Derby County

[PHILINFRANCE]

1 hour ago, REDOXO said:

But in view of where we are I’m not sure I would trust Morris to actually pay money up front. 

Watch this space as I feel it’s all a bit convenient to lower the temperature for tomorrow!

I was thinking along the same lines.

There has been a lot of concern that tomorrow's match might turn violent, and it is extremely convenient for all involved that a last minute 'solution' has been found.

It remains only for Quantuma to draw up the necessary agreement, and then all is Hunky Dory: in the meantime, the fans, both Home and Away, can attend in good spirits. Problem solved.

It is now Friday evening, however, and, to my knowledge, no formal announcement has yet been made.

The cynic in me wonders whether an unforeseen 'problem' with the proposed agreement might be discovered on Monday morning. 

[Port Said Red]

It appears that someone has been busy editing Wikipedia.......

Morris was appointed Commander of the Order of the British Empire (CBE) in the 2017 Birthday Honours for services to business and charitable services.[3] Best mates with Steve Gibson chairman of Middlesbrough FC and fierce supporter of the EFL.

[Derby_Ram]

Fair warning that this is typical of many local newspaper sites - full of ads and ridiculous scrolling required - but Quantuma have broken cover in a joint interview with local radio and newspaper

https://www.derbytelegraph.co.uk/sport/football/football-news/derby-county-middlesbrough-efl-gibson-6646390

In summary they can't detail nature of the agreement with Morris/Gibson. Will reach out to Wycombe and don't forsee any issues. Progress should be quick from here and preferred bidder in 10 days or so. The audio version betrays a clear annoyance with the EFL.

Finally the pressure can be directed squarely at one group. They've been a disaster so far but over to Quantuma to deliver.

[REDOXO]

39 minutes ago, PHILINFRANCE said:

I was thinking along the same lines.

There has been a lot of concern that tomorrow's match might turn violent, and it is extremely convenient for all involved that a last minute 'solution' has been found.

It remains only for Quantuma to draw up the necessary agreement, and then all is Hunky Dory: in the meantime, the fans, both Home and Away, can attend in good spirits. Problem solved.

It is now Friday evening, however, and, to my knowledge, no formal announcement has yet been made.

The cynic in me wonders whether an unforeseen 'problem' with the proposed agreement might be discovered on Monday morning. 

Exactly. I guess we will see. However if it does kick off tomorrow what little sympathy there is for Derby will all but disappear!

[BTRFTG]

17 hours ago, ExiledAjax said:

Shall we start drafting a set of precedent documents that we can flog to 72 EFL clubs? 

70 - Derby & Boro need no further help it might appear....

[BTRFTG]

14 hours ago, Derby_Ram said:

In summary they can't detail nature of the agreement with Morris/Gibson.

They can, but they won't.

If it is the case they can't, that's because there is no detail.

[Mr Popodopolous]

11 hours ago, BTRFTG said:

They can, but they won't.

If it is the case they can't, that's because there is no detail.

Unsure. Confidential settlements seem to be the norm- when Derby sacked Sam Rush in May 2017, and he was claiming for unfair dismissal, there was reportedly a confidential settlement and no details were released- about 18 months on.

[Mr Popodopolous]

As for Derby, two bits.

Still 3 from 4. Reading, Peterborough, Derby all lost but signs of life at Barnsley? They beat QPR today and still have Peterborough and Reading to play at Oakwell so they might believe a little bit more.

Off the pitch, reports that Wycombe have received no fresh contact either from Mel Morris or the administrators. EFL need to keep right on with that if so.

[chinapig]

1 minute ago, Mr Popodopolous said:

As for Derby, two bits.

Still 3 from 4. Reading, Peterborough, Derby all lost but signs of life at Barnsley? They beat QPR today and still have Peterborough and Reading to play at Oakwell so they might believe a little bit more.

Off the pitch, reports that Wycombe have received no fresh contact either from Mel Morris or the administrators. EFL need to keep right on with that if so.

The BBC reported that Wycombe's owner was flying back from the USA this weekend for talks iirc.

[Mr Popodopolous]

14 minutes ago, chinapig said:

The BBC reported that Wycombe's owner was flying back from the USA this weekend for talks iirc.

It has been reported but this evening there has been a report that Wycombe have received no new contact.

https://footballleagueworld.co.uk/update-emerges-on-wycombe-wanderers-claim-against-derby-county/

[ExiledAjax]

7 minutes ago, Mr Popodopolous said:

It has been reported but this evening there has been a report that Wycombe have received no new contact.

https://footballleagueworld.co.uk/update-emerges-on-wycombe-wanderers-claim-against-derby-county/

But isn't that because Wycombe haven't actually made a proper claim yet? I thought Q said as much in that q&a they did with the fans trust last week?

Edit. Was in Morris' statement.

 

Edited February 12, 2022 by ExiledAjax

[Mr Popodopolous]

4 hours ago, ExiledAjax said:

But isn't that because Wycombe haven't actually made a proper claim yet? I thought Q said as much in that q&a they did with the fans trust last week?

Edit. Was in Morris' statement.

 

Thanks- although I question whether the EFL would concur, given that they stated that the claims cannot be compressed/prejudiced whatever. Outstanding claims, no clean exit from administration, no clean exit from administration can a takeover be approved?

Although a story by Nixon- big twist, seems that Derby are studying the ruling by the EFL and might sue Reading if they are relegated by 3 points or less below Reading...is the basis of the claim the mere overspend or the fact it was an overspend masked or attempted to be masked by suspect amortisation policies.

Are they putting themselves on a sticky wicket with proposals such as this if they are still in administration come May and the Golden Share needs to be transferred...I can imagine such proposals antagonising 71 clubs given Derby's recent track record- on a sidenote, the Boro fans didn't hold back it seems! Assume that is Boro?

In theory though, what is good for the goose...but the Derby and Reading cases although they had similarities, are altogether different. What Nixon also fails to mention is that 6 could easily become 12 for Reading this season unless they have and will stick diligently to everything, which would negate Derby's claims somewhat! More likely for 6 to become 12 there than 9 to become 12 at Derby I reckon...

Breaches were different so it's hard to say...the overspends as opposed to the gross figures as such.

