs have to sell!

Again, a club can only sell a player if there is a club to sell to, if most of them have to sell, theres not many able to buy and the transfer window would grind to a halt.

There would have to be somewhat of an amnesty on current players and their current contracts (not re-contracts that happen further down the line after the change) to stop this from happening.

And yes, I can't see it happening as you're correct, it would wreck the product and I cannot see how anyone connected with the EFL (or any other league that considers taking it up) would want that to happen, and that includes the clubs, as it would leave them in an extremely weak bargaining position for absolutely everything, including TV rights and sponsorship, which then in turn further harms the amounts clubs can spend and creates a vicious circle.

And anyway there would still be clubs who find the loopholes, ie. selling a player to a 'friendly club' (one they have other links to who do not operate to the same rules as ours) they would just be different loopholes.

There are loopholes in everything, you just have to find them, I guess it's actually seen as a skill in itself to be able to do that.

Edited June 4, 2019 by DerbyFan

[Olé]

1 hour ago, Mr Popodopolous said:

your model doesn't sound like standard amortisation, the asset off the books incurring a big cost isn't usually the case? Sounds like keeping annual amortisation cost down is the upside, taking the hit the downside

Putting aside the stadium thing, I still think this basic accounting twist on amortisation is already highly dubious. @DerbyFan I do appreciate you sharing the club's definition of how you handle player costs as I'd not seen it officially laid out, which is helpful. I have no specific axe to grind with Derby, I have friends who are Derby fans, always find Derby fans decent when we cross paths on trains on match days, and very much enjoy my trips to the area (well, okay, specifically the Brunswick!)

However I just can't get my head round this practice being fair (it seems like an obvious attempt to "game" compliance) and as in bold above, kicking the can down the road to "take the hit" later seems to be incredibly reckless and exactly what FFP is meant to be putting a stop to. That the definition from Derby even explicitly includes provision to negotiate new contracts and re-amortise an existing prior player cost further into the future is barmy to me, as is self evaluating impairment charges.

It seems to me to be continually deferring a lot of real terms costs from the balance sheet until you can get into the Premiership and then release all these accounting anomalies when you can "take the hit" far more comfortably. It's pure accounting sleight of hand. That alone should bring everything else Morris does into question. If the EFL had half a brain they'd define accounting rules so that the whole process of FFP is comparing like for like and not allowing clubs to write their own rules.

Don't get me wrong, the logic of Derby's model is valid - I've often pointed out on this board myself that paying silly money for a young player is something I think SL would do IF wages were achievable, as it's wages that are our real terms drag on the balance sheet and where we get beaten to players by most of our peers. £10m transfer fee amortised (straight line) followed by a likely profit on sale of exciting young player, is simply asset management to a lifelong share trader like Lansdown. 

Therefore one could argue that we should use Derby's residual value accounting. SL doesn't, I assume because it would be very misleading and very dangerous. Players get injured, players don't work out, and most of all players nowadays will run a contract down if they can get a big signing on fee at a future club. Derby's accounting implies certainty that none of this will happen and there is a guaranteed market and return for their players, allowing them to keep their costs off the balance sheet.

It's a neat trick to comply with FFP limits, but it's just a time bomb done in the hope of securing Premier League football before it goes off. And seeing the definition of how Derby handle re-negotiated contracts with re-amortisation of existing costs that still haven't hit the balance sheet, I can see even more there is a process here to keep deferring costs. You could actually give a **** player a new contract on meager terms to artificially defer their cost. And on current form I suspect Morris would.

 

[downendcity]

28 minutes ago, DerbyFan said:

Of course I was talking about in the future, I know that is not currently how it works, just how I think it should work.

It's the only way I can see clubs not getting into situations such as Bolton, and the knockdown effect that produces to other clubs and to businesses in general who also lose money from the situation.

If the club (or rather the owner) cannot or will not put the money in then you cannot buy, as simple as that. However if they can, and they put that money aside, which cannot be used for anything other than it's intended purpose, ie. for player costs - that would be either until the player leaves 1. At the end of their contract (so all the money set aside is gone) or 2. Is sold (the remaining money set aside for them can then be repurposed) then you can go ahead and buy them without issue.

It's ok talking about a breakeven requirement, and that it would require firesales from most clubs to get into line, however, that doesn't leave many clubs to then actually buy the players that most clubs have to sell!

Again, a club can only sell a player if there is a club to sell to, if most of them have to sell, theres not many able to buy and the transfer window would grind to a halt.

There would have to be somewhat of an amnesty on current players and their current contracts (not re-contracts that happen further down the line after the change) to stop this from happening.

And yes, I can't see it happening as you're correct, it would wreck the product and I cannot see how anyone connected with the EFL (or any other league that considers taking it up) would want that to happen, and that includes the clubs, as it would leave them in an extremely weak bargaining position for absolutely everything, including TV rights and sponsorship, which then in turn further harms the amounts clubs can spend and creates a vicious circle.

And anyway there would still be clubs who find the loopholes, ie. selling a player to a 'friendly club' (one they have other links to who do not operate to the same rules as ours) they would just be different loopholes.

There are loopholes in everything, you just have to find them, I guess it's actually seen as a skill in itself to be able to do that.

Unfortunately, in the real world things change.

The Villa owner, Xia, was financially able to support them and had been doing so, until last summer when he was unable to get money out of his country to here. As a result Villa had major cash flow problems, had not paid their tax bill for a few months and were on the verge of a winding up order from HMRC. 

It was as a result of the situation that befell Pompey, following their relegation from the premier league, that FFP was introduced to protect clubs from owners overcommitting the club financially and beyond it's means. I am sure many clubs can make an argument as to why they should be "exempt" from such limitations, because their owner is a fan and is committed to supporting the club, but as in Villa's situation last year, it only needs the unexpected to occur and all those securities go out of the window.

As I think has already been mentioned on here, the championship is the division with the biggest financial issues, as almost every club needs the support of it's owner to stay afloat. The attraction of the riches in the premier league is such a lure that some owners seem prepared to risk anything to gain promotion - there is a strong suspicion that had they not gained promotion this time around, financial chickens would have come home to roost at Villa. That both Villa and West Brom Brom borrowed against their third year parachute payment during year two following relegation, shows how badly clubs want/need promotion back to the premier league and the financial risks they are prepared to take.

Against this background, ffp protects clubs from themselves and their owners, notwithstanding the owners financial wherewithal and allegiance to the club. Before we start looking at huge changes, dismantling the ffp rules and introducing new ones ( or removing controls completely, as you seem to indicate) I would have though the first step is to get the EFL to make the current rules work properly. 

The situation with Derby's ground sale shows the problems that currently exist and that club's are prepared to "bend" the rules or break the spirit of the rules. You mentioned that is not until the benefit of hindsight that loopholes can be identified i.e. once a club exploits a loophole, and because that will always be the case perhaps the EFL need to reinforce that clubs must operate within the spirit of the rules, and that breaches in this respect will also be subject to penalty. The problem, as has been discussed so often on here, is the doubts that many doubt the  EFL has the balls to take on big clubs, for fear that they will be dragged into legal disputes.

Apart from the fact that Morris carried out the ground sale to avoid a major ffp breach, the real issue with your ground sale is not that Morris did it, but that, given the chance, the EFL did not recognise the loophole and close it before he could use it. I suspect they bottled it because they were worried that if they bought Derby to book for a ffp breach, Derby would argue that the EFL prevented them from remedying the situation by selling the ground.

 At the moment the EFL have dismally failed the many clubs that have worked hard to address ffp, even if it has made them less competitive.

 

 

 

[Mr Popodopolous]

I'll read the latest posts in full later but one interesting note.

Mike Thornton- another FFP writer, specialises in Leeds but also FFP has the following interesting and pertinent Tweet- whole thread is decent but going to pull this one out.

 

I think he's dead wrong about Aston Villa, but he might be right on Derby- I've always had doubts about their failing of FFP as there are some grey areas. Aston Villa though, just a question of by how many million but provided you use Derby accounts as opposed to Sevco 5112 then maybe...just maybe. If excluded from calculations though, they would be right up against it- and tbh even Lampard may have hinted to this when he said other day that they would be heavily reliant on loan signings once again.

If there is sufficient provision within the rules to exclude profit on stadium- and remember in UEFA FFP regs, property revenue does not count under FFP- then there may well be sufficient doubt and vagueness to reopen this case.

Those are 2 posts- the thread itself is worth a look.

One of my takes on their ground sale from Mel Morris who owns Derby to- er- Mel Morris- is that as well as commercial development- and @DerbyFan putting other points and sides across has been interesting to read- it is to cushion the blow from their amortisation policy and to give Lampard a modest amount to spend. As opposed to an out and out epic FFP fail like say Aston Villa.

To me, a just outcome in the Middlesbrough-Derby case would be Derby paying the £39m profit to the EFL in a fine, or it being excluded from the calculations- if it's a real transaction brings them back to parity, if it is a paper one it brings them back to parity!

Edited June 4, 2019 by Mr Popodopolous

[Mr Popodopolous]

The two rules which seem to contradict each other, which means there is an element of doubt and interpretation- pulled off Kieran Maguire's Twitter.

This one suggests it IS legit.

This one suggests it is in doubt- and I would also add in 11.3.4 to that for consideration!

111.1 would help cover it

Quote

(a) Assessment of transactions with Related Party(ies) above or below fair value.

That single rule opens it up again.

Let alone the highlighted bits.

Agree with @Olé that the accounting method for players etc could be worth a look too, it definitely has the effect of kicking the can down the road.

Agree with @downendcity about the detrimental impact to clubs who have complied or worked hard to do so- at the expense of their own competitiveness.

@DerbyFan You're right about loopholes but good governance can close them before they are breached. Like I said before, I doubt UEFA would have waved this through, personally- and they are not great but they're a lot more clued up on this than the EFL appear to be.

Possible Loopholes in EFL FFP, just a few examples.

 Example- Solution

• Stadium sold to Owner or any form of related party- Make it the case that profit excluded from FFP calculations- still comes up on their accounts but not their FFP figure.
• Player sold to Chinese League club owner may have a stake in- Reading mooted to have done this with Aluko. Exclude the profit and only have their remaining amortisation and obviously wages being removed from the books.
• Loan fee with big fee to sister club- Wages maybe off book, but loan fee not counted.
• Over inflated sponsorship by related party- say £10m per season for shirts when the going rate for that club size at this level is say £2m. Simple- it may come up as £10m on published account but refuse to class it as income in FFP submissions. I think they do this already though.

Loopholes can be closed and quickly, and well too- just depends if your organisation- in this case the EFL- is run in any way adequately.

Edited June 4, 2019 by Mr Popodopolous

[Guest DerbyFan]

17 minutes ago, Olé said:

Putting aside the stadium thing, I still think this basic accounting twist on amortisation is already highly dubious. @DerbyFan I do appreciate you sharing the club's definition of how you handle player costs as I'd not seen it officially laid out, which is helpful. I have no specific axe to grind with Derby, I have friends who are Derby fans, always find Derby fans decent when we cross paths on trains on match days, and very much enjoy my trips to the area (well, okay, specifically the Brunswick!)

However I just can't get my head round this practice being fair (it seems like an obvious attempt to "game" compliance) and as in bold above, kicking the can down the road to "take the hit" later seems to be incredibly reckless and exactly what FFP is meant to be putting a stop to. That the definition from Derby even explicitly includes provision to negotiate new contracts and re-amortise an existing prior player cost further into the future is barmy to me, as is self evaluating impairment charges.

It seems to me to be continually deferring a lot of real terms costs from the balance sheet until you can get into the Premiership and then release all these accounting anomalies when you can "take the hit" far more comfortably. It's pure accounting sleight of hand. That alone should bring everything else Morris does into question. If the EFL had half a brain they'd define accounting rules so that the whole process of FFP is comparing like for like and not allowing clubs to write their own rules.

Don't get me wrong, the logic of Derby's model is valid - I've often pointed out on this board myself that paying silly money for a young player is something I think SL would do IF wages were achievable, as it's wages that are our real terms drag on the balance sheet and where we get beaten to players by most of our peers. £10m transfer fee amortised (straight line) followed by a likely profit on sale of exciting young player, is simply asset management to a lifelong share trader like Lansdown. 

Therefore one could argue that we should use Derby's residual value accounting. SL doesn't, I assume because it would be very misleading and very dangerous. Players get injured, players don't work out, and most of all players nowadays will run a contract down if they can get a big signing on fee at a future club. Derby's accounting implies certainty that none of this will happen and there is a guaranteed market and return for their players, allowing them to keep their costs off the balance sheet.

It's a neat trick to comply with FFP limits, but it's just a time bomb done in the hope of securing Premier League football before it goes off. And seeing the definition of how Derby handle re-negotiated contracts with re-amortisation of existing costs that still haven't hit the balance sheet, I can see even more there is a process here to keep deferring costs. You could actually give a **** player a new contract on meager terms to artificially defer their cost. And on current form I suspect Morris would.

 

All of the finance people I've seen say that whilst unusual for a football club, it is a perfectly valid method of accounting. I'm not sure whether we're the only club that utilises it or not.

Yes, it means that we have to take the hits at the end of contracts, but we're obviously going to be aware of that, and yes promotion would allow us to do that, however, that doesn't seem to be the only thing we are banking on as we have been taking steps to lower the future wage bill (I'm aware it went up in the last accounts, and may well have gone up again this year - but the players we are bringing in will be on lower wages than the ones that will be going out), but obviously this is a gradual process, helped by players going out of contract, although we then have to take the hit on their residual values, although the wages cut somewhat offset this.

I believe that as a club we feel we can do this because we're pretty stable in terms of income, our crowds, while very slightly down, are still pretty stable for a club that has been in this league as long as we have, we're a loyal bunch.

I also expect our turnover for this season to have increased probably fairly substantially again, partly due to having Frank as manager, and the associated coverage and increased sponsorship revenues that could bring, but also due to 1. Having cup runs in both competitions including ties at Man Utd, Chelsea, Southampton and Brighton, 2. Getting into the Play Offs again but then also getting to the final - it is said there's normally a gentleman's agreement that the losing finalist takes all of the share of receipts for the match, which is not an insignificant amount. Also, due to season ticket holders for next season being included in the first period of sale for final tickets, I believe this will have the knock on effect of helping the income for next season, I'm aware of people that bought one on the basis of being able to secure a ticket for the final. This can only help the financial situation.

13 minutes ago, downendcity said:

Unfortunately, in the real world things change.

The Villa owner, Xia, was financially able to support them and had been doing so, until last summer when he was unable to get money out of his country to here. As a result Villa had major cash flow problems, had not paid their tax bill for a few months and were on the verge of a winding up order from HMRC. 

It was as a result of the situation that befell Pompey, following their relegation from the premier league, that FFP was introduced to protect clubs from owners overcommitting the club financially and beyond it's means. I am sure many clubs can make an argument as to why they should be "exempt" from such limitations, because their owner is a fan and is committed to supporting the club, but as in Villa's situation last year, it only needs the unexpected to occur and all those securities go out of the window.

As I think has already been mentioned on here, the championship is the division with the biggest financial issues, as almost every club needs the support of it's owner to stay afloat. The attraction of the riches in the premier league is such a lure that some owners seem prepared to risk anything to gain promotion - there is a strong suspicion that had they not gained promotion this time around, financial chickens would have come home to roost at Villa. That both Villa and West Brom Brom borrowed against their third year parachute payment during year two following relegation, shows how badly clubs want/need promotion back to the premier league and the financial risks they are prepared to take.

Against this background, ffp protects clubs from themselves and their owners, notwithstanding the owners financial wherewithal and allegiance to the club. Before we start looking at huge changes, dismantling the ffp rules and introducing new ones ( or removing controls completely, as you seem to indicate) I would have though the first step is to get the EFL to make the current rules work properly. 

The situation with Derby's ground sale shows the problems that currently exist and that club's are prepared to "bend" the rules or break the spirit of the rules. You mentioned that is not until the benefit of hindsight that loopholes can be identified i.e. once a club exploits a loophole, and because that will always be the case perhaps the EFL need to reinforce that clubs must operate within the spirit of the rules, and that breaches in this respect will also be subject to penalty. The problem, as has been discussed so often on here, is the doubts that many doubt the  EFL has the balls to take on big clubs, for fear that they will be dragged into legal disputes.

Apart from the fact that Morris carried out the ground sale to avoid a major ffp breach, the real issue with your ground sale is not that Morris did it, but that, given the chance, the EFL did not recognise the loophole and close it before he could use it. I suspect they bottled it because they were worried that if they bought Derby to book for a ffp breach, Derby would argue that the EFL prevented them from remedying the situation by selling the ground.

 At the moment the EFL have dismally failed the many clubs that have worked hard to address ffp, even if it has made them less competitive.

 

 

 

I'm aware that things change, which is why my suggestion is to have the money in a holding account, there HAS to be enough in there to cover both fee and wages for the player (for the duration of their contract) otherwise you cannot buy them, lets face it - the players are inevitably the highest costs a club has to cover, this could be offset against income in the same way as normal, so when it comes to the end of the season and the accounts or upon the sale of said player, you can free up an amount in the holding account for future purchases (providing all other club costs have been met for the season) but no club can ever end up in a situation where they cannot afford a player they have on their books.

This would mean that a situation such as happened at Villa and Portsmouth could not occur again, as the money will already be in an account ready for use, and if that means an owner taking a hit on a purchase, then it's better than the club taking one. It may encourage crazy spending or it may do the opposite and owners may look carefully at what would be the maximum they would personally like to lose, but a reckless owner can't leave a club high and dry.

