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The Championship FFP Thread (Merged)


Mr Popodopolous

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So basically they're still crying about finishing behind Derby last season, when actually results wise, Derby were the better team anyway.

Yes there's something dodgy about the Pride Park deal and their chairman, but get over it, and stop crying. 

Not quite sure where the Sky deal comes into it. Nowhere in the article does it mention about Sky....

Edited by Taz
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https://www.thetimes.co.uk/article/middlesbrough-to-sue-english-football-league-in-row-over-derby-county-stadium-purchase-w2m38pj6h?shareToken=26f3e4188931848763d7dbf90ea8eeec

Hope this link works.

This penultimate paragraph at the bottom is very interesting- the bit in bold especially:

Quote

If they do face sanctions, insiders suggest there could yet be a case where the EFL has a claim against Derby in response to Middlesbrough’s against the EFL. The Middlesbrough owner Steve Gibson levelled accusations of foul play at Aston Villa, who were promoted in May and sold Villa Park to their owners a month later, and Derby at the Championship’s March meeting. Middlesbrough sent a legal letter to Derby this year.

In other words, if Derby are found to have significantly overvalued- and tbh this is touched upon somewhat in the FFP thread.

If they are though then the EFL as an organisation could yet sue Derby in response to Middlesbrough suing them. Presumably Reading and Sheffield Wednesday too- though tbh claims against Sheffield Wednesday and especially Reading may well be a lot lower. Indemnity of the losses the EFL would occur in the event Middlesbrough's action has some success and if eg Pride Park significantly overvalued plays a role.

Could other PL clubs sue Aston Villa if Villa Park found to be significantly overvalued? Who knows! Maybe the PL themselves or the EFL themselves might! Maybe EFL clubs who have lost out threaten legal action vs the PL and the PL as an organisation in turn sue Aston Villa in the event of a breach?

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31 minutes ago, Taz said:

So basically they're still crying about finishing behind Derby last season, when actually results wise, Derby were the better team anyway.

Yes there's something dodgy about the Pride Park deal and their chairman, but get over it, and stop crying. 

Not quite sure where the Sky deal comes into it. Nowhere in the article does it mention about Sky....

Good stuff I say. It is about time the EFL got held to account for the feeble job they do enforcing FFP.

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36 minutes ago, Taz said:

So basically they're still crying about finishing behind Derby last season, when actually results wise, Derby were the better team anyway.

Yes there's something dodgy about the Pride Park deal and their chairman, but get over it, and stop crying. 

Not quite sure where the Sky deal comes into it. Nowhere in the article does it mention about Sky....

Why should they? They paid their players millions of pounds a year, whilst keeping within FFP constraints, to try and get to that position and were pipped to the post by a team who seemingly bent the rules to gain an advantage over everyone else.

Imho if there is a case to be made then Steve Gibson should take it as far as he possibly can. 

It is about time someone stood up to the EFL and Derby, where the sale of their stadium last season and the signing of Rooney this season absolutely stinks. 

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6 minutes ago, marcofisher said:

Why should they? They paid their players millions of pounds a year, whilst keeping within FFP constraints, to try and get to that position and were pipped to the post by a team who seemingly bent the rules to gain an advantage over everyone else.

Imho if there is a case to be made then Steve Gibson should take it as far as he possibly can. 

It is about time someone stood up to the EFL and Derby, where the sale of their stadium last season and the signing of Rooney this season absolutely stinks. 

I make Aston Villa and Sheffield Wednesday worse tbh. I've done a lot of looking into their accounts for a start- of all 3 in fact, in recent times.

Reading may have breached it by £500k- that'd be a breach of £500,000 over the 3 years as opposed to one year or per year- to June 30th 2018 if not for the ground sale according to one calculation I saw online, but nobody really seems to have passionate and strong feelings about them in the wider football world- good and bad thing.

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2 minutes ago, Mr Popodopolous said:

I make Aston Villa and Sheffield Wednesday worse tbh. I've done a lot of looking at their accounts for a start- of all 3 in fact, in recent times.

Reading may have breached it by £500k to June 30th 2018 if not for the ground sale according to one calculation I saw online, but nobody really seems to have passionate and strong feelings about them in the wider football world- good and bad thing.

Agree wholeheartedly! It’s sad that it has taken Derby to beat Middlesbrough by a point for someone to finally take action, when there was clearly so much wrongdoing before.

But at least someone has taken the first step in this case! 

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22 minutes ago, marcofisher said:

Agree wholeheartedly! It’s sad that it has taken Derby to beat Middlesbrough by a point for someone to finally take action, when there was clearly so much wrongdoing before.