Derby

That's a breach in 3 out of 4 assessed periods, with a max of 17 points had the EFL chosen to push it. As we know they also had to be dragged kicking and screaming into being sanctioned- from suggesting new amortisation methods, to suggesting a Revaluation Reserve to offset via of course not submitting accounts correctly.  17 points breaks down as £7.76m=6 point deduction, £11.72m=8 point deduction, £1.96m, well this falls in the £1-1.999m basically, so 3 point deduction. I should say, 9 points plus a further 3 suspended if the budget not stuck to. Bit hard not to stick to the budget when the EFL are signing off transfers etc. I expect the EFL would have (rightly) pushed for -17 if no Agreed Decision.

Professional Standing rule- this probably helped to focus minds too, and one thing that could have helped too would have been if the EFL had made clear that to contest would mean a separate hearing for each 3 year period...time and money that Derby in administration could ill-afford.

Reading

1 period, albeit exceeds £15m so should be a 12 point deduction really. I suppose had they contested it then the EFL would have pushed for a straight -12.

I would suggest that as I mentioned above, Reading have quite a few more trip hazards to stop 6 > 12 this season than Derby do to have 9 > 12...Reading also appear to have been more cooperative by far.

Quantuma- it's interesting and in theory but the two cases and backgrounds differ significantly I would suggest. That's not to say there wouldn't be a case but it's entirely like with like either?

Edited February 13, 2022 by Mr Popodopolous

[ExiledAjax]

56 minutes ago, Mr Popodopolous said:

Thanks- although I question whether the EFL would concur, given that they stated that the claims cannot be compressed/prejudiced whatever. Outstanding claims, no clean exit from administration, no clean exit from administration can a takeover be approved?#

Outstanding potential claims. Wycombe may not have claimed formally, but have made it damn clear that once Derby are taken over, and have money, then they will? Perhaps that is what has happened. EFL concerned that such a claim would carry and so they'd end up with two clubs in real dispute.

Although a story by Nixon- big twist, seems that Derby are studying the ruling by the EFL and might sue Reading if they are relegated by 3 points or less below Reading...is the basis of the claim the mere overspend or the fact it was an overspend masked or attempted to be masked by suspect amortisation policies.

Are they putting themselves on a sticky wicket with proposals such as this if they are still in administration come May and the Golden Share needs to be transferred...I can imagine such proposals antagonising 71 clubs given Derby's recent track record- on a sidenote, the Boro fans didn't hold back it seems! Assume that is Boro?

In theory though, what is good for the goose...but the Derby and Reading cases although they had similarities, are altogether different. What Nixon also fails to mention is that 6 could easily become 12 for Reading this season unless they have and will stick diligently to everything, which would negate Derby's claims somewhat! More likely for 6 to become 12 there than 9 to become 12 at Derby I reckon...

Breaches were different so it's hard to say...the overspends as opposed to the gross figures as such.

Derby

That's a breach in 3 out of 4 assessed periods, with a max of 17 points had the EFL chosen to push it. As we know they also had to be dragged kicking and screaming into being sanctioned- from suggesting new amortisation methods, to suggesting a Revaluation Reserve to offset via of course not submitting accounts correctly.  17 points breaks down as £7.76m=6 point deduction, £11.72m=8 point deduction, £1.96m, well this falls in the £1-1.999m basically, so 3 point deduction. I should say, 9 points plus a further 3 suspended if the budget not stuck to. Bit hard not to stick to the budget when the EFL are signing off transfers etc. I expect the EFL would have (rightly) pushed for -17 if no Agreed Decision.

Professional Standing rule- this probably helped to focus minds too, and one thing that could have helped too would have been if the EFL had made clear that to contest would mean a separate hearing for each 3 year period...time and money that Derby in administration could ill-afford.

Reading

1 period, albeit exceeds £15m so should be a 12 point deduction really. I suppose had they contested it then the EFL would have pushed for a straight -12.

I would suggest that as I mentioned above, Reading have quite a few more trip hazards to stop 6 > 12 this season than Derby do to have 9 > 12...Reading also appear to have been more cooperative by far.

Quantuma- it's interesting and in theory but the two cases and backgrounds differ significantly I would suggest. That's not to say there wouldn't be a case but it's entirely like with like either?

Interesting. I guess there's a fair bit of EFL animosity from MM and Quantuma. Anything to make the EFL's life difficult maybe?

[Mr Popodopolous]

4 minutes ago, ExiledAjax said:

Interesting. I guess there's a fair bit of EFL animosity from MM and Quantuma. Anything to make the EFL's life difficult maybe?

I can believe that- although I do also wonder if they are as I said on a sticky wicket ie whether a risk exists that the EFL- ie the other 71- might decide that they no longer want Derby, by extension Quantuma and Mel Morris- in their League. Bury got expelled and Macclesfield eased out for far, far less.

Takeovers under EFL jurisdiction, these can take months from Preferred Bidder being announced to completion- and the EFL hold/control the Golden Share in any event while clubs are in administration. If still not completed by the end of the season, I wonder what the EFL's 'offer' to a prospective new owner will be for Derby to remain in the League- some other clubs have had this scenario in the past.

Edited February 13, 2022 by Mr Popodopolous

[ExiledAjax]

Just now, Mr Popodopolous said:

I can believe that- although I do also wonder if they are as I said on a sticky wicket ie whether a risk exists that the EFL- ie the other 71- might decide that they no longer want Derby in their League. Bury got expelled and Macclesfield eased out for far, far less.

true. Would a claim against an EFL club, such as one from Derby against Reading, would that give them leverage to remain in the EFL? I don't have the regs with me so am really not sure, but there might be an argument that they cannot fairly be expelled if they have an active claim? Desperate stuff if so, but the bidders are buying an EFL club, so they need to be in the EFL.

[Mr Popodopolous]

2 minutes ago, ExiledAjax said:

true. Would a claim against an EFL club, such as one from Derby against Reading, would that give them leverage to remain in the EFL? I don't have the regs with me so am really not sure, but there might be an argument that they cannot fairly be expelled if they have an active claim? Desperate stuff if so, but the bidders are buying an EFL club, so they need to be in the EFL.

Good point- active claim has to be heard after all, may well be true.

Rules may have been different here but the Football League certainly set some harsh terms for Portsmouth in 2011...as part of remaining a member, no legal claims of course.

https://www.bbc.co.uk/sport/football/18816436

[ExiledAjax]

1 minute ago, Mr Popodopolous said:

Good point- active claim has to be heard after all, may well be true.