As I said I'm not trying to make an argument that this should be the case now, and clubs somehow deserve leniency if they have rich or benevolent owners, only that I think it would work as a change to the FFP rules in the future.

I'm also not suggesting removing controls completely, I'm not sure how you got that from my suggestion, there is still control over how much a club can spend, but it is decided by the owner of the club and how much they are prepared to spend and potentially lose, not by the league and other clubs.

You could make the argument that this disadvantages the poorer owners, and yes it does, but the rules as they are now have the same effect, if an owner is not prepared to put money into the club then they can only spend a small amount anyway, but they are still allowed to lose money, and this can only lead to problems somewhere further down the line, it can and does lead to normal businesses losing a lot of money when they inevitably end up in administration, all because a club was allowed to go beyond it's (or it's owners) means and try to achieve the big time. I personally don't think a club should be allowed to lose money, the owner has to make sure they can cover it fully by putting money into the holding account, either from their own pocket, and this cannot be in the form of loans that need repaying, or from player sales.

It may not work, it may be flawed, but what we have now is also flawed and I don't see any way to change it (other than making sure there can be no financial loss for a club) that wouldn't cause untold harm to the EFL's brand, which to be fair is happening anyway because of all the bad press about the state clubs find themselves in, which only seems to be getting worse with each passing season.

19 minutes ago, Mr Popodopolous said:

The two rules which seem to contradict each other, which means there is an element of doubt and interpretation- pulled off Kieran Maguire's Twitter.

This one suggests it IS legit.

This one suggests it is in doubt- and I would also add in 11.3.4 to that for consideration!

111.1 would help cover it

That single rule opens it up again.

Let alone the highlighted bits.

Agree with @Olé that the accounting method for players etc could be worth a look too, it definitely has the effect of kicking the can down the road.

Agree with @downendcity about the detrimental impact to clubs who have complied or worked hard to do so- at the expense of their own competitiveness.

@DerbyFan You're right about loopholes but good governance can close them before they are breached. Like I said before, I doubt UEFA would have waved this through, personally- and they are not great but they're a lot more clued up on this than the EFL appear to be.

Possible Loopholes in EFL FFP, just a few examples.

 Example- Solution

• Stadium sold to Owner or any form of related party- Make it the case that profit excluded from FFP calculations- still comes up on their accounts but not their FFP figure.
• Player sold to Chinese League club owner may have a stake in- Reading mooted to have done this with Aluko. Exclude the profit and only have their remaining amortisation and obviously wages being removed from the books.
• Loan fee with big fee to sister club- Wages maybe off book, but loan fee not counted.
• Over inflated sponsorship by related party- say £10m per season for shirts when the going rate for that club size at this level is say £2m. Simple- it may come up as £10m on published account but refuse to class it as income in FFP submissions. I think they do this already though.

Loopholes can be closed and quickly, and well too- just depends if your organisation- in this case the EFL- is run in any way adequately.

As far as I'm aware the rules you have quoted above are the old rules prior to 2016/17, I do not know if those rules form the basis of the new rules, but they reference previous seasons. As below, all of those rules quotes are from part 1 of the rules, not part 2, part 2 is much further down the page.

Quote

Appendix 5 - Financial Fair Play Regulations

APPENDIX 5 FINANCIAL FAIR PLAY RULES

 

PART 1 – CHAMPIONSHIP FAIR PLAY RULES

 

Notes:

Capitalised Terms have the meanings ascribed to them in Regulation 1 or 16 of the Regulations of The League unless otherwise indicated.  The following Rules are supplemental to the Regulations.

This Part consists of the Championship Fair Play Rules which continue to apply for the purposes of reporting in respect of Season 2015/16, and the consequences arising from those reports.  Part 2 contains the Profitability and Sustainability Rules which are applicable for Season 2016/17 onwards.

Looking at the appropriate sections of the rules:

Quote

1.1.2       Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude costs (or estimated costs as the case may be) in respect of the following:

(a)           depreciation and/or impairment of tangible fixed assets, amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

It mentions depreciation and/or impairment, but not profit.

Quote

1.1.8       Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

Fair Market Value - I believe the independent valuation the club obtained to satisfy this. And the club sold an asset, so that seems to fit.

Quote

1.1.10    Related Party Transaction means a transaction:

(a)           disclosed in a Club’s Annual Accounts as a related party transaction;

The club have made no secret about this being a Related Party Transaction.

Quote

2.3          The Executive shall determine whether consideration included in the Club’s Earnings Before Tax arising from a Related Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, the Executive shall restate it to Fair Market Value.

2.4          The Executive shall not exercise its power set out in Rule 2.3 without first having given the Club  reasonable opportunity to make submissions as to:

2.4.1       whether the said consideration should be restated; and/or

2.4.2       what constitutes its Fair Market Value.

Fair enough, there is the scope for them to do this, if they believe they are required to. I guess we will find out in the next years accounts whether the value has been restated or not, if not, then I assume the valuation was accepted as being correct, and as the club have stated they had an independent valuation, then I presume they have all the evidence they need for this.

I make a point of bolding the word independent as I'm not sure what else the club can be expected to do in this situation, they have stated it was an independent valuation, if people don't believe this then I'm not sure what else they can do, making them pay for multiple independent valuations to make sure they are within the same range seems counterintuitive to keeping costs down to me.

In fact I still wonder if this is why they okayed it with the EFL beforehand, to make sure the valuation was acceptable to them. Obviously if the EFL get their own valuation done, this adds to their costs (or would they bill the club for this?) when they may already trust the one obtained by the club.

Quote

4.3          Without prejudice to the right of The League to refer any breach of rules to the Disciplinary Commission in accordance with section 8 of the Regulations, where any Club is in breach of any requirement of these Rules relating to the provision of information, the Executive may refuse any application by that Club to register any Player or any new contract of an existing Player of that Club.

4.4          Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement).  Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

I presume as we have been able to both sign Shinnie on a pre-contract and hand out new contracts to those already within the club (I know Roos' was done recently, the other 3 seem to have been done earlier) then we are ok as far as this goes?

Of course loopholes can be closed quickly after the fact, but if they are not then clubs WILL take advantage of them, clubs have been doing this for ages, and I cannot see it stopping now.

What you cannot do is close it afterwards and then retrospectively punish clubs who used it, as they:

1. May not have used it if they knew they would be punished - regardless of whether you think it should be or not if something was NOT against the rules as they were stated at the time then it was simply not against the rules.
2. May have done business differently - you cannot turn back time, if they knew something was against the rules and would not be allowed then they would not do it and would find another way around it that was, you may be punishing them for something that would not have happened if they knew they could not do it, and they no longer have the ability to change the outcome. ie. they may have failed FFP without it, but they may also have found a way NOT to fail FFP without it, you're no longer giving them that option and they have therefore failed FFP even though what they did was not actually against the rules when they did it. Do you see where I'm going with this? It's a minefield, and one that I doubt the EFL will want to enter, unless something is explicitly against the rules.

Everyone needs to know precisely what rules they are working to, that includes loopholes they may decide take advantage of, you cannot change the goalposts after the fact.

[Coppello]

I thought I'd dip my toe back into this thread. Thanks for contributing @DerbyFan, it's always good to have opposing fans views on here and it allows for better debate. 

I don't want to turn this into a dick waving contest (as I know you already mentioned that you're female ) but I feel I'm reasonably qualified to comment. I was an audit manager at a big four accounting firm having worked there for 6 years, currently work in the football finance world, have worked on a stadium valuation over the last couple of months and have also discussed the Pride Park debacle with a surveyor who has conducted four different stadium valuations in a variety of locations in the UK. 

I've commented on here in the past that the organisation that I have a problem with is the EFL for leaving these pretty obvious loopholes open but I think Derby's actions are pretty unethical. I also have a problem with some of the professionals engaged by Derby to conduct the valuation and sign off the accounts. The fair valuing of the players registrations is also questionable practice. 

I'll start with the stadium valuation, I apologise if you have already responded to some of these points to Mr P. but I've quickly scanned over this thread as there is a lot of posts! I appreciate that you have conducted an 'independent valuation' but it is clearly out of line with the market valuations. The club I work for has had its stadium valued over the past few weeks and the final value was considerably less than Pride Park. The club that I work at is London based and therefore I would've expected the land value to give the London club a significant head start before even considering the stadium itself. This raises a few concerns for me personally.

Another club who revalued their stadium per their most recent set of accounts is Middlesbrough. The combined value of their stadium, training ground and headquarters has been revalued at £49.7m also using the depreciated cost method. The notes from their accounts is as follows:

This is an excellent benchmark given they were built three years apart and have almost identical capacities. Whilst this does not consider all of the work performed on the stadium during their 20-25 year lives, the values are remarkably different. Middlesbrough is a notoriously cheaper area, I will admit, but this does include the stadium, training ground and other buildings. 

This does call into question the integrity of the surveyor who performed the valuation. The auditor has a duty to review the report and, whilst they're not experts at valuing stadiums themselves, should consider the credentials of those performing the survey and also perform a benchmarking exercise comparing against other stadiums in the area. As @Mr Popodopolous states, the right thing to do would be for the EFL to conduct its own review but they are completely inept as an organisation and that ship has sailed. Personally I wouldn't sue Derby in the way that Gibson has; as you state you've just exploited a loophole and, whilst unethical, is not against the rules. 

I was not aware of the way in which you account for the player registrations until I read the thread this morning. I can't fathom how this could be allowed by the auditor having looked at the financial statements. As stated previously, accounting guidance allows the fair valuing of assets in many circumstances and this is not a situation where it is applicable. In the most simplistic terms, there is a 'fair value hierarchy' which considers the reasonableness and the level of judgement exercised. The hierarchy is as follows: 

- Level 1 inputs: This is where there is an identical asset in an active market. Players are not like barrels of oil where they are homogeneous and there is not an active market of Jack Marriott's being traded daily. Players are all different and would not meet the level 1 input criteria. 

- Level 2 inputs: These are quoted prices for similar assets in active markets or quoted prices for identical assets which are from inactive markets. In reality, footballers are not really similar assets as the sales prices are so volatile and cannot be reliably measured. Form, contract length, medical history, nationality and age all haze the situation further. The willingness of other clubs to buy a player has a massive impact on the valuation rather than the individual player himself. 

- Level 3 inputs: These are values which determined from observable sources. For example, Mel Morris' excel model or an in-house assessment of other forwards etc. These are the least reliable and is what the player values are based on. 

As you go down the hierarchy the relevance of the valuation decreases. The value of players are volatile and are hugely determined by form, injury etc. For example, say Bristol City sign Assombalonga for £20m and in 19/20 he scores 1 goal. This would result in a massive impairment charge of probably about 80% of his value (I say probably because it is impossible to value!). If he then scored 29 goals in 20/21 he would be revalued up to £20 million again, causing massive volatility in the financial statements. If I told my auditor that I was going to use this method, he would laugh his way out of the door before resigning. 

It is clearly a piece of creative accounting by the Derby County finance team. If I were the audit partner of Smith Cooper Audit Ltd, who sign off the accounts of DC, I'd be sweating that the accounts were going to be reviewed by the governing body as there's some very concerning issues in the accounts. What is even more interesting is that the lead audit partner is a Derby County fan which probably impairs his independence somewhat. 

As I mentioned previously, it's not the club itself that are completely at blame, there's many other 'professionals' that are failing to perform their duties properly. 

 

Apologies all for the length - I'm not sure how many will make it to the end!

 

[downendcity]

42 minutes ago, Coppello said:

I thought I'd dip my toe back into this thread. Thanks for contributing @DerbyFan, it's always good to have opposing fans views on here and it allows for better debate. 

I don't want to turn this into a dick waving contest (as I know you already mentioned that you're female ) but I feel I'm reasonably qualified to comment. I was an audit manager at a big four accounting firm having worked there for 6 years, currently work in the football finance world, have worked on a stadium valuation over the last couple of months and have also discussed the Pride Park debacle with a surveyor who has conducted four different stadium valuations in a variety of locations in the UK. 

I've commented on here in the past that the organisation that I have a problem with is the EFL for leaving these pretty obvious loopholes open but I think Derby's actions are pretty unethical. I also have a problem with some of the professionals engaged by Derby to conduct the valuation and sign off the accounts. The fair valuing of the players registrations is also questionable practice. 

I'll start with the stadium valuation, I apologise if you have already responded to some of these points to Mr P. but I've quickly scanned over this thread as there is a lot of posts! I appreciate that you have conducted an 'independent valuation' but it is clearly out of line with the market valuations. The club I work for has had its stadium valued over the past few weeks and the final value was considerably less than Pride Park. The club that I work at is London based and therefore I would've expected the land value to give the London club a significant head start before even considering the stadium itself. This raises a few concerns for me personally.

Another club who revalued their stadium per their most recent set of accounts is Middlesbrough. The combined value of their stadium, training ground and headquarters has been revalued at £49.7m also using the depreciated cost method. The notes from their accounts is as follows:

This is an excellent benchmark given they were built three years apart and have almost identical capacities. Whilst this does not consider all of the work performed on the stadium during their 20-25 year lives, the values are remarkably different. Middlesbrough is a notoriously cheaper area, I will admit, but this does include the stadium, training ground and other buildings. 

This does call into question the integrity of the surveyor who performed the valuation. The auditor has a duty to review the report and, whilst they're not experts at valuing stadiums themselves, should consider the credentials of those performing the survey and also perform a benchmarking exercise comparing against other stadiums in the area. As @Mr Popodopolous states, the right thing to do would be for the EFL to conduct its own review but they are completely inept as an organisation and that ship has sailed. Personally I wouldn't sue Derby in the way that Gibson has; as you state you've just exploited a loophole and, whilst unethical, is not against the rules. 

I was not aware of the way in which you account for the player registrations until I read the thread this morning. I can't fathom how this could be allowed by the auditor having looked at the financial statements. As stated previously, accounting guidance allows the fair valuing of assets in many circumstances and this is not a situation where it is applicable. In the most simplistic terms, there is a 'fair value hierarchy' which considers the reasonableness and the level of judgement exercised. The hierarchy is as follows: 

- Level 1 inputs: This is where there is an identical asset in an active market. Players are not like barrels of oil where they are homogeneous and there is not an active market of Jack Marriott's being traded daily. Players are all different and would not meet the level 1 input criteria. 

- Level 2 inputs: These are quoted prices for similar assets in active markets or quoted prices for identical assets which are from inactive markets. In reality, footballers are not really similar assets as the sales prices are so volatile and cannot be reliably measured. Form, contract length, medical history, nationality and age all haze the situation further. The willingness of other clubs to buy a player has a massive impact on the valuation rather than the individual player himself. 

- Level 3 inputs: These are values which determined from observable sources. For example, Mel Morris' excel model or an in-house assessment of other forwards etc. These are the least reliable and is what the player values are based on. 

As you go down the hierarchy the relevance of the valuation decreases. The value of players are volatile and are hugely determined by form, injury etc. For example, say Bristol City sign Assombalonga for £20m and in 19/20 he scores 1 goal. This would result in a massive impairment charge of probably about 80% of his value (I say probably because it is impossible to value!). If he then scored 29 goals in 20/21 he would be revalued up to £20 million again, causing massive volatility in the financial statements. If I told my auditor that I was going to use this method, he would laugh his way out of the door before resigning. 

It is clearly a piece of creative accounting by the Derby County finance team. If I were the audit partner of Smith Cooper Audit Ltd, who sign off the accounts of DC, I'd be sweating that the accounts were going to be reviewed by the governing body as there's some very concerning issues in the accounts. What is even more interesting is that the lead audit partner is a Derby County fan which probably impairs his independence somewhat. 

As I mentioned previously, it's not the club itself that are completely at blame, there's many other 'professionals' that are failing to perform their duties properly. 

 

Apologies all for the length - I'm not sure how many will make it to the end!

 

I did!  

 

 

 

[Guest DerbyFan]

1 hour ago, Coppello said:

I thought I'd dip my toe back into this thread. Thanks for contributing @DerbyFan, it's always good to have opposing fans views on here and it allows for better debate. 

I don't want to turn this into a dick waving contest (as I know you already mentioned that you're female ) but I feel I'm reasonably qualified to comment. I was an audit manager at a big four accounting firm having worked there for 6 years, currently work in the football finance world, have worked on a stadium valuation over the last couple of months and have also discussed the Pride Park debacle with a surveyor who has conducted four different stadium valuations in a variety of locations in the UK. 

I've commented on here in the past that the organisation that I have a problem with is the EFL for leaving these pretty obvious loopholes open but I think Derby's actions are pretty unethical. I also have a problem with some of the professionals engaged by Derby to conduct the valuation and sign off the accounts. The fair valuing of the players registrations is also questionable practice. 

I'll start with the stadium valuation, I apologise if you have already responded to some of these points to Mr P. but I've quickly scanned over this thread as there is a lot of posts! I appreciate that you have conducted an 'independent valuation' but it is clearly out of line with the market valuations. The club I work for has had its stadium valued over the past few weeks and the final value was considerably less than Pride Park. The club that I work at is London based and therefore I would've expected the land value to give the London club a significant head start before even considering the stadium itself. This raises a few concerns for me personally.

Another club who revalued their stadium per their most recent set of accounts is Middlesbrough. The combined value of their stadium, training ground and headquarters has been revalued at £49.7m also using the depreciated cost method. The notes from their accounts is as follows:

This is an excellent benchmark given they were built three years apart and have almost identical capacities. Whilst this does not consider all of the work performed on the stadium during their 20-25 year lives, the values are remarkably different. Middlesbrough is a notoriously cheaper area, I will admit, but this does include the stadium, training ground and other buildings. 

