The Championship FFP Thread (Merged)

[Mr Popodopolous]

With respect to Sheffield Wednesday, it's quite interesting seeing what is left.

Goals FOR in the League last year, 58.

Goals in the League which have left the squad- as it stands, temporarily or otherwise- be it loans expiring, be it out of contract who may yet get renewed under better terms etc but can only go on here and now. Not even bothering to look at assists as this will take some time!

• Fletcher- 13
• Forestieri- 2
• Fox- 2
• Hutchinson- 1
• Joao- 1
• Murphy- 9
• Nuhiu- 6
• Wickham- 2
• Windass- 3
• Winnall- 1

I make that 40/58 goals gone- as it stands. Amazingly, the one by Joao on opening day aside, Joao of course they sold to Reading by end of summer window, they got ZERO in terms of fee for the rest- mix of loanees and contracts expiring.

Clearly it's not that simple but it's interesting-their top 3 scorers for sure in Fletcher, Murphy and Nuhiu currently not there. At least Birmingham- a good comparable- got some cash for Adams, Jota and co!

A monument to mismanagement?

Edited August 6, 2020 by Mr Popodopolous

[Hxj]

4 hours ago, Mr Popodopolous said:

The only issue is that promoted sides, will the PL enforce penalties? This is genuinely a grey area.

Are Projected Accounts not a basis for charge then?

I agree that the PL need to get on side.  But I see it as a 'no-loss' position for them, it actually helps to stop any outsiders getting in. uphold the integrity of the PL.

The problem with 'projected accounts' is that they are always more open to abuse.

[Mr Popodopolous]

6 hours ago, Hxj said:

I agree that the PL need to get on side.  But I see it as a 'no-loss' position for them, it actually helps to stop any outsiders getting in. uphold the integrity of the PL.

The problem with 'projected accounts' is that they are always more open to abuse.

Nicely put. 

They are indeed but interestingly based on an article by Matt Lawton in March 2019,the ones for Aston Villa worked out roughly in line with reality. 

Stated that losses were approaching £60m. Strip out stadium sale and leaseback, but also strip out payments to Xia and general costs of promotion as when they were put in they were playoff chasing and by no means guaranteed to make it, let alone win and their ones were very much in the right ballpark it'd appear.

The forward projections and backward data can enable a real strong scrutiny under the right Executive.

[Mr Popodopolous]

This Derby case is dragging, bloody hell!

https://www.thetimes.co.uk/edition/sport/the-wait-goes-on-for-derby-county-but-sanctions-look-likely-qm6qjzh7p

Quote

"Sanctions look likely"

Let us hope that is in the right ballpark!

[Mr Popodopolous]

I may as well for historical purposes look at the Aston Villa case yet again.

On 22nd March 2019 Matt Lawton wrote- and we know about Derby County and Sheffield Wednesday, the fact they have cases ongoing. One have been docked 12 points, one the case is still dragging but time will tell.

Quote

Villa could have to explain losses believed to total as much as £60million   

That was in the starter bullet points.

Quote

While the clubs declined to comment on Friday, privately insiders insist they will not be found to have breached financial fair play rules. But that will be a matter for interpretation.

Clubs may argue they can allocate certain costs, but the EFL may not accept their explanation and Villa could have to explain losses believed to total as much as £60million.

When Nassef Sawiris and Wes Edens took a controlling stake in Villa last year, they were warned that drastic action was needed to avoid issues with profit and sustainability regulations. 

One solution would have been to sell Jack Grealish, and it could now be that they have to take such an option even if a number of their players are out of contract this summer.

Unclear- does it mean EFL insiders or club insiders? Certainly means that they were wrong about Sheffield Wednesday. May well be wrong about Derby- they were charged and are at the hearing stage.

Remember too this was written under Harvey's leadership, this info came out under his leadership. It does appear also based on a subsequent article by Lawton that the PL would not be minded to enforce embargoes or deductions on a newly promoted club at the request of the EFL. Read differing things on this but the fact they had no points deduction mechanism in place as per Matt Hughes until lately- may still not, as in sliding scale suggests not!

How does that £60million in a season stack up? As we know:

NSWE UK (ie the Aston Villa consolidated accounts) posted losses of £68,884,000.

However, it is worth delving into those figures in a little more depth:

Quote

LOSS- £68,884,000

MINUS- £30,000,000 (XIA PAYMENT TO LERNER)

MINUS- £15,808,000 (Promotion Bonuses)

Loss Before FFP excluded items net of those two above=£23,076,000

However, this loss is of course inclusive of the stadium sale and the HS2.

Add back:

Quote

Loss Before FFP excluded items net of those two above=£23,076,000

Minus- Profit on Disposal of Villa Park- £36,374,000.

Minus Other Operating Income (HS2)- £14,494,000

New Loss Before FFP excluded items but exclusive of Villa Park and HS2=£73,944,000

Add Back HS2- £14,494,000

Revised and Rounded Loss Before FFP excluded items but exclusive of Villa Park=£59,450,000

By the process of elimination, I believe that the HS2 would have been included in the Projected Accounts that were submitted in March and fair enough but not the stadium sale.

Also how can you include as a given promotion bonuses in March of that season- you can't! Goes for both the bonuses and the payment to Lerner- nothing guaranteed in March, especially with not being miles clear at the top- and we all know how unpredictable the playoffs can be.

That means that sometime between the accounts being received and examined by the EFL, say a month, the stadium plan was put into place.

This in turn means that Matt Lawton's article was not far off right! Not far off at all...big hand to the guy!  Well done that man!

That's pretty commercially confidential info too I'd say- had their accounts to within a very reasonable ballpark, wonder who leaked it??  Nearly spot on as well. 

In terms of the leak, did/does public interest outweigh right to commercial confidentially for Aston Villa and the EFL? Leaks in football are not so uncommon however.

On another note, I see that Reading turned down but it's unclear when, £7m for Loader in January or August 2019! No sympathy, they also turned down a £10m bid for Moore, Liam Moore in August 2019 and gave him a bigger new contract- now they must pay an FFP related price!

Edited August 10, 2020 by Mr Popodopolous

[Mr Popodopolous]

Reading are still under some kind of EFL close monitoring/analysis/involvement. I'm sure they're well over to June 2020. Should also correct myself too, the Moore bid and subsequent new deal was August 2018.

Kieran Maguire's thread on Derby. Things moved on a bit since then, ie the charge is available now.

One of his subsequent Tweets in the thread- not looked at it myself really, the charge.

It seems the charge is over the leasehold- I think. Gellaw Newco 202 owns the freehold ie Pride Park. Do Freeholds and Leaseholds of the same property usually have different Title Numbers?

Bit more light? Detail anyway! 

Charge appears to be over the lot.

Although Ryan Conway, the Derby journalist over on The Athletic suggested that they could spend £10m or up to 1/3 of this investment- which I assume is £10m- so what gives??

Indeed, the charge- which I still haven't looked at properly- as confirmed above is over all 8 companies. Still no accounts for the following though:

• Club DCFC Limited
• Stadia DCFC Limited
• The Derby County FC Academy Limitd
• Sevco 5112
• The Derby County Football Club Limited
• Gellaw Newco 203 Limited

The first 3 are under Sevco 5112. The football club is under Gellaw Newco 203 Limited- as is Sevco 5112 inclusive of the first 3.

Quite understand why you cannot yet release the football club accounts and quite possibly Gellaw Newco 203 as the ultimate company- but the other 4??

As for the Gabay related charge, still no sign of that having been cleared yet from Gellaw Newco 202 and Gellaw Newco 204- perhaps this is to clear some of that?

Edited August 12, 2020 by Mr Popodopolous

[Guest visitingholte]

On 06/08/2020 at 09:24, Mr Popodopolous said:

I agree in principle with a good chunk though and yeah I agree on the Licensing thing- the carry back is an interesting idea for sure.

The only issue is that promoted sides, will the PL enforce penalties? This is genuinely a grey area.

Are Projected Accounts not a basis for charge then?

I know you quote Kieran Maguire a bunch, but I'm not sure if you also listen along to his podcast. If not, he discussed it when talking about Sheffield Wednesday's points deduction. He said that EFL points deductions wouldn't count in the PL but theoretically a promoted team could possibly face a points deduction should they get relegated back to the EFL. 

[Hxj]

 

10 hours ago, Mr Popodopolous said:

 

1.  It seems the charge is over the leasehold- I think. Gellaw Newco 202 owns the freehold ie Pride Park. Do Freeholds and Leaseholds of the same property usually have different Title Numbers?

 

2.  Although Ryan Conway, the Derby journalist over on The Athletic suggested that they could spend £10m or up to 1/3 of this investment- which I assume is £10m- so what gives??

 

1. Yes - they are different assets, one can be disposed of without the other, so have different title numbers.

2. The spare £20 million is probably the cash burnt since the last capital injection.

It does increasing look like Morris has had enough.