But at least someone has taken the first step in this case! 

Agreed.

For the record, the reason I have a greater issue with Aston Villa is because they sold nobody of note and actually went again last season- then sold their stadium at the last despite £90m of parachute payments or thereabouts in the 3 seasons! Arrogance of their fan base too, the entitlement.

Then Sheffield Wednesday- their deficit was higher than I anticipated and what makes it worse is the shenanigans over their transaction- that makes very interesting reading tbh. Worth looking in depth at when the accounts were due originally, when they were due on the revised date, when the ground was listed on the Land Registry as having been sold, when the company that purchased it was setup, let alone the valuation in 2014 at depreciated replacement cost by valuers, vs the price it sold for- not even talking net book value here, yes there was a revaluation reserve of around £6.5m but there's a huge difference even factoring that in and small additions. Yeah also Sheffield Wednesday only finally sold Joao in August- they sold nobody of note, for good money between say 2015/16 and 2018/19. 

Oh yes when they appeared at CH vs when they were due 1st and revised time, when the accounts were signed...sure there is more I've missed!! IMO there's a lot more than merely the valuation that at least merits an in depth look.

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Mel Morris on talkSport just starting now. These are summaries of the substance, not direct quotes.

States:

  • They started looking at transaction some 18 months back.
  • A denial it is corrupt.
  • Says that was on current market value, not projected after work and events.
  • Reiterates events during the season could be a huge money-spinner.
  • Makes reference to the roof and puts his business case.
  • Jim White asks a straight question- without the stadium would you have been in breach of FFP?
  • Mel Morris- no straight answer, talks forward planning, player transfers etc- Jim White states he uses a loophole.
  • Mel Morris states nothing done wrong- is allowable.

Simon Jordan:

  • Thinks that if it was any other club doing it, he would call it sabre rattling.
  • Isn't so sure owing to Gibson's track record.
  • Thinks Middlesbrough's actions aimed more at EFL than Derby perse.
  • Considers FFP to be flawed.
  • Thinks Morris is being cute, different to player transaction and believes it will stand up, the valuation that is as it was independent.
  • Doesn't necessarily fit with the ideals of FFP.

 Mel Morris:

  • Wouldn't support the rule change as it would be basically pulling the drawbridge up.
  • Points out on level playing field argument that FFP never intended to create this.
  • Biggest challenge especially at our level the inflation in fees and wages.
  • Premier League the main driver.
  • Also of equal importance, the parachute clubs.
  • Excess funds of clubs that yo-yo, gives them an advantage- £30m, study shows this.
  • Pushes non parachute clubs into a need to react- a financial arms race basically?

Jim White:

  • Only clubs who don't support Middlesbrough clubs are those who want to do that too.

Mel Morris:

  • Great complications- tax etc etc.
  • HMRC- "benefit in kind", other issues, major tax bill if not.
  • Would do it again, as it is within the rules. If you don't like the rules then change them!
  • Talking about Bolton- had they been bankrupted and results expunged, biggest beneficiary would've been Derby.
  • Mentions Shaun Harvey- "Texted him on the morning they played Bolton, and said much disagreement- but applauds him as you have to keep Bolton and all the other clubs alive".
  • No guidance, pushback- took the valuation at face value.
  • Praises Steve Gibson despite this dispute.
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18 minutes ago, Mr Popodopolous said:

Mel Morris on talkSport just starting now.

States:

  • They started looking at transaction some 18 months back.
  • Denies it is corrupt.
  • Says that was on current market value, not projected after work and events.
  • Reiterates events during the season could be a huge money-spinner.
  • Makes reference to the roof and puts his business case.
  • Jim White asks a straight question- without the stadium would you have been in breach of FFP?
  • Mel Morris- no straight answer, talks forward planning, player transfers etc- Jim White states he uses a loophole.
  • Mel Morris states nothing done wrong- is allowable.

Simon Jordan:

  • Thinks that if it was any other club doing it, he would call it sabre rattling.
  • Isn't so sure owing to Gibson's track record.
  • Thinks Middlesbrough's actions aimed more at EFL than Derby perse.
  • Considers FFP to be flawed.
  • Thinks Morris is being cute, different to player transaction and believes it will stand up, the valuation that is as it was independent.
  • Doesn't necessarily fit with the ideals of FFP.