Rules may have been different here but the Football League certainly set some harsh terms for Portsmouth in 2011...as part of remaining a member, no legal claims of course.

https://www.bbc.co.uk/sport/football/18816436

Reasonable. "Yes you can stay, but you're very much on the naughty step."

Interesting how this saga continues to rumble on. Seemingly solved with the MM/Gibson "accord" but then something else rears it's head.

[Mr Popodopolous]

1 minute ago, ExiledAjax said:

Reasonable. "Yes you can stay, but you're very much on the naughty step."

Interesting how this saga continues to rumble on. Seemingly solved with the MM/Gibson "accord" but then something else rears it's head.

I think in any event, a new owner has to agree a 2 year Business Plan with the EFL- that's separate to the one for P&S breaches that they had to adhere to. Sets limits on wages, fees etc I believe. Debt repayment could be a good condition, maybe as a % of income to HMRC and the 25% for Unsecured Creditors until such time as repaid.

It is...I'd be surprised if Couhig has just shelved his claim for one. Unsure there is any obligation on the EFL to transfer the Golden Share to new owners unless their terms are met- perhaps there is a reasonableness test for terms but if one wants to remain a member, then one had better agree to some of them I reckon.

[Mr Popodopolous]

On reflection, my talk of expulsion etc is a bit much but the way that (for the most part) in the last few years Derby at the upper levels and now Quantuma have acted, continue to act- well it makes it hard to take a balanced and reasonable view. I won't even talk about a section of their fans...

I'm also struggling a little with the concept- @ExiledAjax you know more legally- of action being taken against a club for breaching by a club who have breached in that same period. Albeit both via ratified Agreed Decisions as opposed to a full IDC.

[ExiledAjax]

1 minute ago, Mr Popodopolous said:

I'm also struggling a little with the concept- @ExiledAjax you know more legally- of action being taken against a club for breaching by a club who have breached in that same period. Albeit both via ratified Agreed Decisions as opposed to a full IDC.

Not sure, with the caveat of having a couple of whiskies inside me...I can't think of anything in general law that would prevent it...essentially it doesn't sound much different to a traditional counterclaim.

Whether there is something in the EFL regs or articles that stops it is a different question.

[Davefevs]

Why didn’t EFL punish both Derby and Reading with the right number of points…in line with the scale introduced when Brum got theirs?  In Derby’s case I think they could’ve got some of the “taking the piss” 9 points available too.

[chinapig]

2 minutes ago, Davefevs said:

Why didn’t EFL punish both Derby and Reading with the right number of points…in line with the scale introduced when Brum got theirs?  In Derby’s case I think they could’ve got some of the “taking the piss” 9 points available too.

Possibly because the regs allow for agreed penalties. So Reading may have got credit for fessing up.

[Club and Country]

17 arrests at the game yesterday so no love lost between these 2!

[sh1t_ref_again]

Its MM that anoys me the most, my understanding is, Morris sells the ground to himself on paper to try and fudge FFP, does not pay funds due to HMRC therefore having to put less money into Derby to prop them up and cover losses, then when it starts getting messy puts club into admin so does not have to put any more money in. Now owns the ground and will use a tool to get money back out of new owner to again reduce his own losses that he built up for his failed gamble.

Correct me if I am wrong.

[Hxj]

35 minutes ago, sh1t_ref_again said:

Correct me if I am wrong.

Nope - entirely correct.

[BTRFTG]

14 hours ago, Mr Popodopolous said:

Unsure. Confidential settlements seem to be the norm- when Derby sacked Sam Rush in May 2017, and he was claiming for unfair dismissal, there was reportedly a confidential settlement and no details were released- about 18 months on.

My point being there's no reason one CAN'T have disclosure (full or partial.) For reasons unknown they agreed to keep things confidential. It's said there are 'interested parties' - who they and how would they know whether or not they should have been provided access to the detail?

I sued a former employer who decided to settle on the steps of the High Court and I told them where to stick the few additional grand offered for me to sign the confidentiality agreement they demanded,  in addition to the actual settlement (forget the technical name it takes.) That allowed me to continue to tell the truth about them to all and sundry. They could threaten all they liked but truth would have outed either way, in Court and in the papers or with much lesser publicity.

[AnotherDerbyFan]

On 11/02/2022 at 16:39, Mr Popodopolous said:

Very good point, although I do believe the costs of exceptional litigation can be excluded from P&S- would these claims fall under this category had Derby themselves paid up?

Yes

[AnotherDerbyFan]

On 13/02/2022 at 10:05, Davefevs said:

Why didn’t EFL punish both Derby and Reading with the right number of points…in line with the scale introduced when Brum got theirs?  In Derby’s case I think they could’ve got some of the “taking the piss” 9 points available too.

If it went to DC/LAP, there wouldn't be any "taking the piss" points, as evidenced by the previous decision documents. If anything, they would give reductions for various issues - "acting in good faith", delay between the infringement and charge/penalty, inability to act upon overspend to reduce losses which could have resulted in a lower penalty or even no penalty at all, etc...
Reading, I think would only get a small reduction in penalty for owning up to the infringement (as per BCFC), but may also get an additional point for losses in the final year exceeding previous years.

23 hours ago, sh1t_ref_again said:

Its MM that anoys me the most, my understanding is, Morris sells the ground to himself on paper to try and fudge FFP, does not pay funds due to HMRC therefore having to put less money into Derby to prop them up and cover losses, then when it starts getting messy puts club into admin so does not have to put any more money in. Now owns the ground and will use a tool to get money back out of new owner to again reduce his own losses that he built up for his failed gamble.

Correct me if I am wrong.

Mel will get nothing for the stadium. PB gives MSD the money owed for the loan(s), and the stadium is given to the new owner / club.

[Hxj]

32 minutes ago, AnotherDerbyFan said:

Mel will get nothing for the stadium. PB gives MSD the money owed for the loan(s), and the stadium is given to the new owner / club.

That may be the end result.

However legally MSD have claimed in the Administration as they are entitled to do as their debt is secured by the charge on the lease between the football club and the stadium club.

Therefore to exit Administration the club needs to repay that debt.  If it does so then the charge held by MSD will have been met in full, and therefore all the assets currently charged will be released from that charge.

