Derby County

[chinapig]

3 minutes ago, Loco Rojo said:

So the EFL punish Derby because they broke the rules (and I'm sure some would say they got off lightly) and then reduce that punishment because Derby don't like it. 

Then impose new, lenient, conditions.....wonder how long those conditions will last.

Great message to send all the other teams.

The EFL everyone. The Borris Johnson of the football world. 

Yes but, you know, Wayne Rooney and stuff.

[Mr Popodopolous]

3 hours ago, Hxj said:

I know I'll get slated for this, but I have some sympathy for Derby on the player position.

The club still has a mountain of debt and no one wants to own them.

Whilst they can sign players, they are limited and start their campaign in 18 days time, and haven't signed anyone yet.

Plus of course we are still awaiting the FFP position.

While I agree with parts of this, when new and beefed up punishments are agreed by Clubs they have to stick.

The debt, that reminds me. Has Keogh been paid yet? Not expecting anyone but the relevant parties will know but would/could that not be classed as a football debt? Football debt should mean a Hard ie Full embargo. 

[Hxj]

8 hours ago, Mr Popodopolous said:

While I agree with parts of this, when new and beefed up punishments are agreed by Clubs they have to stick.

I look at say Northampton and Derby as far as playing matches go and in the particular circumstances feel that justice is best served by the current outcome.

8 hours ago, Mr Popodopolous said:

Has Keogh been paid yet? could that not be classed as a football debt? Football debt should mean a Hard ie Full embargo. 

I have no doubts that Keogh's payment was a football debt, it was awarded by a Football Tribunal.  Any part due by now has therefore been paid.  Derby are already on a hard embargo, it's just the terms of the embargo that now cause angst.

[Hxj]

11 hours ago, chinapig said:

All of which is a consequence of multiple breaches of the rules. They knew what they were doing and what the sanctions were so I don't see much cause for sympathy. Any more than I would expect any if ,say, I knowingly break traffic law and have my right to drive suspended.

So have you handed your driving licence back as I doubt you have not committed at least 4 speeding offences in the last three years.  Or do you mean - if I didn't get caught it doesn't count?

The 'players of professional standing position' is as a direct result of playing an FA Cup match whereas Northampton were not required to play their league matches.

To me natural justice requires an intelligent nuanced approach to punishment.

[chinapig]

7 hours ago, Hxj said:

So have you handed your driving licence back as I doubt you have not committed at least 4 speeding offences in the last three years.  Or do you mean - if I didn't get caught it doesn't count?

The 'players of professional standing position' is as a direct result of playing an FA Cup match whereas Northampton were not required to play their league matches.

To me natural justice requires an intelligent nuanced approach to punishment.

I chose to stop driving a few years ago because of disability but before that I'm afraid I was one of those irritating drivers who stuck to the speed limit!

And for your equivalence to apply Derby would have to have shopped themselves to the EFL. Though I suspect I am missing your point.

You could certainly have nuance if discretion is written into the regulations.

This would tend I think to lead to (more) inconsistency in decision making. If club A is given some discretionary leeway then clubs B-Z will inevitably demand the same, justified or not. Probably dragging out the process still further.

Apropos of which, sort of, Man City are still under investigation by the PL  having just had an attempt to halt the process rejected by the Court of Appeal. Like Derby they tried refusing to provide evidence and put off the day of judgement. Since the investigation began City have been champions twice!

Still, you have sympathy for Derby and I don't so I doubt we will agree any time soon but the debate is always interesting, thanks.

[Mr Popodopolous]

14 minutes ago, chinapig said:

I chose to stop driving a few years ago because of disability but before that I'm afraid I was one of those irritating drivers who stuck to the speed limit!

And for your equivalence to apply Derby would have to have shopped themselves to the EFL. Though I suspect I am missing your point.

You could certainly have nuance if discretion is written into the regulations.

This would tend I think to lead to (more) inconsistency in decision making. If club A is given some discretionary leeway then clubs B-Z will inevitably demand the same, justified or not. Probably dragging out the process still further.

Apropos of which, sort of, Man City are still under investigation by the PL  having just had an attempt to halt the process rejected by the Court of Appeal. Like Derby they tried refusing to provide evidence and put off the day of judgement. Since the investigation began City have been champions twice!

Still, you have sympathy for Derby and I don't so I doubt we will agree any time soon but the debate is always interesting, thanks.

Just googled that and seen it- wonder if that could see a UEFA case reopened or fresh charges materialise there if it sticks at PL level.

Surely if under Investigation for alleged breaches, an Embargo can be slapped on by the PL as it can at our level- the Rules are in theory the same after all.

[chinapig]

4 minutes ago, Mr Popodopolous said:

Just googled that and seen it- wonder if that could see a UEFA case reopened or fresh charges materialise there if it sticks at PL level.

Surely if under Investigation for alleged breaches, an Embargo can be slapped on by the PL as it can at our level- the Rules are in theory the same after all.

In the UEFA case CAS ruled that some charges were unproven and others time barred. Not exactly a not guilty verdict but I doubt the case will be revived.

And I just don't see the PL using sanctions against any of the big clubs as they are the ones who bring in the big TV money.

[Mr Popodopolous]

Well G Star Ram, I probably shouldn't bother but going to address a few points very quickly and likely not in enough depth.

Audit and Accounting Experience

Vast experience clearly, doesn't mean you are necessarily objective however- let's be honest you appear to think Derby are innocent so...wouldn't expect you to be.

LAP vs IDC

As we recall, in the initial case which ended last August exonerated Derby in respect of the First Charge- Pride Park Sale and Leaseback, valuation etc, while mostly finding Derby innocent on the 2nd Charge except in terms of Disclosure. However from that, the EFL worked their way up to get a Guilty Verdict from the LAP. Incidentally I do trust their objectivity more than I would yours, as you are a Derby fan albeit as per your post, one with 23 years of Accounting and Auditing Experience and they are objective and Independent. Doubt you can say the same on this matter. When sent back to the IDC, it was £100k fine for Wrong Accounting, a Reprimand in respect of Future Financial Conduct and then the Restatement by 18th August.

Importance of Independent Witnesses

Unsure if it was ignorance or arrogance on the part of Mel Morris- but Independent Witnesses are quite important in cases such as this. Why did Derby not choose one or hire one for the matter in front of the League Arbitration Panel? It wouldn't surprise me if Professor Pope helped to tip the balance in favour of the EFL in that particular case. Justifiably so because the Auditors and Accountants on behalf of both Derby and the EFL are hardly going to be purely objective are they, in legal terms Independent Expert Witnesses are quite important- CPS explanation as to why: 

Quote

The Duty of an Expert Witness. The duty of an expert witness is to help the court to achieve the overriding objective by giving opinion which is objective and unbiased, in relation to matters within their expertise

Their words can carry weight- EFL hired one, Derby didn't for whatever reason. Wouldn't surprise me if it tipped the balance- and on balance I do think I believe the LAP, as there were some quite eminent names on it! Lord Dyson the most known, but also David Phillips QC and Charles Hollander QC are not exactly just starting out!

Could Derby not find one, or was there a belief on their part that one was not needed? My suspicion is that it helped to tip the balance, that extra objective Expert opinion.

Difference between Restatement for P&S and in general

Personally speaking, though it would be interesting, is it that important to Restate in terms of the past and overdue but especially the past Accounts due at CH? Restatement to the EFL/Disciplinary Process for P&S purposes however is required and that is what needs to happen by 18th August. I don't understand why e.g. the outstanding Accounts are not out now but with Internal Restatement for P&S purposes possible. There is some debate as to whether they specifically needed to wait for the Verdict as to the format for CH. Maybe they couldn't be bothered with the extra work that it might entail which I fully get, but a Restatement if it's just about a) Amortisation Schedules and b) Profit on Disposal of Players can be simple enough.

That said, given that there was no Sale guaranteed or lined up for players by the end of their Contract, how a Residual Value can be applied is questionable, IIRC Spanish made a good post on it back in May on the EFL Verdict thread. FFP/P&S=Straight Line or Straight Line with Extensions seems reasonable, for these purposes anyway IMO.

Impermissible under FRS 102. Haven't read it for a while but only permissible IIRC if an Active Market exists to do it that way- clearly not the case in this instance.

Bottom line is that a) EFL had an Independent Witness and Derby chose not to utilise one- probably helped to swing things- b) The LAP with some quite eminent individuals on it ruled it less than compliant.

Auditors in General

Number of Auditing Scandals in general in recent years, lax practice in the Industry etc- just because Smith Cooper and the Delves signed it off as aok doesn't necessarily mean it was entirely accurate?

Why don't I join DCFCFans and debate there?

Your Head of Pravda, sorry Admin, in Chief Dave the Rave certainly won't let that happen. Dissenting views...amusing how I found a post a little while ago that still blaming the EFL, Gibson and Kieran Maguire for your Clubs woes. Perhaps he should look a bit closer to home.