This does call into question the integrity of the surveyor who performed the valuation. The auditor has a duty to review the report and, whilst they're not experts at valuing stadiums themselves, should consider the credentials of those performing the survey and also perform a benchmarking exercise comparing against other stadiums in the area. As @Mr Popodopolous states, the right thing to do would be for the EFL to conduct its own review but they are completely inept as an organisation and that ship has sailed. Personally I wouldn't sue Derby in the way that Gibson has; as you state you've just exploited a loophole and, whilst unethical, is not against the rules. 

I was not aware of the way in which you account for the player registrations until I read the thread this morning. I can't fathom how this could be allowed by the auditor having looked at the financial statements. As stated previously, accounting guidance allows the fair valuing of assets in many circumstances and this is not a situation where it is applicable. In the most simplistic terms, there is a 'fair value hierarchy' which considers the reasonableness and the level of judgement exercised. The hierarchy is as follows: 

- Level 1 inputs: This is where there is an identical asset in an active market. Players are not like barrels of oil where they are homogeneous and there is not an active market of Jack Marriott's being traded daily. Players are all different and would not meet the level 1 input criteria. 

- Level 2 inputs: These are quoted prices for similar assets in active markets or quoted prices for identical assets which are from inactive markets. In reality, footballers are not really similar assets as the sales prices are so volatile and cannot be reliably measured. Form, contract length, medical history, nationality and age all haze the situation further. The willingness of other clubs to buy a player has a massive impact on the valuation rather than the individual player himself. 

- Level 3 inputs: These are values which determined from observable sources. For example, Mel Morris' excel model or an in-house assessment of other forwards etc. These are the least reliable and is what the player values are based on. 

As you go down the hierarchy the relevance of the valuation decreases. The value of players are volatile and are hugely determined by form, injury etc. For example, say Bristol City sign Assombalonga for £20m and in 19/20 he scores 1 goal. This would result in a massive impairment charge of probably about 80% of his value (I say probably because it is impossible to value!). If he then scored 29 goals in 20/21 he would be revalued up to £20 million again, causing massive volatility in the financial statements. If I told my auditor that I was going to use this method, he would laugh his way out of the door before resigning. 

It is clearly a piece of creative accounting by the Derby County finance team. If I were the audit partner of Smith Cooper Audit Ltd, who sign off the accounts of DC, I'd be sweating that the accounts were going to be reviewed by the governing body as there's some very concerning issues in the accounts. What is even more interesting is that the lead audit partner is a Derby County fan which probably impairs his independence somewhat. 

As I mentioned previously, it's not the club itself that are completely at blame, there's many other 'professionals' that are failing to perform their duties properly. 

 

Apologies all for the length - I'm not sure how many will make it to the end!

 

It's interesting to get the input of someone with some knowledge of the subject that can back it up with examples, however I would imagine there will be vast differences in the various stadia and it's not a one size fits all valuation.

As you mention, they were built 3 years apart and actually ours is based on Middlesbrough's, but I have no knowledge of the work that has been undertaken on theirs since it opened, but I do know, to some extent at least, the work that has happened on ours, so I wouldn't like to say that they should be anything like the same value now, and as you point out, property values in Middlesbrough are much less than in Derby, in fact I believe Derby is one of the places that prices have gone up rather a lot over the years, it helps that we are very central and it's pretty easy to get to anywhere from here I guess.

I notice that our remaining tangible assets amount to around £14.5m, I can only guess that this is the book value of the training ground, I don't think the valuation of this on the books has changed recently either as the book value of them all including the ground from the previous year was £59.3m (and this had been going down at a similar rate for years from what I can see) so minus the £41m we're told was the book value of the stadium at the time of the sale and you're not too far off what's left, presuming the current figure is minus the years depreciation.

I imagine the training ground will now in actuality be valued a lot higher as since Mel Morris bought the club a lot of work has happened on it, including the acquisition of and work to further land (which was maybe a 60-70% increase on the original size - guesstimate from looking at a map) to create more pitches to keep us up to Cat 1 standard, and there is planning permission in place for even more work to take place, which I believe also adds value.

I know that Middlesbrough's training ground is also Cat 1, so I imagine a similar size and probably standard, this maybe gives an idea of the difference in value of the clubs assets. (As an aside, I assume the Hall and golf course aren't included in Middlesbrough's asset valuation - 'other properties' from that quote? I believe Gibson also owns these - surely the value would be even higher if they were.)

As far as I can see the accounts don't mention who did the most recent stadium valuation for the sale, but the previous accounts do mention who did the last two, and having just Googled the most recent one, it seems that the two companies merged in 2011, so they were effectively done by one and the same.

I don't know how it works in relation to the clubs accounts, I've no inside knowledge of them, but others have said that it's a perfectly acceptable method of accounting, just different to use it for a football club. As far as I'm aware having seen discussions on the subject on our own forum, once a player is valued down they cannot then be up valued again, so your Assombalonga example is not how it would actually be done on the books.

There is a section in the accounts that says:

Quote

In the period since the end of the financial year the Company has entered into agreements to dispose of first team players with a net book value of £12,819,777 for £11,704,300

Yes it is a loss on residual values, however it does seem from that they were at least fairly accurate.

*I forgot to ask, from someone in the business would the market rate of a stadium, be the valuation with the depreciation removed, or the value before that is taken into account?

Edited June 4, 2019 by DerbyFan
*Added the question

[Mr Popodopolous]

A very interesting post that @Coppello

I'll get into it all the most recent posts from you and DerbyFan properly later the most recent posts etc, but I wonder a few things on this.

1) The integrity of the surveyor- yes I have wondered this for a while, without necessarily stating it.

2) The auditors- believe you said the Lead Auditor a Derby County fan? Independence and objectivity surely must be considered in a different light with that info?

3) Not too late for the EFL or its members I should say to conduct its own review. How about interested parties- so therefore Messrs Lansdown, Gibson, Marinakis et al pool resources hire a set of bona fide top independent auditors, bona fide top independent accountants, top independent land valuers and top independent corporate lawyers to launch a genuine review into Derby's finances. Take it to the CAS in Lausanne if necessary to seek access to the fine detail of the accounts. Yes, there is precedent on this, see AC Milan at the CAS in August 2018- related to here, I suspect Gibson turning down the offer of viewing accounts was him making sure he had all his ducks lined up in a row.

I would be surprised if owners were not bang up for this, the only question is the EFL as a Governing body themselves- as you say they're very much inept as an organisation...However were it to be left with the owners, the chairmen this could be a goer! Keep Shaun Harvey away from it though- he didn't even know who owned Leeds when he was there!! I think there would be a lot and I mean a lot of owners up for this. Though not like the Birmingham situation in many ways, one way is similar- them signing Pedersen under embargo got a lot of clubs very antsy- and this move though not necessarily outside the letter of the law, has had exactly the same effect I feel. God knows how Shaun Harvey got the gig though- Clubs appointing a patsy they can run rings round??

Also think the first 2 should be officially reported to their Professional Bodies over this, to check thoroughly their integrity and judgement in this matter. EFL or the above owners should do it.

I'm not so concerned about the sign off of players in the wake that the players were worth x but sold at a loss- that assuages some of those concerns at least IMO.

The other thing too before I forget.

It is possible- and I hadn't considered this- but not to be a case of simply letting bigger clubs off, but it is possible that because clubs obeyed during the period under embargo and didn't do anything stupid- unlike Birmingham's ludicrous signing of Pedersen- that it satisfied the EFL. The fact they showed some willing in the case of Derby for example by signing loanees...and Sheffield Wednesday that they didn't try anything outside of conditions that it meant a points deduction was off the table. That might have satisfied the EFL.

If it is the case- entirely possible on their track record- then it shows how inadequate the EFL are and have been in all honesty.

Quite blatant gaming of the system though- that alone deserves a punishment I feel.

Edited June 4, 2019 by Mr Popodopolous

[Mr Popodopolous]

If anyone has access to RICS isurv, valuation examples and methods maybe interesting- football stadia included on there incidentally.

Taking all the posts into account. £40-50m? I could believe. £81.1m...laughed out the room!

Ohhhh and an interesting Tweet.

Or 2.

If Aston Villa- now officially promoted- are potentially having this issue, then it follows that Derby who are still in the EFL can be hammered- or at least punished for this- if an investigation finds they merit it.

Edited June 4, 2019 by Mr Popodopolous

[Guest DerbyFan]

16 minutes ago, Mr Popodopolous said:

A very interesting post that @Coppello

I'll get into it all the most recent posts from you and DerbyFan properly later the most recent posts etc, but I wonder a few things on this.

1) The integrity of the surveyor- yes I have wondered this for a while, without necessarily stating it.

2) The auditors- believe you said the Lead Auditor a Derby County fan? Independence and objectivity surely must be considered in a different light with that info?

3) Not too late for the EFL or its members I should say to conduct its own review. How about interested parties- so therefore Messrs Lansdown, Gibson, Marinakis et al pool resources hire a set of bona fide top independent auditors, bona fide top independent accountants, top independent land valuers and top independent corporate lawyers to launch a genuine review into Derby's finances. Take it to the CAS in Lausanne if necessary to seek access to the fine detail of the accounts. Yes, there is precedent on this, see AC Milan at the CAS in August 2018- related to here, I suspect Gibson turning down the offer of viewing accounts was him making sure he had all his ducks lined up in a row.

I would be surprised if owners were not bang up for this, the only question is the EFL as a Governing body themselves- as you say they're very much inept as an organisation...However were it to be left with the owners, the chairmen this could be a goer! Keep Shaun Harvey away from it though- he didn't even know who owned Leeds when he was there!! I think there would be a lot and I mean a lot of owners up for this. Though not like the Birmingham situation in many ways, one way is similar- them signing Pedersen under embargo got a lot of clubs very antsy- and this move though not necessarily outside the letter of the law, has had exactly the same effect I feel. God knows how Shaun Harvey got the gig though- Clubs appointing a patsy they can run rings round??

Also think the first 2 should be officially reported to their Professional Bodies over this, to check thoroughly their integrity and judgement in this matter. EFL or the above owners should do it.

I'm not so concerned about the sign off of players in the wake that the players were worth x but sold at a loss- that assuages some of those concerns at least IMO.

You want to report people to their Professional Bodies and you are questioning their integrity and objectivity? Why on earth would anyone jeopardise their career for that, even if they do support the club in question? Unbelievable.

The accounts and the stadium valuation are clear for everyone to see, presumably anyone with an accounting background can go through them and find out what they need to, no one has tried to hide anything, they've told people how they amortise the players, and they've told everyone how much the stadium was valued at, if people don't believe that value then there is not much they can do about that one, but presumably they will have all the evidence they need to back it up.

Steve Gibson was actually invited by Mel Morris to view the clubs accounts, with his finance people I believe, twice, and he apparently didn't even bother to reply, according to a Sky article (I think it was the one I referenced yesterday), if he was so concerned then why would he not take up that offer? And if there was anything to hide why would the club make that offer to him - anything amiss would be spotted instantly by his people?

Also according to recent articles with quotes from Mel Morris, that were released just before the final, absolutely no one voted for Gibson's proposal at the EFL meeting, not one person, including, apparently, his own representative!

2 minutes ago, Mr Popodopolous said:

On the valuation front- I'm no surveyor, but a very interesting article.

If anyone has access to this, this will be very interesting- fits almost perfectly Pride Park description!!

https://www.isurv.com/info/1076/valuation_calculations/3866/depreciated_replacement_cost_worked_examples/8

Where to start...

Quote

The football club has been relegated and they never managed to more than half-fill the stadium.

That fits almost perfectly Pride Park description?

Ok.

[Mr Popodopolous]

54 minutes ago, DerbyFan said:

You want to report people to their Professional Bodies and you are questioning their integrity and objectivity? Why on earth would anyone jeopardise their career for that, even if they do support the club in question? Unbelievable.

The accounts and the stadium valuation are clear for everyone to see, presumably anyone with an accounting background can go through them and find out what they need to, no one has tried to hide anything, they've told people how they amortise the players, and they've told everyone how much the stadium was valued at, if people don't believe that value then there is not much they can do about that one, but presumably they will have all the evidence they need to back it up.

Steve Gibson was actually invited by Mel Morris to view the clubs accounts, with his finance people I believe, twice, and he apparently didn't even bother to reply, according to a Sky article (I think it was the one I referenced yesterday), if he was so concerned then why would he not take up that offer? And if there was anything to hide why would the club make that offer to him - anything amiss would be spotted instantly by his people?

Also according to recent articles with quotes from Mel Morris, that were released just before the final, absolutely no one voted for Gibson's proposal at the EFL meeting, not one person, including, apparently, his own representative!

Where to start...

That fits almost perfectly Pride Park description?

Ok.

Done nothing wrong, nothing to worry about I'd say- so let's get them reported to clear it all up. I think there is a lot that is very creative here so yeah I'd say so. Do I think they would truly let Derby support influence their judgement...doubt it but I believe the EFL should report them yes, especially if a valuation of an independent surveyor who maybe hired by the EFL would differ significantly to that of the ones appointed by Derby. Coppello's post about the valuation of a London stadium being significantly less than this sounded most interesting. If they get reported and they're totally on the level, then case will be laughed out of the room and all good.

The valuation is not so clear- the revaluation as of 2013 is not so clear- it states that it was revalued in 2013 but to what? The valuation is either what was sold in the 2017/18 accounts excluding depreciation or that what was sold in 2017/18 inclusive of depreciation.

Steve Gibson wanting to make sure his ducks were lined up in a row- we don't know the context of the offer, only what Mel Morris said. Was it a case of "an offer to view accounts (as presented) in return for an undertaking you drop it". Can well see Gibson's grounds for reservations here. Or maybe the "offer" was the case that Morris took the piss- "Haha, we've passed FFP and there's nothing you can do- look- look at these accounts! Stadium profit!"

Lack of votes also makes me wonder what other clubs are hiding...then again on this however, the distinct a) Lack of votes and b) Gibson's own rep not bothering, we only have the word of Mel Morris, hardly a neutral party.

Why don't you produce some sources some actual proof of some of your more recent claims- you seem to be rather passionate about this story and sometimes I wonder- are you Derby "Fan" or Derby "Something Else"?

Also where is your proof that the EFL approved the transaction pre purchase? You have none unless you can link us to it, in the public domain of course...unless of course you are "Derby Something Else"- be it employee, auditor etc. In which case you shouldn't be posting about it on a forum- should you.

I mean, you seem awfully worked up for a random fan because of one or 2 slight technical errors and you seem awfully keen to obfuscate, from the original point which is that your club overspent and used very creative accounting to (so far) get round the regs.

Yeah, quick searches will do that- that clearly was not quite the right one...then again I'm not a Chartered surveyor.

Oh and a quick search for comparison. Walkers Stadium completed in 2002 I believe, valued at May 2018 or May 31 2018- their accounts actually lay out the individual Tangible Assets you see- £38,211,000. Now I can believe it is somewhere between £40-50m given work on it but much beyond that?

Edited June 4, 2019 by Mr Popodopolous

[Davefevs]

Out of interest @DerbyFan, what is your reason for joining our forum?  I understand posters of other clubs forums, coming onto OTIB to discuss players / recruitment, or best pub to drink in type stuff....but I’ve never seen anyone join to post about FFP....that’s pretty niche!

[Guest DerbyFan]

1 hour ago, Mr Popodopolous said:

Done nothing wrong, nothing to worry about I'd say- so let's get them reported to clear it all up. I think there is a lot that is very creative here so yeah I'd say so. Do I think they would truly let Derby support influence their judgement...doubt it but I believe the EFL should report them yes, especially if their valuation differs significantly to "Derby's". Coppello's valuation of a London stadium being significantly less than this sounded most interesting.

The valuation is not so clear- the revaluation as of 2013 is not so clear- it states that it was revalued in 2013 but to what? The valuation is either what was sold in the 2017/18 accounts excluding depreciation or that what was sold in 2017/18 inclusive of depreciation.

Steve Gibson wanting to make sure his ducks were lined up in a row- we don't know the context of the offer, only what Mel Morris said. Was it a case of "an offer to view accounts (as presented) in return for an undertaking you drop it". Can well see Gibson's reservations here.

Lack of votes also makes me wonder what other clubs are hiding...again we only have the word of Mel Morris, hardly a neutral party.

Why don't you produce some sources some actual proof of some of your more recent claims- you seem to be rather close to this story and rather keen to pump out PR on it- are you "DerbyFan" or "Derby Something Else"?

Also where is your proof that the EFL approved it pre-purchase? You have none...unless of course you are "Derby Something Else"- be it employee, auditor etc. In which case you shouldn't be posting it on a forum- should you.

I mean, you seem awfully worked up for a random fan because of one or 2 slight technical errors and you seem awfully keen to obfuscate, from the original point which is that your club overspent and used very creative accounting to (so far) get round the regs.

Yeah, quick searches will do that- that clearly was not quite the right one...then again I'm not a Chartered surveyor.

I was just very surprised that you'd openly stated that, I've been lurking on forums for long enough to have seen people getting themselves in hot water for casting aspersions on people before.

What if the EFL's valuation matches that of the club?

I don't know which club the other poster works for - you may know as a fellow fan of theirs(?) so I can't know which stadium it is they have worked on a valuation for, there may be reasons why it differs from ours? I wouldn't like to make assumptions on that as I don't know anything about how to value a stadium, the only thing I do assume is that the only people who know how they come to a valuation are the people that have all the facts of why they have done so.

I don't know what the 2013 valuation was, it doesn't appear to say, and the book value didn't appear to change either. From the notes I took it to be an exercise that had to be undertaken, as it said something about FRS 11, but maybe they didn't have to actually change the book value? Again, I don't know, I'm guessing, like everyone else is.