[Major Isewater]

13 minutes ago, Hxj said:

 

1. Yes - they are different assets, one can be disposed of without the other, so have different title numbers.

2. The spare £20 million is probably the cash burnt since the last capital injection.

It does increasing look like Morris has had enough.

It would be good if he bought Oxford . 
( one for the old fellas there ) 

[Port Said Red]

15 minutes ago, Major Isewater said:

It would be good if he bought Oxford . 
( one for the old fellas there ) 

Or a team from the minor leagues as our american cousins might say?

[Davefevs]

32 minutes ago, Major Isewater said:

It would be good if he bought Oxford . 
( one for the old fellas there ) 

If only he had a spare thousand!

[chucky]

"Derby County have received a major cash injection from a New York investment bank belonging to American billionaire Michael Dell.

Dell is the owner of MSD Capital and records on Companies House confirm a loan was registered last week.

Owner Mel Morris has been searching for additional funding for over two years having sunk millions of pounds into Bristol City's Championship rivals, hoping to get the club back into the Premier League.

The club are currently awaiting the verdict from an independent disciplinary charge over a battle with the EFL over the sale and leaseback of Pride Park.

Sheffield Wednesday were docked 12 points for a similar charge, however, Derby's relates to the £80million valuation of the stadium, rather than the year it was accounted for.

The Telegraph report that a £30million cash injection has been borrowed against the club's assets.

It is stated that Dell and Derby are talking about a range of financial arrangements, which could include a significant loan, investment or takeover.

 

Dell was listed as the 25th richest man in the world in Forbes last year and has also held talks with a number of other clubs in England outside the top tier.

The cash injection will help towards Derby's efforts of staying within the EFL's Financial Fair Play regulations, having watched Birmingham City and Wednesday lose points for breaches.

It also further highlights the strain placed on all EFL clubs due to the COVID-19 crisis, which has seen very little money change hands since the summer transfer window opened."

 

What assets do Derby have worth £30m to borrow against?

Under FFP are you allowed to borrow money to stay with in it?

[Mr Popodopolous]

1 hour ago, chucky said:

"Derby County have received a major cash injection from a New York investment bank belonging to American billionaire Michael Dell.

Dell is the owner of MSD Capital and records on Companies House confirm a loan was registered last week.

Owner Mel Morris has been searching for additional funding for over two years having sunk millions of pounds into Bristol City's Championship rivals, hoping to get the club back into the Premier League.

The club are currently awaiting the verdict from an independent disciplinary charge over a battle with the EFL over the sale and leaseback of Pride Park.

Sheffield Wednesday were docked 12 points for a similar charge, however, Derby's relates to the £80million valuation of the stadium, rather than the year it was accounted for.

The Telegraph report that a £30million cash injection has been borrowed against the club's assets.

It is stated that Dell and Derby are talking about a range of financial arrangements, which could include a significant loan, investment or takeover.

 

Dell was listed as the 25th richest man in the world in Forbes last year and has also held talks with a number of other clubs in England outside the top tier.

The cash injection will help towards Derby's efforts of staying within the EFL's Financial Fair Play regulations, having watched Birmingham City and Wednesday lose points for breaches.

It also further highlights the strain placed on all EFL clubs due to the COVID-19 crisis, which has seen very little money change hands since the summer transfer window opened."

 

What assets do Derby have worth £30m to borrow against?

Under FFP are you allowed to borrow money to stay with in it?

Borrowed it seems against the leasehold for Pride Park, plus given that the charge seems to cover all of the companies within the group.

Think borrowing can take a club up to acceptable equity limits ie the 3 year difference between £15-39m but the rest doesn't count under FFP. If it even hits the P&L all that much, feels more like cashflow to me.

Businesses borrowing is one thing but loss making businesses borrowing is quite something! Could in theory lead to more investment, a take-over but the FFP limits remain the FFP limits. 

Seen mentioned/speculated on their forum that it could be a plan to put into place a cheap takeover.

As in default and Dell gets the lot as that is what would happen I believe If Derby defaulted, hence the security.

[Davefevs]

1 hour ago, chucky said:

"Derby County have received a major cash injection from a New York investment bank belonging to American billionaire Michael Dell.

Dell is the owner of MSD Capital and records on Companies House confirm a loan was registered last week.

Owner Mel Morris has been searching for additional funding for over two years having sunk millions of pounds into Bristol City's Championship rivals, hoping to get the club back into the Premier League.

The club are currently awaiting the verdict from an independent disciplinary charge over a battle with the EFL over the sale and leaseback of Pride Park.

Sheffield Wednesday were docked 12 points for a similar charge, however, Derby's relates to the £80million valuation of the stadium, rather than the year it was accounted for.

The Telegraph report that a £30million cash injection has been borrowed against the club's assets.

It is stated that Dell and Derby are talking about a range of financial arrangements, which could include a significant loan, investment or takeover.

 

Dell was listed as the 25th richest man in the world in Forbes last year and has also held talks with a number of other clubs in England outside the top tier.

The cash injection will help towards Derby's efforts of staying within the EFL's Financial Fair Play regulations, having watched Birmingham City and Wednesday lose points for breaches.

It also further highlights the strain placed on all EFL clubs due to the COVID-19 crisis, which has seen very little money change hands since the summer transfer window opened."

 

What assets do Derby have worth £30m to borrow against?

Under FFP are you allowed to borrow money to stay with in it?

This is likely to be cash flow.....won’t impact FFP.

[davidoldfart]

10 minutes ago, Davefevs said:

This is likely to be cash flow.....won’t impact FFP.

Amazing that the EFL can deduct points from S/Weds but delay it until the new season thus saving them from relegation, at the same time not announcing the points deduction for Derby who also broke the rules.Are they waiting for the cash injection so that they can avoid deductions? My understanding of the rules is that FFP is based on turnover /trading rather than external investments to muddy the debt waters . 

[Mr Popodopolous]

5 minutes ago, davidoldfart said:

Amazing that the EFL can deduct points from S/Weds but delay it until the new season thus saving them from relegation, at the same time not announcing the points deduction for Derby who also broke the rules.Are they waiting for the cash injection so that they can avoid deductions? My understanding of the rules is that FFP is based on turnover /trading rather than external investments to muddy the debt waters . 

Referred to an Independent Disciplinary Commission. Once that happens, the timescale seems out of EFL's hands somewhat.

Case is either ongoing or the verdict is being deliberated on. 

Unlikely, given that the 3 year period that they are in the dock for relates to the 3 years to June 2018!

It is. Profit and loss basically, turnover trading all that. The only FFP benefits I can see are if Morris isn't sticking in the upper limits of equity.

Even that's only a potential gain but the lower limits are £15m (no equity), £39m in 3 years upper limits (that's if all put in) and I guess anything between £15m and £39m- so £5m equity in 3 years means allowed to lose £20m instead of £15m say.

[Mr Popodopolous]

I see Stoke have slashed Butland's asking price down to £8-10m.

Gambled, kept hold...and failed and now in danger of failing FFP?

Meanwhile, expanding the Stoke FFP question marks.

In other FFP related news, read- perhaps it was reiterated- that Reading owner is refusing to sell Swift- they've got to be either really close to having failed or having failed in any case surely.

Are the EFL working with them quietly, maybe enabling them to backdate sales as Howe is on the board and they don't want the embarrassment of yet another club with a board member having failed? Their two years leading into 2019/2020 were appalling financially speaking. Mind you, that didn't stop them from charging Derby! They- ie Reading- were under a soft embargo until late June 2019 so clearly on the edge of it then!

That idea of EFL quietly working with, is pure idle throwaway speculation- but it seems odd that they are still complying- or at least haven't been charged.

Edited August 13, 2020 by Mr Popodopolous

[Davefevs]

@Spud55 interesting news above From Mr Pop.

[Mr Popodopolous]

Apologies for the source.

The paper is terrible, but in some areas and notably this one Nixon can at times be quite good.

According to the publication in question, the EFL bungled the Sheffield Wednesday thing- this will not come as a great surprise to those who frequent this thread!

They should've received deduction in 2018/19 apparently- as with Birmingham. I'd also argue that it should've been 2017/18 for multiple clubs ie Projected Accounts but the brilliant leader of the EFL, Mr. Harvey only had a points tariff in place from September 2018- after the event!  What he was doing for 2 seasons I'll never know! The rules themselves began in 2016/17, but the first full 3 year period with said rules was between 2016/17-2018/19.

The big and interesting claim- which I've been calling for a while

Quote

Instead the IDC panel let off the Owls because the EFL took too long to bring charges — as well as pursuing the wrong case first.

The governing body initially wanted Wednesday officials to be sanctioned for their part in owner Dejphon Chansiri buying the Hillsborough stadium.

That case was dismissed and by the time their focus turned to the FFP offence, it was too late for them to handle it quickly.