Found the post in q from David, the amount of blame and deflection is fairly incredible.

https://dcfcfans.uk/topic/37683-please-don’t-blame-morris-and-pearce/?tab=comments#comment-2143735

Edited July 21, 2021 by Mr Popodopolous

[Mr Popodopolous]

On a general note, just looking back- not aimed at anyone in particular, it's interesting reading this thread from April 2019 that a quick search threw up and some of the blasé responses to the EFL and Derby issues...

https://dcfcfans.uk/topic/32065-trouble-ahead/

Wonder if they're pooh-poohing it now, some of the posters. Granted the OP was a tad wide of the mark in terms of the here and now but still it rumbles on in July 2021...

Edited July 21, 2021 by Mr Popodopolous

[Coupon]

BBC Sports has an article stating that EFL are allowing Derby to sign out of contract players, but within strict wage limits.  That'll be interesting!!!

[Hxj]

On 21/07/2021 at 23:59, Mr Popodopolous said:

Auditors in General

Number of Auditing Scandals in general in recent years, lax practice in the Industry etc- just because Smith Cooper and the Delves signed it off as aok doesn't necessarily mean it was entirely accurate?

I think you missed the point from the LAP decision that it appeared that the club had misled the auditors too ....

[CheddarReds]

 

 

[CheddarReds]

Derby going for the double of lowest ever Premier League and Championship point totals?

[Unan]

Just saw this, absolutely mental.

[Davefevs]

Think this is for those players they are trying to sign or have gone past expired contract.

What a mess.  PFA need to be involved.

[TheReds]

What was Morris' comments before the meeting?

A complete shambles of a club, but they are getting exactly what they deserve with what he has done over the past few years. How long before Rooney jumps ship?

[TheReds]

Have all the players signed for some YTS money, or are they doing an "internship"?

[supercidered]

21 hours ago, TheReds said:

What was Morris' comments before the meeting?

A complete shambles of a club, but they are getting exactly what they deserve with what he has done over the past few years. How long before Rooney jumps ship?

He's usually trying to jump something!

[TheReds]

Taken from Derby forum:

Rooney confirms Davies, Stearman and Allsop have signed and they are available tomorrow

Rooney says the club is working on trying to bring some of the other trialists in

[Mr Popodopolous]

£4,500 a week I believe...

As long as the cap on a) Wages and b) Number of allowable signings remains, they clearly have big problems.

EFL shouldn't budge an inch until they get what they want, save for an absolute bare minimum- they've signed 3, talk of Davies as a player-coach so 1 or maybe 2 max as it stands.

Some Derby fans say it's bad for the EFL but is it?

Edited August 6, 2021 by Mr Popodopolous

[Mr Popodopolous]

Also amusing to read elsewhere some Derby fans querying whether or querying the rent and whether they can lift the charging order on the ground.

I hope MSD and their lawyers are all over the 2nd bit...a debt is a debt, especially secured.

I also query the rent- £1.1m per season on an £81.1m Transaction is very much known as what professionals might call, a piss take. For a reminder of context:

1. Reading paid £750k per season on a £26.5m transaction, rising to £1.5m on a £36.5m further sale.
2. Birmingham pay £1.25m per season on a £22.6m transaction.
3. Aston Villa pay- though I have to question the lease length, £2.6m on a £56.7m transaction.
4. Sheffield Wednesday pay well it's opaque but it's maybe somewhere between £2.5-3m per season on a £60m transaction.

The Derby way, once again...EFL need to pile in on this too.

Derby's own hired valuers assessed the Market Rent at £4.16m per year...

However...

The 100 days a year bit.

??

"100 days a year" vs "without there being any restriction on the number of days for which the Club would have access to Pride Park for football purposes".

The market rent is consistently from their valuer, £4.16m per annum regardless of method it seems.

Few bits and bobs...is it merely the Club or would there be additional rent in the companies such as Club DCFC and Stadia DCFC that feed into the consolidated ie Sevco 5112/Gellaw Newco 203?

ie on the Club specific Accounts it might show £1.1m per annum, but adding these in...

If not that, would it/should it eat into Commercial Revenue that otherwise goes to the club? @AnotherDerbyFan seemed to suggest it a while ago.

If not, then the EFL need to pile in and if necessary, draw up fresh charges about this matter.

Edited August 6, 2021 by Mr Popodopolous

[Mr Popodopolous]

Certainly think Derby are getting their just desserts FFP wise or in the process of it, the Embargo a good holding pattern, but this really is no way to run a club the views on finance aside.

 

[Mr Popodopolous]

Looks like Dirtbag Derby were trying to flout it yet again in 2019. Hope the EFL are fully aware given Mel still in charge, not watched or followed it in great depth but assume some of these know a bit.

Saw debt write off on takeover mentioned.

https://dcfcfans.uk/topic/37983-al-jezeera-the-men-who-sell-football-morris-on-tape-offering-to-sell-to-mr-x/?tab=comments#comment-2173919

[Johnny Musicworks]

Not a good look for the EFL

[Mr Popodopolous]

Not a good look for DCFC either.

Having read bits and bobs- but not watched it yet- seems Derby/Mel were looking to sell Pride Park for £29m as part of the takeover...the EFL should be all over that.

 

[AnotherDerbyFan]

It's not looking too go for us, but you must be pooing yourselves for this season. 

Draw vs newly promoted Blackpool, now a defeat vs Forest Green. Ouch

[daored]

7 hours ago, AnotherDerbyFan said:

It's not looking too go for us, but you must be pooing yourselves for this season. 

Draw vs newly promoted Blackpool, now a defeat vs Forest Green. Ouch

Hope this season is there are three worst teams , simple as that 

[Mr Popodopolous]

I think we'll survive, it won't be great though doubtless some good games. Big caveat there is injuries- if we have a shitload of injuries like last year then we're in major trouble- in fact we've had a fair few injuries for a number of seasons but last time was off the charts.

Think we have too many young players too soon in and around the first team squad- though Scott in particular has looked good and 2 goals for Janneh feels promising albeit very early days with both at this level.

Feel we need 2-3 in if possible, loanees or cut price signings...

[Mr Popodopolous]

https://dcfcfans.uk/topic/38022-filing-our-accounts/

Arrogant bunch I have to say, much like Mel, much like Rooney moaning again today that he needs help.

I made a bit of a vow thatI'd stop citing them but some of them still don't get a year post the Written Reasons of the 1st case that the Consolidated not the Club Accounts are what would be used for P&S purposes.

In theory could they be sanctioned to 2017? ie 2014/15, 2015/16, 2016/17? Restatement would have a knock-on effect as far as the last 2 goes as the Amortisation policy was amended in 2015/16 and the first applicable period for P&S as per the EFL site was 2014/15, 2015/16 and 2016/17, unless it's badly worded.

The £30m addition seems sketchy to me, they argue that there is up to another £30m in Profit on Pride Park due to hit the Accounts but that feels very much like Cake and eat it territory- seen Accountant Derby fans on Twitter question its inclusion etc.

The Stadium was held at Valuation under DRC until 2016 if not 2017 then suddenly flipped to Cost- but could be something about cherry-picking under FRS 102 if one asset type only.

They also seem not to discuss compliance to 2019 and the joint 2020 and 2021 period plus possibly even to this season in theory? It keeps on and on, headroom can be lost and gained.

https://stevecollings.co.uk/property-valuations-under-frs-102-and-frs-105/

If Kieran Maguire's interpretation of the £30m or up to that figure was right, then it is tied to the Revaluation Reserve from a 2008 Revaluation but...under FFP/P&S there is no provision stated for such a Reserve Transfer and inclusion within the calcs.

Maybe the possible improvement could be the difference between historical depreciation at cost and at revalued between 2008 and when this stopped being stated in 2015...but it ain't £30m! £8-10m maybe, could that be subtracted from the Proceeds - Carrying Value and added to it by reducing carrying value in 2018 at time of sale to add a bit more to Profit on Disposal?

Still sketchy however because there was a clear arrangement...£74.4m agreed between Club and EFL in 2018 for DRC and £81.1m under the Profits Method. Profit on Disposal was agreed and adjusted respectively for P&S purposes...and Revaluation Reserve to Profit is dicy unless reversing a prior downward Revaluation or Impairment.

Interested in @Hxj @Coppello thoughts on this...seems awfully opportunist IMO.

PPS, the Revaluation Reserve bumped up the number on Tangible Assets while still sitting visible- was £39m or thereabouts in 2008 but we also saw the value rise to £55m via it and some removal of Depreciation said same year.

The corresponding bump up following Revaluation.

Lastly included within Reserves and stated as such.

Could well be cake and eat it territory.

Edited August 12, 2021 by Mr Popodopolous

[Mr Popodopolous]

They're still at it...trying the workarounds, I don't think the EFL would accept it though, and if they refuse them we all know what that should mean.

https://dcfcfans.uk/topic/38022-filing-our-accounts/page/2/?tab=comments#comment-2177209

Edited August 12, 2021 by Mr Popodopolous

[Mr Popodopolous]

I'll row back a bit, slated some of the fans when I first read the Thread but maybe not that warranted.

However I reiterate and stand by the following:

1) Mel Morris has a gross sense of entitlement, believes the rules are window dressing or something.

2) Rooney's bleating is a laugh. Or unwarranted anyway, he complained in a Press Conference about 'needing help' as he often does.

Newsflash, the Club have pushed the boundaries and still not giving the EFL what they want, hence these are the consequences. Suck it up.