Maybe you're right and that was Gibson's aim, I guess only he knows, all I know is what the club (or Mel Morris) have communicated to us fans. I have no reason not to believe what they're saying, especially on things that can be proved or disproved quite easily. Until anyone comes out with anything different to what's already been said then that's all I've got I'm afraid.

You're right, we do only have Mel Morris' word for it, but given that there were supposed to be representatives from every club in the league there, and none of them have come out and said anything different, then I believe it to be true, I don't get why anyone would think any different when it's something that every club could disprove if they so wished?

What claims would you like me to provide sources on? I'll try my best to find them if you let me know. Re. The EFL approving pre-purchase, I have already provided the link to the Sky article referencing this in a previous post, yes it has obviously come from the club, so you will probably choose not believe it, but where else is that information going to come from? If it is not true then I would imagine the EFL would have come out by now and said this. It doesn't say on the article, but the information seemed to come from Rob Dorsett, he is the local Sky reporter, if the club want to put information out there, this is one of the ways they do it, one of the others being via the Derby Telegraph.

Sky Article

Quote

Sky Sports News has been told that Derby are bemused by Boro's complaint, saying they cleared the stadium sale with the EFL before the deal was done, and they remain convinced it is within the rules.

They also had the stadium independently valued before the sale, and are currently investigating whether they can put a roof on Pride Park, to make it more commercially viable outside of match days.

Quote

Sky Sports News has seen two emails, sent to Middlesbrough by Derby's bosses, inviting officials from the North East to come and view Derby's financial accounts. Boro did not reply to either offer.

You can tell from the second quote that it is obviously the club who have told Sky this, otherwise why would they have seen the emails, they've not just been told about them by a third party, they've seen them, the wording is obviously deliberate.

Derby Telegraph Article

Quote

Derby County chairman Mel Morris has hit back at Championship rivals Middlesbrough and their owner Steve Gibson.

Quote

Derby are adamant they have been fully compliant.

They invited Middlesbrough to take a look at their accounts. The invitation was declined.

"Middlesbrough were offered by us in writing to come with their advisors to go through our submissions for profitability and sustainability, [but] they declined," Morris told DerbyshireLive last month.

Quote

Asked for his thoughts on the latest reported stance by Middlesbrough, Morris said: "I’ll call it out there because I think it needs calling out.

"Sale of fixed assets is allowed in the rules.

"In 2016 a club [Middlesbrough) got promoted who chose to sell the tax loss from the football club to the parent company, because that then makes it revenue which is a positive towards profit to help remain within Financial Fair Play.

"When I raised that at a meeting (in March) where all the Championship clubs met to debate this, the representative from the club said it was allowed in the rules at that time.

"So is this! What is different? You set the mould and we copied your lead, now you’re bitching. He [Gibson] had the hypocrisy to do that.

"Even his own fans called it out on their forums and said ‘how dare we do this with our own history’.

"We discussed this issue again and there wasn’t a single vote for the motions being put forward on this thing, not one, including the club that raised the issue. They didn’t even vote for their own motion.

"It needs calling out because unfortunately I didn't write the rules. It is absolutely hypocritical.

"I consider the timing of their action to be cynical, an open attempt to try and steal our focus ahead of a crucial game. Fortunately, we are motivated by such actions.

"I find this to be entirely out of character for Boro, and their chairman."

Derby Telegraph Article

Quote

Derby County invited Middlesbrough to look at their accounts in private, but the offer was declined.

This was in March when Middlesbrough owner Steve Gibson voiced concern over the finances of Derby, Aston Villa and Sheffield Wednesday.

Quote

The Rams insist they have complied fully with the regulations.

Morris told DerbyhireLive: "Middlesbrough were offered by us in writing to come with their advisors to go through our submissions for profitability and sustainability, they declined."

Championship clubs met at Nottingham Forest's City Ground yesterday and voted against proposals for an independent review and for changing the EFL's financial rules.

The meeting was said to have lasted for five hours and both Morris and Derby's chief executive, Stephen Pearce, attended.

Are those quotes satisfactory? Yes, you have to trust the words of Mel Morris, there are plenty of people who can come out and claim something different if they would like to, but as they don't appear to have...

You're clearly very suspicious minded, I'm just a fan of my club, any 'PR' you think I'm 'pumping out' is just me being a fan, you can believe or disbelieve that if you like, it makes no difference to me as I know who I am. 

I've been visiting your forum for some time as a lurker to see what your fanbase has to say, as I do with every club, yours is more active than most, so I lurked more often, it's an interesting way to pass the time.

I'd noticed your repeated mention of the 'double and double again' of the value in this thread, it seemed this was really irking you as you kept mentioning it and having looked through the clubs accounts recently out of interest, even though I don't understand most of it, I saw this bit was wrong from the notes underneath and when I'd seen that you had mentioned it again I wanted to point it out, if only to put your mind at rest that that wasn't actually the case.

You and others then replied to me, so I carried on replying, if I was wrong to do that then I apologise, I thought your forum might appreciate an alternative view, especially from a fan of one of the clubs that it seems are frustrating you the most re. FFP. Obviously I can only go on the information put out into the public domain, as that's all I'm aware of, like yourselves, but I thought I may be aware of things you are not as I obviously follow things at my club more closely than you would, and I watch the fans forums the club do and then subsequently put out on Rams TV, where things have been mentioned, directly, by Mel Morris and various people from the club.

It's a subject I find interesting, as most people (like myself) have a pretty strong opinion on it, even if they don't (also like myself) seemingly actually understand the full ins and outs of it - no one but the clubs involved can actually understand the clubs positions with regard to FFP, as there are so many variables, so many things can be excluded, the values of which I would assume vary wildly club by club.

I'm not worked up at all, I'd actually thought you were, hence pointing that out in the first place, and then I was just engaged in the conversation, I can leave if you'd rather this thread be an echo chamber? I don't mind either way.

Edited June 4, 2019 by DerbyFan

[Coppello]

2 hours ago, DerbyFan said:

It's interesting to get the input of someone with some knowledge of the subject that can back it up with examples, however I would imagine there will be vast differences in the various stadia and it's not a one size fits all valuation.

As you mention, they were built 3 years apart and actually ours is based on Middlesbrough's, but I have no knowledge of the work that has been undertaken on theirs since it opened, but I do know, to some extent at least, the work that has happened on ours, so I wouldn't like to say that they should be anything like the same value now, and as you point out, property values in Middlesbrough are much less than in Derby, in fact I believe Derby is one of the places that prices have gone up rather a lot over the years, it helps that we are very central and it's pretty easy to get to anywhere from here I guess.

I notice that our remaining tangible assets amount to around £14.5m, I can only guess that this is the book value of the training ground, I don't think the valuation of this on the books has changed recently either as the book value of them all including the ground from the previous year was £59.3m (and this had been going down at a similar rate for years from what I can see) so minus the £41m we're told was the book value of the stadium at the time of the sale and you're not too far off what's left, presuming the current figure is minus the years depreciation.

I imagine the training ground will now in actuality be valued a lot higher as since Mel Morris bought the club a lot of work has happened on it, including the acquisition of and work to further land (which was maybe a 60-70% increase on the original size - guesstimate from looking at a map) to create more pitches to keep us up to Cat 1 standard, and there is planning permission in place for even more work to take place, which I believe also adds value.

I know that Middlesbrough's training ground is also Cat 1, so I imagine a similar size and probably standard, this maybe gives an idea of the difference in value of the clubs assets. (As an aside, I assume the Hall and golf course aren't included in Middlesbrough's asset valuation - 'other properties' from that quote? I believe Gibson also owns these - surely the value would be even higher if they were.)

As far as I can see the accounts don't mention who did the most recent stadium valuation for the sale, but the previous accounts do mention who did the last two, and having just Googled the most recent one, it seems that the two companies merged in 2011, so they were effectively done by one and the same.

I don't know how it works in relation to the clubs accounts, I've no inside knowledge of them, but others have said that it's a perfectly acceptable method of accounting, just different to use it for a football club. As far as I'm aware having seen discussions on the subject on our own forum, once a player is valued down they cannot then be up valued again, so your Assombalonga example is not how it would actually be done on the books.

There is a section in the accounts that says:

Yes it is a loss on residual values, however it does seem from that they were at least fairly accurate.

*I forgot to ask, from someone in the business would the market rate of a stadium, be the valuation with the depreciation removed, or the value before that is taken into account?

Yeah but I'm sure that we can agree that the land value difference between Middlesbrough and Derby is not significant enough to create a £40-50m difference. As mentioned, i've spoken to various professional in and around the sports industry and they think it's a bit of a sham. This includes the surveyor who works for a large firm who have become a leader for valuing sports facilities. Whilst I'm sure that the property prices are rising in Derby, it's not exactly London or Monaco in terms of land value. 

I saw your explanation of the development works that have gone on at Pride Park over the last few years but I seriously doubt the capital expenditure will be anywhere near enough to have significant boost (>40%) to the stadium value. As a side note, we levelled a three stands at Ashton Gate a few years ago, added in boxes, top media facilities, a desso pitch, increased our capacity by £8,000, added in a coffee shop/sports bar/new club shop and landscaped the whole area and it still only cost £45m. This value would then have been depreciated if we to do a depreciated replacement cost valuation today. This is where myself, finance professionals in the sports industry and experienced surveyors are slightly confused and why the 'independent' valuation might not be all that it seems. I am sure you can appreciate this?

Regarding your point about reversing impairments, you can only reverse an impairment up the amount of the initial impairment. So my calculations were correct when I said that you can reduce a players value from £20m, down to £2m and back up to £20m. There is a reason why no other football club (that I can think of anyway) accounts for player valuations in the same way.

Your point about the accuracy of the accounting valuations on disposals compared to their market value is actually quite a simple one. If you sell a player on the 10th August 2019 for £20 million for example, you would have performed an revaluation exercise as at '30th June 2019'. Whilst this is the book date, this will actually be performed a lot later, ie around September/October time when the company is audited. This will allow you to accurately account for the players sold and you will adjust said players value to the £20m he was sold for. There is no better indication of a player's value than its actual selling price. This will limit the loss/gains on player trading because it will always been fairly accurate, you would've already recognise an impairment or valuation gain pre-disposal. The vast majority of losses would actually be made in the January transfer window as they would've been revalued several months earlier. 

The big issue will be for players who are not sold in the summer and therefore the accounting valuation is based on an internal assessment. These will fluctuate significantly season-on-season and will result in impairments and reversals all over the shop. As I mentioned, player registrations are not an asset which should be fair valued, it doesn't really follow accounting guidance, creates a lot of risk and makes an auditor shit their pants. Any reputable audit firm would have a real issue with it. 

Regarding your query about the stadium valuation, the depreciated replacement cost method is basically what it would be to build the stadium now and then depreciate to the current level of wear and tear. So it would be the value with the depreciation removed. 

Also, what do the two owners in dispute have to called Mel Morris and Steve Gibson. I keep thinking your owner is called Mel Gibson!

[Mr Popodopolous]

54 minutes ago, DerbyFan said:

I was just very surprised that you'd openly stated that, I've been lurking on forums for long enough to have seen people getting themselves in hot water for casting aspersions on people before.

What if the EFL's valuation matches that of the club?

I don't know which club the other poster works for - you may know as a fellow fan of theirs(?) so I can't know which stadium it is they have worked on a valuation for, there may be reasons why it differs from ours? I wouldn't like to make assumptions on that as I don't know anything about how to value a stadium, the only thing I do assume is that the only people who know how they come to a valuation are the people that have all the facts of why they have done so.

I don't know what the 2013 valuation was, it doesn't appear to say, and the book value didn't appear to change either. From the notes I took it to be an exercise that had to be undertaken, as it said something about FRS 11, but maybe they didn't have to actually change the book value? Again, I don't know, I'm guessing, like everyone else is.

Maybe you're right and that was Gibson's aim, I guess only he knows, all I know is what the club (or Mel Morris) have communicated to us fans. I have no reason not to believe what they're saying, especially on things that can be proved or disproved quite easily. Until anyone comes out with anything different to what's already been said then that's all I've got I'm afraid.

You're right, we do only have Mel Morris' word for it, but given that there were supposed to be representatives from every club in the league there, and none of them have come out and said anything different, then I believe it to be true, I don't get why anyone would think any different when it's something that every club could disprove if they so wished?

What claims would you like me to provide sources on? I'll try my best to find them if you let me know. Re. The EFL approving pre-purchase, I have already provided the link to the Sky article referencing this in a previous post, yes it has obviously come from the club, so you will probably choose not believe it, but where else is that information going to come from? If it is not true then I would imagine the EFL would have come out by now and said this. It doesn't say on the article, but the information seemed to come from Rob Dorsett, he is the local Sky reporter, if the club want to put information out there, this is one of the ways they do it, one of the others being via the Derby Telegraph.

Sky Article

You can tell from the second quote that it is obviously the club who have told Sky this, otherwise why would they have seen the emails, they've not just been told about them by a third party, they've seen them, the wording is obviously deliberate.

Derby Telegraph Article

Derby Telegraph Article

Are those quotes satisfactory? Yes, you have to trust the words of Mel Morris, there are plenty of people who can come out and claim something different if they would like to, but as they don't appear to have...

You're clearly very suspicious minded, I'm just a fan of my club, any 'PR' you think I'm 'pumping out' is just me being a fan, you can believe or disbelieve that if you like, it makes no difference to me as I know who I am. 

I've been visiting your forum for some time as a lurker to see what your fanbase has to say, as I do with every club, yours is more active than most, so I lurked more often, it's an interesting way to pass the time.

I'd noticed your repeated mention of the 'double and double again' of the value in this thread, it seemed this was really irking you as you kept mentioning it and having looked through the clubs accounts recently out of interest, even though I don't understand most of it, I saw this bit was wrong from the notes underneath and when I'd seen that you had mentioned it again I wanted to point it out, if only to put your mind at rest that that wasn't actually the case.

You and others then replied to me, so I carried on replying, if I was wrong to do that then I apologise, I thought your forum might appreciate an alternative view, especially from a fan of one of the clubs that it seems are frustrating you the most re. FFP. Obviously I can only go on the information put out into the public domain, as that's all I'm aware of, like yourselves, but I thought I may be aware of things you are not as I obviously follow things at my club more closely than you would, and I watch the fans forums the club do and then subsequently put out on Rams TV, where things have been mentioned, directly, by Mel Morris and various people from the club.

It's a subject I find interesting, as most people (like myself) have a pretty strong opinion on it, even if they don't (also like myself) seemingly actually understand the full ins and outs of it - no one but the clubs involved can actually understand the clubs positions with regard to FFP, as there are so many variables, so many things can be excluded, the values of which I would assume vary wildly club by club.

I'm not worked up at all, I'd actually thought you were, hence pointing that out in the first place, and then I was just engaged in the conversation, I can leave if you'd rather this thread be an echo chamber?

I'm not openly stating that I believe they are bent or similar- simply that if the EFL reported them to their bodies, they should welcome an investigation as they clearly have done nothing wrong. Just a bit of a believer in the saying "Nothing to hide, nothing to fear"- in the same way Man City claimed they welcome the investigation by UEFA then perhaps those should welcome a report to their professional bodies? I think it would be good for transparency anyway- who doesn't like transparency after all. That paragraph perhaps reads a bit flippant though- but there are sufficient questions I think for some sort of report but particularly if there are substantive valuation differences for example.

If the EFL's valuation matches the club? Then we have to go with it. It sticks in the craw but we would have to accept it for what it is. A thorough investigation by top of the range accountants, auditors, corporate lawyers and land valuers should take place though and I dare say most Championship owners would agree. I dare say most owners are very rich at this level so would gladly fund it too if they pooled resources- they certainly easily could. The same would go for Birmingham and Sheffield Wednesday too incidentally if they have attempted this.

Don't know- wouldn't be prudent for them to put that sort of thing on a public forum, PL in London IIRC? Though again can't remember entirely, definitely a London club- wouldn't presume to speak for them beyond that. On valuation- and I know this aspect isn't so relevant in building valuations, land let alone stadia- you mentioned house price inflation in Derby. House prices rising- well as it goes, Leicester- which is a good comparison- has higher house prices but a lower stadium valuation. Interesting, but perhaps not so relevant. FWIW, Zoopla- Average Property Price Derby- £210,436...Leicester £232,777. Now I know property valuation has little relation to that of stadia, but Walkers Stadium valued in the accounts at around £38m yet Pride Park goes for more than double!? Bit funny no- it isn't London, Monaco or New York- with respect. Hell it isn't even Bristol (£331,554)- yet AG a fair bit less as pointed out by @Coppello . 

Well that is interesting in itself- see when Villa Park was revalued in 2016, the amount lopped off it was put into the accounts and was down as the cost of impairment. Maybe it isn't obligatory with compulsory revaluations that take place over a given time period, but it is with ones by choice.

Only Steve Gibson knows Steve Gibson's motivations. Playing the long game maybe, who knows. Or maybe Morris offered it in a mocking way- only Gibson will know his reasons but I dare say he believes in them.

A fair bit doesn't stack up with it- not pointing the finger at Derby here (for once!), but I was under the impression that as well as Gibson, my club were pretty angry over the FFP issues, so too were Nottingham Forest and it goes without saying Leeds. Are they too playing a long game- maybe canvassing support and planning an ambush in the form of a vote at this summer's EFL conference?  That would be great!  

I'll read these articles again now- thanks. Well so they did- EFL should have got in independent auditors and lawyers appointed by them before approving- look at Man City now facing a possible CL ban, to think old cases cannot be reopened is patently a view that is held on shaky ground.