 Mel Morris:

  • Wouldn't support the rule change as it would be pulling the drawbridge up.
  • Points out on level playing field argument that FFP never intended to create this.
  • Biggest challenge especially at our level the inflation in fees and wages.
  • Premier League the main driver.
  • Also of equal importance, the parachute clubs.
  • Excess funds of clubs that yo-yo, gives them an advantage- £30m, study shows this.
  • Pushes non parachute clubs into a need to react- a financial arms race basically?

Jim White:

  • Only clubs who don't support Middlesbrough clubs want to do that too.

Mel Morris:

  • Great complications- tax etc etc.
  • HMRC- "benefit in kind", other issues, major tax bill if not.
  • Would do it again, as it is within the rules. If you don't like the rules then change them!
  • Talking about Bolton- had they been bankrupted and results expunged, biggest beneficiary would've been Derby.
  • Mentions Shaun Harvey- "Texted him on the morning they played Bolton, and said much disagreement- but applauds him as you have to keep Bolton and all the other clubs alive".
  • No guidance, pushback- took the valuation at face value.
  • Praises Steve Gibson despite this dispute.

Thanks for making a note of what was said, I only caught the last 30 seconds!

I'd guess that Gibson's problem is the Riverside isn't valued at what Pride Park (PP - easier to type!) is and he's wondering how given that PP was basically a copy when built.

But, PP was opened only 2 years after, and (if the quoted figures are correct) it cost £12m more to build, £16m and £28m. So (if correct) that's either the difference in build costs in the 2 years between, or there are other differences, I notice that the link I posted to the costs of PP says: "Architects of Miller Partnership have implemented over 30 alterations" so it depends what those alterations were and how much they vary the costs, I'd hazard a guess that the location would also make a difference.

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4 hours ago, Mr Popodopolous said:

Mel Morris on talkSport just starting now. These are summaries of the substance, not direct quotes.

States:

  • They started looking at transaction some 18 months back.
  • A denial it is corrupt.
  • Says that was on current market value, not projected after work and events.
  • Reiterates events during the season could be a huge money-spinner.
  • Makes reference to the roof and puts his business case.
  • Jim White asks a straight question- without the stadium would you have been in breach of FFP?
  • Mel Morris- no straight answer, talks forward planning, player transfers etc- Jim White states he uses a loophole.
  • Mel Morris states nothing done wrong- is allowable.

Simon Jordan:

  • Thinks that if it was any other club doing it, he would call it sabre rattling.
  • Isn't so sure owing to Gibson's track record.
  • Thinks Middlesbrough's actions aimed more at EFL than Derby perse.
  • Considers FFP to be flawed.
  • Thinks Morris is being cute, different to player transaction and believes it will stand up, the valuation that is as it was independent.
  • Doesn't necessarily fit with the ideals of FFP.

 Mel Morris:

  • Wouldn't support the rule change as it would be basically pulling the drawbridge up.
  • Points out on level playing field argument that FFP never intended to create this.
  • Biggest challenge especially at our level the inflation in fees and wages.
  • Premier League the main driver.
  • Also of equal importance, the parachute clubs.
  • Excess funds of clubs that yo-yo, gives them an advantage- £30m, study shows this.
  • Pushes non parachute clubs into a need to react- a financial arms race basically?

Jim White:

  • Only clubs who don't support Middlesbrough clubs are those who want to do that too.

Mel Morris:

  • Great complications- tax etc etc.
  • HMRC- "benefit in kind", other issues, major tax bill if not.
  • Would do it again, as it is within the rules. If you don't like the rules then change them!
  • Talking about Bolton- had they been bankrupted and results expunged, biggest beneficiary would've been Derby.
  • Mentions Shaun Harvey- "Texted him on the morning they played Bolton, and said much disagreement- but applauds him as you have to keep Bolton and all the other clubs alive".
  • No guidance, pushback- took the valuation at face value.
  • Praises Steve Gibson despite this dispute.

I've listened to it on the catch up feature now.

Re. the bit in bold, Jim wanted a straight answer but it couldn't be that simple, as I think Mel's point was that as it stands we haven't breached FFP, because we spent what we could within the limits including the stadium sale. So if someone just decides to do some sums and take the stadium sale off from the figures now then we will have but only because we spent up to what we could with it. That doesn't mean that without it we would have failed, it just means that as everything stands now the figures without the sale would show that we would have, because we spent including the sale in the planning, ie. if the sale hadn't happened, then we would have adjusted our spending accordingly and not failed it. You can't just take it off the figures as everything else would have changed without it, that's how I understood it from what he said.