Said it multiple times I am sure- win the case vs the CLUB first and then go after the individuals, potentially. The club in 99.99% of cases is the most important factor- whether it was fully dismissed or the EFL dropped it to expedite the process as it was stuck in arbitration with legal wrangling, potentially the report itself will make crystal clear.

Apparently the report is due to be published Sunday- why not Monday or Saturday?? Anyway it shall make very interesting reading. Maybe the interesting reading is the reason to sneak it out on the Sunday?

@Davefevs @Hxj @Coppello @downendcity @chinapig @CyderInACan

I give them credit for winning the case and am sure it may not have happened had it not been for a mix of Bury, Gibson's righteous anger and Harvey's ineptitude but still!

I suppose consistency of punishment makes sense because if Derby are guilty, then it's only right the points are docked in 2020-21, otherwise they would either get relegated a few days before fixtures out or they would receive a points penalty season just gone with no tangible effect- though it would put them into scope for some sort of loss reset/EFL business plan/individual targets.

Much more significantly however, had they been charged at that time and found guilty, then Middlesbrough definitely and possibly even we would have taken a bit more heart and overtaken Middlesbrough and them- would likely have made top 6!! Gibson would undoubtedly have had grounds to believe in top six had Derby been docked points.

IF these two get docked, I'd suggest the EFL have the right to re-examine Aston Villa for sure. It's a big if and purely a hypothetical but I am sure that Sheffield Wednesday, and if found guilty Derby County, and maybe Birmingham, would all be demanding it.

Edited August 16, 2020 by Mr Popodopolous

[Mr Popodopolous]

Reading Owlstalk and the thread. 

'All fair-minded clubs will support us'. A few posts say similar.

No they ducking won't. Far from it actually, you did try and fiddle the system, and more amusingly you did it in ridiculous fashion. 

Maybe the stuff in The Times in May 2019 about accounts not being submitted was true. 

Some of the posts are for want of a better word, deluded but nonetheless this case doesn't paint the EFL in a great light either.

[downendcity]

7 minutes ago, Mr Popodopolous said:

Reading Owlstalk and the thread. 

'All fair-minded clubs will support us'. A few posts say similar.

No they ducking won't. Far from it actually, you did try and fiddle the system, and more amusingly you did it in ridiculous fashion. 

Maybe the stuff in The Times in May 2019 about accounts not being submitted was true. 

Some of the posts are for want of a better word, deluded but nonetheless this case doesn't paint the EFL in a great light either.

Correct.

Fair minded clubs are those that organised their finances so that they could stay within ffp limits notwithstanding the impact it had on the on field competitiveness, Why would those clubs support any club that, in essence, ignored the rules thinking that the end would justify the means?

[Mr Popodopolous]

1 hour ago, downendcity said:

Correct.

Fair minded clubs are those that organised their finances so that they could stay within ffp limits notwithstanding the impact it had on the on field competitiveness, Why would those clubs support any club that, in essence, ignored the rules thinking that the end would justify the means?

Yeah, you're not wrong- don't understand their line of thinking in this area really.

I don't see them getting any required majority for change for a start- the bulk of the clubs complied with and intended to genuinely comply with and therefore likely support the regulations after all.

Still wonder why the EFL took so long to get a points tariff based on sliding losses in place though! Mind you, I've read the PL don't even have one but it's unclear.

[Hxj]

39 minutes ago, Mr Popodopolous said:

Still wonder why the EFL took so long to get a points tariff based on sliding losses in place though! Mind you, I've read the PL don't even have one but it's unclear.

My understanding is that as all the clubs voted for it it was assumed that they would all abide by it so sanctions were unnecessary.

As to the Premier League, as no one has breached the rules yet there isn't considered to be a need for sanctions.

[Mr Popodopolous]

3 minutes ago, Hxj said:

My understanding is that as all the clubs voted for it it was assumed that they would all abide by it so sanctions were unnecessary.

As to the Premier League, as no one has breached the rules yet there isn't considered to be a need for sanctions.

Thanks- there was still potential for embargoes but I assume you mean points penalties and the like.

Out of interest, many sites I read are quiet on this but do you think that Aston Villa in particular are somebody the EFL would look at in terms of their 3 years to 2019 as and when they return? I've certainly read in some places that the EFL were furious that they didn't get the chance for a proper good long look while under their jurisdiction- Martin Samuel suggested as much anyway,

Edited August 16, 2020 by Mr Popodopolous

[Hxj]

So do we know where we are with SWFC then.  Given that they were penalised for failing in 2017/18, are the EFL now likely to look at 2018/19 and 2019/20 as well or just sweep those under the carpet.

[Mr Popodopolous]

We don't know yet, EFL likely know more than we do.

Precedent does suggest that losses should be reset to £13m individual targets for FFP but we're in the dark for 2 reasons. Firstly, that the report hasn't yet been released though I've read Monday.

Secondly, we do not know what is in their 2018/19 accounts as they are still showing as overdue at Companies House. I would hope the EFL have more detail than us!

Thirdly, we do not know whether they will be allowed to stick it in 2018/19 accounts- hopefully the full judgement will shed some light.

Fourthly, we do not know (but I think we can get a fair guess in what should happen) whether the EFL will challenge the £60m valuation with £38m profit if the plan is to stick it in 2018/19 accounts- given they believe Pride Park worth £49-50m when it was sold for £81.1m, I don't see how Hillsborough being sold for £60m and the full profit being included in the accounts moved forward should stand.

[Hxj]

An embargo isn't really an issue for most clubs, it simply stopped them from spending money they didn't have on players that weren't good enough

As to any promoted club, I'd like to see a decision made as soon as possible and any penalty suspended until return, unless of course the PL can be convinced that enacting the sanction is the right thing to do.

I don't like revisiting things in later years.

[Mr Popodopolous]

Agreed- though Birmingham seem to have been struggling under the EFL monitoring/guidance/business plan. It can help a club however as you say, stopping them from overspending on rubbish!

Yep, tried in absentia if you like, if the PL won't enforce the sanction. There is a feeling that PL would enforce fines but not much else- but again only the PL and EFL truly know!

It's unclear if there is a statute of limitations with respect to these rules- I read somebody who asked about it on The Athletic and it genuinely seems unclear- in principle things should be done as swiftly as possible, actually the regulations allow for same season referrals. Whole point of this aspect of them was to stop teams overspending and escaping out of EFL jurisdiction.

Edited August 16, 2020 by Mr Popodopolous

[chinapig]

Interesting piece just published by The Guardian, covering Wigan and Wednesday:

https://www.theguardian.com/football/2020/aug/16/wigans-former-owner-kay-asked-about-administration-before-his-takeover

We already know about Wigan's former owner but quite how Wednesday officials backdating signatures on legal documents doesn't merit more severe punishment is beyond me.

The EFL remains incompetent and weak it seems.

Edited August 16, 2020 by chinapig

[Mr Popodopolous]

You beat me to it @chinapig saw it elsewhere, or a snippet of it!

Ask the Independent Panel! Maybe it has some grounds somewhere in legality/accounting but is very much against FFP regulations? Should have pushed for the 12 points first and then gone after the club/individuals for backdating- about to read the article now.

How does the law/accounting allow of otherwise for backdating of such documents?  

Wonder what the role of a certain ex EFL CEO could be- in the general mess I mean- not backdating!

Backdating would 100% make sense given the huge gap between Reporting Period ending- even taking into account 2 month extension, the significant overshoot to get the accounts in- see dated June 20th 2019, Sheffield 3 Limited at CH on June 21st 2019- finally at Land Registry on June 28th 2019, accounts up on Sheffield Wednesday site on July 11th 2019 and finally at CH on July 16th 2019!!

What I find interesting is that I called it on here some weeks before it actually made The Times in late September 2019, the significant discrepancy. Granted they probably had far more red tape to go through than me to reach that point.  Me, I just looked at the key dates and did some research- and reached the same conclusion!

Serious note, I had read in various places that maybe there was novation or whatever- some Sheffield Wednesday fans had been claiming this to be the case. However I think it more likely, backdating or otherwise, that the club saw what Morris did at Derby and just copied it.

Edited August 16, 2020 by Mr Popodopolous

[Mr Popodopolous]

I should also add, that surely the profit on disposal shouldn't just be bumped forward a year. 

I understand the accounting argument but this is claimed to have been a backdated transaction?

Surely if it goes forward AND counts against FFP, that benefits them for another year even though it was backdated. 

Because if you think about it:

2015/16 and 2016/17 were overspent and significantly 2017/18 when the breach was hit. 

There's more. The overspend in the rolling 3 years into 2018/19 and indeed 2019/20 though some cutbacks.

It has ALREADY benefited them for half a decade indirectly, it must not roll forward onto 2018/19 to give them a cushion for 2020/21.

I might add, Birmingham had 2 seasons which contained varied aspects of business plan, monitoring, oversight etc.

I'd be very keen on Sheffield Wednesday getting something similar. 

[Mr Popodopolous]

On another note, I read that Sheffield Wednesday received the written reasons (as did the EFL) on August 4th I think. 