Haha suspicious minded? On some things perhaps...on this- yeah. I believe that there are clubs who have been very close to the rules- and actually FWIW I have always had Derby down as being just about in compliance before any such transaction- I have claimed it on this thread pretty often in recent months. Yeah though, I believe clubs may well have flouted the regs or seriously tested the spirit of them, while we and lots more have sold players and abided and it ain't right. It is still possible with a big youth expenditure in 2015-16, that the 3 years to 2017/18 might have had you in compliance, albeit narrowly incidentally! I think it is tight either way, but my main bugbear is that I think given you sold 7 players in that period- 4 or 5 first team and the remainder squad, that if you had breached then the EFL should have applied more mitigation i.e. removed a few from any potential points penalty if guilty due to said sales. Whereas Aston Villa I'd say should have the book thrown, Sheffield Wednesday no real mitigations either but a smaller breach so less punishment. Birmingham got punished and should be watching this with interest.

Agreed- I from time to time will look up other forums, interesting to see perspective- Aston Villa the most odious of them all IMO at this level.

Yeah fair enough- looks inflated though, £81.1m which while not doubled and doubled again. 50%,, double maybe- something like that.

Yeah, input is good- that is the point of forums after all.

They certainly can vary club by club and it is definitely an interesting subject- why else would I make this thread after all!  Think it's interesting in itself and also interesting from a competitive advantage/disadvantage tbh.

Wouldn't say I'm so worked up as such. Passionate about it yes, and if honest quite angry at the EFL- they're a disgrace. Echo chambers are no good though, the input has helped stimulate the thread- different perspective always positive I find.

Edited June 4, 2019 by Mr Popodopolous

[CyderInACan]

Yet again this thread is absolutely required reading. Lots of interesting, healthy and intense - yet well mannered - debate. As it should be guys. Love it. 

[Mr Popodopolous]

On a light side note, given it appears to be in the rules.

Why don't Gibson and Lansdown do a ground swap- Lansdown purchases Riverside, Gibson does the same with AG and relevant guarantees about the future of the 2 stadia- with equivalent rent charged, given they get on so well!

No rule against...no loophole forbidding- if you can't beat them etc! 

[Guest DerbyFan]

11 minutes ago, Coppello said:

Yeah but I'm sure that we can agree that the land value difference between Middlesbrough and Derby is not significant enough to create a £40-50m difference. As mentioned, i've spoken to various professional in and around the sports industry and they think it's a bit of a sham. This includes the surveyor who works for a large firm who have become a leader for valuing sports facilities. Whilst I'm sure that the property prices are rising in Derby, it's not exactly London or Monaco in terms of land value. 

I saw your explanation of the development works that have gone on at Pride Park over the last few years but I seriously doubt the capital expenditure will be anywhere near enough to have significant boost (>40%) to the stadium value. As a side note, we levelled a three stands at Ashton Gate a few years ago, added in boxes, top media facilities, a desso pitch, increased our capacity by £8,000, added in a coffee shop/sports bar/new club shop and landscaped the whole area and it still only cost £45m. This value would then have been depreciated if we to do a depreciated replacement cost valuation today. This is where myself, finance professionals in the sports industry and experienced surveyors are slightly confused and why the 'independent' valuation might not be all that it seems. I am sure you can appreciate this?

Regarding your point about reversing impairments, you can only reverse an impairment up the amount of the initial impairment. So my calculations were correct when I said that you can reduce a players value from £20m, down to £2m and back up to £20m. There is a reason why no other football club (that I can think of anyway) accounts for player valuations in the same way.

Your point about the accuracy of the accounting valuations on disposals compared to their market value is actually quite a simple one. If you sell a player on the 10th August 2019 for £20 million for example, you would have performed an revaluation exercise as at '30th June 2019'. Whilst this is the book date, this will actually be performed a lot later, ie around September/October time when the company is audited. This will allow you to accurately account for the players sold and you will adjust said players value to the £20m he was sold for. There is no better indication of a player's value than its actual selling price. This will limit the loss/gains on player trading because it will always been fairly accurate, you would've already recognise an impairment or valuation gain pre-disposal. The vast majority of losses would actually be made in the January transfer window as they would've been revalued several months earlier. 

The big issue will be for players who are not sold in the summer and therefore the accounting valuation is based on an internal assessment. These will fluctuate significantly season-on-season and will result in impairments and reversals all over the shop. As I mentioned, player registrations are not an asset which should be fair valued, it doesn't really follow accounting guidance, creates a lot of risk and makes an auditor shit their pants. Any reputable audit firm would have a real issue with it. 

Regarding your query about the stadium valuation, the depreciated replacement cost method is basically what it would be to build the stadium now and then depreciate to the current level of wear and tear. So it would be the value with the depreciation removed.

Yes I agree it shouldn't make that much of a difference on it's own, I was just thinking of reasons by there might be a difference, even if not that large a one. I don't know why it was valued so high, all I know is that it was according to everything that we've been told. Only the valuers can know the reasons why they gave it the value they did.

I think the reason I find it hard to believe that £80m is excessive is simply because you hear for example that it's costing over £1bn for Spurs' stadium and you think, well ok, I can easily see how it would cost less than a tenth of that to replace ours. Even if that's not actually the case, it's how my mind seems to compute it! Those figures seem crazy for Spurs, I get that it's good but blimey, it's very, very expensive isn't it!

I do think you're vastly over complicating the way we deal with player amortisation I can't remember where it originally came from, but if you read on our forum, everyone is of the same belief (so it must have been said somewhere in the past, I just don't know when or who said it, maybe at a fans forum(?) I'm not sure on that one) that once we amortise a player down, we cannot (or maybe it was do not rather than cannot?) then revalue them upwards in future accounts.

It's been said that we cannot (do not?) put a value higher on a player than they were in the last accounts, and we cannot (do not?) put a value on players that had no value in the first place, ie. Free transfers or youth players, hence when we sell one of them it is pure profit for the books (unless they are a youth player that was actually purchased at some point, rather than fully homegrown, then there might be sell on fees).

It could be wrong, but that is how we all understand it to be, no one talks about putting a value back up again from year to year, only carrying a higher value towards the end of the contracts than straight line amortisation would. ie. a player bought for £4m on a 4 year contract would normally be £1m each year, we might make it £0.5m, £0.5m, £1m and then £2m over the 4 years, so we take a larger hit in the last year, unless we extend their contract, in which case say we gave them a 1 year contract extension at the end of year 3 then we amortise the remaining £2m over years 4 and 5 instead of taking the full £2m in year 4.

It may not be quite as simple as that, but I'm not sure if it's quite as complicated as you make it. Unless we are all under the wrong impression of how we deal with it, which could be a possibility, I just wish I could remember why it is that we are of this belief. 

39 minutes ago, Coppello said:

Also, what do the two owners in dispute have to called Mel Morris and Steve Gibson. I keep thinking your owner is called Mel Gibson!

[Guest DerbyFan]

35 minutes ago, Mr Popodopolous said:

I'm not openly stating that I believe they are bent or similar- simply that if the EFL reported them to their bodies, they should welcome an investigation as they clearly have done nothing wrong. Just a bit of a believer in the saying "Nothing to hide, nothing to fear"- in the same way Man City claimed they welcome the investigation by UEFA then perhaps those should welcome a report to their professional bodies? I think it would be good for transparency anyway- who doesn't like transparency after all. That paragraph perhaps reads a bit flippant though- but there are sufficient questions I think for some sort of report but particularly if there are substantive valuation differences for example.

If the EFL's valuation matches the club? Then we have to go with it. It sticks in the craw but we would have to accept it for what it is. A thorough investigation by top of the range accountants, auditors, corporate lawyers and land valuers should take place though and I dare say most Championship owners would agree. I dare say most owners are very rich at this level so would gladly fund it too if they pooled resources- they certainly easily could. The same would go for Birmingham and Sheffield Wednesday too incidentally if they have attempted this.

Don't know- wouldn't be prudent for them to put that sort of thing on a public forum, PL in London IIRC? Though again can't remember entirely, definitely a London club- wouldn't presume to speak for them beyond that. On valuation- and I know this aspect isn't so relevant in building valuations, land let alone stadia- you mentioned house price inflation in Derby. House prices rising- well as it goes, Leicester- which is a good comparison- has higher house prices but a lower stadium valuation. Interesting, but perhaps not so relevant. FWIW, Zoopla- Average Property Price Derby- £210,436...Leicester £232,777. Now I know property valuation has little relation to that of stadia, but Walkers Stadium valued in the accounts at around £38m yet Pride Park goes for more than double!? Bit funny no- it isn't London, Monaco or New York- with respect. Hell it isn't even Bristol (£331,554)- yet AG a fair bit less as pointed out by @Coppello . 

Well that is interesting in itself- see when Villa Park was revalued in 2016, the amount lopped off it was put into the accounts and was down as the cost of impairment. Maybe it isn't obligatory with compulsory revaluations that take place over a given time period, but it is with ones by choice.

Only Steve Gibson knows Steve Gibson's motivations. Playing the long game maybe, who knows. Or maybe Morris offered it in a mocking way- only Gibson will know his reasons but I dare say he believes in them.

A fair bit doesn't stack up with it- not pointing the finger at Derby here (for once!), but I was under the impression that as well as Gibson, my club were pretty angry over the FFP issues, so too were Nottingham Forest and it goes without saying Leeds. Are they too playing a long game- maybe canvassing support and planning an ambush in the form of a vote at this summer's EFL conference?  That would be great!  

I'll read these articles again now- thanks. Well so they did- EFL should have got in independent auditors and lawyers appointed by them before approving- look at Man City now facing a possible CL ban, to think old cases cannot be reopened is patently a view that is held on shaky ground.

Haha suspicious minded? On some things perhaps...on this- yeah. I believe that there are clubs who have been very close to the rules- and actually FWIW I have always had Derby down as being just about in compliance before any such transaction- I have claimed it on this thread pretty often in recent months. Yeah though, I believe clubs may well have flouted the regs or seriously tested the spirit of them, while we and lots more have sold players and abided and it ain't right. It is still possible with a big youth expenditure in 2015-16, that the 3 years to 2017/18 might have had you in compliance, albeit narrowly incidentally! I think it is tight either way, but my main bugbear is that I think given you sold 7 players in that period- 4 or 5 first team and the remainder squad, that if you had breached then the EFL should have applied more mitigation i.e. removed a few from any potential points penalty if guilty due to said sales. Whereas Aston Villa I'd say should have the book thrown, Sheffield Wednesday no real mitigations either but a smaller breach so less punishment. Birmingham got punished and should be watching this with interest.

Agreed- I from time to time will look up other forums, interesting to see perspective- Aston Villa the most odious of them all IMO at this level.

Yeah fair enough- looks inflated though, £81.1m which while not doubled and doubled again. 50%,, double maybe- something like that.

Yeah, input is good- that is the point of forums after all.

They certainly can vary club by club and it is definitely an interesting subject- why else would I make this thread after all!  Think it's interesting in itself and also interesting from a competitive advantage/disadvantage tbh.

Wouldn't say I'm so worked up as such. Passionate about it yes, and if honest quite angry at the EFL- they're a disgrace. Echo chambers are no good though, the input has helped stimulate the thread- different perspective always positive I find.

I can't speak for them, it just surprised me due to situations I've seen or heard about in the past.

I believe that at that meeting it was said the owners heard the briefing by the EFL's own finance people and were so impressed by it, that they trusted them to get things right. I'll try and find a link, it may have been live on Sky Sports News that this was said, not sure, hopefully there will be an article to back this up somewhere too.

That's fine I didn't expect them to say where it was that they worked, but sometimes when people have been together on a forum for a while, things become common knowledge between longstanding members that others don't know so I wasn't sure if others were maybe aware.

It may not have been relevant, I wasn't sure, I saw on Zoopla (maybe Rightmove? one of them...) that Derby has had a 12% increase in property values since 2016, that seemed quite high I thought.

I don't know about Leicester's valuation, that actually seems low to me, when you think about how expensive stadia are to build these days - look at Spurs , but I'm only a layperson.

I don't know if they're a good comparison, but on the other Derby venues I mentioned before, the Arena (velodrome) next to the stadium apparently cost the Council £27-28m to build - opened 2015 (I feel pretty sure the land was already council owned, it was built on an existing car park, so I guess the cost may not include the acquisition of the land?) granted theres a huge amount of wood for the track and all the work that making the actual track involved, but the building itself is pretty simple, nice but basic, only 1500 fixed seats. The Assembly Rooms that had the fire in the plant room (which was on top of the car park, not the main building, so very little damage to the main part) will apparently cost the Council £24m to fully refurbish, the cost to replace it would apparently have been £44m for a 3000 seater music and performance venue with car park. It's even costing the Council another £42m to replace an old swimming pool complex. Like I say, I don't know whether those values are at all relevant, but given the relative sizes and complexity of the buildings involved they could be? As an aside, I have no idea - do construction costs vary much depending on location? Or are most of the differences in costs due to location down to the land value, or the actual location itself being desirable?

Maybe, but Mel Morris doesn't seem to do that, he's very straight talking from what little I've seen and heard (televised fan forums, radio interviews) (the quotes mentioned before I think show this) he's very compelling to listen to, if you watch the clips of him you mentioned previously, I think you'll see. From those quotes he does seem unhappy that even after offering it and seemingly being ignored, it appears Gibson is still going for us, especially with the things that he points out Middlesbrough having done themselves previously, with their representative saying the same thing he is now ie. it was within the rules.

Presumably Forest would be angry because 1. It's us  and 2. I don't think they can do the same as I think their ground is Council owned. Leeds, who knows, although I did notice they were mentioned by the Times as being close to FFP or something in the article you quoted in your other thread, I believe they bought their ground back quite recently too? Maybe they don't have any book value to market value headroom because of this?

Man City are under both PL and UEFA FFP rules - it is the UEFA ones they are supposed to have broken isn't it? We (clubs in the EFL) are under EFL FFP rules, they are not one and the same thing, so surely the situations cannot be compared?

That's the thing, as this point none of us know what the EFL did (or didn't) do with regard to it, which is why I asked what if their valuation was the same earlier, we simply don't know, we (as in the fans of the clubs rather than the clubs themselves) may never know, actually even the clubs themselves may never know, apart from a reassurance from the EFL - I'm not sure exactly what is covered under the confidentiality agreement. They haven't gone against the clubs claim that they okayed it though, so I assume that is accepted by the EFL, and presumably the club have the proof of this. That's why I don't understand how the club can be investigated even at the request of other clubs, that would effectively be the EFL investigating themselves, wave something through as ok and then say oh no sorry it actually wasn't.

This is not the same situation as Birmingham, they must have known they had flouted the rules, they spent a huge amount on very little income (isn't their wage bill alone something over 200% of their income? Ours isn't great but I don't think I've ever known it to be that bad!) but they made absolutely no attempt to do anything about it, and then bought another player when they were under an embargo. I seem to remember the EFL wanted a 12 point deduction, wasn't it 9 for the amount over and above what they were allowed to lose and then the extra 3 for the aggravated breach? I saw their fans arguing that because they ended up registering the player rather than forcing them to get rid, either temporarily, or permanently, that they shouldn't get punished for that bit. Is this the argument the club used? Is this why the deduction was the 9 points and not 12 in the end?

I do see that last part at least as somewhat similar to our situation, if the EFL okayed the sale of the stadium ie. a tangible fixed asset - as we're told they did - and they haven't denied it (not sure whether they knew the valuation or not at this point, however, logically, surely they would have known it was going to be more than the book value, as otherwise why would we have wanted to do it? - the club will know exactly how much the EFL knew at the time though) then we can't be punished for the sale under the good faith rule:

Quote

4.4          Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement).  Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

I notice that the rule specifically states that only The League shall have the right to bring any action. I assume then that should any legal action that Gibson may bring about mention 'good faith' (I don't know if you can actually sue someone for this?!) then the EFL may not be too happy about it, as it would undermine their own 'good faith' rule?

I did notice that you had said that you thought we might be ok for FFP anyway, I also note that the club specifically said (in the accounts - under the 'Financial and business review') that the reasoning for the stadium sale was:

Quote

to fully realise the market value of the stadium from its balance sheet after consideration of the Club's P&S position for forthcoming years.

...

Given the number of clubs in receipt of parachute payments and the level of wages and transfer fees paid in the division, the Club has wished to remain competitive to achieve its desires of Premier League football and undertaking a transaction of this type allows it to do so whilst also remaining within the financial rules of the league.

As it specifically mentions forthcoming years, I wonder if that is the case.

I'm glad that you don't mind my input, I wasn't sure whether I should be here or not, but I thought you might appreciate the different perspective, I'm pleased to see that is the case. I hope I'm not going around in circles (too much...) it's difficult to remember what you've covered before, especially when typing long posts! And it took me a while to notice the multi quote button. 

[Guest DerbyFan]

3 hours ago, Mr Popodopolous said:

On a light side note, given it appears to be in the rules.

Why don't Gibson and Lansdown do a ground swap- Lansdown purchases Riverside, Gibson does the same with AG and relevant guarantees about the future of the 2 stadia- with equivalent rent charged, given they get on so well!

No rule against...no loophole forbidding- if you can't beat them etc! 

Ahh, but what are your book values? And why so convoluted, just each buy your own! 

[Mr Popodopolous]

10 hours ago, DerbyFan said:

Ahh, but what are your book values? And why so convoluted, just each buy your own! 

Haha, well my idea is that bit more creative though- if you're going to pull a stunt, it should be a big one. Two third parties- sounds a good one!

Will respond to all the bigger posts later- saw this on another site though presumably the date indicates the date it was searched- if the transaction occurred later than 30th June 2018 though, it's amazing the flexibility permitted in UK business laws and regs!.