So the Stadium Group, owned by Morris, will contain the Stadium with no charge against that asset.

Only Morris has the power to give the stadium away.

 

[Mr Popodopolous]

2 hours ago, AnotherDerbyFan said:

If it went to DC/LAP, there wouldn't be any "taking the piss" points, as evidenced by the previous decision documents. If anything, they would give reductions for various issues - "acting in good faith", delay between the infringement and charge/penalty, inability to act upon overspend to reduce losses which could have resulted in a lower penalty or even no penalty at all, etc...
Reading, I think would only get a small reduction in penalty for owning up to the infringement (as per BCFC), but may also get an additional point for losses in the final year exceeding previous years.

Mel will get nothing for the stadium. PB gives MSD the money owed for the loan(s), and the stadium is given to the new owner / club.

Birmingham got 7 for the overspend, 3 for losses rising year on year and 1 back for cooperation.

Sheffield Wednesday even if halved due to stadium bungling on all sides issue, dunno why they didn't get the extra 3 for losses rising successively.

Reading would have got 12 for the overspend, 1 back if lucky for cooperation and then 1 or 2 more docked perhaps for the trajectory of losses.

17 points would be the starting point breach wise for Derby, I think the Panel who found Derby guilty wouldn't have reduced it by much. There isn't much mitigation.

If the stadium goes back to the club then I expect the EFL and other clubs to object. Stadium Group needs keeping separate for FFP purposes for some time, ie go to new owner yes, reconsolidated not yet.

[Mr Popodopolous]

2 hours ago, AnotherDerbyFan said:

Yes

Although could the EFL get funny about that and have used it as a bargaining chip for the Business Plan with new owners? That 2 year business plan needs to be a fairly solid one tbh.

[sh1t_ref_again]

3 hours ago, AnotherDerbyFan said:

Mel will get nothing for the stadium. PB gives MSD the money owed for the loan(s), and the stadium is given to the new owner / club.

If MM is going to exit with nothing back from the stadium, why does not not come out now and say, that he is giving the stadium back as part of the deal. Or maybe he is still hoping to generate some income back from it, although I guess by having a lone secured against it that he / Derby have pocketed, as the loan will have to be paid off by the new owners to be able to gain access to the ground

[Davefevs]

Seen some stuff on twitter today that Wycombe’s claim is being settled and it’s less than 6 figures.  Surely that can’t be right?

[chinapig]

9 minutes ago, Davefevs said:

Seen some stuff on twitter today that Wycombe’s claim is being settled and it’s less than 6 figures.  Surely that can’t be right?

Well, the BBC reported last week that the total cost of meeting the claims from Boro and Wycombe was thought to be £7m so that may be right.

Which suggests that the two clubs had decided to compromise their claims, possibly based on legal advice.

[Davefevs]

15 minutes ago, chinapig said:

Well, the BBC reported last week that the total cost of meeting the claims from Boro and Wycombe was thought to be £7m so that may be right.

Which suggests that the two clubs had decided to compromise their claims, possibly based on legal advice.

But less than 6 figure, means less than £100k???

[BTRFTG]

3 hours ago, Hxj said:

However legally MSD have claimed in the Administration as they are entitled to do as their debt is secured by the charge on the lease between the football club and the stadium club.

From memory the initial MSD loan yet to be satisfied is against the freehold title of a number of properties, Pride Park included. I don't believe it's against a lease. I think there were 5 or 6 titles listed in the schedule.

There is a secondary and more recent charge MSD hold against the lease held by the football club buts that's for use of the training ground, not stadium. One assumes this was for further monies loaned to keep the club afloat which, of course, couldn't involve the stadium as that had already been 'sold' (sic).

[BTRFTG]

In respect of P/S & FFP perhaps somebody might explain the following:

Derby went to very great pains to argue the valuation of Pride Park for purposes of disposal as included within their accounts was £81m (though as I wrote elsewhere this might only ever be an insurance value, not market value.) Derby successfully argued that it was market value and one presumes that sum appears within their accounts now submitted (though presumably unseen by any save the EFL.)

Now if a new buyer of the club acquires (or is given) the stadium as part of the deal it won't transfer at £81m, yet nothing significant has moved in the property market.

In which case might the EFL revisit their initial argument that the stadium value appearing in the accounts was over-inflated, else if Derby maintain the stadium was worth that yet it now transfers at a significant discount, is that counted as a gift to the club?

[Davefevs]

7 minutes ago, BTRFTG said:

In respect of P/S & FFP perhaps somebody might explain the following:

Derby went to very great pains to argue the valuation of Pride Park for purposes of disposal as included within their accounts was £81m (though as I wrote elsewhere this might only ever be an insurance value, not market value.) Derby successfully argued that it was market value and one presumes that sum appears within their accounts now submitted (though presumably unseen by any save the EFL.)

Now if a new buyer of the club acquires (or is given) the stadium as part of the deal it won't transfer at £81m, yet nothing significant has moved in the property market.

In which case might the EFL revisit their initial argument that the stadium value appearing in the accounts was over-inflated, else if Derby maintain the stadium was worth that yet it now transfers at a significant discount, is that counted as a gift to the club?

Isn’t one of the fundamentals of accounting that you should keep your policies the sane, so year on year evaluation can be done in a consistent manner?  Only changing them for very good reasons.

I’ve wondered about exactly the same point as you.

[chinapig]

40 minutes ago, Davefevs said:

But less than 6 figure, means less than £100k???

Ah, yes. I suspect the lion's share of the alleged £7m would go to Boro but less than 6 figures to Wycombe does look odd. Perhaps they meant less than £1m so 6 zeros?

[BTRFTG]

5 minutes ago, Davefevs said:

Isn’t one of the fundamentals of accounting that you should keep your policies the sane, so year on year evaluation can be done in a consistent manner?  Only changing them for very good reasons.

I’ve wondered about exactly the same point as you.

Indeed it is, though with amortization Derby clearly thought otherwise.

So if any deal has to be conditional on the new buyer getting their hands on the stadium might it be the case Derby would incur further penalties for understating the quantum of their losses for which they've already been punished?

Edited February 14, 2022 by BTRFTG

[chinapig]

2 minutes ago, BTRFTG said:

Indeed it is, though with amortization Derby clearly thought otherwise.