Local journo up there on Twitter seems to think Sheffield Wednesday will appeal.

Think they have until Tuesday. Truth is, there are only two grounds on which they appeal unless I'm getting the wrong type of appeal or Hearing etc, would be Sections 67 and 68 of the Arbitration Act.

https://www.efl.com/-more/governance/efl-rules--regulations/section-9--arbitration/

Would be interested in any legal knowledge as to which is which and applicable here, etc.

This seems to be the 2nd part of the jigsaw?

https://www.efl.com/-more/governance/efl-rules--regulations/section-8---offences-inquiries-commissions-disputes-and-appeals/

Edited August 16, 2020 by Mr Popodopolous

[Mr Popodopolous]

Written reasons or is it decision for Birmingham, Sheffield Wednesday and Wigan all out. Assume Derby case ongoing still.

Can't read them as my phone has a lack of battery however it has been confirmed that Sheffield Wednesday WILL appeal. 

Edited August 17, 2020 by Mr Popodopolous

[Hxj]

A quick scan of the SWFC ones add a lot of clarity to the background and decision making progress.  Clearly learning points for the EFL, but they secured the sanction.  

All of the club’s defences robustly dealt with but the timing point on the sanction is interesting.  The club would not have been relegated if the sanction had been applied in 2018/19, plus inconsistencies with arguments in the Derby case.

 With luck the appeals will be heard quickly and be put out of their own misery.

 

[Mr Popodopolous]

Had a bit of a read of the Birmingham appeal as well- feels quite interesting- the fact that there was a reprimand is not intended and is stated not to be intended as a precedent but is linked to Covid.

Mind you at time the charges were brought, it felt relatively pointless on one level- the penalty was intended to be a 2-3 point deduction- now Birmingham's form imploded post lockdown but on return and before it looked pointless. Suppose it's important to uphold the principle as this system develops and the fact that Breach of Business Plan=Reprimand isn't a precedent feels potentially interesting.

Just reading the Sheffield Wednesday one now...oooh I see that Shaun Harvey gave evidence- anything's possible with him!

Edited August 17, 2020 by Mr Popodopolous

[Mr Popodopolous]

Reading through the Sheffield Wednesday one now- "Heads of Terms" seems to be mentioned.

How legally binding it is I'm unsure but 3 valuations mentioned thusfar, as in "a minimum purchase price of"- £37.5m, £40m and £42m- they are all markedly below £60m!

In any event, I certainly would question the £60m sale price!!

Just put it to a vote, threaten the golden share- maybe make it clear that Chansiri is too inept, slippery, questionable to have as an owner in this League- you can't take the club off him but you can remove the issue- goes for Morris too- unless the punishment in this case and hopefully Derby's is accepted somewhat. Matt Slater of the Athletic thinks this will rally clubs around the EFL if Sheffield Wednesday appeal. Refuse to allocate them fixtures, clearly is not possible at this stage in Derby's case as it is still ongoing.

Maybe if this final appeal goes against the club and he still tries to kick off, the EFL should look at this! 

Stadium value of £40m with an annual Rent of £3m comes up again- this feels more in line with commercial reality IMO. I wonder how it reached £60m then??

Ah this is interesting- certainly not a valuation I considered feasible method wise!

Would appear the club were not keen on Depreciated Replacement Cost as the basis for Fair Market Value and wanted instead to use value of Insurance for the stadium as the valuation/sale price.  

I'd suggest for FFP purposes it is in the EFL's gift to determine, surely for such RPTs?

Edited August 17, 2020 by Mr Popodopolous

[Mr Popodopolous]

One good thing to come out of all this- and I don't feel either side cover themselves in glory though I know whose side I am on and that The Good Guys subject to appeal seem to have won.

We now have an actual proper outline of excess losses to penalty. 

Starting point is 12 points deducted. Based on the sliding scale, it's 12 points minus depending on the overspend. Kieran Maguire outlined a template a while ago but we now have it in black and white.

Quote

Quantum of the Breach

• 9 points if less than £2m
• 8 points if between £2.0m - 4.0m
• 7 points if between £4.0m - £6.0m
• 6 points if between £6.0m - £8.0m
• 5 points if between £8.0m - £10.0m
• 4 points if between £10.0m - £12.5m
• 3 points if between £12.5m - £15.0m
• No deduction if the breach is greater than £15.0m

It's not worded in the best way- what it means is deduction from the deduction- think they should work on the wording a bit but these are the Sanctioning Guidelines. Losses trending downwards also count in a club's favour to reduce the deduction a bit.

As to that last point, I guess losses trending upwards could see an addition too- Birmingham got 7 + 3 after all for that reason, minus one back for cooperation etc.

Edited August 17, 2020 by Mr Popodopolous

[Hxj]

Also need to add - beyond any question this was an entirely unnecessary and self-inflicted result for SWFC.

What a bunch of absolute idiots.

[Mr Popodopolous]

Yes- 100%. Agree wholly.

Utter idiocy as you rightly state! I remember thinking that from early on...

I've finally read through all the written reasons for Sheffield Wednesday. I note that contrary to claims on Owlstalk, the charges against the individuals were not necessarily dismissed, but I would interpret it as possibly dropped due to expediency ie to push for the main charges vs the club to be completed as quickly as possible. Didn't sound like they were dismissed, but more than likely stuck in arbitration, back and forth- very difficult to prove tbh- or at least would take a very long time.

Some of them are claiming racism etc.

Edited August 17, 2020 by Mr Popodopolous

[Hxj]

Just popped over to Owlstalk - not sure they actually understand the decision or the appeal.

The appeal panel does not take evidence it simply reviews the facts found by the Commission and decides if the decision is one that a reasonable Commission could make based upon the facts found.  Any alleged improprieties during the hearing process are also relevant, but of course any allegations of impropriety during the investigation that have already been dealt with in the decision fall outside the scope of any appeal.

 

[Mr Popodopolous]

Thanks- so that clears that up- think there is a decent chance of things being upheld then?

Interesting paragraph in the verdict- taken from Owlstalk, as my Copy and Paste not so good.

Shaun Harvey- what can we say!!

Email from him to the other EFL or the relevant EFL top brass. 

The Aston Villa thing is interesting, doesn't state which fixed assets, given this was August 2018 and the sale of Villa Park went through in May 2019- plus the Matt Lawton story on Projected Accounts was numerically very accurate- does it mean the HS2 stuff I wonder? This got some profit on disposal. After their accounting period had expired- the extended one at that.

Quote

"It is the clubs challenge to create a contract that satisfies their auditors that it can be included in their 2018 accounts".

Create- but this was after the extended Reporting Period had ended.

That is shambolic Governance on his part. Wonder how many of the other top brass were in agreement with his position? It's atrocious!

I'm still struggling too as to how they reached £60m as an true valuation. The key thing for me is that they shouldn't be allowed to benefit once again from the full £38m profit. The fact that they didn't seem to make their required submissions in terms of accounts in March 2019 though happy to go back and read is quite startling!

Edited August 17, 2020 by Mr Popodopolous

[Port Said Red]

I would have thought the taxman might be interested in what documents etc, were backdated or signed as an after thought. Unless they were using two sets of books which is equally dodgy.

[Hxj]

56 minutes ago, Mr Popodopolous said:

Thanks- so that clears that up- think there is a decent chance of things being upheld then?

I would rather people made their own minds up - a checklist for you all:

In respect of the Charge under appeal only (that SWFC breached the FFP regulations):

1. Are there any allegations of improprieties in the investigation that were not taken into account in the decision?
2. Are there any allegations of improprieties in the hearing process?
3. Are the material findings of facts substantiated by the evidence?
4. Is the decision made one that a reasonable panel could have made based upon those findings?
5. Is the punishment one that a reasonable panel could have made based upon the decision?

If the answers you get are No, No, Yes, Yes, Yes then the appeal will fail.

[Hxj]

1 hour ago, Mr Popodopolous said:

Interesting paragraph in the verdict- taken from Owlstalk, as my Copy and Paste not so good.

Shaun Harvey- what can we say!!

Email from him to the other EFL or the relevant EFL top brass. 

The Aston Villa thing is interesting, doesn't state which fixed assets, given this was August 2018 and the sale of Villa Park went through in May 2019- plus the Matt Lawton story on Projected Accounts was numerically very accurate- does it mean the HS2 stuff I wonder? This got some profit on disposal. After their accounting period had expired- the extended one at that.

Create- but this was after the extended Reporting Period had ended.

That is shambolic Governance on his part. Wonder how many of the other top brass were in agreement with his position? It's atrocious!

I think that you are being a tad harsh on Harvey.  The man is not a Professional Accountant or Lawyer or similar and the email does appear to be to those he considers to be friends as well as colleagues, if it was intended to be for general consumption it might have been worded differently.  If you treat it as that sort of email and put in the context of the discussions that had taken place then it makes more sense.  The obvious flaw in SWFC's defences is that here Harvey is talking about a sale to Chansiri, that of course never happened.