The valuation was always going to be on what was there now, not what was planned. The only way planned things could make a difference to the valuation was surely if there was the permissions for it already granted, like with a house or plot of land, if the permissions are there then it tends to be worth more? The only thing for the future that might potentially have made a difference is that I think the stadium was built to make it easy to expand to 44,000, I've got a feeling that there's some ground works already done for it or something already in place to allow it, I can't remember exactly.

I'm not sure I agree with what Simon said about not being like selling a player from the way that Mel was saying it, from what I remember, Mel was only comparing be able to spend as like being able to spend after selling a player, ie. it's within the rules to sell a player and spend the proceeds, it's within the rules to sell a fixed asset and spend the proceeds, not sure he was trying to compare it in any other way.

I agree with Mel about the pulling the drawbridge up, it's up to the other clubs now whether they want to change the rules, but we wouldn't try and stop them doing something we have done as it would be hypocritical.

Don't really understand Jim's point about the only clubs that don't support Boro are the ones that want to do it too, well yeah, isn't that kind of the point? The ones that don't want to (maybe want to keep the asset within the club/don't want to spend that much money/etc) or can't (don't own their assets/can't spend that much money even if they wanted to/etc) do the same thing aren't likely to want other clubs doing it as it's puts them at a financial disadvantage! But that doesn't mean that we were wrong to do it when it's explicitly allowed within the rules.

Mel's makes an interesting comment about Bolton, from what I remember most people seemed quite confused by the seemingly lenient way the EFL dealt with Bolton compared to other clubs in similar situations, like with Bury this season, they've not been given a lot of time, they were just kicked out. If that means that the rules were potentially stretched at all to let Bolton stay in when they wouldn't normally have been then we would have had a case to be annoyed by it, as we would have benefitted from it more than some others, but Mel says on the day of our game with Bolton he told them he applauded them for doing everything they could. In the end it didn't make a difference to us as we got the place anyway, but he didn't know that we would get it at that point.

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Not going to go TOO detailed tonight but a couple of quick, interesting snippets- both from the Mail in a roundup of stories on Saturday.

Quote

EFL set to block clubs from exploiting stadium loophole 

The EFL are planning to close the sale-and-lease-back loophole that has allowed several Championship clubs, including Derby County, Sheffield Wednesday and Reading, to sell their stadiums to sister companies to enable them to comply with Financial Fair Play rules. 

Under a proposal to be discussed at a meeting of Championship clubs later this month, sale-and-lease-back arrangements would continue to be permitted, but as an artificial method of injecting cash the sale would not count on the balance sheet when calculating a club’s profit and sustainability, thus making it less attractive

Derby County sold their stadium to sister companies to comply with Financial Fair Play rules
 
+3
  •  

Derby County sold their stadium to sister companies to comply with Financial Fair Play rules

Under EFL rules, clubs who lose more than £39million over a three-year period face being docked points, the punishment given to Birmingham City last season. 

A number of Championship clubs have complained that by selling and leasing back their grounds their rivals are cheating the system, with Middlesbrough threatening to sue both Derby and the EFL over the issue.

 
About time! Actually, it should've been done back in April- would've stopped 1 if not both of the 2 biggest loss makers from doing so, Aston Villa especially and MAYBE Sheffield Wednesday though there is a lot of confusion about which accounting period their transaction fell in.
 
Quote

Derby valuation raises EFL eyebrows 

Mel Morris’s valuation of Pride Park during talks over the sale of Derby has raised eyebrows at the EFL, who are investigating the owner’s sale of the stadium to his own company Servco 5112, which enabled the club to comply with FFP. 

In talks about selling Derby, Morris has indicated he would accept an offer of around £30million for Pride Park, plus £10m for the holding company that controls all the club’s shares

In April, Pride Park was sold to Servco 5112 for £80m including a deal to lease it back to Derby, but it is listed as an asset worth £41m on the club’s books, which has led the EFL to appoint independent auditors to assess its value.

This one appears to be more speculative. Also a couple of factual errors.

  1. For a start, the company who purchased the ground were Gellaw Newco 202 Limited, Sevco 5112 is either the parent company or the Holding Company.
  2. It was not sold in April either, but this was when the accounts were released- the transaction took place or was completed on 28th June 2018 I believe.

That notwithstanding, the £30m + £10m figure is new- I thought it was £60m for the lot?

Wasn't aware the EFL appointed independent auditors- assumed it was valuers.

Having said all of that, I have my doubts about £81.1m- but also appreciate that £41m doesn't necessarily represent market value. Thinking £50-55m and maybe up to £60m given the 2007 valuation of £55m- yet that revaluation reserve set against valuation is a bit puzzling. Is it value at that time + revaluation + revaluation reserve- why that takes it to around £94-95m in 2007 which can't be right! Or is some of the revaluation reserve already accounted for in that 2007/08 revaluation upwards? Doubtless the full explanation is out there.