So if any deal has to be conditional on the new buyer getting their hands on the stadium might it be the case Derby would incur further penalties for understating the quantum of their losses for which they've already been punished?

It's hard to see how they can claim the stadium was worth £81m but is now only worth say £20m. Or at least they can claim it but there should be consequences.

[BTRFTG]

If only there were accounts to review.

This might be an oversimplification but wasn't the essence of the stadium deal this:

Derby County FC sold the freehold title of Pride Park to Gellaw Newco 202 for £81.1m.

The purchase was funded by around £20m in the form of a cash loan from MSD (secured by charge against Gellaw/Pride Park) and £61m in loans from Derby County FC to Gellaw Newco 202.

Derby County FC recorded a profit on the deal of £39.9m, presumably the book value of Pride Park previously was around £41m.

So whilst Morris might argue he owns the stadium and that has nothing to do with the football club, surely the administrators are looking to have Gellaw repay the loans they undertook? Unlike MSD is the suggestion the Gellaw loans were all unsecured?  How possibly could the EFL sanction a disposal in this form without any underpinning guarantee that asset values might, to the most part, be recoverable by those issuing the loan?

 

[Hxj]

1 hour ago, BTRFTG said:

From memory the initial MSD loan yet to be satisfied is against the freehold title of a number of properties, Pride Park included.

This is Schedule 2 from the August 2020 charge:

 

[Hxj]

1 hour ago, BTRFTG said:

In which case might the EFL revisit their initial argument that the stadium value appearing in the accounts was over-inflated, else if Derby maintain the stadium was worth that yet it now transfers at a significant discount, is that counted as a gift to the club?

It is too late now,  The debate on the stadium valuation at the date of sale has long gone.  As the stadium group is no longer part of the FFP group then any change in valuation for say 2021 accounts would have no impact on the FFP position.

 

56 minutes ago, Davefevs said:

Isn’t one of the fundamentals of accounting that you should keep your policies the sane, so year on year evaluation can be done in a consistent manner?  Only changing them for very good reasons.

It is.  The stadium was valued using Depreciated Replacement Cost and should be continued to be valued in the same way.  However in preparing the accounts for the Stadium Group companies for say 2021 the valuer and auditor may decide that there is sufficient evidence to use a different method.

[BTRFTG]

28 minutes ago, Hxj said:

This is Schedule 2 from the August 2020 charge:

 

Ah. Was it structured that way such if they so wanted the football club could satisfy the charge via their lease, whilst MSD retained the ultimate backstop via the freehold being sold?

Is it Morris is looking for the new buyer of the club to pay off the MSD loan such the charge is removed that way? Presumably, if he wished to be as helpful as he suggests he himself could satisfy the charge and give the new owner necessary protection by issuing a new long-term lease for the stadium perhaps with buy-out options?

[Hxj]

57 minutes ago, BTRFTG said:

Derby County FC sold the freehold title of Pride Park to Gellaw Newco 202 for £81.1m.

Agreed.

57 minutes ago, BTRFTG said:

The purchase was funded by around £20m in the form of a cash loan from MSD (secured by charge against Gellaw/Pride Park) and £61m in loans from Derby County FC to Gellaw Newco 202.

Not my understanding.  The stadium was sold by DCFC in the June 2018 accounting period.  The accounts for that period show intra-group debtors of £75 million or so, which I understand relate to the Stadium sale.

The accounts for Gellaw Newco 202 (the company acquiring the stadium show the property costing £81 million and an intra-group loan covering the entire cost in the 2019 accounts.  The company was incorporated in June 2018, so these cover the first 54 weeks or so.

The accounts for Gellaw Newco 204 Limited (the new parent of the Stadium group) show that it is owed £74 million by the subsidiary and in turn owes £74 million elsewhere in the 2019 accounts.

By the time DCFC enters Administration the debtors (an asset) no longer existed.   I suspect that cash passed around the circle from Morris to Gellaw 202 to Gellaw 204 to DCFC and back up the Football Club Group to Morris shortly after June 2020.

My guess is that the £20 million from MSD received in August 2020 was used to fund the running costs of the DCFC.

Edited February 14, 2022 by Hxj

[BTRFTG]

22 minutes ago, Hxj said:

It is too late now,  The debate on the stadium valuation at the date of sale has long gone

Sounds like double jeopardy but I still can't get my head around somebody arguing the value of an asset and shortly after having disposed of it it bring established the valuation was wholly contrived. The value is immaterial but what isn't is Derby's insistence their accounts were an accurate record when demonstrably they were not.

[Hxj]

13 minutes ago, BTRFTG said:

Ah. Was it structured that way such if they so wanted the football club could satisfy the charge via their lease, whilst MSD retained the ultimate backstop via the freehold being sold?

I suspect that it was more along the lines of getting all the security they could.

 

13 minutes ago, BTRFTG said:

Is it Morris is looking for the new buyer of the club to pay off the MSD loan such the charge is removed that way?

That has always been my suspicion.

 

13 minutes ago, BTRFTG said:

Presumably, if he wished to be as helpful as he suggests he himself could satisfy the charge and give the new owner necessary protection by issuing a new long-term lease for the stadium perhaps with buy-out options?

Yep.  He could do any number of things to make life easier for anyone buying the club,  No evidence that he is doing anything.

Edited February 14, 2022 by Hxj

[BTRFTG]

5 minutes ago, Hxj said:

Agreed.

Not my understanding.  The stadium was sold by DCFC in the June 2018 accounting period.  The accounts for that period show intra-group debtors of £75 million or so, which I understand relate to the Stadium sale.

The accounts for Gellaw Newco 202 (the company acquiring the stadium show the property costing £81 million and an intra-group loan covering the entire cost in the 2019 accounts.  The company was incorporated in June 2018, so these cover the first 54 weeks or so.

The accounts for Gellaw Newco 204 Limited (the new parent of the Stadium group) show that it is owed £74 million by the subsidiary and in turn owes £74 million elsewhere in the 2019 accounts.

By the time DCFC enters Administration the debtors (an asset) no longer existed.   I suspect that cash passed around the circle from Morris to Gellaw 202 to Gellaw 204 to DCFC and back up the Football Club Group to Morris shortly after June 2020. 2021.

My guess is that the £20 million from MSD received in August 2020 was used to fund the running costs of the DCFC.