There are circumstances where you can have an oral contract that leads to the valid disposal of land.  So there would be nothing wrong with Chansiri and SWFC agreeing to the immediately binding disposal of the stadium on 15 July 2018 and then that agreement later being ("created" or) turned into a binding written contract.  All the significant terms of the binding disposal would need to be agreed, including value, and then that transcation would need to actually take place.  Of course neither of those two rather important points happened.

 

[Mr Popodopolous]

20 minutes ago, Hxj said:

I think that you are being a tad harsh on Harvey.  The man is not a Professional Accountant or Lawyer or similar and the email does appear to be to those he considers to be friends as well as colleagues, if it was intended to be for general consumption it might have been worded differently.  If you treat it as that sort of email and put in the context of the discussions that had taken place then it makes more sense.  The obvious flaw in SWFC's defences is that here Harvey is talking about a sale to Chansiri, that of course never happened.

There are circumstances where you can have an oral contract that leads to the valid disposal of land.  So there would be nothing wrong with Chansiri and SWFC agreeing to the immediately binding disposal of the stadium on 15 July 2018 and then that agreement later being ("created" or) turned into a binding written contract.  All the significant terms of the binding disposal would need to be agreed, including value, and then that transcation would need to actually take place.  Of course neither of those two rather important points happened.

 

Possibly in some respects,  but it appears that he was having read all this and followed it in depth, willing to let Sheffield Wednesday put it back into the 2017/18 accounts. 

Quote

"Our objective is to try and get the Club to a position that it is not in breach but at all times within the rules"

My response to that is that given this was after the Reporting Period, even the extended one ended, that the deadline had passed- they were in breach- charged like Birmingham were at that time! Possibly Derby too, we'll have to see how that one plays out.

Oral contract, interesting- binding disposal too. Bottom line is though, it doesn't sound like they had it within the required timeframe so should IMO have been charged with the simple overspend in 2018. Harvey and the EFL should not be helping clubs trying to avoid, as such IMO.

Put it this way, had it happened on Parry's watch...I don't think it would have been accepted.

Edited August 17, 2020 by Mr Popodopolous

[Mr Popodopolous]

https://www.efl.com/news/2020/august/independent-disciplinary-commissions-and-league-arbitration-panels/

There are all 5 sets of written reasons. Snippets of them in thread but here.

[Mr Popodopolous]

Good thread on this by Dale Johnson, who is a journo. 

Still one or two loose ends that the report hasn't tied up. 

1) The valuation of Hillsborough of £60m, is this deemed true and fair (profit £38m)- surely it won't just be moved into 2018/19 for FFP?

And

2) What sort of expectations will be on Sheffield Wednesday be under this year- as in will they be able to lose £50m or something stupid owing to a shift in ground sale profit?

[Mr Popodopolous]

Apparently Charlton have requested the EFL to appeal the verdict or the season of the verdict. 

https://londonnewsonline.co.uk/charlton-athletic-request-efl-to-appeal-independent-disciplinary-commission-ruling-on-sheffield-wednesday/

In the Sheffield Wednesday written reasons, worth reading some of the Annexes at the end- laid out 5 scenarios for the sale and leaseback of Hillsborough (and I guess would be applicable for all clubs). Could it have repercussions elsewhere?

It is unclear but I wonder, dependent on what specific scenario this transaction happened under, could the profit be excluded from the P&S calculations in its entirety?

Edited August 19, 2020 by Mr Popodopolous

[Mr Popodopolous]

Reading the written reasons again, seems that Derby and Sheffield Wednesday have been exchanging information with each other about the proceedings/cases.

Anyway-5 scenarios, sent from James Karran to the club on 30th May 2018! I wonder which Scenario this (and potentially other) transactions would fall under?

Quote

Scenario 1 - Club sells the stadium to a company within the Football Club Group (e.g. to SWFC Holdings Limited)

• The Executive would propose that the Club's stadium is a material aspect of the football operations. Thus, if the stadium was simply sold to a Group Company within the Football Group structure, the Executive would want the purchasing company to be included within the consolidated results for the purposes of P&S in accordance with Rule 1.1.9 (referenced below).
• The profit on the sale of the stadium would therefore be adjusted out of the results on consolidation.
• If the exclusion of the profit resulted in the Club submitting a P&S result in excess of the Upper Threshold, it would be treated as being in breach of the P&S Rules in accordance with Rule 2.9 and the League would refer the breach to a Disciplinary Commission in accordance with Section 8 of the Regulations.

 

Quote

Scenario 2 - Club sells the stadium to a Company outside of the football group but still owned by the Club's owner,

• The transaction would be deemed as a Related Party Transaction in accordance with the P&S Rules and the onus would be on the Club to support the Fair Market Value of the transaction. The simplest way to do this would be through an independent external valuation of the fixed asset.
• Depending on the structure of the group or the other assets/operations of the purchasing company, the Club might still be caught by Rule 1.1.9 of the P&S Rules. Such a circumstance would be if the 'Newco' on purchasing the stadium carried out the match day and non-match day catering and hospitality operations. The purchasing company would be consolidated for the purposes of the P&S rules resulting in the profit on the sale of the stadium being adjusted out of the P&S results.
• If the purchasing Company is deemed to be a separate operation to the Club Group and the fixed asset can be proven to have been purchased at Fair Market Value, the profit on the sale of the fixed asset would be included in the Club's P&S calculation. 

Now I think this transaction would fall into Scenario 2 or 3, personally. Unsure which Scenario of the two however!

Quote

Scenario 3 - Club sells the stadium to the Owner as an Individual

• The assumption within this scenario is that the Stadium is purchased by Mr Chansiri as an individual not as a corporate entity.
• The Owner is at the top of the Football Club Group, however as he is not a corporate entity the transaction would not be caught by Rule 1.1.9 of the P&S rules with reference to Section 1161 of the Companies Act (in references below).
• The transaction would be deemed as a Related Party Transaction in accordance with the P&S Rules and the onus would be on the Club to support the Fair Market Value of the transaction. The simplest way to do this would be through an independent external valuation of the fixed asset.
• If the value of the sale is proven to be at Fair Market Value, the profit would be allowable for the purposes of the P&S rules.
• Dependent on the level of profit generated, the club would fulfil the P&S requirement and the current embargo would be lifted.
• Please note, if the Owner purchases the stadium through a new corporate entity rather than as an individual, it would be captured within Scenario 1.

Is Sheffield 3 Limited a corporate entity or purchase as an individual?? As that is the company who own it!- as per the Land Registry and sale. This in turn is owned by Sheffield 5 Limited (was Sheffield 4 but this was wound up and eventually had its final rites on Boxing Day 2019).

Quote

Scenario 4 - Club sells the stadium to a 3rd party not connected to the owner or the Club

• If the purchasing entity is not deemed to be a Related Party in accordance with P&S Rules (reference below) to either the Owner or the Football Club, then the transaction will be deemed as a sale of the stadium to a third party.
• The profit on the sale of the fixed asset would be accounted for in the Club's 2017/18 financial end.
• Dependent on the level of profit generated, the club would fulfil the P&S requirement and the current embargo would be lifted.

 

Quote

Scenario 5 - The Stadium is sold after the Club's new financial year end (30th June 2018) to any party

• The sale of the stadium would be accounted for post year end.
• The Club's results for the 2017/18 financial period would not include the profit on the sale of the stadium.
• If the exclusion of the profit resulted in the Club submitting a P&S result in excess of the Upper Threshold, it would be treated as being in breach of the P&S Rules in accordance with Rule 2.9 and the League would refer the breach to a Disciplinary Commission in accordance with Section 8 of the Regulations.

Would Sheffield 3 Limited be deemed a company outside the Football Group but still owned by Chansiri, or would it be a sale to the Owner as an individual but via a new corporate entity.

Interested to know what we all think!

Edited August 20, 2020 by Mr Popodopolous

[Hxj]

 

Scenario 3 is what was supposed to happen, but Scenario 5 actually happened.  The structure used falls within Scenario 2.

2017/18 failures are old hat.

Still waiting on the 2018/19 failures and then the 2019/20 and 2020/21 ones!

[Mr Popodopolous]

Derby could be in trouble once again!! 

https://www.dailymail.co.uk/sport/football/article-8644537/Derby-County-set-inquiry-threat-deductions-allegedly-breaches-EFL-rules.html

 

[Mr Popodopolous]

8 hours ago, Hxj said:

 

Scenario 3 is what was supposed to happen, but Scenario 5 actually happened.  The structure used falls within Scenario 2.

2017/18 failures are old hat.

Still waiting on the 2018/19 failures and then the 2019/20 and 2020/21 ones!

Scenario 5 yep, Scenario 2 or 3- I can't make my mind up but will defer to you on that!

Does that not depend on a few factors, not least as to whether the stadium sale is just bumped into 2018/19? If it is I don't see them failing until the 3 years until 2021/22 at the earliest! That £38m profit would be a strong cushion in order to keep them within limits albeit not by a huge amount.