Seemingly owned by Gellaw NewCo 201 Limited- which appointed a Voluntary Liquidator within a month or so. Amazing what Company, Solvency, Financial law and EFL regs permit! This was on the same site- Mel Morris likes a Gellaw Newco it appears.

Edited June 5, 2019 by Mr Popodopolous

[elhombrecito]

14 hours ago, CyderInACan said:

Yet again this thread is absolutely required reading. Lots of interesting, healthy and intense - yet well mannered - debate. As it should be guys. Love it. 

Very true, a very interesting and informative thread, without the infighting that usually pops up at some point in OTIB threads. 

It does, however, have the unfortunate side affect of making me feel thick as pig shit though 

[downendcity]

1 minute ago, elhombrecito said:

Very true, a very interesting and informative thread, without the infighting that usually pops up at some point in OTIB threads. 

It does, however, have the unfortunate side affect of making me feel the EFL look as thick as pig shit though 

Corrected for complete accuracy elhimbrocity!  

[Guest DerbyFan]

47 minutes ago, Mr Popodopolous said:

Haha, well my idea is that bit more creative though- if you're going to pull a stunt, it should be a big one. Two third parties- sounds a good one!

Will respond to all the bigger posts later- saw this on another site though presumably the date indicates the date it was searched- if the transaction occurred later than 30th June 2018 though, it's amazing the flexibility permitted in UK business laws and regs!.

Seemingly owned by Gellaw NewCo 201 Limited- which appointed a Voluntary Liquidator within a month or so. Amazing what Company, Solvency, Financial law and EFL regs permit! This was on the same site- Mel Morris likes a Gellaw Newco it appears.

I'm not sure what all of that means, but does it not say the registered owner is Gellaw Newco 202, and not Gellaw Newco 201?  I'm not sure why the liquidation of Gellaw Newco 201 is relevant - have I missed something?

If the date shown is the date of the search, then surely that doesn't have any bearing on when the transaction took place? Do you mind me asking which site you found it on? If that is the date of a search then I can't help but wonder why someone went looking for this information in January?  The sale was only made public knowledge (as far as I'm aware anyway, ie. I'd not seen anyone mention it previously, and I feel sure someone on our forum or Twitter would have picked up on it) when we released the accounts.

Edited June 5, 2019 by DerbyFan
Changed it to read better, too many 'searches'!

[Mr Popodopolous]

13 minutes ago, DerbyFan said:

I'm not sure what all of that means, but does it not say the registered owner is Gellaw Newco 202, and not Gellaw Newco 201?  I'm not sure why the liquidation of Gellaw Newco 201 is relevant - have I missed something?

If the date shown is the date of the search, then surely that doesn't have any bearing on when the transaction took place? Do you mind me asking which site you found it on? If that is the date of a search then I can't help but wonder why someone went looking for this information in January?  The sale was only made public knowledge (as far as I'm aware anyway, ie. I'd not seen anyone mention it previously, and I feel sure someone on our forum or Twitter would have picked up on it) when we released the accounts.

Owlstalk.

Owlstalk in that thread made reference to Gellaw Newco 201 having ownership at some stage- presumably because Sheffield Wednesday are or have been planning similar.

Okay, another post on that thread makes clear that it was within the accounting period.

Quote

 

Nothing is registered at Land Registry - still owned by Sheffield Wednesday Football Club Limited. (as at 17 May 2019)

Registration of transfer should be made within 30 days of date if transfer,

 

If you look at the title for Pride Park it was sold to Gellaw Newco 202 Limited for £81,100,000 on the 28th June 2018 and registered on 30th July 2018.

A lease for 20 years to Derby County was granted at the same time.

 

So it is unlikely our ground was transferred before  31 July  2018 (accounts period end), 

 

It would also be quite costly with  stamp duty of 5% of the sale price payable, (so £50m would be £2.5m stamp duty) plus another say £400k stamp duty on the grant of a 20 year lease at £1.5m rent per annum.

 

 

I also don't understand how this helps P&S any impact from the sale/purchase or deprecation of fixed assets (except players) is excluded from the calculated P&S losses,

 

Amazing that speculation in The times has lead to 36 pages here,

 

20 year lease, £81.1m- I make that a yield of around £4.05m per season rent if commercial rates applied. Yet I believe it is around £1.2m per season- on a 20 year lease for £81.1m transaction??

Though, in Derby rental yield apparently 3.41%- I make that £2.76m per season- maybe disregard the rent per year as purchase price but still it is £1.56m per season lower.

Edited June 5, 2019 by Mr Popodopolous

[cidered abroad]

Like many on here, I'm totally at a loss to understand the technicalities of the business accounting world. Except that I have always understood that when money is involved, it is incredible how many ways there are for circumventing the rules.

So just a comment on the valuation of a football stadium. When we were trying to get Ashton Vale new stadium approved, we had a purchaser, Sainsbury's, lined up to buy ours. I don't remember the value of the stadium mentioned at the time but it didn't appear to be extortionate.

Surely the value of a stadium is not really measured by what it cost, except for depreciation in annual accounts. It has, in my opinion, minimal value as a stadium because unlike a residence or an office block, there will not be many, if any, purchasers. What does one do with a football stadium, if there isn't another football or rugby club in the near vicinity?

Pull it down and use the land for another building? Thus, the true value is what it would sell for as building land. Correct? If so the value should be in line with other land in the immediate neighbourhood, if there is any.

Edited June 5, 2019 by cidered abroad

[Guest DerbyFan]

1 hour ago, Mr Popodopolous said:

Owlstalk.

Owlstalk in that thread made reference to Gellaw Newco 201 having ownership at some stage- presumably because Sheffield Wednesday are or have been planning similar.

Okay, another post on that thread makes clear that it was within the accounting period.

20 year lease, £81.1m- I make that a yield of around £4.05m per season rent if commercial rates applied. Yet I believe it is around £1.2m per season- on a 20 year lease for £81.1m transaction??

I'll go have a nosy, that's another forum I like to lurk on! 

So were they wrong about Gellaw Newco 201? Did someone misread and then miscommunicate it somewhere along the line?

At least we now know that it was within the accounting period then.

Re. Hillsborough, I assumed they wouldn't have sold theirs until this years accounts anyway, 2019?

If they were intending to do the sale for the 2018 accounts then it would definitely have been done outside of the accounting period if the above quote about still being registered with the club at 17 May is true? Although I think they are still to file their 2018 ones?

I can't see in the rules where profit from the sale of fixed assets is excluded from P&S for Championship clubs, so I'm not sure why they have stated this, unless the rules, in full, are not the same as on the EFL website?

The quote I mentioned in a previous post from Mel Morris (article in the Derby Telegraph) specifically said that the sale of fixed assets was allowed in the rules, I can't think why else would you want to sell a fixed asset but to gain a profit?

For comparison, Reading, I believe lease their stadium? £1.1m a season, I seem to recall?* Less capacity but at £50m seemingly cost around double to build in 1998 (only 1 year after Pride Park opened in 1997), down South - so more expensive rental value to counteract the capacity?

*Actually, their accounts seem to say that their rent is only £750,000 to the parent company.

57 minutes ago, cidered abroad said:

Like many on here, I'm totally at a loss to understand the technicalities of the business accounting world. Except that i have always understood that when money is involved, it is incredible how many ways there are for circumventing the rules.

So just a comment on the valuation of a football stadium. When we were trying to get Ashton Vale new stadium approved, we had a purchaser, Sainsbury's, lined up to buy ours. I don't remember the value of the stadium mentioned at the time but it didn't appear to be extortionate.

Surely the value of a stadium is not really measured by what it cost, except for depreciation in annual accounts. It has, in my opinion, minimal value as a stadium because unlike a residence or an office block, there will not be many, if any, purchasers. What does one do with a football stadium, if there isn't another football or rugby club in the near vicinity?

Pull it down and use the land for another building? Thus, the true value is what it would sell for as building land. Correct? If so the value should be in line with other land in the immediate neighbourhood, if there is any.

It surely can't be as simple as only the land having the value, because regardless of the limited usage of a stadium (unless you get creative with it being a performance venue) it has cost something to build and/or make improvements to, can you imagine being the person that has to tell Spurs that their new £1bn stadium is now only worth the land value. 

As the Ricoh Arena debacle shows there doesn't have to be a team in the near vicinity to attract a buyer - they were London Wasps weren't they?

Sainsbury's presumably would only have been interested in the land though (unless they wanted to branch out into the sport world? ) which maybe would have limited the value if they were the only interested party at that time?

Edited June 5, 2019 by DerbyFan
Added extra

[Mr Popodopolous]

44 minutes ago, DerbyFan said:

I'll go have a nosy, that's another forum I like to lurk on! 

So were they wrong about Gellaw Newco 201? Did someone misread and then miscommunicate it somewhere along the line?

At least we now know that it was within the accounting period then.

Re. Hillsborough, I assumed they wouldn't have sold theirs until this years accounts anyway, 2019?

If they were intending to do the sale for the 2018 accounts then it would definitely have been done outside of the accounting period if the above quote about still being registered with the club at 17 May is true? Although I think they are still to file their 2018 ones?

I can't see in the rules where profit from the sale of fixed assets is excluded from P&S for Championship clubs, so I'm not sure why they have stated this, unless the rules, in full, are not the same as on the EFL website?

The quote I mentioned in a previous post from Mel Morris (article in the Derby Telegraph) specifically said that the sale of fixed assets was allowed in the rules.

For comparison, Reading, I believe lease their stadium? £1.1m a season, I seem to recall? Less capacity but at £50m seemingly cost around double to build in 1998 (only 1 year after Pride Park opened in 1997), down South - so more expensive rental value to counteract the capacity?

It surely can't be as simple as only the land having the value, because regardless of the limited usage of a stadium (unless you get creative with it being a performance venue) it has cost something to build and/or make improvements to, can you imagine being the person that has to tell Spurs that their new £1bn stadium is now only worth the land value. 

As the Ricoh Arena debacle shows there doesn't have to be a team in the near vicinity to attract a buyer - they were London Wasps weren't they?

Sainsbury's presumably would only have been interested in the land though (unless they wanted to branch out into the sport world? ) which maybe would have limited the value if they were the only interested party at that time?

Bolded sections I reply to.

More than likely wrong about the Gellaw Newco number- there were quite a few. Thought of getting on the Land Registry myself but it costs and I have no professional interest so...

Yeah, only just but only just is enough!

Surely it can't be backdated to the 2015/16-2017/18 accounts which is what they would be judged on? Their accounts for that period were due on Feb 28th 2019, which they then shifted back to ending on May 31st 2019- don't know when that was planned but it came up on Companies House on 27th February 2019 and they have been due since April 30th 2019- seem to be down as overdue. If there's a side who deserve the book being thrown along with Aston Villa it'd be them!

Yep- see above for their shifting accounts.

Feels wrong though, if it is to a related party and especially interesting if towards the end of an accounting period where passing FFP up for debate.

Interesting you should mention Reading! I just now looked up their sale and leaseback of ground- I assumed it was sale of fixed assets other than Madejski Stadium but it appears it was for £26.5m- by way of comparison, that is a notable difference to Derby! Whereas Griffin Park for £30m- London premium? Madejski value at time of sale was around £20m, so the profit was £6.5m- £1.2m per season feels low for rent on an asset sold on a 20 year lease tbh- the Madjeski is a 25 year lease I believe. EFL should have insisted on commercial rent arrangements for such moves if to related parties from the get-go, would a bank or a property developer be happy with such a low rate? 

Tottenham's worth £1bn is crazy even for football yet if that is what it cost. London, high end PL clubs, capacity, inflation and all of the mod cons added probably played a role, agree property prices a bit of a red herring- Ashton Gate however as per our accounts- 5-6,000 less capacity than Pride Park but many similar features. According to Ashton Gate Limited, as I think already pointed out by Coppello,  £42,548,669 at 31st May 2018, though it wasn't a fresh new build but a big redevelopment nonetheless.

My big problem with this but particularly the sharp rise for Derby is that- what would Barclays Bank HSBC realistically offer- assuming they are not linked in any way to Derby. What would a property company offer? If an unrelated company came to a valuation of £81.1m and a rent of £1.2m per season on a 20 year lease? I'd think they were mental but it's their prerogative!! I can only assume the Reading valuation was a lot closer to an open market one, given that there was a profit of only £6.5m or so.

Edit: They're (Barclays that is) Derby's bankers- didn't think that one through- just picked a bank at random! 

Edited June 5, 2019 by Mr Popodopolous

[Guest DerbyFan]

2 hours ago, Mr Popodopolous said:

Bolded sections I reply to.

More than likely wrong about the Gellaw Newco number- there were quite a few. Thought of getting on the Land Registry myself but it costs and I have no professional interest so...

Yeah, only just but only just is enough!

Surely it can't be backdated to the 2015/16-2017/18 accounts which is what they would be judged on? Their accounts for that period were due on Feb 28th 2019, which they then shifted back to ending on May 31st 2019- don't know when that was planned but it came up on Companies House on 27th February 2019 and they have been due since April 30th 2019- seem to be down as overdue. If there's a side who deserve the book being thrown along with Aston Villa it'd be them!

Yep- see above for their shifting accounts.

Feels wrong though, if it is to a related party and especially interesting if towards the end of an accounting period where passing FFP up for debate.

Interesting you should mention Reading! I just now looked up their sale and leaseback of ground- I assumed it was sale of fixed assets other than Madejski Stadium but it appears it was for £26.5m- by way of comparison, that is a notable difference to Derby! Whereas Griffin Park for £30m- London premium? Madejski value at time of sale was around £20m, so the profit was £6.5m- £1.2m per season feels low for rent on an asset sold on a 20 year lease tbh- the Madjeski is a 25 year lease I believe. EFL should have insisted on commercial rent arrangements for such moves if to related parties from the get-go, would a bank or a property developer insist on such a low rate? 

Tottenham's worth £1bn is crazy even for football yet if that is what it cost. London, high end PL clubs, capacity, inflation and all of the mod cons added probably played a role, agree property prices a bit of a red herring- Ashton Gate however as per our accounts- 5-6,000 less capacity than Pride Park but many similar features. According to Ashton Gate Limited, as I think already pointed out by Coppello,  £42,548,669 at 31st May 2018, though it wasn't a fresh new build but a big redevelopment nonetheless.

My big problem with this but particularly the sharp rise for Derby is that- what would Barclays Bank realistically offer- assuming they are not linked in any way to Derby. What would a property company offer? If an unrelated company came to a valuation of £81.1m and a rent of £1.2m per season on a 20 year lease? I'd think they were mental but it's their prerogative!! I can only assume the Reading valuation was a lot closer to an open market one, given that there was a profit of only £6m or so.

Yes, I can't see how it can be at all possible that Sheffield Wednesday won't fail FFP at some point, haven't they only sold 1 player (to you) of any significance (or at all?) in something like 3 years? And I seem to remember that their owner actually told them that if they didn't get promoted they would be in big trouble?

Unless of course they can do or have done a stadium sale that covers for period they were going to fail for, that also covers the amount they were going to fail by. But I don't know 1. The valuation or 2. The book value of Hillsborough, to know whether this is achievable or not.

Re. Reading, just wondering, is it possible that the stadium was actually valued (not the book value) at more than the sale price but their owners didn't want to put in that much money so if they had a specific amount of loss to cover (ie. the amount of profit created from the sale once the book value is taken off) that this why they sold the stadium for the value they did? Can you sell an asset for a lot less than you know it is worth?

Griffin Park - very interesting, I find it strange in that case that theirs, even with a London premium, can be worth more than Reading, who are also southern and have a much nicer stadium. I notice from their accounts that Brentford used the same company we did for our 2013 valuation, Jones Lang LaSalle.

Re. Ashton Gate, I've seen an article (Bristol Post) that describes the work as costing £100m in total (including for not yet completed or future developments I assume?). I've also seen a BBC article from 2013 that says £40m developments (presumably this would have been a bit more by the time it actually happened like most things with a few years in between?). Is the £42m odd that you mention, the total valuation of your completed (£40m?) development works and what was already existing? Or is that the value of work that you have had done to it, minus the existing?

All I know, from the accounts, is that Pride Park was valued at £55m in December 2007 by King Sturge LLP (now incorporated into Jones Lang LaSalle), seemingly both highly respected companies for this kind of thing. It was revalued in 2013 by Jones Lang LaSalle (but no new value has been stated in the accounts as far as I can see) and both of these valuations were before the vast majority of the works I listed the other day, in fact I think it was only the internal big screen (and maybe the exterior ones) that were done just before 2013. Then it was valued in 2018 at £81m or whatever it was, for the sale, but it doesn't state by which company.

I don't know what anyone else would offer for it, but if an unrelated respected company has given it a valuation of £55m some 11 years before the sale (and some 10 years after it was built for a total cost of somewhere between £21-28m) then I can only assume they do and that would've been the amount at the time, in 2007.

Edited June 5, 2019 by DerbyFan

[Fontaineofallknowledge]

Looks like Villa did a derby and sold their stadium to circumvent FFP:

 

really disappointing that clubs are doing this-We are competing with parachute payments and dirty tactics (not to mention refs being against us!)

[downendcity]

1 hour ago, Fontaineofallknowledge said:

Looks like Villa did a derby and sold their stadium to circumvent FFP:

 

really disappointing that clubs are doing this-We are competing with parachute payments and dirty tactics (not to mention refs being against us!)

The disappointing bit- no the really annoying bit - is the way fans are almost admitting they are getting away with it because the rules are not tight enough and that even if any action is taken, they see little chance of points deduction now they are in the prem.