Wow, in which case it's worse than I thought, but I am totally befuddled.

I get the principle of the various holding companies having effectively nil circulating debt, but they've also minor, negative assets. Pride Park must have had a book value when owned by DCFC (I naively assumed that was the sell price minus the banked profit.) DCFC may have had equivalent debt on its books against that asset but they're separate items so where's the stadium asset value (as reflected pre sale) now held?

 

[Hxj]

23 minutes ago, BTRFTG said:

Derby's insistence their accounts were an accurate record when demonstrably they were not.

Depreciated Replacement Cost valuations can be problematic which is why they are the method of last resort.  If DRC is used correctly then the accounts are entirely correct from an Accounting Standards perspective.

Whether or not in the 'real world' the accounts are as meaningful as they might be is an entirely different debate.

Edited February 14, 2022 by Hxj

[BTRFTG]

10 minutes ago, Hxj said:

Depreciated Replacement Cost valuations can be problematic which is why they are the method of last resort.  If DRC is used correctly then the accounts are entirely correct from an Accounting Standards perspective.

Whether or not in the 'real world' the accounts are as meaningful as they might be is an entirely different debate.

Fully appreciate that but during my time in dealing with such matters I never once experienced somebody banking profit (sic) from a bespoke asset by suggesting it changed hands at market value at or near DRC value. Bespoke assets necessarily come with discounted impairment, it's usually how much that is that's open to debate.

As you highlight this is only material to P&S / FFP and it makes no sense if theoretical (not realisable) profits are permitted to be included. One might as well not bother with the whole charade of supposed regulation.

[Mr Popodopolous]

A couple of observations, thoughts etc.

@Hxj

1) Could a drastically cheaper return of the stadium to Derby not constitute new evidence for the EFL. Derby defended the valuation in September 2019, at the IDC and indeed in the accounts for Gellaw Newco 202 to June 2020.

The period that this could most easily materially change would be the 3 years to 2018 (principle of reset, presumably included the Stadium sale, £28.12m 3 year loss means pass).

2) Failing that, the small matter of a Fair Rent applicable to a Fair Value. £4.16m per season/year as per the company who did the valuation- which leads me to my 3rd and final point...

3)...As we have discussed before, the importance of keeping the Stadium Group and the FFP/Club Group separate for FFP purposes- do that and a Fair Value Rent can be thrashed out. Benchmark using other clubs and their % yield etc.

A reconsolidation is not acceptable so soon.

[REDOXO]

On 13/02/2022 at 05:30, sh1t_ref_again said:

Its MM that anoys me the most, my understanding is, Morris sells the ground to himself on paper to try and fudge FFP, does not pay funds due to HMRC therefore having to put less money into Derby to prop them up and cover losses, then when it starts getting messy puts club into admin so does not have to put any more money in. Now owns the ground and will use a tool to get money back out of new owner to again reduce his own losses that he built up for his failed gamble.

Correct me if I am wrong.

The best summary yet!

[REDOXO]

On 13/02/2022 at 06:15, BTRFTG said:

My point being there's no reason one CAN'T have disclosure (full or partial.) For reasons unknown they agreed to keep things confidential. It's said there are 'interested parties' - who they and how would they know whether or not they should have been provided access to the detail?

I sued a former employer who decided to settle on the steps of the High Court and I told them where to stick the few additional grand offered for me to sign the confidentiality agreement they demanded,  in addition to the actual settlement (forget the technical name it takes.) That allowed me to continue to tell the truth about them to all and sundry. They could threaten all they liked but truth would have outed either way, in Court and in the papers or with much lesser publicity.

No one in their right mind would buy this shit show without access to the agreement between Morris and Gibson! But this whole affair is without right mindedness!

[Mr Popodopolous]

@sh1t_ref_again

Largely agree with your post although one set of people run him close.

A good chunk of Derby fans. Not sure I've seen such an arrogant, entitled, whiny, conspiracy claiming group at our level. Objectionable in many ways.

[ExiledAjax]

Hadn't realised that when they get relegated it will be only the third time in their history they've been in the third tier.

[Mr Popodopolous]

A few Derby fans unless there have been new reports that I have not yet seen have been getting quite excited about Gould's comments a few weeks ago. My take...

1) We have not failed to 2021, so the point about Martin one or two make is suspect.

2) The chances are that we will not fail to 2022. Even my most pessimistic modelling discounts that. Remember to 2021 that and 2020 are added and halved for ALL clubs.

3) The problem comes to 2023.

4) The claim by Gould about £30m of lost player sales- it is nonsense, for the birds, it will not stack up. If we do not fill the shortfall probably mainly through player sales then we will be docked points in line with that breach with a Business Plan for 2 years- feels a bad idea to breach!

5) The £5m in Covid losses- well we would be in trouble but a few would join us in the dock. I question whether how it fits with the EFL's own guidance and I might add that Derby's administrators claimed £20m in Covid losses, as did Mr. Pearce, can't have it both ways.

I actually do believe £20m is in the right ballpark for Derby, but if the EFL HAVE put a cap of £5m, well we'll likely still be okay to 2021 and 2022, but Derby surely not to 2021.

Edited February 14, 2022 by Mr Popodopolous

[chinapig]

18 minutes ago, Mr Popodopolous said:

A few Derby fans unless there have been new reports that I have not yet seen have been getting quite excited about Gould's comments a few weeks ago. My take...

1) We have not failed to 2021, so the point about Martin one or two make is suspect.

2) The chances are that we will not fail to 2022. Even my most pessimistic modelling discounts that. Remember to 2021 that and 2020 are added and halved for ALL clubs.

3) The problem comes to 2023.

4) The claim by Gould about £30m of lost player sales- it is nonsense, for the birds, it will not stack up. If we do not fill the shortfall probably mainly through player sales then we will be docked points in line with that breach with a Business Plan for 2 years- feels a bad idea to breach!

5) The £5m in Covid losses- well we would be in trouble but a few would join us in the dock. I question whether how it fits with the EFL's own guidance and I might add that Derby's administrators claimed £20m in Covid losses, as did Mr. Pearce, can't have it both ways. 

I expect our cost base to be reduced further next summer in any event. If push comes to shove we have sellable players. We could also receive a windfall from either Webster or Kelly, though we should not assume that of course.