I should also add, the corporate structure is, er, interesting! This surely muddies the waters significantly. Will make a post on it when I've pulled a timeline or a rough timeline with facts together.

That said if the valuation is knocked down, then surely failures before 2021/22 are possible- question then is what is the Fair Market Value of Hillsborough, and what is a fair rent based on this! I certainly don't believe it to be £60m but it could be who knows.

Edited August 20, 2020 by Mr Popodopolous

[Hxj]

I think we need to await the Derby decision as that will have to refer to stadium valuation methodologies.

It will also depend on what the reset FFP loss position will be at 31 July 2018.  That is another area that needs more transparency.

[Mr Popodopolous]

Agreed.

Yes, more transparency needed- seems oddly silent on that, the Sheffield Wednesday verdict- in terms of loss resetting and targets.

From reading the written reasons for the Sheffield Wednesday case, it states the following paragraphs and points with respect to valuation:

James Karran, email to the club I think in April or maybe May 2018. Point is it's within and before the conclusion of that Reporting Period. Paragraph 26, points a) and e) feel pertinent.

Quote

26. The EFL, through JK, reviewed the information supplied and raised certain queries, including queries about the proposed stadium sale. These were as follows:

"a.  Can you please provide any external valuation you have received prior to setting the sale price. 

 e.  Can you please explain how the sale is reflected within the cash flow forecast? There looks to be an issue of shares of £40m rather than receipt of land sale. This then seems to be used immediately to pay working capital loans.

That's the first suggestion of a price or a valuation- £40m- though it is notable that no Independent valuation seemed to be provided, certainly not at this stage.

Quote

31.  The evidence indicates that the Club at this stage was focusing principally on obtaining a suitable valuation, the precise basis for which being uncertain. There were it seems other discussions in which the Chairman was involved at this time that might have led to the purchase of the stadium by some other party.

No valuation yet obtained. The scenarios can kick in here, not least Scenario 4 ie the third party one. I wonder why these came to nothing- one aspect is likely that the price offered absolutely would not have been £60m!

Bit below isn't all of Paragraph 35 but a potentially key snippet of it. John Redgate of Sheffield Wednesday emailed Chansiri to say that the auditors said that- email sent 19th July 2018. Redgate is no longer at the club, along with Meire- both left during 2018/19 IIRC. Would have to check the dates to be sure but I know neither are at the club for whatever reason.

Quote

35.  "...If we were to sell the stadium there is a form of words that would be acceptable which would say ... for a minimum consideration of £40m. That way if the figure is higher we can use the final agreed figure once know (sic). "

Still no decision by 19th July 2018- clock approaching midnight. (well the end of July 2018). What do they mean exactly by "agreed figure"?? Agreed between which parties- surely the figure is the one the Independent valuer gives, or the EFL hired Independent valuer gives, end of! This adds weight to what you've said many times @downendcity about the valuation/sale price just being enough to ensure compliance in all these cases.

Draft Heads of Terms- Paragraph 51- suggested minimum price of £40m- these terms were never executed. It's a long email which I can't be bothered to write out entirely. Sale to Chansiri as an individual not via a company- so it was stated. Were dated 1st July 2018 but actually says they were produced on 6th August 2018. Paragraph 53 suggests that the auditors said they were at the time, happy enough to treat these as having taken place before the end of July 2018.

Paragraphs 54 and 55 are interesting- once again can't be bothered to write them all out but suggests a lot of communication between Club and EFL, plus Club and potential valuers between 6th-15th August 2018. Mentions a minimum purchase price of £37.5m.

However, Paragraph 55 suggests that this was amended from a minimum purchase price of £37.5m to £42m- with yet another version of the Heads of Terms.

So far, we have:

1. £37.5m
2. £40m
3. £42m

Nothing satisfactory in terms of a concrete Independent valuation that I can see so far, the above numbers are classed as "minimum purchase prices", nothing satisfactory in the Cash flow statement- on that point alone see Aston Villa's cash flow for 2018/19! 17th August 2018 was when this latest- final?- set of Heads of Terms was sent to the EFL by Katrien Meire.

Quote

57.  Simply to put matters in a chronological perspective, the proposed sale to DC personally was not completed as might have been anticipated, namely within 2-3 months of 16 August 2018. The sale, by way of a Sale and Leaseback Agreement, in fact took place to a company called Sheffield 3 Ltd (a corporate vehicle of DC) which was incorporated on 21 June 2019. Completion of the sale at £60 million took place on 28 June 2019. The Stadium was then immediately leased back to the Club on a 30-year lease with a commencement date on that day. 

Heads of Terms appear not to have constituted a legally binding contract in any event. EFL and Sheffield Wednesday do not come out well- neither appeared to take proper legal advice with regards to this matter. Certainly not relevant to English law, property law or accounting law- Chansiri seems to have used his Thai lawyers for guidance!!

Onwards!

Paragraph 105 suggests a valuation of £40 million and annual rent of £3 million. Quite long again but this was included within the notes of a meeting between EFL and Sheffield Wednesday on 3rd August 2018- that seems more commercially feasible to me! Struggling to see how they reach £60m.

From Katrien Meire to Shaun Harvey and Nick Craig (Ex CEO of EFL and current Director of Legal Affairs of the EFL respectively). Sent I think on 6th August 2018 at around 9am. This was contained within Paragraph 111.

Quote

"As discussed, we would like to understand at what point today you will be able to communicate the possibility of the club selling the stadium to the club's owner. I have attached (JK's) last email which outlines the different scenarios. We would be talking about scenario 2 or 3 and our question is whether the Fair Market Value can be based on the value of our insurance for the stadium. As discussed on Friday, we don't agree with the idea of third party valuation report that uses a depreciated replacement cost".

Is Insurance Value a justifiable proxy for Fair Market Value?? Seems suspect to me- Depreciated Replacement Cost feels much more sensible. Is it possible that the only third party valuation report they could get would give them this (sensible and justifiable equivalent I believe) for Fair Market Value- as in DRC. Interested in your thoughts @Coppello - Value of Insurance as the basis for Fair Market Value?

Potentially this bit offers some answers- finally? Meire sends email to John Redgate, very basic Heads of Terms as per her description. He then sends to BHP, and has spoken to John Warner over there- could say JW's advice is just the ticket- Warner's subsequent email to Meire was as follows:

Quote

"I have just spoken to auditors.

They are ok with what's proposed as long as the sale document is dated 31st July so once we have a draft I will send them a copy to review.

As to the independent valuation we will need this to be yield based on the rent of (sic) the repairing responsibility being with the Club".

I'm still none the wiser though as to whether £60m is a fair and accurate valuation. Always thought 5-6% a fair rental return on transactions- ie sell for £60m, £3-3.5m in annual rent over x years?

There is also the suggestion, though perhaps not fully material to this, that Harvey and Craig didn't focus their minds to this properly as they were either about to go on holiday or on holiday. That's a paragraph a bit further down- we've all done to be fair, if holiday or annual leave on the horizon minds can wander a bit! There were other top brass on hand who should have kept on top of it though, so it's pretty poor by the EFL in a lot of respects- even though I'm ultimately on their side here.

Purely as an aside, I wonder if the industry or the relevant Professional Body would be asking questions of auditors here- or is that simply a red herring.

Just to clarify on my Aston Villa based point, essentially IF Cash Flow is a criteria for consideration then their transaction would fail in 2018/19. Because Statement of Cash Flow showed nothing!

Edited August 20, 2020 by Mr Popodopolous

[Mr Popodopolous]

Some Reading claims incoming. In general with FFP, I am working with some assumptions here- the 3 year position won't be judged until after the closure of the Transfer window- not least due to Covid19 and the delay in the season. Maybe any transfer outbound between now and the window closing can be backdated to the end of the Reporting Period of 2019/20, if the club so chooses.

Irrespective, the above suggests what I alluded to a while ago- Nigel Howe IS trying to sell players for FFP or at least respecting this fact- he has publicly stated this at least twice maybe more in recent months that Player disposals were required in order to hit targets- Swift given the Sheffield United interest was prime candidate No.1 for a sale/move- the fact that the CEO who is quite well respected within the game has been excluded from the conversation is odd to say the least. Owner is just refusing to sell him (Swift) verbatim by the looks.

That's not to say they can't sell others- Rafael joined on a free, experience in Serie A, Liam Moore is on the books- high earner too- Meite, Puscas and Joao all feel saleable- have I missed anyone. Point is selling Swift isn't a total deal-breaker, as long as they dispose of other saleable players- and by dispose I mean do so properly not laughable transactions with Beijing Renhe- see £3m loan fee for a somewhat past his best Aluko-FFS!

Edited August 20, 2020 by Mr Popodopolous

[Mr Popodopolous]

With respect to Derby County, we are still awaiting accounts for the following entities, at CH. Will write due date next to them!