3) A lot of DCFC fans still seem to blame the EFL. Hard to understand really and this erodes my sympathy that those who say people should have for the fans when inadequate ownership takes hold. Hence I don't have much.

4) £30m. It's arguable, it seems very sketchy.

5) I may have been hasty on criticising the Amortisation bit. Straight line with extensions also feels acceptable. Believe Clubs definitely utilise this.

[Hxj]

22 hours ago, Mr Popodopolous said:

Interested in @Hxj @Coppello thoughts on this...seems awfully opportunist IMO.

The issue will boil down to how much DCFC can alter the accounts previously submitted on resubmission.

The FRS 102 accounts (2016 onwards) are on a 'Revaluation Basis' which is entirely acceptable, as would accounts on a 'Cost Basis'.  What I am unsure of is how compliant the accounts would be if on resubmission, the basis was changed from a 'Revaluation Basis' to a 'Cost Basis'. hence releasing the additional profit.

This will only effect the periods to 2018, 2019 and 2020 plus 2021.

There is also the issue relating to the rent paid, as mentioned in the original DC decision.

[Jerseybean]

Added two free agents to their squad, one who is well known to us.

https://www.derbytelegraph.co.uk/sport/football/transfer-news/derby-county-breaking-transfers-embargo-5796323

 

[Mr Popodopolous]

FRS 102 states that Accounting Policies must be applied consistently etc. To switch at an apparently convenient time...well.

That aside, the situation gets a bit odd. They appear to have signed Jagielka and Baldock until Jan- the latter as Kazim-Richards out for some time I believe.

The oddity however is that Sky asked the EFL about Derby's Transfer status on Saturday or so I read.

[Hxj]

7 minutes ago, Mr Popodopolous said:

FRS 102 states that Accounting Policies must be applied consistently etc. To switch at an apparently convenient time...well.

Sadly, by some god given co-incidence, 2016 was the first accounting period that Derby adopted FRS 102 so there is no history of adoption of any policy ... oh and I was in error above the actual adjustment is made on adoption of FRS 102 which was in 2016.

[Mr Popodopolous]

18 minutes ago, Hxj said:

Sadly, by some god given co-incidence, 2016 was the first accounting period that Derby adopted FRS 102 so there is no history of adoption of any policy ... oh and I was in error above the actual adjustment is made on adoption of FRS 102 which was in 2016.

Ah was it?? Still sounds debatable FFP wise, plus no provision for Reserve Transfers contained within the FFP Regs. No provision against either.

I've not looked at 2008-2018 in a great deal of depth for a while but when they Revalued in 2008 it showed the Revaluation Reserve on the Balance Sheet but also it enhanced the Valuation by an equal amount. Double Counting a possibility?

They appear to be proposing knocking up to £30m off the 2018 Carrying Value however which is a total absurdity.

Proceeds-Carrying Value-Revaluation Reserve=Enhanced Profit on Disposal?

IIRC, was a transfer to Retained Earnings? Even with that though Retained Earnings still negative, Cherrypicking maybe...as in picking out one favourable section.

Edited August 17, 2021 by Mr Popodopolous

[Mr Popodopolous]

Had a quick skimread of 2017 Accounts, still seemed like Revaluation was in play for Pride Park?

Accounting Policies 2.6 and 2.7..Proceeds - Carrying Value still Profit or Loss on disposal bit.

[Hxj]

On adoption of FRS 102 in 2016 you can revert to a 'Cost' basis for all assets.  So you remove the revaluation Reserve and reduce the revalued asset to cost.  You therefore 'create' an addition £30 million profit on the sale of the asset.  Amazing how far sighted Morris was 

[Mr Popodopolous]

I'll have a look into it further but thanks...it just seems suspect to me, from an FFP angle at the very least- they switched to FRS 102 in the 2016 Accounts but still seemed to show Cost and Revaluation in 2017- EFL surely have some good grounds for objection? Reserve Transfer in 2018 also, but this is not covered in the P&S Regs or their FFP predecessors.

That would just be one section of their Profit and Loss Account, the cumulative one I mean- after the Transfer I mean, this was -£42m even with the Revaluation Reserve bit. Plus unsure they changed category for all Fixed Assets- cherry picking a possibility?

Equity vs Profit? Hmm...EFL have their Equity limits with respect to what can count for P&S as well, ie the gap between £15-39m.

As for the wider issue, two lines.

1. Firstly, the EFL seem to have granted them an extension to 24th August 2021 with respect to the Restated Accounts.
2. Secondly, a number of the companies within the Group appear to have received striking off orders/notices. Presumably for lack of Accounts and Confirmation Statements.

This leads me onto two conspiracy theories, the first of which I wondered about at times...

1. Could the EFL be deliberately stringing out charges/punishment, whatever in exchange for buying time for a takeover. Takeover comes in, charges magically go away- clean slate etc.
2. Could these companies- the following all have Active proposals to Strike Off- and weirdly they're all front dated??  Dated 24th August 2021, Sevco 5112 Limited, Club DCFC Limited, Stadia DCFC Limited and The Derby County FC Academy Limited- have either FFP implications or debts that Mel Morris is looking to hide- what better way to hide them or obfuscate than to not submit Accounts and Confirmation Statements and let them automatically get struck off??

The second bit could go- in theory?

Quote

"Can't judge Consolidated Accounts without the component parts, can't chase debts from the component parts if they are struck off".

Yes these theories are likely way out but have to wonder at times...Club DCFC Limited, Stadia DCFC Limited and The Derby County FC Academy Limited all listed as being under Sevco 5112- which in turn is listed as being under Gellaw Newco 203 Limited...could the Club keep the Revenue but have the associated Costs disappear into the ether when Restated Accounts emerge for those seasons?

How about external debt, if those companies are struck off- might this disappear or at the very least be unrecoverable? Or say Rental obligations included within Gellaw Newco 203- hypothetically speaking but not the Club Accounts, for use of Pride Park...would these be impossible to gauge if these companies struck off?

Back onto the Accounting policies and transition thereof...

2015

"Held at Valuation based on DRC".

2016

"(Still) Held at Valuation based on DRC". This year was the first under FRS 102...

...As Note 26 itself shows/indicates."

They had the chance to change it then did they not?

2017

Indeed, still showing as under Cost but excluding Freehold Property- Pride Park is the Freehold Property in q. FRS 102 has already been adopted, yet in 2017 it still states "Freehold property is carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses." Plus the rest...they appear to have carried on the prior Accounting Policy into FRS 102 then tried a quick switch in 2018 in their hour of need.

My argument in a nutshell, is that Derby would like to be able to have their cake and eat it, very much so.

Edited August 18, 2021 by Mr Popodopolous

[Mr Popodopolous]

Interesting thread on it too.

 

[NcnsBcfc]

@Mr Popodopolous and @Hxj many thanks for your updates on this thread.

You are both it appears specialists, and I enjoy trying to understand both of your rationales of quite complex situations.

My issue with the whole issue of FFP is thus.....

There appears to be a block of clubs within the Championship who either seem from an ethical or moralistic point of view that FFP  is merely some form of an advisory concept; and the full ramifications of what it entails doesn't apply to their particular club (Derby, Birmingham, Reading, Sheff Wed; when they were in the league). Even Stoke have posted a £54m loss for last season alone.

Then there are others that stick to the rules, in particular Gibson at Boro; and of course our own Lansdown.

The aforementioned clubs feel that they can drag out the process for eternity, and that the EFL are toothless. My question in a way is either the EFL are strong enough/able enough to withstand these legal challenges or they're not.

Clubs are obviously gambling on getting promoted, and then being governed by a different board (PL). They then do a deal with the EFL in the background to pay off any fine that they would have incurred if they hadn't been promoted with the vast riches from the PL.

I see that in L1 & L2 they seem to have have done away with all salary caps this season, after the legal challenge. Is that still the case moving forward? A number of clubs (Of which Ipswich of course, and Wigan are good examples). Seem to be taking the opportunity to spend vast amounts of money on whole new squads. It's no surprise that a number of players that you thought would be playing in the Championship have gone to L1 clubs therefore.

From my own viewpoint. Clubs appear to be punished for trying to do the right thing, and stay within the £39m threshold; and with regard to us, this is of course having a huge impact on our club at the moment. Whilst others, flout the rules; and are willing to take the risk of charges coming years down the line.

If the FFP can't be enforced on a rigorous basis, within a set period of time. Then is it fit for purpose? The parachute payments afforded to relegated clubs, already make it a completely unfair playing field anyhow.

Do clubs have to sign a set of rules, that require them to adhere to FFP? I would think that as a Ltd company they of course have obligations around tax, NI; and VAT and these are governed by laws. What is the FFP governed by? A hypothetical set of rules that more conscience owners abide by, or something more concrete.

Apologies for the numerous questions. But the whole FFP debate, when the PL, & L1 & L2 seem to have abandoned any protocols seems completely futile.

 

[Mr Popodopolous]

It's a weird one @NcnsBcfc thanks btw, do try- it's interesting stuff.

All these cases are similar yet different and I'll try and offer a little on each.