But if we breach then we will deservedly get a points deduction. Gould has acknowledged that we will take the hit as required. We won't attempt to drag it out for years either.

Guilty of poor financial management? Yes, thanks to Steve giving Ashton control without oversight. The difference compared to Derby is that we won't have attempted to cheat the system and we won't be in administration.

[Davefevs]

29 minutes ago, Mr Popodopolous said:

A few Derby fans unless there have been new reports that I have not yet seen have been getting quite excited about Gould's comments a few weeks ago. My take...

1) We have not failed to 2021, so the point about Martin one or two make is suspect.

2) The chances are that we will not fail to 2022. Even my most pessimistic modelling discounts that. Remember to 2021 that and 2020 are added and halved for ALL clubs.

3) The problem comes to 2023.

4) The claim by Gould about £30m of lost player sales- it is nonsense, for the birds, it will not stack up. If we do not fill the shortfall probably mainly through player sales then we will be docked points in line with that breach with a Business Plan for 2 years- feels a bad idea to breach!

5) The £5m in Covid losses- well we would be in trouble but a few would join us in the dock. I question whether how it fits with the EFL's own guidance and I might add that Derby's administrators claimed £20m in Covid losses, as did Mr. Pearce, can't have it both ways. 

1. 
2. miles inside, because of 18/19’s profit
3. agree, but I don’t think we will be too badly over, and we’ve 15 months to sort it, including two transfer windows, with sellable assets.
4. yes, a nonsense…but let’s see what the likes of Stoke and Forest and Boro put in their 20/21 accounts, let alone this seasons!
5. it doesn’t fit, it was an arbitrary figure plucked out of the ether and latched onto.

Back to 3.  We need to be smart, but not care-free.  If someone genuinely wants Palmer (for example) then there needs to be give and take.  As it stands his amortisation will be £0.875m next year and his wages £1.200m (allegedly).  Let’s not forget the “buying” club will be spreading any fee over the term and that might be the way to cover a bit more in wages.  We have to recoup (avoid spending) as much of that £2.075m as possible.  Similar debate with Wells, lesser extent with Moore and whoever else.

[chinapig]

In the latest Price of Football podcast Kieran Maguire reckons Boro settled for a sum equal to the insurance value. Those on here with expertise may be able to explain exactly what this means.

He also says that Wycombe's claim is more complicated as it involves the difference in TV money between the Championship and League 1, though it is not a big amount.

He implies that Morris and Couhig have not spoken and has a dig at the Administrators for doing nothing and hoping it will just go away - while their people pick up £600 a day.

Finally, he has spoken to people at Board level at EFL clubs who, unsurprisingly, won't be happy if Derby don't pay the full amount to HMRC when other clubs have taken out loans to pay their dues.

We must be due another press release saying a preferred bidder will be named imminently surely?.

[Monkeh]

1 hour ago, chinapig said:

In the latest Price of Football podcast Kieran Maguire reckons Boro settled for a sum equal to the insurance value. Those on here with expertise may be able to explain exactly what this means.

He also says that Wycombe's claim is more complicated as it involves the difference in TV money between the Championship and League 1, though it is not a big amount.

He implies that Morris and Couhig have not spoken and has a dig at the Administrators for doing nothing and hoping it will just go away - while their people pick up £600 a day.

Finally, he has spoken to people at Board level at EFL clubs who, unsurprisingly, won't be happy if Derby don't pay the full amount to HMRC when other clubs have taken out loans to pay their dues.

We must be due another press release saying a preferred bidder will be named imminently surely?.

We had one yesterday,

The boy who cried wolf applies here,

I dont believe it until its actually happened now

[chinapig]

38 minutes ago, Monkeh said:

We had one yesterday,

The boy who cried wolf applies here,

I dont believe it until its actually happened now

Thanks I obviously missed it.

[AnotherDerbyFan]

On 14/02/2022 at 15:03, sh1t_ref_again said:

If MM is going to exit with nothing back from the stadium, why does not not come out now and say, that he is giving the stadium back as part of the deal. Or maybe he is still hoping to generate some income back from it, although I guess by having a lone secured against it that he / Derby have pocketed, as the loan will have to be paid off by the new owners to be able to gain access to the ground

If he wanted money for it he'd be charging rent. £0 paid or requested since entering admin...

[sh1t_ref_again]

5 minutes ago, AnotherDerbyFan said:

If he wanted money for it he'd be charging rent. £0 paid or requested since entering admin...

Think he may be looking at a big picture than the odd few quid in rent.

We know MM is not short of a few pounds, so if he is that generous and honourable, why not fund the money he should of put in and paid HMRC and countless other unsecured creditors

[AnotherDerbyFan]

On 14/02/2022 at 13:43, Mr Popodopolous said:

Birmingham got 7 for the overspend, 3 for losses rising year on year and 1 back for cooperation.

Sheffield Wednesday even if halved due to stadium bungling on all sides issue, dunno why they didn't get the extra 3 for losses rising successively.

Reading would have got 12 for the overspend, 1 back if lucky for cooperation and then 1 or 2 more docked perhaps for the trajectory of losses.

17 points would be the starting point breach wise for Derby, I think the Panel who found Derby guilty wouldn't have reduced it by much. There isn't much mitigation.

If the stadium goes back to the club then I expect the EFL and other clubs to object. Stadium Group needs keeping separate for FFP purposes for some time, ie go to new owner yes, reconsolidated not yet.

Disagree on "isn't much mitigation".

Relevance of which company owns the stadium? The same fee would be paid one way or another so it doesn't matter at all.

On 14/02/2022 at 15:50, Davefevs said:

But less than 6 figure, means less than £100k???

Wycombe's case was/is exceptionally weak. In simple terms, they disagreed with the EFL's processes.
This'll just be paying their legal fees so far.

On 14/02/2022 at 16:35, BTRFTG said:

Indeed it is, though with amortization Derby clearly thought otherwise.

So if any deal has to be conditional on the new buyer getting their hands on the stadium might it be the case Derby would incur further penalties for understating the quantum of their losses for which they've already been punished?

No

On 14/02/2022 at 19:12, Mr Popodopolous said:

A couple of observations, thoughts etc.

@Hxj

1) Could a drastically cheaper return of the stadium to Derby not constitute new evidence for the EFL. Derby defended the valuation in September 2019, at the IDC and indeed in the accounts for Gellaw Newco 202 to June 2020.