Quote

Derby County:

1. The Derby County Football Club Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
2. Club DCFC Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
3. Stadia DCFC Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
4. The Derby County FC Academy Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
5. Sevco 5112 Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
6. Gellaw Newco 203 Limited- (18th March 2020- seemed not to be any Covid related extension stated).

For clarity purposes, Club DCFC is event catering, Stadia DCFC is classified as "Other Sports Activities", the Academy and Football ones- self-explanatory.

Sevco 5112 is the parent company for Club DCFC, Stadia DCFC and The Derby FC Academy Limited.,

Gellaw Newco 203, this would be the ultimate company in the group- it is directly both above the Club and Sevco 5112. Quite why the separations is unclear as most if not all of this would be consolidated for FFP purposes anyway- or should be!

Gellaw Newco 203 was incorporated on 28th June 2018 and became the Parent of Sevco 5112 on 28th June 2018- as per CH. "Took over" Derby on 28th June 2018, became the Person with Significant Control on this date- this shifts the controlling party from Sevco 5112 in the prior year and the "Person with Significant Control" is no longer Mel Morris- except it is really as he owns the lot!

EDIT: A quick search and Kieran Maguire 2 years ago suggested Stadia DCFC Limited was related to sponsorship and broadcasting.

Edited August 20, 2020 by Mr Popodopolous

[Mr Popodopolous]

Sheffield Wednesday. This is a bit about the structure too.

Quote

Sheffield Wednesday Football Club Limited  (31st July 2020- took the 3 month extension from 30th April 2020 which was applicable to all with Covid).

Regarding the other companies and the structure, let's see.

Quote

Sheffield 2 Limited- incorporated at CH on 21st June 2019. They then proceeded to shorten the Accounting Period from 30th June 2020 to 31st July 2019- aligned with the Club.

On 9th April 2020, they proceeded to extend the Accounting Period through to 31st July 2020. Therefore the accounts appear not to be due at CH until 21st June 2021! How that works I've no idea.

Quote

Sheffield 3 Limited- As above essentially. As we know, Hillsborough is registered with this company.

Quote

Sheffield 4 Limited- This was the controlling party of Sheffield 3 Limited.

Shortened accounting period in line with the other Companies to the end of July.

The reason I say was is that on the day of the sale, there was a Special resolution to wind up.

Voluntary Liquidator appointed on 2nd July 2019, with a Declaration of Solvency that said same date.

Final Gazette dissolved, dated 26th December 2019.

Quote

Sheffield 5 Limited- The current controlling party of Sheffield 3 Limited.

Seemed to already have the Accounting Period in place to 30 June 2020- but of course to align have moved it to 31 July 2020.

As we might have noted, Sheffield Wednesday Holdings Limited was mentioned in the Written reasons, as an example of a company who may purchase Hillsborough. This was based in Hong Kong, but not listed in a way that accounts publicly viewable.

They also appeared to become the parent/overall company for Sheffield Wednesday- purchased some 21m shares in 2018/19 and in June 2019, a share for share exchange made the club wholly owned subsidiary of Sheffield Wednesday Holdings Limited.

This document on Sheffield 4 Limited looks interesting:

Quote

Non-cash consideration

"SHARES ALLOTTED IN EXCHANGE FOR THE TRANSFER OF THE ENTIRE ISSUED SHARE CAPITAL OF SWFC HOLDINGS LIMITED"

I might have to re-read some documents but it appears that the shareholding in SWFC Holdings Limited transferred to Sheffield 2 Limited after Sheffield 4 Limited was wound up- as we know, Sheffield 3 Limited is now controlled by Sheffield 5 Limited as opposed to Sheffield 4 Limited.

My point is that given the structure, can Sheffield Wednesday withhold accounts from EFL or consolidated accounts until summer 2021?? Or am I misreading that.

In any case, I feel they are somewhat fortunate to get -12 in 2020/21! EFL won't be appealing the date of sanction.

It's theoretically possible on this structure point, that the new controlling party is Sheffield 2 Limited.

Edited August 20, 2020 by Mr Popodopolous

[Hxj]

1 hour ago, Mr Popodopolous said:

With respect to Derby County, we are still awaiting accounts for the following entities, at CH. Will write due date next to them!

For clarity purposes, Club DCFC is event catering, Stadia DCFC is classified as "Other Sports Activities", the Academy and Football ones- self-explanatory.

Sevco 5112 is the parent company for Club DCFC, Stadia DCFC and The Derby FC Academy Limited.,

Gellaw Newco 203, this would be the ultimate company in the group- it is directly both above the Club and Sevco 5112. Quite why the separations is unclear as most if not all of this would be consolidated for FFP purposes anyway- or should be!

Gellaw Newco 203 was incorporated on 28th June 2018 and became the Parent of Sevco 5112 on 28th June 2018- as per CH. "Took over" Derby on 28th June 2018, became the Person with Significant Control on this date- this shifts the controlling party from Sevco 5112 in the prior year and the "Person with Significant Control" is no longer Mel Morris- except it is really as he owns the lot!

EDIT: A quick search and Kieran Maguire 2 years ago suggested Stadia DCFC Limited was related to sponsorship and broadcasting.

The Derby County Group went through a complex reorganisation which was structured for legal and tax reasons (so at least one owner knows the value of advice!), but resulted in a fairly simple outcome.  The split resulted in three parts, the 'Football Part (GN203)", the "Stadium Part (GN204)" and the "Debt Part (Sevco 5113)", all owned by Morris but in separate chains. 

The latter is actually interesting in that Morris effectively wrote off £55 million that he had lent the club, possibly as part of planning for the disposal of the "Football Part" and the "Stadium Part"?

[Mr Popodopolous]

3 hours ago, Hxj said:

The Derby County Group went through a complex reorganisation which was structured for legal and tax reasons (so at least one owner knows the value of advice!), but resulted in a fairly simple outcome.  The split resulted in three parts, the 'Football Part (GN203)", the "Stadium Part (GN204)" and the "Debt Part (Sevco 5113)", all owned by Morris but in separate chains. 

The latter is actually interesting in that Morris effectively wrote off £55 million that he had lent the club, possibly as part of planning for the disposal of the "Football Part" and the "Stadium Part"?

0kay thanks, that makes sense- I suppose I'm just looking at it through the prism of FFP- but the usual business rules would apply!

Sevco 5113? Know little about that! 2nd bolded bit- planning for a future takeover maybe.

Incidentally- yet more Derby news! Nigel Howe's presence also appears to be getting questioned too- these are both clubs that have utilised various FFP loopholes though Derby much more aggressively!

https://www.dailymail.co.uk/sport/football/article-8648935/EFL-pressure-remove-Derby-County-CEO-Stephen-Pearce-board-stadium-row.html

Some useful article snippets!

Quote

The EFL are facing calls from clubs to remove Derby chief executive Stephen Pearce from their board due to potential conflicts of interest in their disciplinary process.

Interesting.

Quote

A number of executives at other clubs are understood to have lobbied the EFL that Pearce’s presence on the board is untenable in such circumstances as his role is to uphold rules his club are alleged to have broken and they are considering whether to begin a formal process to engineer his removal.

Wonder if Mr. Ashton might be amongst their number... 

Bit of flesh on the bones.

Quote

‘It’s not personal but this is poor governance,’ one executive told Sportsmail. ‘Stephen is a very nice guy and able administrator but even he must acknowledge the conflict of interest issue, even if it’s just perception.’

Could be purely perception, could be reality. Doesn't sound like it's personal for sure, more the risk of conflict of interest- and then even maybe just a perceived risk of one!

Quote

The presence of Reading chief executive Nigel Howe on the board has also been questioned as they have also been the subject of an EFL investigation into the sale of their stadium, although they have yet to be charged.

Unclear if that's done and dusted or still ongoing. Reading do appear to be under some kind of restrictions in the market though that could merely be for the FFP losses irrespective of this angle.

Edited August 21, 2020 by Mr Popodopolous

[Mr Popodopolous]

All I can say though, is that I'm pretty convinced that it would be firewalled- Corporate firewalling- keep those club relevant executives away from decisions directly involving their club, job done!

Will be ridiculous if the EFL had nothing like that in place!

Now I hold my hands up here! Pearce was not elected to the Board until summer 2019- well after the Stadium sale and leaseback occurred. I also believe the EFL surely must have a corporate firewall or equivelant.

Howe OTOH, WAS elected to the EFL board within the relevant time frame. He left Reading and went back but he was elected as per an article on 4th July 2017. It's also unclear whether we should use Reading FC or Renhe Sports Management Limited in terms of the FFP results. Both Kieran Maguire and Swiss Ramble seem to use the club but it could be either IMO.