Birmingham

2018 one, the EFL did move relatively quickly- the question is why. I make the timeline Accounts to 30th June 2018 ie Projected and a Soft Embargo to hold their position in place, before any Transfer Revenue to offset the Projections. Said Revenue did not arrive, but the updated or finalised Draft Accounts did maybe a week into July 2018- EFL Statement 2nd August 2018, possibly the final charges on 14th August 2018- they can move quickly and set the ball rolling. Still need to do better but this as a starting point is positive.

They got -9 points, a soft Embargo into EFL approval needed and an EFL Business Plan for 2018/19 and perhaps beyond.

Derby

Where to begin? The EFL seemed not to substantially challenge their Amortisation policy or Stadium Sale under Shaun Harvey- whereas under Rick Parry, doubtless nudged by Gibson and post Bury collapse, the EFL now seemed to take a different stance hence the charges in January 2020...Covid seems to have made an impact of course into speed of Hearings etc? There have been lengthy Embargoes and restrictions but the EFL are oddly slow off the mark at times. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021.

Reading

This is a big mystery to me. Their losses in 2018, 2019 and 2020- 2020 and 2021 are added and halved and Covid losses stripped as well as the usual deductions, one period so it's 2018, 2019 and then 2020 and 2021 combined average. Their P&S losses looked pretty terrible in 2018, 2019 and 2020 and this was despite sale of Stadium and sale again under new Parent presumably, sale of old Training Ground, sale of land around the Stadium and Aluko £3m loan fee counting as Revenue- they must have breached to 2021...indeed their Embargo conditions are due to this- it explicitly states due to Breach of Profit and Sustainability Regulations- therefore Charges must follow, whether it's an overspend, a breach in other ways or maybe more than one issue. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021. Rot started under Harvey's tenure at the EFL and a lack of early intervention probably made matters worse...

Sheffield Wednesday

Failed and was clear they had failed to Summer 2018- they planned to sell and leaseback Hillsborough but under tough embargo conditions as lack of Accounts etc- not quite tough enough though. EFL launch investigation in Summer 2019- after Harvey departs- charged in November 2019 under Parry. Between times bits came out, such as asked to explain why discrepancy on Land Registry, Company formation and date it was suitable for the Accounts. There is an argument that they shouldn't be allowed to include it at all for FFP and it disappears after this season anyway, all depends then on how the FFP between League 1 and the Championship should join up.

Stoke

Odd one. On the one hand there is a significant Impairment in 2019/20 Accounts attributed to Covid- about £30m in Player Registrations but on the other hand there clearly were from 2019/20 efforts at downsizing beginning...see the loans out and especially from Jan 2020 onwards- Covid came at a very good time for them however and I'd be surprised if the EFL aren't looking very closely at each and every player whose value was Impaired yet there could be some justification for their claims as I believe that in a non Covid world their plan was to loan and loan and loan...and then sell final year of contract, and given a number of their players are based or went to 2nd tier European Leagues I have a certain amount of sympathy for their argument in some ways. Selling Collins for £12m absolutely helped as well- of course if they've sold the Ground on top of this, then the dial can move badly.

I have to say though, as a collective their fans are up their own arse- a lot of them, Derby I mean- weird sense of entitlement, pretty loathsome lot like Mel Morris and was he even seriously unwell or was this a figment of imagination- you can tell he's one of their own. Vile club too.

Onto the differences between the divisions

EFL and Clubs

Wanted a hard salary cap ie £xm per year with certain exemptions and probably Promotion bonuses, like in Rugby ie £m per year and within a 24-25 man squad IIRC. PFA and some clubs e.g. Sunderland, Ipswich, Portsmouth IIRC objected though I'd be surprised if EFL and Clubs at some point didn't try and rework it- fell away in the bottom 2 divisions which knocked back any ambitions for it at our level.

The PL

Have the same P&S regs as we do, except the loss limits differ greatly- £105m per 3 years as opposed to £39m in a 3 year period, between the two divisions it's -£22m per Championship season. I have to wonder if they are as hot on Embargoes in a pre-emptive sense- Everton seem to be under some kind of restrictions but it's unclear, I also have had my q's about Aston Villa too but selling Grealish for £100m may have fixed it all.

e.g. Championship-PL-Championship, that's £13m + £35m + £13m=£61m.

Covid has complicated this, naturally

Now it'd be 2017/18 Championship. 2018/19 Championship, 2019/20 PL and 2020/21 Championship- say Norwich? £13m + £13m + £35m + £13m=£74m. £74m/4 x 3=£55.5m. 2 of each would give you £72m, 3 of PL and one of our level would give you £88.5m. 4 x Championship or 4 x PL would keep it at £39m or £105m respectively.

Is there some weird punishment for compliance ongoing?

We and others are definitely being punished in a sense for trying to do the right thing, see Blackburn as well- yes they were pushing it but selling Armstrong and a clutch of players released will have eased things but will they reinvest some? Middlesbrough got hit especially badly in 2019/20 by trying to stay in, arguably- Nottingham Forest seem to have released a reasonable number, loanees ended, regularly sell academy products but signed only a free and 2 youngish loanees. Swansea too maybe to an extent? Seem to have at least one big sale per season and wages were dropping more than say Stoke in 2019/20 and 2018/19. Both dropped in the same season.

Parachute Payments

Arguments for and against. Need to be given a better type of Accounting Treatment perhaps- as in loans or cash flow to help with solvency which immediately ups the FFP pressure on Clubs. Some clubs trade and are happy to do so, likely comply in Year 1 without Parachute Payments but some use them to gain a significant and immediate competitive advantage- Cardiff were one, Fulham definitely are one. Imagine that just an amount equal to the PL Solidarity Payment goes through P&L or counts towards FFP- and the rest is for Cash Flow etc- that retains solvency but gives a huge pressure to comply that's added...you're suddenly talking about a £35-40m hole in Year 1 which won't bankrupt the club but will give them serious FFP issues or will force them either to sell/loan out higher earners, ie better players or subsidise their wages elsewhere maybe, show more restraint in the market or perhaps a bit of each.

Edited August 18, 2021 by Mr Popodopolous

[NcnsBcfc]

11 minutes ago, Mr Popodopolous said:

It's a weird one @NcnsBcfc thanks btw, do try- it's interesting stuff.

All these cases are similar yet different and I'll try and offer a little on each.

Birmingham

2018 one, the EFL did move relatively quickly- the question is why. I make the timeline Accounts to 30th June 2018 ie Projected and a Soft Embargo to hold their position in place, before any Transfer Revenue to offset the Projections. Said Revenue did not arrive, but the updated or finalised Draft Accounts did maybe a week into July 2018- EFL Statement 2nd August 2018, possibly the final charges on 14th August 2018- they can move quickly and set the ball rolling. Still need to do better but this as a starting point is positive.

They got -9 points, a soft Embargo into EFL approval needed and an EFL Business Plan for 2018/19 and perhaps beyond.

Derby

Where to begin? The EFL seemed not to substantially challenge their Amortisation policy or Stadium Sale under Shaun Harvey- whereas under Rick Parry, doubtless nudged by Gibson and post Bury collapse, the EFL now seemed to take a different stance hence the charges in January 2020...Covid seems to have made an impact of course into speed of Hearings etc? There have been lengthy Embargoes and restrictions but the EFL are oddly slow off the mark at times. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021.

Reading

This is a big mystery to me. Their losses in 2018, 2019 and 2020- 2020 and 2021 are added and halved and Covid losses stripped as well as the usual deductions, one period so it's 2018, 2019 and then 2020 and 2021 combined average. Their P&S losses looked pretty terrible in 2018, 2019 and 2020 and this was despite sale of Stadium and sale again under new Parent presumably, sale of old Training Ground, sale of land around the Stadium and Aluko £3m loan fee counting as Revenue- they must have breached to 2021...indeed their Embargo conditions are due to this- it explicitly states due to Breach of Profit and Sustainability Regulations- therefore Charges must follow, whether it's an overspend, a breach in other ways or maybe more than one issue. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021. Rot started under Harvey's tenure at the EFL and a lack of early intervention probably made matters worse...

Sheffield Wednesday

Failed and was clear they had failed to Summer 2018- they planned to sell and leaseback Hillsborough but under tough embargo conditions as lack of Accounts etc- not quite tough enough though. EFL launch investigation in Summer 2019- after Harvey departs- charged in November 2019 under Parry. Between times bits came out, such as asked to explain why discrepancy on Land Registry, Company formation and date it was suitable for the Accounts. There is an argument that they shouldn't be allowed to include it at all for FFP and it disappears after this season anyway, all depends then on how the FFP between League 1 and the Championship should join up.

Stoke

Odd one. On the one hand there is a significant Impairment in 2019/20 Accounts attributed to Covid- about £30m in Player Registrations but on the other hand there clearly were from 2019/20 efforts at downsizing beginning...see the loans out and especially from Jan 2020 onwards- Covid came at a very good time for them however and I'd be surprised if the EFL aren't looking very closely at each and every player whose value was Impaired yet there could be some justification for their claims as I believe that in a non Covid world their plan was to loan and loan and loan...and then sell final year of contract, and given a number of their players are based or went to 2nd tier European Leagues I have a certain amount of sympathy for their argument in some ways. Selling Collins for £12m absolutely helped as well- of course if they've sold the Ground on top of this, then the dial can move badly.