£30m for Pride Park- if true of course- is very, very interesting though. Of course as a lifelong Derby fan and someone who seems passionate about Derby in general it wouldn't surprise me but it does raise questions about the market value if there is any truth to the story. "If" and truth being the key words of course.

https://www.dailymail.co.uk/sport/football/article-7461849/Football-news-Super-agent-Mino-Raiola-looks-make-Wilfried-Zaha-latest-high-profile-client.html

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Thinking about it, @Coppello and @Drew Peacock maybe pretty well placed to advise on this one.

Hillsborough transaction- all legit in terms of transaction to accounting period yeah?

What we know:

Quote

Accounts it appeared in

2017/18

Quote

Date that the Reporting Period ran to originally

May 31st 2018

Quote

Date that the 2017/18 Accounts were due at CH by originally.

February 28th 2019

Quote

Date that the 2017/18 Reporting Period was extended to

July 31st 2018

Quote

Date that the 2017/18 Accounts were now due at CH

April 30th 2019

Quote

Date that the Accounts were published on the SWFC Website.

July 11th 2019

Quote

Date that the Accounts were published on CH.

July 16th 2019

Quote

Date that the Accounts were signed by Chansiri.

June 20th 2019

Quote

Date that the Accounts were signed by the Auditor.

June 21st 2019

Quote

Date that Sheffield 3 Limited was incorporated at CH.

June 21st 2019

Quote

Date that the Transaction was stated to have been paid at the Land Registry.

June 28th 2019

Obviously that it appeared on July 22nd 2019 is fine as it had been paid in late June 2019 and this stuff takes a few weeks? So that bit isn't terribly relevant IMO.

 

How does this all knit together though? Accounts signed not once but twice after due at CH and 2 months added to that, transaction occurs or price paid within a further week, allowed to just push on at getting it to CH, is there a year to complete such transactions or something- paperwork beginning by July 31st 2018 and everything else has a year? Certainly one of the most 'interesting' transactions I have come across.

That's not even factoring in the highly interesting valuation when 2013/14 accounts stated that it was at DRC of £22.25m that season ie sometime in 2014 and the fact the Revaluation Reserve £6.4-6.5m. Or the fact that Chansiri claimed that they would be in big trouble with FFP  if promotion not achieved- spoke not of a small overspend but 8 figures if promotion not achieved. Forget the Revaluation debate for a minute though, the process is very interesting- such a variety of dates!

Mike McCarthy of BBC Sheffield did say something about Post Balance Sheet event on Twitter but unless that appears in 2018/19 accounts I struggle to see it- wasn't referenced as one in either of the 2016/17 or 2017/18 accounts for a start.

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I retired a few years ago, but as I recall, the accounts would be drawn up as at the year end date and a Post Balance Sheet note would have been included which explained and showed the effect of the transaction.

I have never come across a transaction like this, despite being involved in some "interesting" accounting practices and quite a few normal property deals.  I think you will need to see board minutes to get to the very bottom of this - assuming they are not too opaque.  You could take profit on exchange, so again you need to see the documentation.

I will leave this one to more current accountants and enjoy my retirement!

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19 hours ago, Drew Peacock said:

I retired a few years ago, but as I recall, the accounts would be drawn up as at the year end date and a Post Balance Sheet note would have been included which explained and showed the effect of the transaction.

I have never come across a transaction like this, despite being involved in some "interesting" accounting practices and quite a few normal property deals.  I think you will need to see board minutes to get to the very bottom of this - assuming they are not too opaque.  You could take profit on exchange, so again you need to see the documentation.

I will leave this one to more current accountants and enjoy my retirement!

Thanks for the insight- interesting stuff indeed. Post Balance Sheet event seems to show nothing, unless of course it will appear in 2018/19 accounts. :dunno:

I've taken an interest in accounts of late owing to my own company and some of their practices- and like you I have not seen this one- EFL signed it off it seems though which is puzzling. Hopefully the EFL will demand all documentation- to me, Sheffield Wednesday should've remained under a registration embargo all summer for this- no Odubajo, Borner, Scowen, Harris, Murphy- this worthy of stronger investigation maybe than mere valuation questions.

Hopefully some others will contribute- someone did ask Kieran Maguire and he said something about "adjusting post balance sheet event". Yet I always rather assumed it would have appeared in 2017/18 accounts listed as such.