You get the feeling that as a club Villa decided that they would do whatever it took financially to get back to the prem, in the almost certain knowledge that they would face down any attempt by the EFL to bring them to book over ffp ( and win!) and that the money they would pocket in the premier league would enable them to balance the books.

In a nutshell it crystallises the problem the EFL has singularly failed to grasp and address. Namely, that the financial rewards for getting promotion are so great that some clubs will risk everything to get there and that they will do this because they know that the EFL is inept in implementing , applying and enforcing it's ffp rules, and in particular when faced with so called big clubs.

[Mr Popodopolous]

It's late so I'll look properly tomorrow but one note.

Reports- maybe erroneously- suggested Aston Villa under a soft transfers embargo until 30th June 2019.

They've just announced signing of Jota. If it a straight swap with Gary Gardner all okay to a point as no cash changed hands but if not- aggravated breach.

How many points should within regs EFL dock them if they return in a year or 2? I'm going with 14.

Am assuming amoral scummers at EPL won't honour the agreement- legal action a possibility?

@Coppello you are the expert and particularly on PL FFP. Any scope for a Championship points deduction to follow a promoted rule breaker into PL?

Assumed that was a key point of harmonised FFP! A number of sources have certainly intimated it possible.

Edited June 5, 2019 by Mr Popodopolous

[Johnny Musicworks]

My opinion for what it’s worth is that there could be various reasons why Gibson got no support from the other clubs including ourselves.

Firstly that having looked at it legally there was the conclusion that whatever had been done had broken no actual rule and concerted efforts to punish the ‘offenders’ would be futile.

Secondly that it was a case of ‘shutting the stable door after the horse had bolted’. We all know that financially this league is not a level playing field, favouring the cash rich and the ex premier League clubs consistently. Having Derby, Villa, Wednesday etc blatantly abuse the system  on top of everything else and then preventing the lesser clubs doing likewise would only tip the balance even more. Indeed the lack of support might indicate that an olive branch had been offered prior to the meeting by the EFL. Something like “okay before we do everything to close this loophole we have a period where anybody else can do likewise as each club can only do it once.”

Finally there is the possibility that a ‘plan B’ has been found that would redress the balance a little and it was merely a case of keeping their powder dry until the right moment. It would have been useful if one of the clubs sympathetic with Gibson had an astute financial expert as an owner and an employee on the EFL board. We can but hope !

[Mr Popodopolous]

https://astonvilla.vitalfootball.co.uk/were-aston-villa-well-just-pay-the-ffping-fine-but-it-would-be-nice-if-the-media-did-their-job-investigated/

Aren't they odious, the author of this piece- I don't like to generalise but.

Double relegation too good for them.

I actually am of a mind that if and when they return to Championship I have no desire for our players to have to share a pitch with the pricks. More importantly, SL to have to share a boardroom and most of all our fans to have to share a stadium.

Wonder how many other Championship clubs have similar feelings- at the very least fans and boardroom level.

Edited June 6, 2019 by Mr Popodopolous

[Coppello]

8 hours ago, Mr Popodopolous said:

It's late so I'll look properly tomorrow but one note.

Reports- maybe erroneously- suggested Aston Villa under a soft transfers embargo until 30th June 2019.

They've just announced signing of Jota. If it a straight swap with Gary Gardner all okay to a point as no cash changed hands but if not- aggravated breach.

How many points should within regs EFL dock them if they return in a year or 2? I'm going with 14.

Am assuming amoral scummers at EPL won't honour the agreement- legal action a possibility?

@Coppello you are the expert and particularly on PL FFP. Any scope for a Championship points deduction to follow a promoted rule breaker into PL?

Assumed that was a key point of harmonised FFP! A number of sources have certainly intimated it possible.

Is this a PL points deduction once a Championship club has been promoted? There's currently nothing written in the legislation about it and I don't think the PL are that interested. They're focused on the granting of UEFA licenses to PL teams and ensuring the adherence to those rules rather than looking at the teams towards the bottom of the division. In addition, they're almost separate jurisdictions and this is why the EFL were unable to punish QPR until they went down to the Championship. There may be appetite to change this given the current situation but I haven't heard anything.  

[Mr Popodopolous]

1 minute ago, Coppello said:

Is this a PL points deduction once a Championship club has been promoted? There's currently nothing written in the legislation about it and I don't think the PL are that interested. They're focused on the granting of UEFA licenses to PL teams and ensuring the adherence to those rules rather than looking at the teams towards the bottom of the division. In addition, they're almost separate jurisdictions and this is why the EFL were unable to punish QPR until they went down to the Championship. There may be appetite to change this given the current situation but I haven't heard anything.  

That's the thing, I've read different things on it. Some sites suggest that there was some sort of agreement that points deductions can follow a side up. Others seem to think just a fine-= EFL certainly if reports to be believed pushing for it- PL are amoral tossers however and EFL are wildly inept which is a terrible combination for enforcement of such matters- I would suggest the FA would be the most appropriate but I don't have a huge amount of confidence in them- Prince William FA, Prince William Aston Villa fan for one!? I am sure it wouldn't impair hus judgement but I have precious little faith in them.

Ah, just paper talk then? Besides how on earth can UEFA licenses be granted when PL loss limit is £35m per season, whereas UEFA limit quite a bit lower? That bit does confuse me a bit- surely the UEFA loss limits take precedence for licensing purposes?

Do you think therefore that stiff sanctions could be imposed on Aston Villa for a 3 year beach when they return? Aston Villa fans seem adamant no rule allows it.

[Mr Popodopolous]

1 hour ago, Johnny Musicworks said:

My opinion for what it’s worth is that there could be various reasons why Gibson got no support from the other clubs including ourselves.

Firstly that having looked at it legally there was the conclusion that whatever had been done had broken no actual rule and concerted efforts to punish the ‘offenders’ would be futile.

Secondly that it was a case of ‘shutting the stable door after the horse had bolted’. We all know that financially this league is not a level playing field, favouring the cash rich and the ex premier League clubs consistently. Having Derby, Villa, Wednesday etc blatantly abuse the system  on top of everything else and then preventing the lesser clubs doing likewise would only tip the balance even more. Indeed the lack of support might indicate that an olive branch had been offered prior to the meeting by the EFL. Something like “okay before we do everything to close this loophole we have a period where anybody else can do likewise as each club can only do it once.”

Finally there is the possibility that a ‘plan B’ has been found that would redress the balance a little and it was merely a case of keeping their powder dry until the right moment. It would have been useful if one of the clubs sympathetic with Gibson had an astute financial expert as an owner and an employee on the EFL board. We can but hope !

Perhaps yes- a full vote by clubs surely has potential to change this though?

Yes. Aston Villa by far the most egregious however IMO. At least Derby sold quite a few players- first team and squad alike, not fringe. Sheffield Wednesday were sort of somewhere between the 2 and Birmingham ultimately paid for one window of Redknapp! Run by idiots the last and possibly the 2nd last too. Your last sentence could be interesting- Allow everyone to do it once then shut off the loophole for good. I question whether UEFA would permit such transactions, but as we know the EFL are useless.

This is my hope too. Powder dry- EFL meeting today I believe in Portugal- wouldn't mind being a fly on the wall- do we think we will see any vocal arguments between owners??

I still have no desire for us to play them if or when they return to the EFL.

Edited June 6, 2019 by Mr Popodopolous

[downendcity]

12 minutes ago, Coppello said:

Is this a PL points deduction once a Championship club has been promoted? There's currently nothing written in the legislation about it and I don't think the PL are that interested. They're focused on the granting of UEFA licenses to PL teams and ensuring the adherence to those rules rather than looking at the teams towards the bottom of the division. In addition, they're almost separate jurisdictions and this is why the EFL were unable to punish QPR until they went down to the Championship. There may be appetite to change this given the current situation but I haven't heard anything.  

Even if they were to be given a PL points deduction Villa will be enjoying the financial rewards of being in the prem, which was the purpose behind everything they have done to get around ffp.  If such a points deduction meant they were relegated after just one season they pick up, what, £100m plus the best part of another £100m in parachute payments. The only hope would be that they again throw caution to the wind by overpaying for players, so that when they are relegated, despite parachute payments they will again struggle to cope with reduced income. It could also be that by then the EFL might by then have grown a pair and apply penalties that should have been made last season to prevent their promotion in the first place.

More importantly, if they were to be given a PL points deduction, it would be for breaching EFL ffp rules. If so, the question then would be  why wasn't the breach identified and punished during this last season, which, under the new, much heralded rules, the EFL had indicated was to be the case and the reason for requiring projected accounts in year 3?

Piss up, couldn't,  EFL, brewery, organise a, would seem to be the appropriate words to use in connection with this whole shambolic mess. As a result a few clubs appear to have taken the proverbial!

 

[downendcity]

4 minutes ago, Mr Popodopolous said:

Perhaps yes- a full vote by clubs surely has potential to change this though?

Yes. Aston Villa by far the most egregious however IMO. At least Derby sold quite a few players- first team and squad alike, not fringe. Sheffield Wednesday were sort of somewhere between the 2 and Birmingham ultimately paid for one window of Redknapp! Run by idiots the last and possibly the 2nd last too. Your last sentence could be interesting- Allow everyone to do it once then shut off the loophole for good. I question whether UEFA would permit such transactions, but as we know the EFL are useless.

This is my hope too. Powder dry- EFL meeting today I believe in Portugal- wouldn't mind being a fly on the wall- do we think we will see any vocal arguments between owners??

I still have no desire for us to play them if or when they return to the EFL.

Sl takes a stand and refuses to play Villa on their return to the championship.

You can bet the EFL would be lightning quick out of the blocks to give us a 40 point deduction, thereby guaranteeing relegation, and a £100m fine, for failing to fulfil a fixture.

Oh, they would also probably suspend Bailey and Famara for a whole season!

[downendcity]

18 minutes ago, Mr Popodopolous said:

That's the thing, I've read different things on it. Some sites suggest that there was some sort of agreement that points deductions can follow a side up. Others seem to think just a fine-= EFL certainly if reports to be believed pushing for it- PL are amoral tossers however and EFL are wildly inept which is a terrible combination for enforcement of such matters- I would suggest the FA would be the most appropriate but I don't have a huge amount of confidence in them- Prince William FA, Prince William Aston Villa fan for one!? I am sure it wouldn't impair hus judgement but I have precious little faith in them.

Ah, just paper talk then? Besides how on earth can UEFA licenses be granted when PL loss limit is £35m per season, whereas UEFA limit quite a bit lower? That bit does confuse me a bit- surely the UEFA loss limits take precedence for licensing purposes?

Do you think therefore that stiff sanctions could be imposed on Aston Villa for a 3 year beach when they return? Aston Villa fans seem adamant no rule allows it.

According to Villa fans the premier league desperately want a huge club like Villa back in the fold, so it's a fair guess that even if they are found to have breached EFL ffp (and I believe the premier league agreed with/endorsed the new ffp rules) they will do 100% of bu99er all about it.

[Mr Popodopolous]

1 hour ago, downendcity said:

Sl takes a stand and refuses to play Villa on their return to the championship.

You can bet the EFL would be lightning quick out of the blocks to give us a 40 point deduction, thereby guaranteeing relegation, and a £100m fine, for failing to fulfil a fixture.

Oh, they would also probably suspend Bailey and Famara for a whole season!

Needs 21- hell perhaps even as their breaches were smaller and not cushioned by parachute payments without which their (Aston Villa's) breaches would have been astronomical, all 23 clubs to take a stand and tell them where to go basically. A rough estimate at this stage but I believe that stripping out Parachute Payments, Aston Villa's three year breach would have been £100m+ over the limit- ONE HUNDRED MILLION PLUS!?! I assume they would have modified behaviour significantly and obviously without PP's a lot more clubs would have failed FFP but most relegated clubs at least sell key players, sign cheaper or a mix of the 2 to try to offset some of it.

Would have to be a totally united front however- you cannot force a division to play a bunch of cheats surely?

I also read that clubs have no faith in EFL- in a Telegraph article, which rather contradicts the DerbyFan who said that owners were very impressed indeed with EFL financial professionals! Unless this took place after the reforms of course- clubs wanting a far bigger say in the new P & S regs is particularly interesting- could be good, could be bad but definitely appears to be the case that there's no confidence- and rightly so! What took them so long??

Two Telegraph articles suggest a lot of disquiet indeed.

Some key snippets from the 2 articles- key bits within key bits in bold:-

Quote

 

EFL officials met with representatives from the clubs at Derby’s Pride Park stadium last week and were told there is no confidence in the existing board.

Clubs are insisting on governance reform and want a far bigger say in commercial deals, the new Profitability and Sustainability rules and the distribution of money across the leagues. 

 

Derby, Leeds, Aston Villa, Preston, Stoke, Middlesbrough and West Brom are the leading clubs demanding for change, though it is understood the 24 clubs in the Championship broadly share the same view. 

 

 

 

 

 

https://www.telegraph.co.uk/football/2019/03/07/efl-facing-turmoil-interim-chair-debbie-jevans-expected-step/

 

Second article basically rehashes decent chunks and is past events.

 

https://www.telegraph.co.uk/football/2019/03/01/english-football-league-fire-rebel-championship-clubs-demand/

Edited June 6, 2019 by Mr Popodopolous

[martnewts]

Going forward I wonder if the solution is that if a promoted club has been found to have breached FFP in the promotion season then perhaps the punishment should be that if they are subsequently relegated from the PL at any time in the future that they would then not be eligible for Parachute payments? This would certainly lessen the financial advantage gained by "cheating" to get promotion.

[Mr Popodopolous]

That could well be a good one- question is would the Premier League play ball?

There would be quite a sale on the cards if no pp for cheats. 

Edited June 6, 2019 by Mr Popodopolous

[Guest DerbyFan]

2 hours ago, Mr Popodopolous said:

Needs 21- hell perhaps even as their breaches were smaller and not cushioned by parachute payments without which their (Aston Villa's) breaches would have been astronomical, all 23 clubs to take a stand and tell them where to go basically.

Would have to be a totally united front however- you cannot force a division to play a bunch of cheats surely?

I also read that clubs have no faith in EFL- in a Telegraph article, which rather contradicts the DerbyFan who said that owners were very impressed indeed with EFL financial professionals! Unless this took place after the reforms of course- clubs wanting a far bigger say in the new P & S regs is particularly interesting- could be good, could be bad but definitely appears to be the case that there's no confidence- and rightly so! What took them so long??

Two Telegraph articles suggest a lot of disquiet indeed.

Some key snippets from the 2 articles- key bits within key bits in bold:-

 

https://www.telegraph.co.uk/football/2019/03/07/efl-facing-turmoil-interim-chair-debbie-jevans-expected-step/

 

Second article basically rehashes decent chunks and is past events.

 

https://www.telegraph.co.uk/football/2019/03/01/english-football-league-fire-rebel-championship-clubs-demand/

That article is from March and references a meeting at the end of February (at Pride Park incidentally), the article to which I was referring was after the meeting in April (at Forest), in which the EFL's own finance team did a presentation. It is also the Telegraph and also written by John Percy here:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

There's an interesting article here from 2 days ago about Blackburn's position, which references the stadium sale being within the rules:

Quote

Last month, it was reported Boro owner Gibson would take legal action against Derby for allegedly breaking EFL profitability and sustainability rules before Rams owner Mel Morris hit back, accusing Gibson of hypocrisy.

Waggott said some club have been ‘creative’ with how they have managed their figures, but notes everything is being done within current EFL rules.

He added: “There have been numerous discussions of how people are counting their figures back to profit and sustainability.

“Some are being creative with how they go about it, staying within the EFL rules of course. At the last Championship meeting we had a big presentation about it because it’s been well broadcast and heralded that some clubs are buying their stadiums and offsetting different losses against the permissible development.

“People are working within the rules as they presently are.

“We’re off to Portugal for an EFL meeting and it will be one of the hot topics.”

I do find the quote on this tweet quite interesting:

From here it looks like we weren't one of the clubs that lobbied against Gibson's proposal:

Quote

His proposed changes would have allowed all profitability and sustainability information to be shared with fellow Championship clubs, although a majority vote of 75 per cent (18 out of 24) of the second tier clubs at the meeting is the requirement to make changes.

The fiery meeting lasted over five hours, with Sky Sports News reporting that both Aston Villa and Sheffield Wednesday lobbied the decision in an effort to keep the current rules in place.

These are apparently Tony Pulis' comments from their Norwich programme notes (my bolding, quote from here) :

Quote

In his programme notes ahead of the Norwich City game, boss Tony Pulis echoed the chairman's position.

He wrote: "We saw Birmingham hit by a nine point deduction for breaching the EFL's profit and sustainability rules, Bolton hit with a winding up order and reports have suggested more clubs spending way beyond their means could be facing action from the EFL.

"Some of the figures published are quite staggering.

"Aston Villa's operating loss for last season was £50m while the player costs of both Reading and Birmingham was quoted as being almost 250% of their actual income.

"The total losses for the Championship clubs last season currently stand at £366m and with a number of other clubs still to announce their financial results it is not beyond the realms of possibility that the total figure could be in excess of half a billion pounds.

"Thankfully, here at Boro, we have an owner in Steve Gibson who will never risk the future of this football club.

"Steve is a committed man who lives and breathes this area. The care, attention and support he gives this club should never be under-estimated.

"Steve has worked hard to abide by the EFL financial rules but it is clear that a number of other clubs haven't and that simply can not be right.

"Birmingham's nine point deduction should set a precedent now for other clubs not complying with the rules.

"Over the past year here we have brought money in through the sales of players and reducing the wages and we have cut our cloth accordingly - yet at the same time there are others in apparent breach of the rules and that cannot be right."