I have to say though, as a collective their fans are up their own arse- a lot of them, Derby I mean- weird sense of entitlement, pretty loathsome lot like Mel Morris and was he even seriously unwell or was this a figment of imagination- you can tell he's one of their own. Vile club too.

Thank you.

As to my points around the sustainability of the whole FFP process though, given that the PL, L1 & L2 seem to have given up? What's your take on it?

Plus are the rules around FFP actually legally applicable? As per the points around HMRC,VAT,NI.

In my view, it boils down to probably a bullying culture by Derby behind the scenes. The EFL itself is probably not a big organisation in terms of finance. If the billy big QC's of this world (engaged by Derby). They throw a load of legal arguments at the EFL, who themselves have to engage expensive legal counsel.

It's all reminiscent of the Ashton Vale fiasco. Where Bristol City Council cocked up. The judicial review found against them (not City). But the Council couldn't afford to find the legal ruling; so folded like a pack of cards.

Either FFP is rigorously applied fairly across the division or it's not fir for purpose in my book. 

[Hxj]

The often forgotten fundamental problem with the EFL Championship is that it is a Member's Club that everyone wants to leave.  A quarter of the members will every year.

Governance of any such organisation will be problematic regardless of how it is done.  No system is perfect and all will appear to be biased in some way or another.  The EFL needs to take the vast majority of clubs with it on any changes.  With the ever changing membership and differing priorities that will never be easy.

As regards FFP specifically, I know that there are a range of views out there.  My view is that a Member's club which last season takes action which results in one club being relegated (Sheffield Wednesday) and another having a seriously close relationship with potential relegation (Derby County) and this season has three clubs Transfer Embargoes of one sort or another cannot be doing a bad job.

The FFP rules are signed up to and agreed as are the sanctions and information requirements as part of becoming or remaining a member of the EFL.

The level of resistance from various clubs as been problematic, as has the EFL's Board inconsistent 'prosecution' of the offences, however the previous powers that be were to condoning of bad behaviour.  That said I would rather look forwards than backwards.

I would say that there are two recently good signs that matters are improving.  Firstly the published Embargo List, and secondly the announcement that all clubs were missed the filing deadline for their statutory accounts last season were on a soft embargo.  I appreciate that it had no real impact, but it was a sign if intent.  It also made it much easier to put clubs on stricter embargos if the failure continued, which did happen. 

As to improvements I would make it compulsory for each club (or relevant group to have a 31 May accounting date, submit their audited financial statements and final FFP statements by mid June, with any disciplinary action to be taken by the end of June.  Failure to comply would mean automatic expulsion.  Football clubs are not inherently complex as regards their accounts, so the deadline would be easily achievable.

[Red_Alligator]

54 minutes ago, Mr Popodopolous said:

It's a weird one @NcnsBcfc thanks btw, do try- it's interesting stuff.

All these cases are similar yet different and I'll try and offer a little on each.

Birmingham

2018 one, the EFL did move relatively quickly- the question is why. I make the timeline Accounts to 30th June 2018 ie Projected and a Soft Embargo to hold their position in place, before any Transfer Revenue to offset the Projections. Said Revenue did not arrive, but the updated or finalised Draft Accounts did maybe a week into July 2018- EFL Statement 2nd August 2018, possibly the final charges on 14th August 2018- they can move quickly and set the ball rolling. Still need to do better but this as a starting point is positive.

They got -9 points, a soft Embargo into EFL approval needed and an EFL Business Plan for 2018/19 and perhaps beyond.

Derby

Where to begin? The EFL seemed not to substantially challenge their Amortisation policy or Stadium Sale under Shaun Harvey- whereas under Rick Parry, doubtless nudged by Gibson and post Bury collapse, the EFL now seemed to take a different stance hence the charges in January 2020...Covid seems to have made an impact of course into speed of Hearings etc? There have been lengthy Embargoes and restrictions but the EFL are oddly slow off the mark at times. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021.

Reading

This is a big mystery to me. Their losses in 2018, 2019 and 2020- 2020 and 2021 are added and halved and Covid losses stripped as well as the usual deductions, one period so it's 2018, 2019 and then 2020 and 2021 combined average. Their P&S losses looked pretty terrible in 2018, 2019 and 2020 and this was despite sale of Stadium and sale again under new Parent presumably, sale of old Training Ground, sale of land around the Stadium and Aluko £3m loan fee counting as Revenue- they must have breached to 2021...indeed their Embargo conditions are due to this- it explicitly states due to Breach of Profit and Sustainability Regulations- therefore Charges must follow, whether it's an overspend, a breach in other ways or maybe more than one issue. Would have failed had the Stadium Profit rule not weirdly changed in 2016 and only been adjusted out again in 2021. Rot started under Harvey's tenure at the EFL and a lack of early intervention probably made matters worse...

Sheffield Wednesday

Failed and was clear they had failed to Summer 2018- they planned to sell and leaseback Hillsborough but under tough embargo conditions as lack of Accounts etc- not quite tough enough though. EFL launch investigation in Summer 2019- after Harvey departs- charged in November 2019 under Parry. Between times bits came out, such as asked to explain why discrepancy on Land Registry, Company formation and date it was suitable for the Accounts. There is an argument that they shouldn't be allowed to include it at all for FFP and it disappears after this season anyway, all depends then on how the FFP between League 1 and the Championship should join up.

Stoke

Odd one. On the one hand there is a significant Impairment in 2019/20 Accounts attributed to Covid- about £30m in Player Registrations but on the other hand there clearly were from 2019/20 efforts at downsizing beginning...see the loans out and especially from Jan 2020 onwards- Covid came at a very good time for them however and I'd be surprised if the EFL aren't looking very closely at each and every player whose value was Impaired yet there could be some justification for their claims as I believe that in a non Covid world their plan was to loan and loan and loan...and then sell final year of contract, and given a number of their players are based or went to 2nd tier European Leagues I have a certain amount of sympathy for their argument in some ways. Selling Collins for £12m absolutely helped as well- of course if they've sold the Ground on top of this, then the dial can move badly.

I have to say though, as a collective their fans are up their own arse- a lot of them, Derby I mean- weird sense of entitlement, pretty loathsome lot like Mel Morris and was he even seriously unwell or was this a figment of imagination- you can tell he's one of their own. Vile club too.

Onto the differences between the divisions

EFL and Clubs

Wanted a hard salary cap ie £xm per year with certain exemptions and probably Promotion bonuses, like in Rugby ie £m per year and within a 24-25 man squad IIRC. PFA and some clubs e.g. Sunderland, Ipswich, Portsmouth IIRC objected though I'd be surprised if EFL and Clubs at some point didn't try and rework it- fell away in the bottom 2 divisions which knocked back any ambitions for it at our level.

The PL

Have the same P&S regs as we do, except the loss limits differ greatly- £105m per 3 years as opposed to £39m in a 3 year period, between the two divisions it's -£22m per Championship season. I have to wonder if they are as hot on Embargoes in a pre-emptive sense- Everton seem to be under some kind of restrictions but it's unclear, I also have had my q's about Aston Villa too but selling Grealish for £100m may have fixed it all.

e.g. Championship-PL-Championship, that's £13m + £35m + £13m=£61m.

Covid has complicated this, naturally

Now it'd be 2017/18 Championship. 2018/19 Championship, 2019/20 PL and 2020/21 Championship- say Norwich? £13m + £13m + £35m + £13m=£74m. £74m/4 x 3=£55.5m. 2 of each would give you £72m, 3 of PL and one of our level would give you £88.5m. 4 x Championship or 4 x PL would keep it at £39m or £105m respectively.

Is there some weird punishment for compliance ongoing?

We and others are definitely being punished in a sense for trying to do the right thing, see Blackburn as well- yes they were pushing it but selling Armstrong and a clutch of players released will have eased things but will they reinvest some? Middlesbrough got hit especially badly in 2019/20 by trying to stay in, arguably- Nottingham Forest seem to have released a reasonable number, loanees ended, regularly sell academy products but signed only a free and 2 youngish loanees. Swansea too maybe to an extent? Seem to have at least one big sale per season and wages were dropping more than say Stoke in 2019/20 and 2018/19. Both dropped in the same season.

Parachute Payments

Arguments for and against. Need to be given a better type of Accounting Treatment perhaps- as in loans or cash flow to help with solvency which immediately ups the FFP pressure on Clubs. Some clubs trade and are happy to do so, likely comply in Year 1 without Parachute Payments but some use them to gain a significant and immediate competitive advantage- Cardiff were one, Fulham definitely are one. Imagine that just an amount equal to the PL Solidarity Payment goes through P&L or counts towards FFP- and the rest is for Cash Flow etc- that retains solvency but gives a huge pressure to comply that's added...you're suddenly talking about a £35-40m hole in Year 1 which won't bankrupt the club but will give them serious FFP issues or will force them either to sell/loan out higher earners, ie better players or subsidise their wages elsewhere maybe, show more restraint in the market or perhaps a bit of each.

Thanks Pops, this helps a lot if, like me, you're struggling to get a clear overview of the situation. I wonder if an increasing number of Championship clubs will take a gamble with the EFL?

[chinapig]

31 minutes ago, Hxj said:

The often forgotten fundamental problem with the EFL Championship is that it is a Member's Club that everyone wants to leave.  A quarter of the members will every year.