@29AR you're pretty clued up financially/accounting wise I believe- which category does this fall under in your view?

Given all of the oddities in dates, should it not appear as a Post Balance sheet event of some description? It appears under RPT indirectly...

Quote

22 Events after the reporting date

      On 1 September 2018 the company issued 21,000,000 ordinary shares at par value to Mr D Chansiri.

      On 14 June 2019 the company became a wholly-owned subsidary of Sheffield Wednesday Holdings Limited, a company registered in Hong Kong, as a result of a share for share exchange.

Nothing here...

Quote

23 Related Party Transactions

     Transactions with Related Parties

     Mr D Chansiri is a director of Sheffield Wednesday Football Club Community Programme. During the year, the company recharged amounts to SWFC Community Programme for expenses incurred on their behalf.

     Mr D Chansiri is also a director of Elev8 Energy Drink and Elev8 Clothing Ltd.

    Income of £61,266,677 was receivable from related parties in respect of transactions recognised in these financial statements.

    There are no other related party transactions to disclose.

That £61,266,677 will be the £60m and EFL market based/adjusted sponsorship presumably - well that and recharged expenses to the Community Programme.

Don't see how or why it wasn't listed under 22 though, given all of the varying dates- surely it didn't take nearly 11 months to get it done??

Someone also asked Mike McCarthy to elaborate on his post and point to where it is in the accounts when it came to what he said Post Balance Sheet events but he did not!

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One more general note.

573D8B19-FE51-4751-A1C8-B7F75176D271.thu

This was dated July 4th 2019 this thread, this post.

https://www.owlstalk.co.uk/forums/topic/283140-ground-sale-to-go-through-shortly/

Getting print screens of time and date not so easy but if it was application lodged around that time, Land Registry 28th June 2019, Accounts signed June 21st 2019 and June 20th 2019, accounts due on April 30th 2019 and originally February 28th 2019, Reporting Period to July 31st 2018 and originally May 31st 2018, baffled by the EFL waving this through at the time.

Lastly!

4C0BA4D0-A1DF-4FFD-A8DE-63A87E5F3476.thu

This was July 4th so same day and yet still listed at Land Registry as owned by SWFC.

I know it went through eventually but surely it should have appeared in 2018/19 accounts??

@Davefevs @downendcity any thoughts on how this all fits in, overlaps?

One more bit of corroborating- and this time it's dated which helps.

Capture.JPG.e442bedff947c62533c612f22958

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26 minutes ago, Mr Popodopolous said:

One more general note.

573D8B19-FE51-4751-A1C8-B7F75176D271.thu

This was dated July 4th 2019 this thread, this post.

https://www.owlstalk.co.uk/forums/topic/283140-ground-sale-to-go-through-shortly/

Getting print screens of time and date not so easy but if it was application lodged around that time, Land Registry 28th June 2019, Accounts signed June 21st 2019 and June 20th 2019, accounts due on April 30th 2019 and originally February 28th 2019, Reporting Period to July 31st 2018 and originally May 31st 2018, baffled by the EFL waving this through at the time.

Lastly!

4C0BA4D0-A1DF-4FFD-A8DE-63A87E5F3476.thu

This was July 4th so same day and yet still listed at Land Registry as owned by SWFC.

I know it went through eventually but surely it should have appeared in 2018/19 accounts??

@Davefevs @downendcity any thoughts on how this all fits in, overlaps?

One more bit of corroborating- and this time it's dated which helps.

Capture.JPG.e442bedff947c62533c612f22958

Im no legal expert, but if Im reading the land registry extracts correctly it seems to confirm that Wednesday were the legal owners on 4 July 2019, so this would appear to indicate that Wednesday remained the legal owners of the stadium at the time their last set of accounts were finalised/signed off.  The only thing I wouldn't be sure about is whether the "sale" transaction could have been completed before the accounts were finalised, and registered at the land registry some time later ( i.e. after 4 July) . Bearing in mind the "timely" nature of Wednesday's accounting it would be little surprise of the land registry registration was done in an equally swift manner!

The one thing that strikes me about all these ground "sales" is that they appear to have been carried out in a rush ( I wonder why that might have been?!)and in so doing they have created a rather murky set of circumstances and a less than transparent audit trail. If I - a layman - can see that, then I remain baffled as to why the EFL, with all the specialist experts they must have to hand, don't see the same and carry out robust financially forensic investigation of the facts. Thus far, the scope of their investigation seems to be to ask Morris if the valuation of Pride Park was done professionally and independently and when Morris replied in the affirmative, they've accepted it without question.