He seems to go from being 'clear' that others haven't abided by the rules, to then saying 'apparent breach' of the rules, which sounds not so 'clear' after all?

The reason that I was sceptical in a previous post about the Daily Mail's very recent claim (30 May here) :

Quote

Villa, who were promoted to the top flight after beating Derby County in Monday's Championship play-off final at Wembley, are among a number of clubs — Derby included — currently operating under a soft transfer embargo while the English Football League continue to assess their P and S submission.

 that we were under a soft transfer embargo is because of this quote from John Percy (normally very reliable with our news) in the Telegraph (15 April here) :

Quote

But Derby are said to be operating under a “soft transfer embargo”, which is preventing them from registering Aberdeen captain Graeme Shinnie. 

The midfielder held talks with Derby last week but cannot sign a pre-contract at this stage, as the club’s accounts are being looked at by the EFL.

It is understood the embargo should be lifted later this week, however, enabling Derby manager Frank Lampard to make Shinnie his first signing ahead of next season.

As we have now announced Shinnie (7 May here - I think it's possible that it was only announced this much later because he had an injury in between and knowing how soon he would be back we didn't want to announce him whilst he was injured) then either it has already been lifted and the Daily Mail are wrong, or John Percy was wrong (which would be very unusual) that we couldn't announce Shinnie until it had been lifted.

From the quote in my previous post *678 (from the EFL regulations) that suggests you wouldn't be able to register new contracts if in breach of the rules and we have at least signed Roos on one, that's another reason to believe it has been lifted. All of this together would seem to suggest that the league have passed our accounts.

I have actually been pondering whether a soft transfer embargo is the default position of a (ie. every) club while the EFL finance team mentioned earlier do their own checks after P&S and/or account submissions. As I think we were one of the later ones to submit our accounts to Companies House, it may stand to reason that it then takes longer to clear.

As this post is already very long I'll post my thoughts on the Villa situation later.

Edited June 6, 2019 by DerbyFan
*Added post number for reference

[downendcity]

2 hours ago, DerbyFan said:

That article is from March and references a meeting at the end of February (at Pride Park incidentally), the article to which I was referring was after the meeting in April (at Forest), in which the EFL's own finance team did a presentation. It is also the Telegraph and also written by John Percy here:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

Playing devil's advocate a little, depending on which club's senior executive is quoted could have a huge bearing on the comment, as if it was, say, a Villa executive then he would say that, wouldn't he? 

As for "taking potshots .......... when on-field results go badly". I remember this sort of comment being trotted out by Leeds fans when our owner was pushing for Leeds to be punished over the spygate incident and I've seen comments from Villa fans along similar lines when their ffp position has been questioned i.e. it's sour grapes or jealousy. The issue is not that club's are aggrieved because their own results have gone against them, it is that if a club has breached ffp but escaped any punishment then  they have gained an advantage over all the other clubs clubs that have complied with the same set of financial rules. 

I am sure all clubs and fans would be more than happy to "let the authorities do their job". It is the fact that the authorities, i.e. the EFL, do not appear to be doing their job when it comes to ffp  that is causing other people to "interfere. The ulterior motive such people have is to ensure the EFL applies ffp rules properly and fairly across all clubs and ensures that any club that breaches is properly penalised - there appears to fairly widespread scepticism as to whether this is the case currently.

 

[Mr Popodopolous]

1 hour ago, downendcity said:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

Read more  

Playing devil's advocate a little, depending on which club's senior executive is quoted could have a huge bearing on the comment, as if it was, say, a Villa executive then he would say that, wouldn't he? 

As for "taking potshots .......... when on-field results go badly". I remember this sort of comment being trotted out by Leeds fans when our owner was pushing for Leeds to be punished over the spygate incident and I've seen comments from Villa fans along similar lines when their ffp position has been questioned i.e. it's sour grapes or jealousy. The issue is not that club's are aggrieved because their own results have gone against them, it is that if a club has breached ffp but escaped any punishment then  they have gained an advantage over all the other clubs clubs that have complied with the same set of financial rules. 

I am sure all clubs and fans would be more than happy to "let the authorities do their job". It is the fact that the authorities, i.e. the EFL, do not appear to be doing their job when it comes to ffp  that is causing other people to "interfere. The ulterior motive such people have is to ensure the EFL applies ffp rules properly and fairly across all clubs and ensures that any club that breaches is properly penalised - there appears to fairly widespread scepticism as to whether this is the case currently.

 

You beat me to the punch.

Perhaps it was Derby's! Or in seriousness, as you say anyone who is just happy with the status quo- that comment just sounds made up to me, I am not saying it is but it's so toadying, flies in the face of a lot of evidence that it is laughable unless in self-interest.

Where to start with the unnamed senior executive:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

It seems that they (EFL finance team) can talk a very good game. Easy to do at times- or being fair maybe this is what happens post the changes, maybe the anger at the March meeting has actually brought about serious changes- Shaun Harvey going for a start is an instant improvement. I'm open-minded on this, though a lot of course depends on the Senior Executive in question.

Quote

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

What can risk bringing a competition into disrepute is owners selling grounds to themselves in a very creative manner- not just Derby, but anyone out of Aston Villa, Birmingham and Sheffield Wednesday too. Reading, though for different reasons- £26.5m in that part of the country seems oddly low to me. They made a modest but barely substantial profit but I query why the value pre sale was £20m or so, Madejski Stadium that is. Shouldn't have been done of course but compared to Derby...?

What can risk bringing a competition into disrepute even more is the prospect that Aston Villa run up an FFP excess of £25-30m over 3 seasons and only get a risk of a points deduction once they've reached PL!

What truly will- or should- bring a competition into disrepute is the EFL lacking the competence to close loopholes before exploitation- namely the ground one- and the dexterity to properly enforce in-season punishments as per their own regulations!!

Quote

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

Total toadying. Laughable, PR. Sounds like someone with an axe to grind than an objective reading of the situation- I mean they may have a valid point even if it isn't one I agree with, but it's so obsequious- with ironically a slight potshot, i.e. the bolded bit.

One more interesting note- the finances of Aston Villa and Derby it seems will be on the agenda at the EFL Summer Conference. Hopefully Birmingham and Sheffield Wednesday also.

Edited June 6, 2019 by Mr Popodopolous

[Guest DerbyFan]

3 hours ago, downendcity said:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

Playing devil's advocate a little, depending on which club's senior executive is quoted could have a huge bearing on the comment, as if it was, say, a Villa executive then he would say that, wouldn't he? 

As for "taking potshots .......... when on-field results go badly". I remember this sort of comment being trotted out by Leeds fans when our owner was pushing for Leeds to be punished over the spygate incident and I've seen comments from Villa fans along similar lines when their ffp position has been questioned i.e. it's sour grapes or jealousy. The issue is not that club's are aggrieved because their own results have gone against them, it is that if a club has breached ffp but escaped any punishment then  they have gained an advantage over all the other clubs clubs that have complied with the same set of financial rules. 

I am sure all clubs and fans would be more than happy to "let the authorities do their job". It is the fact that the authorities, i.e. the EFL, do not appear to be doing their job when it comes to ffp  that is causing other people to "interfere. The ulterior motive such people have is to ensure the EFL applies ffp rules properly and fairly across all clubs and ensures that any club that breaches is properly penalised - there appears to fairly widespread scepticism as to whether this is the case currently.

 

It could be but it obviously doesn't say who it was, so how can we know? I'm not going to assume I know who it's come from as I have no idea. I haven't seen any other direct quotes referencing the April meeting saying anything to the contrary. Have you seen any?

I can't know the reasoning behind their quotes, I did notice they used the phrases 'that everyone realised' and 'we all realised after discussion'. They seem to be talking like it was unanimous once they'd all discussed it? That would fit with the quotes I posted before from Mel Morris saying that no one voted for Gibson's proposal including his own clubs representative/s (whoever they were as he didn't even seem to attend according to the BBC):

Quote

The Boro chairman, who has reportedly demanded that the spending of Derby County, Sheffield Wednesday and Aston Villa be looked at, is understood not to have attended Wednesday's meeting in Nottingham - which lasted almost five hours - at which the clubs decided not to accept Gibson's proposal.

If the clubs themselves decided not to vote for Gibson's proposal, who are we to say anything different? They were the ones that saw the EFL's presentation, they were the ones that had the discussion, they were the ones that had the chance to vote for it. They didn't.

Unless anyone comes out and says they did vote for it and the quotes from both Mel Morris and the person (whoever they are) quoted above are wrong, or tells us a different reason than the above as to why they didn't vote for it, then that's all we've got to go on, for now.

Re. the 'taking potshots' and 'ulterior motives' comments, you realise those were the comments from the 'senior executive' quoted and not myself? If the other clubs felt so strongly about clubs 'gaining an advantage' or if there was such 'widespread scepticism' they could have voted for the proposal or couldn't they have tried with a different proposal themselves? There would have to have been 75% voting in favour for it to be passed wouldn't there? If there are only a few clubs causing an issue, surely that would have been an easy target to hit from all of the others?

3 hours ago, Mr Popodopolous said:

You beat me to the punch.

Perhaps it was Derby's! Or in seriousness, as you say anyone who is just happy with the status quo- that comment just sounds made up to me, I am not saying it is but it's so toadying, flies in the face of a lot of evidence that it is laughable unless in self-interest.

Where to start with the unnamed senior executive:

It seems that they (EFL finance team) can talk a very good game. Easy to do at times- or being fair maybe this is what happens post the changes, maybe the anger at the March meeting has actually brought about serious changes- Shaun Harvey going for a start is an instant improvement. I'm open-minded on this, though a lot of course depends on the Senior Executive in question.

What can risk bringing a competition into disrepute is owners selling grounds to themselves in a very creative manner- not just Derby, but anyone out of Aston Villa, Birmingham and Sheffield Wednesday too. Reading, though for different reasons- £26.5m in that part of the country seems oddly low to me. They made a modest but barely substantial profit but I query why the value pre sale was £20m or so, Madejski Stadium that is. Shouldn't have been done of course but compared to Derby...?

What can risk bringing a competition into disrepute even more is the prospect that Aston Villa run up an FFP excess of £25-30m over 3 seasons and only get a risk of a points deduction once they've reached PL!

What truly will- or should- bring a competition into disrepute is the EFL lacking the competence to close loopholes before exploitation- namely the ground one- and the dexterity to properly enforce in-season punishments as per their own regulations!!

Total toadying. Laughable, PR. Sounds like someone with an axe to grind than an objective reading of the situation- I mean they may have a valid point even if it isn't one I agree with, but it's so obsequious- with ironically a slight potshot, i.e. the bolded bit.

One more interesting note- the finances of Aston Villa and Derby it seems will be on the agenda at the EFL Summer Conference. Hopefully Birmingham and Sheffield Wednesday also.

I've covered most of this in my reply above, so won't go over it all again - see above for my thoughts on the quotes.

Although I will add, at the time Middlesbrough were still fighting for top 6 with the clubs that he was accusing, is it possible that the executives of the other clubs thought about exactly why Gibson might have been making his accusations ie. he might have believed they wouldn't finish in the top 6 (as did come to pass) and was trying to unsettle some of the clubs they were directly competing with and they did actually believe he had an ulterior motive?

A few things I've found, that may or may not be relevant to the stadium valuation discussion, but I thought they were interesting none the less:

Here (Click 'OUR SPECIALISMS' -> 'Sport stadia')

Quote

Sports stadia and football ground assets are valued in different ways, depending on the purpose of the valuation. As each approach may produce different figures, it’s essential to understand the purpose of the valuation.

Here (Page 3 - Although seems to be from 2006, so it's possible it may no longer be relevant - I've not read much past that bit yet either, it's quite a long read!)

Quote

It is, however, important to remember that DRC is not intended represent a potential sale price (i.e. a value in exchange) and, within the UK, it should still normally be used only within the context of financial reports.

Re. The Villa situation, weren't Birmingham punished for their 2015/16, 2016/17 and 2017/18 season losses? If so, didn't the EFL say at the time that Birmingham were the only club to have failed FFP for this period?

In that case the only period that Villa (or anyone else for that matter) could have failed for is their 2016/17, 2017/18 and 2018/19 losses, ie. ending this season, which although finished, most clubs actual accounting periods don't end until later, giving them time after the season in which they made the loss to rectify it, once their know their future seasons financial position.

With the situation, as it stands, under the current rules (regardless of whether you believe it is right or not to be able to do so) had they stayed down they presumably could've sold players before the end of their accounting period after the end of the season which would've meant they stayed within the rules. I'm not saying it is likely they would have been able to cover a big loss had they stayed down, but they could surely argue they could have, and as they didn't stay down, now no one will ever know if this would've happened or not.

As it stands, having been promoted, I'm not sure when they get their first Premier League payment/s? If this is outside of their accounting period, I assume what they could do is take a loan on their guaranteed income to cover themselves for whatever they are behind by? In the same way that I believe they (and others?) have done when they've taken loans out on their future years of parachute payments?

Even if their losses are above those allowed and they chose to deliberately disregard FFP for this season, ie. not cover the loss anyway to make sure. Unless the Premier League are willing to align themselves with the EFL on the situation then there is sadly nothing that anyone can do about them having a points deduction into next season, this it the problem having different organisations controlling leagues with in the same league structure.

If they do still fail FFP, I guess the only thing the EFL could do to hit them currently is fine them a hefty amount. They might be able to 'park' a points deduction so that the next time they fall under their jurisdiction that comes in play? But I imagine as no one knows whether that will be 1, 2, 10 or even more years from now that might be something they try to avoid, so as not to hit any possible future owners?

If it does turn out that they failed FFP, and we passed, then we would have lost out at Wembley for a second time to a team that failed FFP, but once again there would be nothing that we could do about it, so we'd once again have to deal with it.

I don't know how, apart from making clubs have their financial years ending prior to the end of April (ie. before the end of the season to stop post season fixes), the EFL can fix this situation in the future, so that any punishment for a breach is dealt with in the season in which it occurs.

But even then don't they have months to file them with Companies House? Will they have them ready before that or not - I assume not? So how do the EFL make sure that they have them by the end of April (and go through them all) so that they can hand out punishment before the end of the season? Or is this the point of the P&S submission, you're basically submitting your accounts details to them early? But then how can you do this when you have to file that before your accounting period ends and things could change?

It's not easy is it.

[Davefevs]

Your comments re the projected accounts submission id the big flaw in that rule and one we’ve speculated a lot on here. 

If Villa projected a big loss, then their FFP submission might include a footnote that they’ll sell Grealish before the end of of their accounts period to comply. 

And to be fair, there’s nothing wrong with that, hence the flaw in the projected accounts rule!

[Guest DerbyFan]

29 minutes ago, Davefevs said:

Your comments re the projected accounts submission id the big flaw in that rule and one we’ve speculated a lot on here. 

If Villa projected a big loss, then their FFP submission might include a footnote that they’ll sell Grealish before the end of of their accounts period to comply. 

And to be fair, there’s nothing wrong with that, hence the flaw in the projected accounts rule!

I agree, of course clubs will do it if it helps them and they're allowed to.

I don't really know what the EFL can do to fix the flaw. Would forcing clubs to have reporting periods ending by April, so that they can't project a sale happening after the season work? But then I don't know if there's a way around that too, would having a sale set up ready to go when the window opened be a way around it? Or because that sale would only go through after the end of April (when the window opens) be enough? Could a club use their post balance sheet events as mitigation if they did fail?

So many questions! 

Edited June 7, 2019 by DerbyFan

[Mr Popodopolous]

Regards projected accounts- these posts are relatively small so can reply to them now and bigger ones on the weekend, a few thoughts.

Problem- Accounts submitted by 1st March 2019 don't cover proposed sales- ie. Grealish.

One solution might be to get a contractual undertaking that sale is pre-arranged- any breach automatic points deduction for fail FFP in whichever division- or maybe even refuse to accept such an idea of sale of Grealish unless a proper paper trail.

Problem- Accounts submitted by 1st March 2019 may not cover further revenue i.e. playoffs.

Solution- In Aston Villa's case their apparent breach was so big that playoff revenue wouldn't make a material difference to the points/loss tariff. Maybe a problem for clubs within a lower range- Promotion and playoffs about £5m? Any club within that range would have to include that as a variable within their projected accounts.

Problem- Ground can be sold to owners postseason but before accounting period closes.

One possible Solution- The projected submitted accounts take precedence for FFP purposes-, ground sales to owners that take place post 1st March 2019 therefore not included in FFP calculations for this period. May require a rule change voted for by at least 18 clubs for this though- or another aspect to the solution maybe that simply no profit from such RPTs for FFP purposes. FFP results are different to published accounts after all.

The other big solution as well as in-season punishments would be to have the EFL given unlimited powers against any club who breaches this on their return- would again require the 18/24 minimum voting rule and be a new rule moving forward- Aston Villa reps along with the newly promoted clubs will actually be at the Conference in Portugal so there may yet be one last chance to get a punishment voted on?

As for Ground Transactions involving related parties- well it's unbelievable oversight by EFL to have profit on such transactions included as positive revenue for FFP calculations. If it is a true third party transaction and all transparent, could people complain too much?

Plus moving forward, given there is a share transfer between EFL and EPL- in theory why couldn't the EFL refuse to transfer the share of say Aston Villa if it transpires that the following has occurred: a) They have won playoffs in a big FFP breach, b) A ground sale and leaseback with owners/Related parties was arranged hastily after promotion or lack of and c) A proposed Grealish sale by 31st May 2019 turned out to be bogus.

Different sites and such do suggest that points penalty can follow a side up, but others contradict this- unless there is a watertight agreement, then it could be this eras ITV Digital debacle for the EFL?

Edited June 7, 2019 by Mr Popodopolous