Governance of any such organisation will be problematic regardless of how it is done.  No system is perfect and all will appear to be biased in some way or another.  The EFL needs to take the vast majority of clubs with it on any changes.  With the ever changing membership and differing priorities that will never be easy

Which is one reason I reckon why Tracey Crouch wants an independent regulator.

She has said publicly that the current authorities aren't prepared to take robust action so the authority needs to lie elsewhere.

Let's face it self regulation is rarely successful and certainly isn't likely in the case of what amounts to a cosy rich boy's club.

Note that Derby have now been given an extension to the deadline for presenting their revised accounts for instance.

[downendcity]

2 hours ago, NcnsBcfc said:

@Mr Popodopolous and @Hxj many thanks for your updates on this thread.

You are both it appears specialists, and I enjoy trying to understand both of your rationales of quite complex situations.

My issue with the whole issue of FFP is thus.....

There appears to be a block of clubs within the Championship who either seem from an ethical or moralistic point of view that FFP  is merely some form of an advisory concept; and the full ramifications of what it entails doesn't apply to their particular club (Derby, Birmingham, Reading, Sheff Wed; when they were in the league). Even Stoke have posted a £54m loss for last season alone.

Then there are others that stick to the rules, in particular Gibson at Boro; and of course our own Lansdown.

The aforementioned clubs feel that they can drag out the process for eternity, and that the EFL are toothless. My question in a way is either the EFL are strong enough/able enough to withstand these legal challenges or they're not.

Clubs are obviously gambling on getting promoted, and then being governed by a different board (PL). They then do a deal with the EFL in the background to pay off any fine that they would have incurred if they hadn't been promoted with the vast riches from the PL.

I see that in L1 & L2 they seem to have have done away with all salary caps this season, after the legal challenge. Is that still the case moving forward? A number of clubs (Of which Ipswich of course, and Wigan are good examples). Seem to be taking the opportunity to spend vast amounts of money on whole new squads. It's no surprise that a number of players that you thought would be playing in the Championship have gone to L1 clubs therefore.

From my own viewpoint. Clubs appear to be punished for trying to do the right thing, and stay within the £39m threshold; and with regard to us, this is of course having a huge impact on our club at the moment. Whilst others, flout the rules; and are willing to take the risk of charges coming years down the line.

If the FFP can't be enforced on a rigorous basis, within a set period of time. Then is it fit for purpose? The parachute payments afforded to relegated clubs, already make it a completely unfair playing field anyhow.

Do clubs have to sign a set of rules, that require them to adhere to FFP? I would think that as a Ltd company they of course have obligations around tax, NI; and VAT and these are governed by laws. What is the FFP governed by? A hypothetical set of rules that more conscience owners abide by, or something more concrete.

Apologies for the numerous questions. But the whole FFP debate, when the PL, & L1 & L2 seem to have abandoned any protocols seems completely futile.

 

My understanding of ffp is relatively basic and like you I continue to be both baffled and amazed at the amount of complex information and analysis the likes of @Mr Popodopolous@Hxj and @Davefevs produce.

With the benefit of hindsight I have a number of thoughts about ffp.

The concept was well intentioned, in trying to protect clubs from themselves in the quest to gain promotion to the premier league and avoid the Portsmouth situation, when an owner was no longer willing  and/or able to support the club’s debts.

However, it is now clear that the set up was fundamentally flawed, for a number of reasons:

1. Daft as it sounds, I think there was an element in the EFL's thinking that ,when the ffp rules were introduced, and with effectively a 3 year lead time until the first “day of reckoning” ,  all member clubs would use this time to make the necessary adjustments to their finances, in order to ensure compliance. Following on from this the EFL seems to have had the (now clearly naive) belief that all clubs would follow and adhere to the rules.

2. The people drafting the rules were just not good enough, as evidenced by failing to include a rule that prevented fixed assets ( stadia) being “sold” to other of the club owners companies as a means of adjusting profits. That rule did exist in the financial rules that preceded ffp. I know a few have questioned Harvey’s involvement and if there was any ulterior motive behind this.

3. The rules provided that in the third year projected accounts would be provided ( by the end of March I think?) so that full assessment could be made before the end of the season. This means that any club breaching ffp limits could have penalties applied during that season and accordingly if, say , a club had flouted ffp and secured promotion, then a points deduction could be immediately applied to potential stop that promotion.

4. Most crucially, in their actions ( or more accurately inaction) the EFL seem to have completely failed to address the fact that they have completely failed in their responsibility to all the other championship clubs ( including ours) that took appropriate action, at the right time to ensure compliance, even if such actions compromised their on field competitiveness - selling players to reduce wage bills and bring in transfer fees to balance the books. However, since then it seems that the date for submission of accounts has become a moveable feast, with Derby and others appearing to stretch the point further than Mrs Downend’s knicker elastic !

4. When , surprisingly, clubs have breached ffp we have then seen the tail wagging the dog, with the EFL appearing to be continually on the back foot under the threat of legal action from clubs and I suspect the majority of fans feeling that clubs have been “getting away with it”.

Many will argue “why shouldn't owners be allowed to spend what they want/can”. Derby’s situation tends to prove why, as when the sale of Pride Park broke I read many comments by Derby fans along the lines of “Mel Morris is a lifelong Derby fan and would never let the club go to pot”. We’ve seen the same man struggling to sell the club and players not getting paid during that period, which only goes to prove that things can change and why the concept of ffp is the right thing if we want clubs protected for fans and against some of th owners out there.

 

 

 

 

[Hxj]

1 hour ago, chinapig said:

Which is one reason I reckon why Tracey Crouch wants an independent regulator.

She has said publicly that the current authorities aren't prepared to take robust action so the authority needs to lie elsewhere.

Let's face it self regulation is rarely successful and certainly isn't likely in the case of what amounts to a cosy rich boy's club.

Note that Derby have now been given an extension to the deadline for presenting their revised accounts for instance.

Well enforced government regulation will result in the FA being thrown out of UEFA and FIFA, so that would work well!  

Derby is a red herring.  They are in a Hard Embargo, so any delay in submitting the accounts will simply hamper their recruitment policy further.

[chinapig]

Just now, Hxj said:

Well enforced government regulation will result in the FA being thrown out of UEFA and FIFA, so that would work well!  

Derby is a red herring.  They are in a Hard Embargo, so any delay in submitting the accounts will simply hamper their recruitment policy further.

An independent regulator is not the same as government regulation. Nobody is suggesting the EFL be accountable to DCMS.

The FA should of course have been the regulator but it sold out to the Premier League so lost all credibility and authority.

Not that I expect an independent regulator to happen. The minute the PL objects the government would back down.

So it will be left to the jolly decent chaps who control the game to carry on doing a splendid job of protecting the financial security of clubs.

As to Derby, what is the point in acting firm in setting a deadline then saying in effect "ok chaps we didn't really mean it, carry on"? It just adds to the perception that the EFL does not stand firm.

[Hxj]

1 hour ago, downendcity said:

The concept was well intentioned, in trying to protect clubs from themselves in the quest to gain promotion to the premier league and avoid the Portsmouth situation, when an owner was no longer willing  and/or able to support the club’s debts.

Agreed.

 

1 hour ago, downendcity said:

However, it is now clear that the set up was fundamentally flawed, for a number of reasons:

Agreed.

1 hour ago, downendcity said:

1. Daft as it sounds, I think there was an element in the EFL's thinking that ,when the ffp rules were introduced, and with effectively a 3 year lead time until the first “day of reckoning” ,  all member clubs would use this time to make the necessary adjustments to their finances, in order to ensure compliance. Following on from this the EFL seems to have had the (now clearly naive) belief that all clubs would follow and adhere to the rules.

Agreed.

1 hour ago, downendcity said:

2. The people drafting the rules were just not good enough, as evidenced by failing to include a rule that prevented fixed assets ( stadia) being “sold” to other of the club owners companies as a means of adjusting profits. That rule did exist in the financial rules that preceded ffp. I know a few have questioned Harvey’s involvement and if there was any ulterior motive behind this.

I would prefer - "Didn't realise the extent to which clubs would go to bend the rules" - clearly none of them had kids!

1 hour ago, downendcity said:

The rules provided that in the third year projected accounts would be provided ( by the end of March I think?) so that full assessment could be made before the end of the season. This means that any club breaching ffp limits could have penalties applied during that season and accordingly if, say , a club had flouted ffp and secured promotion, then a points deduction could be immediately applied to potential stop that promotion.

The problem is that until the end of the season, you can't tell what the FFP position actually is, so this fails on the 'Theoretically good, practically impossible' test.

 

1 hour ago, downendcity said:

4. Most crucially, in their actions ( or more accurately inaction) the EFL seem to have completely failed to address the fact that they have completely failed in their responsibility to all the other championship clubs ( including ours) that took appropriate action, at the right time to ensure compliance, even if such actions compromised their on field competitiveness - selling players to reduce wage bills and bring in transfer fees to balance the books. However, since then it seems that the date for submission of accounts has become a moveable feast, with Derby and others appearing to stretch the point further than Mrs Downend’s knicker elastic !

Two points here.  Firstly the new crowd are better than the old crowd.  Secondly the EFL did tighten up significantly on accounts submission with the soft embargos, moving to hard embargos for such failures.  The extended failure for Derby simply harms them, not anyone else.