 

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3 hours ago, 29AR said:

@Mr Popodopolous Very kind, but I'm just a blagger I'm afraid. I only have limited accounting knowledge gained when working in cross lines of service. I'll ask a bean counter though, and pretend I understand their response haha

Haha, so am I to an extent- I'm not a qualified accountant but I am good with numbers and football clubs creativity in this dept has increased my interest in it- at least football wise!

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On a general note, decent read.

https://www.thetotallyfootballshow.com/feature/why-are-football-league-clubs-selling-their-grounds-to-their-owners/

Was interesting as well to note the following paragraph:

As we know about the Times report into the EFL investigation/independent valuations.

Quote

And that is a more serious prospect: according to a report in the Times, the EFL is investigating the valuation of the stadia, which is understandable but also slightly curious, since at least one of the clubs involved worked closely with the EFL during the sale process, which does lead to the suggestion that this investigation is simply to placate some of the clubs making a noise. Independent valuers were used, and one of the clubs involved confirmed to the Totally Football Show that the final sum was arrived at on the assumption that the land was being sold for commercial purposes, shops, housing etc.

  1. I wonder which club(s)? ?
  2. Could well be to placate.
  3. Interesting. So you can basically it seems claim and value on the basis that it will be sold for commercial purposes but continue to play in and lease it back. Which valuation method would this be- DRC, simple RC or something else?

Is there no valuation mechanism to assess Fair Market Value in continued current use? That one would seem/feel appropriate in this instance.

Edited by Mr Popodopolous
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31 minutes ago, Mr Popodopolous said:

On a general note, decent read.

https://www.thetotallyfootballshow.com/feature/why-are-football-league-clubs-selling-their-grounds-to-their-owners/

Was interesting as well to note the following paragraph:

As we know about the Times report into the EFL investigation/independent valuations.

  1. I wonder which club(s)? ?
  2. Could well be to placate.
  3. Interesting. So you can basically it seems claim and value on the basis that it will be sold for commercial purposes but continue to play in and lease it back. Which valuation method would this be- DRC, simple RC or something else?

Is there no valuation mechanism to assess Fair Market Value in continued current use? That one would seem/feel appropriate in this instance.

In my youth I studied valuation and estate management, although I never got into practice.

If I remember correctly, there was/is a method of valuing commercial/investment property based on rental income. This utilises something called years purchase and value is arrived at by way of a formula that takes into consideration rental and the yield or rate of return the property gives/is expected to give.

For Derby their case seems to have been  made on the basis of an independent "desk" valuation, and as there is no active and established open market in football stadium sales, there are no comparable against which this can be measured and compared. From all the answers given by them, I am still none the wiser as to the basis of the valuation, as the valuer seems to have taken very conceivable item into consideration - I saw it suggested that the new roof ( mooted but not yet agreed, work started and certainly not completed) had enhanced the value.

The  valuers desk valuation at £80m maximised the financial benefit to Derby upon completion of the "sale" However, following completion, Derby were committed to a ridiculously low annual rent, which was obviously designed to minimise  the financial impact on Derby County. I can't remember the exact rental figure, but when it was mentioned on here I recall that it provided a return so low ( against there £80m price "paid") that it was no better than a high rate savings account and certainly not compatible with the quality of stadium the £80m valuation implied.

On the face of it, Derby have had their cake and eaten it, as far as the valuation and rental levels are concerned - one maximising the immediate financial benefit, the other minimising the future financial impact, and especially for ffp. The EFL could question the level of rental when compared to the independent property value, but I suspect that Derby will say that one was independently provided, while the other was a commercial agreement between 2 parties.

Therein lies the fundamental problem with the EFL cocking up the ffp rules so that sale of an asset to a related third party does not, in itself, break the rules. What it does do, however, is leave the situation wide open to manipulation because buyer and seller are one and the same , which I suspect is what most outsiders looking at this will be thinking. The EFL have been on the back foot since it came to light that they themselves left open this loophole. Their one angle of attack was the valuation, but having failed to really push on this issue when it first arose, I think they've missed their chance and anything they now try to do will probably be just bluster to appease other clubs ( like Boro) that are making waves of their own.

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On 18/09/2019 at 16:10, downendcity said:

In my youth I studied valuation and estate management, although I never got into practice.

If I remember correctly, there was/is a method of valuing commercial/investment property based on rental income. This utilises something called years purchase and value is arrived at by way of a formula that takes into consideration rental and the yield or rate of return the property gives/is expected to give.