Timeline:

1. July 4th 2017, Howe joins the EFL Board.
2. July 10th 2017, Howe is replaced by Gourlay at Reading.
3. Sometime in 2017/18, the Madejski Stadium is sold to (and leased back from) the immediate parent- which is odd from a consolidated accounts POV- Renhe Sports Management Co Limited. There is still no sign of this on the Land Registry, but only the Accounts! £26.5m, £750,000 annual rent- so far so meh! Still bits of it don't correspond but who cares, pretty meh as I say- at this point! Think was over 25 years the annual rent.
4. In December 2018, Howe returns to Reading- as Gourlay has left somewhat of a mess. Still on the EFL Board.

Sometime in 2018/19:

1. Renhe Sports Management Limited invoiced Prestige Fortune Asia Limited £37,500,000 in respect of the disposal of the Madejski Stadium. This will have been reflected in the Renhe accounts but not the Reading ones as it was already with Renhe- but Renhe are the parent of Reading. Annual rent £1,500,000 over 24 years. The Reading owner is also the owner of Prestige.
2. The Reading Football Club Limited invoiced Sun Elegant Group Limited £13,000,000 in respect of the disposal of the club's training facilities at Hogwood Park. Included in loans from group undertakings. The Reading owner is also the owner of Sun Elegant. This of course is in the Club accounts but also reflected in the parent company/consolidated in UK accounts.
3. The Reading Football Club Limited invoiced £3,000,000 to Beijing Renhe Football Club in respect of the loan of a player. Sone Aluko! The ultimate owner is their owner- Ms Xiu Lu Hawken is a director of the Chinese club. Obviously in the club but by extension, the consolidated/parent accounts.
4. RFC Bearwood Limited invoiced Prestige Fortune Asia Limited £4,833,333 in respect of the disposal of the residential part of the land owned by the company. Obviously in RFC Bearwood accounts but reflected in the consolidated. As with Point 1, Prestige is owned by the owner.

Actually pretty shocking seeing it all in black and white! I wonder about the rise of £11m in terms of sale price in a year for the Madejski Stadium- though the rent did double I guess!

In the interests of balance, these are big big numbers but the profit was less.

For example, the profit in 2017/18 Madejski Stadium sale was only £6.5m or thereabouts. Hence the so far, so meh!

The following season however, the profit for Renhe was £29.9m on disposal on fixed assets and £3m on Aluko. With the probable exception of the Aluko and the 2017/18 deals, the rest were paid for in loans/other borrowings etc.

For the club it was only £8,173,614 plus of course the revenue boost from the Aluko loan. Without the exceptional items, the losses for both are huge and maybe one is a few million better off than the other but in the grand scheme they seem to have big FFP issues whichever you use!

Reading of course in terms of FFP and angry chairmen/fans/social media tend to fly below under the radar- largely as they are Reading  but their accounts are shocking!

Edited August 21, 2020 by Mr Popodopolous

[Mr Popodopolous]

Talking of Reading, interesting thread.

Seems they may well be under a soft embargo. One or two of their fans do not appear to 'get it' and suggest spending £100m and taking the 12 points- can't think the EFL would let that happen!

This is the second summer on the bounce, so it's an indicator of trouble IMO. Think my suggestion some time ago about split between Howe and the owner may have a bit of merit- with respect to this anyway.

I also don't see how they can spend big if under a soft embargo- that is a suggestion by him on one of the points. Didn't Birmingham get battered somewhat for buying Pedersen under a soft embargo?

As for Reading, it absolutely makes me ******* laugh their fans pleading poverty when they had a wage bill of I think around or approaching £40m in 2018/19- to finish in bottom third or maybe pushing midable was it.

When they signed Joao and Puscas in summer 2019 not long after release from a soft embargo- EFL shouldn't make that mistake again!

Moaning that they can't sign Ejaria- again I struggle to see how they splash the cash given an apparent soft embargo. Anyone?? @Davefevs @Hxj @Coppello

Further claim.

Like I say, selling Swift is no deal-breaker but there had better be no preferential or quietly get back to balance and spend a little treatment- remember Howe is on the EFL Board.

I don't understand why they appear to be getting extra time- they surely could've failed to 2020, ie to June 2020- they've released a lot of players but you can't backdate much in the way of wage savings. Player sales yes, possibly- I also don't understand how if they cannot spend- as in Point 1- they can spend big as of Point 5- the accounts alone indicate soft embargo at best territory.

If they've been selling property again, or selling and leasing back property again the EFL need to keep right on their case. Hell even if they haven't, that and Howe's role on the Board needs investigation in itself, and if clubs- not unreasonably arguably in the circs- have been given until the end of the Summer window to assess their position ie the extended summer window after transfers closed, allowed to backdate sales into the 2019/20 season due to Covid etc, then the EFL need to keep watching them closely and act accordingly if the time comes.

Edited August 22, 2020 by Mr Popodopolous

[Mr Popodopolous]

https://www.footballlaw.co.uk/articles/birmingham-city-fc-small-heath-big-breaches-efl

A thread on the Birmingham saga.

No grand problems with Birmingham given their cutbacks and 9 points but what I can only assume to be another Shaun Harvey masterpiece, this bit of the Business Plan.

Quote

Thirdly, the buyers’ market created by the Business Plan, and notwithstanding the usually limited transfer activity in a January transfer window, was exacerbated by the EFL sending a media release to chairpersons of all EFL Championship clubs indicating the conditions of the Business Plan

This surely gives a club avenues when it comes to contesting a charge- buyers market and all that. Business Plan is fine but sending it to all the other clubs, dunno what I think of that! Wonder if Harvey himself had any input into the Business Plan- would sooner let a club run it than him!

Edited August 22, 2020 by Mr Popodopolous

[Davefevs]

Reading could well be the next “big-mess” club.  Think they’ll be bottom 6-8, even a relegation chance.

[Mr Popodopolous]

Thinking the same. They can't even sign Ejaria it seems on a permanent deal- this was arranged in summer 2019- such is their position. Certainly not under the agreed terms.

Why some of their fans seem to think that they can go on a spending spree irrespective to try and gain promotion this season is beyond me.

Or the idea of taking - 12 and spending a lot, fairly sure that wouldn't fly.

Maybe under the old regime but not now! Released from soft embargo summer 2019, late June maybe, then in August Joao and Puscas arrive! Good players but doubt low wages.

Disconnect between Owner and CEO strikes me as problematic times.

I'd say they're somewhere between Birmingham summer 2018 and Sheffield Wednesday summer 2019.

If they go into the current season with the current squad, well surely they could struggle.

Surely too they would be in breach of FFP to 2020 as it would mean nobody sold- though as I said before maybe clubs would have until closure of window in mid October to rectify.

Edited August 22, 2020 by Mr Popodopolous

[Mr Popodopolous]

I thought John Redgate had left Sheffield Wednesday but clearly not.

https://www.dailymail.co.uk/sport/football/article-8652645/EFL-members-shocked-conduct-Sheffield-Wednesday-director-John-Redgate.html

Seems he would like a club facing charges/a Disciplinary Hearing to have the ability to veto the composition of the Independent Panel. 

Fairly sure clubs won't go for that!

[Mr Popodopolous]

Seeing a number of claims on Twitter that Derby will be deemed innocent of all charges. However none of these are from actual journalists AFAIK!

Certainly none from local or national media that I recognise- but Nixon says verdict is coming soon.

Edited August 23, 2020 by Mr Popodopolous

[Mr Popodopolous]

On 22/08/2020 at 09:10, Davefevs said:

Reading could well be the next “big-mess” club.  Think they’ll be bottom 6-8, even a relegation chance.

You might well be right!!

Surely Howe isn't/wasn't the massive spendthrift pushing things, including Joao and Puscas within a month-6 weeks of exiting a soft embargo? That's pretty implausible so...

Oddly- the standard of logic must be a thing with teams who play in Blue and White  - Reading fans seem or some of them seem to think it's a green light to open the cheque book?  I somehow doubt the EFL will accept that!

When I say open the cheque book, I obviously don't mean under embargo limits, more like spending spree/gamble on promotion.

I do wonder if their owner and his placeman might say '**** it' and try to sign Ejaria despite the soft embargo. There would be major consequences of course, probably more than Birmingham but I wouldn't put it past them!

Edited August 24, 2020 by Mr Popodopolous

[View from the Dolman]

The new chief exec's purported LinkedIn doesn't exactly shout that they've recruited a sharp operator...

...he also appears to have started a company (C&E SPORTING MANAGEMENT LIMITED) earlier this year and he is personally a registered intermediary with the FA - that sounds like a potential conflict of interest.

[Mr Popodopolous]

Nice find! Conflict of interest eh??

Done a little more research, Howe will be remaining as Vice-Chairman apparently.

Sounds like a placeman the new guy. Reading fans or some of them still appear to think it opens the door to big spending- and that gamble and go up=fine, stay down=points. The rules since 2016 are much more multilayered and complex.

Edited August 24, 2020 by Mr Popodopolous

[BLRed]

Seems on Twitter, derby have escaped any fine/points deduction etc for any wrongdoing. Shambles if true. Just sets a precedent for all others to get away with bad financial management