 

1 hour ago, downendcity said:

4. When , surprisingly, clubs have breached ffp we have then seen the tail wagging the dog, with the EFL appearing to be continually on the back foot under the threat of legal action from clubs and I suspect the majority of fans feeling that clubs have been “getting away with it”.

This is a commonly quoted problem, but it does not really exist.  No club can take legal action through the courts against the EFL or another club.  What they can do is go to arbitration on a relevant dispute.

1 hour ago, downendcity said:

Many will argue “why shouldn't owners be allowed to spend what they want/can”.

That is a perfectly valid position and regulatory system to adopt.  

 

1 hour ago, downendcity said:

the concept of ffp is the right thing if we want clubs protected for fans and against some of th owners out there.

Agreed, and I think that, contrary to an awful lot on here that Steve Lansdown is an excellent owner.

[Hxj]

6 minutes ago, chinapig said:

An independent regulator is not the same as government regulation

It's a fine point of distinction, but if a regulator is truly independent then then their rules have to be set by a truly independent body with the power to make those rules enforceable.  Other than government who is there?

 

8 minutes ago, chinapig said:

As to Derby, what is the point in acting firm in setting a deadline then saying in effect "ok chaps we didn't really mean it, carry on"?

I'd prefer "OK Derby you carry on not submitting your accounts and we will carry on with the Hard Embargo until you do." The only party suffering as a result of Derby's actions is Derby.

[chinapig]

Just now, Hxj said:

It's a fine point of distinction, but if a regulator is truly independent then then their rules have to be set by a truly independent body with the power to make those rules enforceable.  Other than government who is there?

 

I'd prefer "OK Derby you carry on not submitting your accounts and we will carry on with the Hard Embargo until you do." The only party suffering as a result of Derby's actions is Derby.

Fair point. I guess the requirement has to be for the EFL Board to be made up of non-executive Directors as opposed to club representatives. That looks like good corporate governance to me.

Though they need to be given sufficient qualified staff to carry out their functions.

As to Derby, short term pain for sure but there may be long term gain if it allows time for a deal to be done over the revised accounts.

Forgive my cynicism but there are a lot of cynical people controlling the game. We could yet find ourselves in a situation like Man City, who have been under investigation for 3 years and counting.

Justice delayed is justice denied.

[Hxj]

14 minutes ago, chinapig said:

Forgive my cynicism

Never, cynicism is healthy!

15 minutes ago, chinapig said:

Fair point. I guess the requirement has to be for the EFL Board to be made up of non-executive Directors as opposed to club representatives. That looks like good corporate governance to me.

As far as I am aware the EFL Board consists of 10 members, the EFL Chair and CEO, three independent members, three from the Championship, 2 from League 1 and 1 from League 2, that seems fairly balanced to me, and certain;y ahead of most big business.

17 minutes ago, chinapig said:

Justice delayed is justice denied.

Agreed.

[Selred]

How are Derby 12th? Phenomenal really.

[alexukhc]

Can’t deny their wage bill must be huge

[Davefevs]

2 hours ago, Selred said:

How are Derby 12th? Phenomenal really.

They still have some good players, enough to field a competitive (not great) eleven, so will get the odd result….but as soon as injuries and fatigue hit they are gonna suffer.  There is no depth.

[Mr Popodopolous]

2 hours ago, alexukhc said:

Can’t deny their wage bill must be huge

Was maybe....some estimates on their forum have claimed it's £1.2m per month- and this is last season! Sky suggested that was what Mel was putting in one of the months last season.

Now there could be a lot of variables- is that just for players or for the entire club and club staff, is that before or after PAYE etc, is this £1.2m per month literally per month or divided up into per week x 52 and then divided by 4 or maybe other way round...ie £1.2m x 12 or £1.2m x 13. 

Edited August 18, 2021 by Mr Popodopolous

[Mr Popodopolous]

4 hours ago, Hxj said:

It's a fine point of distinction, but if a regulator is truly independent then then their rules have to be set by a truly independent body with the power to make those rules enforceable.  Other than government who is there?

 

I'd prefer "OK Derby you carry on not submitting your accounts and we will carry on with the Hard Embargo until you do." The only party suffering as a result of Derby's actions is Derby.

Should they have been allowed to sign Jagielka and Baldock until Jan while this was outstanding? Or just told to pick one of them...

Edited August 18, 2021 by Mr Popodopolous

[Hxj]

As I said before I think that that is fair.

The FA told them to play the FA Cup match, whilst the squad had players isolating.  They therefore fielding a team with lots of non-first team players in it.  In my view to count those players towards the permitted squad level is not fair in the circumstances.  It would be different if they had chosen to include a few such players in the starting 11 for the experience.

[Hxj]

6 hours ago, Mr Popodopolous said:

Was maybe....some estimates on their forum have claimed it's £1.2m per month- and this is last season! Sky suggested that was what Mel was putting in one of the months last season.

My guess is that was what Mel was putting in to fund the amount paid to players.  Taking into account PAYE and NIC that would be a gross wages bill of around £27 million a year.  It also explains the amount owing to HMRC.

[Mr Popodopolous]

4 hours ago, Hxj said:

My guess is that was what Mel was putting in to fund the amount paid to players.  Taking into account PAYE and NIC that would be a gross wages bill of around £27 million a year.  It also explains the amount owing to HMRC.

Thanks, that sounds quite plausible. I was struggling to see how they would have cut the entire consolidated wage bill inclusive of PAYE etc from £46m in 2017/18 to that in 2020/21, it the £1.2m per month bit. Yes lots left but Cocu and his staff won't have been cheap, Clarke loan, Bielik and Rooney wages likewise. Then there's all the non football costs included in Sevco 5112 but not Club accounts but furlough knocks it down ...

...Okay don't necessarily disagree with your other point but Jagielka and Baldock feels one too many- some reports suggested the latter got permission to sign due to Kazim-Richards long term injury? To which I believe, the answer to them should be, suck it up- if you have to play Stretton, a midfielder or similar up front then tough.

Nixon has posted at times about a lack of guarantees about certain issues by Mel relating to football debts as they fall due etc, why should they be allowed to add two players in those circs? I assume he was referencing Keogh plus Cocu and staff.

[Mr Popodopolous]

As to this potential winding up through lack of Accounts for a variety of companies, putting my conspiracy theories aside:

1) Club DCFC Limited

2) Stadia DCFC Limited

3) The Derby County FC Academy Limited

4) Sevco 5112 Limited

What is your take on this @Hxj (apologies if already covered Wednesday as thread has moved along a bit).

Could it be a ruse to hide costs contained within Accounts for 2019, 2020? ie Revenue flows to club but costs to Sevco 5112, then if these companies disappear so do some of the Costs/wages! How can the EFL take consolidated results from a company that doesn't exist anymore.

The ruse idea comes from not submitting Accounts or Confirmation Statements and if you do it for long enough the Company(ies) might be struck off. Simplistic by me I know...

What about debt? Secured, HMRC, tax or otherwise? If costs are contained within these companies, especially HMRC or tax, then does that vanish if the company does..

If the debt is reduced drastically as it disappears with the companies, that reduces it significantly for a new owner.

Could be talking rubbish here but these theories have at least made me wonder a little.

[downendcity]

6 minutes ago, Mr Popodopolous said:

Thanks, that sounds quite plausible. I was struggling to see how they would have cut the entire consolidated wage bill inclusive of PAYE etc from £46m in 2017/18 to that in 2020/21, it the £1.2m per month bit. Yes lots left but Cocu and his staff won't have been cheap, Clarke loan, Bielik and Rooney wages likewise. Then there's all the non football costs included in Sevco 5112 but not Club accounts but furlough knocks it down ...

...Okay don't necessarily disagree with your other point but Jagielka and Baldock feels one too many- some reports suggested the latter got permission to sign due to Kazim-Richards long term injury? To which I believe, the answer to them should be, suck it up- if you have to play Stretton, a midfielder or similar up front then tough.

Nixon has posted at times about a lack of guarantees about certain issues by Mel relating to football debts as they fall due etc, why should they be allowed to add two players in those circs? I assume he was referencing Keogh plus Cocu and staff.

Isn’t there an element of you reap what you sow with Derby’s current situation.

They failed to address/ignored the implementation of ffp, as did most other clubs as they continued their push for promotion to the premier league and the financial rewards it offered. In one interview following the contentious “sale” of Pride Park, Mel Morris said that to address their finances, as ffp would have required, would have made them uncompetitive on the pitch, but that’s what happened to most, if not all the clubs that did make the necessary financial changes.

The irony is that had they taken the ffp hit by not selling Pride Park, they would have suffered a points deduction that would have meant they could not be promoted, which they managed all by themselves anyway, both that season and subsequently. 

It now appears that the consequence of their actions back then is almost more severe due to what appear to be real financial problems, Morris not being able to find a buyer for the club, and the embargo that is causing them real on field issues.

Had they not tried to circumvent ffp punishment back at the time of the first assessment, the worst case scenario from a points deduction would have been failing to gain promotion. As it is, the consequence of their actions is that they now face the real possibility of relgation.