For Derby their case seems to have been  made on the basis of an independent "desk" valuation, and as there is no active and established open market in football stadium sales, there are no comparable against which this can be measured and compared. From all the answers given by them, I am still none the wiser as to the basis of the valuation, as the valuer seems to have taken very conceivable item into consideration - I saw it suggested that the new roof ( mooted but not yet agreed, work started and certainly not completed) had enhanced the value.

The  valuers desk valuation at £80m maximised the financial benefit to Derby upon completion of the "sale" However, following completion, Derby were committed to a ridiculously low annual rent, which was obviously designed to minimise  the financial impact on Derby County. I can't remember the exact rental figure, but when it was mentioned on here I recall that it provided a return so low ( against there £80m price "paid") that it was no better than a high rate savings account and certainly not compatible with the quality of stadium the £80m valuation implied.

On the face of it, Derby have had their cake and eaten it, as far as the valuation and rental levels are concerned - one maximising the immediate financial benefit, the other minimising the future financial impact, and especially for ffp. The EFL could question the level of rental when compared to the independent property value, but I suspect that Derby will say that one was independently provided, while the other was a commercial agreement between 2 parties.

Therein lies the fundamental problem with the EFL cocking up the ffp rules so that sale of an asset to a related third party does not, in itself, break the rules. What it does do, however, is leave the situation wide open to manipulation because buyer and seller are one and the same , which I suspect is what most outsiders looking at this will be thinking. The EFL have been on the back foot since it came to light that they themselves left open this loophole. Their one angle of attack was the valuation, but having failed to really push on this issue when it first arose, I think they've missed their chance and anything they now try to do will probably be just bluster to appease other clubs ( like Boro) that are making waves of their own.

Thanks, interesting stuff.

So would this be something like price paid divided by length of lease=rent? Or is it more complex than this- I've always thought commercial rental yield 4-5% but again that could be oversimplified by me.

AFAIK the new roof was not included but lots of different sources seem to say different things- Mel Morris said new roof factored in and you could add another £100m onto it which seems nuts yet...no open market doesn't help- the method could be quite important?

Agreed- even if the rent is right, then the fee paid seems much too low, or if the fee is broadly correct, then the rent should be increased by a factor of 3-4? Read online in varied places 5% but again football stadia pretty specialised.

Agreed- I wonder if they could have made it the case that a profit is only applicable if the stadium is being sold ie to reinvest into the club and building a new one, or if the stadium is being sold and leased back to a bona fide 3rd party. They should have put in the T&C that it needs to be done and dusted liaising with the EFL, ie the EFL appoint a valuer, not the club.

Thanks @Coppello looking forward to it.

Incidentally, saw on Twitter that Derby have released a statement on it. It however looks alright from a procedural perspective ie accounting period date to transaction date,  the price is the key issue here, along with Aston Villa and I assume Reading. Sheffield Wednesday OTOH have a myriad of questions against their sale and leaseback IMO!

Quote

Derby County Football Club has adhered to the EFL’s Profit and Sustainability Rules with respect to the sale of its stadium.

ClubStatementBanner.jpg

The stadium was subject to an independent professional valuation before sale, nearly 18 months ago, and the EFL indicated in writing that the arrangement was in accordance with its rules and regulations.

The EFL cannot now, long after approving the arrangements, suggest Derby County breached the rules.

The Club regrets that Middlesbrough Football Club have said they are suing the EFL over the matter, but that is a matter for them. Derby County offered to show Middlesbrough its financial records but they declined the invitation and appear to have decided to bring a claim against the EFL instead.

The outcome of that action could not now affect Derby County, which has already had its financial returns for the relevant season approved by the EFL, and the Club is solely focussed on the current season.

The Club will not be making any further comment at this time.

 
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Good listen!

It covers the facts but breaks them down quite well.

Part 1 and Part 2 about Fulham- seems to cover Huddersfield 2. Part 2 about Stoke, seems to also cover Swansea and West Brom.

 

Of those last 2, I think Stoke are surely heading for choppy FFP waters as it stands.

Interesting read as well, Mike Thornton!

https://www.mikethornton.xyz/why-the-efl-stadium-sale-rule-is-flawed/

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18 minutes ago, Mr Popodopolous said:

City related (for a change).

About to watch/listen to it now.

Up there certainly I'd say, in this category.

"Steve Hargreaves is a ridiculously rich individual and a very smart guy as well!"

Hargreaves is a smart guy because he wasn't foolish enough to invest in a football club  :)

It's one thing when people call us Bristol...................!

Edited by downendcity
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