The period that this could most easily materially change would be the 3 years to 2018 (principle of reset, presumably included the Stadium sale, £28.12m 3 year loss means pass).

2) Failing that, the small matter of a Fair Rent applicable to a Fair Value. £4.16m per season/year as per the company who did the valuation- which leads me to my 3rd and final point...

3)...As we have discussed before, the importance of keeping the Stadium Group and the FFP/Club Group separate for FFP purposes- do that and a Fair Value Rent can be thrashed out. Benchmark using other clubs and their % yield etc.

A reconsolidation is not acceptable so soon.

£81.1m had to be proven to be of fair value. Any transfer of stadium to a new club owner would not have to pay fair value.

[ExiledAjax]

4 hours ago, Monkeh said:

We had one yesterday,

From whom? Could you link to it as I can't find anything from Monday.

I'm sure they'll be following tonight's game with interest. Although none of the three possible results help Derby at all. Will be at least 5 points adrift of safety, with 15 games remaining, whatever happens. 7 adrift if Reading win. Big game at the weekend as well for them.

[Mr Popodopolous]

36 minutes ago, AnotherDerbyFan said:

Disagree on "isn't much mitigation".

Relevance of which company owns the stadium? The same fee would be paid one way or another so it doesn't matter at all.

From -17 down to? Birmingham only got one for compliance/admission and Derby were anything but for the most part. What possible mitigation might there be? I doubt we would have seen anything less than -9 for a start,- especially had the EFL appealed it to the original panel who ruled against Derby on amortisation after an initial positive/moderate verdict.

No no, the relevance is the Stadium Group and the Football Group- if reconsolidated into the club's ownership then it makes a nonsense of the 20 year lease and the EFL need to be making this point amongst others to prospective new owners- a rental charge for P&S purposes is a must- whether it is real or paper I don't really care.

If reconsolidated into club ownership/the club group then I don't see where a Fair Rent comes in- if under the new owner but in the stadium group then a rent is workable.

36 minutes ago, AnotherDerbyFan said:

Wycombe's case was/is exceptionally weak. In simple terms, they disagreed with the EFL's processes.
This'll just be paying their legal fees so far.

If it's so weak then they need to stick to their guns and not take the first offer. No clubs should do Derby any favours, given how that club has acted in the last few years.

Plus had Derby submitted their accounts and P&S projections as pretty much other club do, then a breach would have been shown in the Projections to June 2021 and the EFL regs allow for in-season deductions theoretically.

36 minutes ago, AnotherDerbyFan said:

£81.1m had to be proven to be of fair value. Any transfer of stadium to a new club owner would not have to pay fair value.

That strikes me as creating an FFP issue- the EFL are transferring the Golden Share to new owners, I'd suggest that they impose firm conditions indeed moving forward- and the stadium/rent (paper or otherwise) should be a part of this.

I particularly like this section of the Owners and Directors Test. Perhaps a Fair Rent on the original transaction could be part of imposed conditions.

The other 71 clubs will be watching with interest (not just on that but in general) I'm certain...the section I quite like.

Quote

(b)           submit to the League up to date Future Financial Information (as defined in Regulation 16) prepared to take into account the consequences of the change of Control on the Club’s future financial position; and

 

Quote

3.2          In relation to any proposed acquisition of Control of a Club by a Person, The League shall have:

Quote

3.2.1      the powers set out in Regulation 16.20; and/or

3.2.2      the ability to impose such other conditions,

as in each case it may determine, in order to monitor and/or ensure compliance with Regulations 16 to 19, 21, 22 (including Appendix 3) and 103 to 113 inclusive (and their successor or replacement provisions).

Quote

3.3.3      The Club and any Person proposing to acquire Control have acceded to any powers and/or accepted any conditions imposed pursuant to Rule 3.2.

I particularly like that 16.20 alone isn't enough, but ability to impose such other conditions as it may determine. It's carte blanche to some extent!

Edited February 16, 2022 by Mr Popodopolous

[lenred]

10 minutes ago, Mr Popodopolous said:

From -17 down to? Birmingham only got one for compliance/admission and Derby were anything but for the most part. What possible mitigation might there be? I doubt we would have seen anything less than -9 for a start,- especially had the EFL appealed it to the original panel who ruled against Derby on amortisation after an initial positive/moderate verdict.

No no, the relevance is the Stadium Group and the Football Group- if reconsolidated into the club's ownership then it makes a nonsense of the 20 year lease and the EFL need to be making this point amongst others to prospective new owners- a rental charge for P&S purposes is a must- whether it is real or paper I don't really care.

If reconsolidated into club ownership/the club group then I don't see where a Fair Rent comes in- if under the new owner but in the stadium group then a rent is workable.

If it's so weak then they need to stick to their guns and not take the first offer. No clubs should do Derby any favours, given how that club has acted in the last few years.

Plus had Derby submitted their accounts and P&S projections as pretty much other club do, then a breach would have been shown in the Projections to June 2021 and the EFL regs allow for in-season deductions theoretically.

That strikes me as creating an FFP issue- the EFL are transferring the Golden Share to new owners, I'd suggest that they impose firm conditions indeed moving forward- and the stadium/rent (paper or otherwise) should be a part of this.

100%. To suggest otherwise makes a complete mockery of the situation (although to be fair it doesn’t take much to do that!) 

[Mr Popodopolous]

I think what Derby fans would like in respect of a takeover and Pride Park, would be for the stadium to return as pre 2018- full revenue and commercial revenue to the club as before, no rent- but no opportunity to revisit the reset period to 2018 which was only passed owing to the profit on disposal of Pride Park.

Cake and eat it and the EFL need to push back heavily against such ideas.

Edited February 16, 2022 by Mr Popodopolous

[lenred]

8 minutes ago, Mr Popodopolous said:

I think what Derby fans would like in respect of a takeover and Pride Park, would be for the stadium to return as pre 2018- full revenue and commercial revenue to the club as before, no rent- but no opportunity to revisit the reset period to 2018 which was only passed owing to the profit on disposal of Pride Park.

Cake and eat it and the EFL need to push back heavily against such ideas.

It amazes me how so many of their fans think they can just wipe the slate clean so to speak in regards all of their past financial misdemeanours and then expect everyone else to just suck it up and crack on. It won’t wash.