[Mr Popodopolous]

2 minutes ago, downendcity said:

Isn’t there an element of you reap what you sow with Derby’s current situation.

They failed to address/ignored the implementation of ffp, as did most other clubs as they continued their push for promotion to the premier league and the financial rewards it offered. In one interview following the contentious “sale” of Pride Park, Mel Morris said that to address their finances, as ffp would have required, would have made them uncompetitive on the pitch, but that’s what happened to most, if not all the clubs that did make the necessary financial changes.

The irony is that had they taken the ffp hit by not selling Pride Park, they would have suffered a points deduction that would have meant they could not be promoted, which they managed all by themselves anyway, both that season and subsequently. 

It now appears that the consequence of their actions back then is almost more severe due to what appear to be real financial problems, Morris not being able to find a buyer for the club, and the embargo that is causing them real on field issues.

Had they not tried to circumvent ffp punishment back at the time of the first assessment, the worst case scenario from a points deduction would have been failing to gain promotion. As it is, the consequence of their actions is that they now face the real possibility of relgation.

Oh absolutely, it's richly deserved what's going on there.

That is it, try to circumvent in order to get promotion, worst case if nipped in bud sooner would've been a 2018/19 deduction so missing the playoffs then could have slowly rebuilt like Birmingham, and ironically QPR who have moved in the right direction off the pitch in recent times.

Mix of overspending and covid has put them in a position.

Remember too that a decent minority at best were crowing in April 2019, then the Rooney coup. Oh yes adding Clarke loan and Billie in Summer 2019- EFL on strings all that irksome stuff.

Don't even know how much they tried to cut back after the Stadium sale in reality.

There are few clubs and arguably decent sections of the fanbase too more deserving of their current travails at our level.

[Mr Popodopolous]

Just to add a little bit on the Projected Accounts bit, with hindsight admittedly.

I can see how it could work. It all depends on efficiently joining up past, present and future financials.

Past

Previous 3 years, assess pass or fail (albeit as we've seen with legacy issues can take somewhat longer for charges to arise)!

Where the Present and Future kick in.

Present

*You have lost X in T-1 and T-2. Therefore you can lose Y in T. Hence the Projections.*

*=Subject to aggregate loss in the last two falling between £15-39m.

Future

As we know Clubs are to submit Future financial information if losses fall between these two categories.

The aggregation of T-2 and T-1 going into T. Therefore a club can only lose X and if the financial info shows an upcoming breach they have to rectify by March, or show proof ie an agreement to sell player X to a Club struck now but taking place in Summer that it will be solved by end of May/June/July. Additionally a pre-emptive Soft Embargo or Hard one remains in play to not make matters worse.

Failure to be in line by March=Deduction based on the sliding scale. I hope they're moving towards this now and their win on Appeal v Birmingham for the Business Plan might mean that Absolute Obligations to make good the deficit are in play.

Edited August 19, 2021 by Mr Popodopolous

[Hxj]

3 hours ago, Mr Popodopolous said:

As to this potential winding up through lack of Accounts for a variety of companies, putting my conspiracy theories aside:

1) Club DCFC Limited

2) Stadia DCFC Limited

3) The Derby County FC Academy Limited

4) Sevco 5112 Limited

What is your take on this @Hxj (apologies if already covered Wednesday as thread has moved along a bit).

Could it be a ruse to hide costs contained within Accounts for 2019, 2020? ie Revenue flows to club but costs to Sevco 5112, then if these companies disappear so do some of the Costs/wages! How can the EFL take consolidated results from a company that doesn't exist anymore.

The ruse idea comes from not submitting Accounts or Confirmation Statements and if you do it for long enough the Company(ies) might be struck off. Simplistic by me I know...

What about debt? Secured, HMRC, tax or otherwise? If costs are contained within these companies, especially HMRC or tax, then does that vanish if the company does..

If the debt is reduced drastically as it disappears with the companies, that reduces it significantly for a new owner.

Could be talking rubbish here but these theories have at least made me wonder a little.

Compulsory Strike Off is an administrative action taken by Companies House only.  If it happens it (which it clearly won't) all those companies would be dissolved and cease to exist, all assets held would vest in the Crown, including the shares held in any subsidiaries.  Company debts would not exist after the company was dissolved. 

Bona vacantia dissolved companies (BVC1) - GOV.UK (www.gov.uk)

Edited August 19, 2021 by Hxj

[Mr Popodopolous]

1 hour ago, Hxj said:

Compulsory Strike Off is an administrative action taken by Companies House only.  If it happens it (which it clearly won't) all those companies would be dissolved and cease to exist, all assets held would vest in the Crown, including the shares held in any subsidiaries.  Company debts would not exist after the company was dissolved. 

Bona vacantia dissolved companies (BVC1) - GOV.UK (www.gov.uk)

I will have a read of that and try to understand it- thank you!

Hmm so in theory, just don't submit what you have to submit and debts/costs can vanish or reduce...Surely the Football League would have something to say if it meant that they no longer could prove the 2019 Consolidated Accounts...surely Dell via MSD would have a view if he thought his not small loans were at risk! There must be many interested counterparties here?

In this scenario however, do Derby just wriggle off the hook? The second part of my theory would be that they release Club Accounts, Gellaw Newco 203 Accounts- retain the historic revenue streams from the component parts up to 2020 and maybe 2021, but debts relevant to these Accounts and Costs in these and Sevco 5112 but not Club Accounts just disappear.

Quote

Set up a company...wrack up debts, through borrowing- don't bother to submit and pay smallish fines- ooh smallish fines, CH eventually dissolve your company- cash overseas or similar, haha- yes you can claim assets but there is little asset to claim!

Clearly that post, and particularly clear that I'm messing about a bit with the 'Set up a company' paragraph- but the loophole does seem much too good to be true. I must be fundamentally misunderstanding it here.

Edited August 19, 2021 by Mr Popodopolous

[Hxj]

35 minutes ago, Mr Popodopolous said:

I must be fundamentally misunderstanding it here.

Yep   But not far off.

Limited liability means that a shareholder can walk away from an insolvent company at no cost, subject to any guarantees they have given, and a director can do too, subject to any provisions of the Insolvency Act.  But if a company is dissolved the unsecured debts disappear, a charge holder can sell any land charged to recover the charged amount and any surplus belongs to the Crown. 

In this case Sevco 5112 owns the football club, not the stadium.  So if that company was dissolved then the club would be owned by the Crown, not by Morris, and the Crown could sell to whom ever they wanted and pocket the money.

[Mr Popodopolous]

33 minutes ago, Hxj said:

Yep   But not far off.

Limited liability means that a shareholder can walk away from an insolvent company at no cost, subject to any guarantees they have given, and a director can do too, subject to any provisions of the Insolvency Act.  But if a company is dissolved the unsecured debts disappear, a charge holder can sell any land charged to recover the charged amount and any surplus belongs to the Crown. 

In this case Sevco 5112 owns the football club, not the stadium.  So if that company was dissolved then the club would be owned by the Crown, not by Morris, and the Crown could sell to whom ever they wanted and pocket the money.

Ha thought so!

Yep, it does- so unsecured debts- ie small creditors etc vanish, £20m HMRC bill also vanishes? Football Creditors Rule...that's a condition of EFL membership I believe. Nice little bonus for the Crown if it comes to that.

Erik Alonso come on down! Do have to wonder if this is yet another attempt to swing FFP for 2019 and beyond in their favour again- "Can't charge us with overspending if you don't have the Consolidated data as we have deliberately let Sevco 5112 and the other 3 relevant companies be struck off"- kinda thing? Or "All you have to go on is the Club/Gellaw Newco 203 (as prepared by us) Revenue v Costs...Sevco 5112, Stadia and Club DCFC and the Academy are no more so that data has disappeared".

Rent reference

43/123

https://www.efl.com/siteassets/image/202021/general-news-images/efl-v-derby-county--decision.pdf

"Can't press for the full Rent if the companies- in this case Club DCFC and Stadia DCFC, have their Rental obligations hidden within those and Sevco 5112 and these 3 no longer exist- £1.1m per year it is".

They truly are slimy from Mel down as a Club though, reading their wording and their persecution complex. ******* pathetic in that Hearing, claiming the EFL had it in for him...a minority of their fans just and they can't help it clearly, and clearly there are many sensible and decent Derby fans out there too, I assume- just a mix of entitlement and outrage that the EFL would dare to question the mighty Mel I imagine. Mel Morris is a pompous arse and that's being kind. A sizeable minority- but minority is less than majority, are I dunno words can't describe.

Edited August 19, 2021 by Mr Popodopolous

[downendcity]

16 minutes ago, Hxj said:

Yep   But not far off.

Limited liability means that a shareholder can walk away from an insolvent company at no cost, subject to any guarantees they have given, and a director can do too, subject to any provisions of the Insolvency Act.  But if a company is dissolved the unsecured debts disappear, a charge holder can sell any land charged to recover the charged amount and any surplus belongs to the Crown. 

In this case Sevco 5112 owns the football club, not the stadium.  So if that company was dissolved then the club would be owned by the Crown, not by Morris, and the Crown could sell to whom ever they wanted and pocket the money.

Im guessing I'm right in thinking that your wealth of knowledge didn't come from a skim read of "Accounting for Dummies"?