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The Championship FFP Thread (Merged)


Mr Popodopolous

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On 11/09/2019 at 11:32, Mr Popodopolous said:

To update on this one, if I haven't already covered it in another part of this thread.

Transaction was listed at Land Registry as having gone through on June 28th 2019.

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Puzzles me given when the accounts were due, dated, signed, the accounting period even when extended- let alone £60m on a ground valued at £22.25m in 2014 and with a £6.4m revaluation reserve in the 2016/17 accounts.

Yeah and the company who purchased it was Sheffield 3 Limited, listed as having been incorporated on 21st June 2019. Owned initially by Sheffield 4 Limited but that in turn was dissolved on 18th July 2019, having been incorporated at CH on 20th June 2019.

https://www.thetimes.co.uk/article/sheffield-wednesday-told-to-explain-year-delay-over-38m-stadium-sale-7ncwgwjx3

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6 minutes ago, chucky said:

Thanks, just read.

I've been trawling the accounting regs in recent weeks and it is possible that there is some clause that allows for it, there must be- but I have not yet found it.

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33 minutes ago, Mr Popodopolous said:

Thanks, just read.

I've been trawling the accounting regs in recent weeks and it is possible that there is some clause that allows for it, there must be- but I have not yet found it.

It sounds like Derby included in their stadium valuation the building of a new roof that hasn't been started, yet alone completed, so Im sure it is perfectly acceptable for Wednesday to include in their accounts the profit from the sale of Hillsborough that was yet to take place.:grr:

 @Mr Popodopolous Re Wednesday's accounts I'm sure you've previously confirmed that the publishing of their accounts was delayed way beyond the norm. I'm guessing the concern is that they delayed the accounts so as to enable the stadium sale to be organised so the profit could then be included in the accounts prior to publication. If they were desperate to avoid ffp sanctions, they might have just waited long enough to get valuation organised os as to determine what profit they could then account for , even if the sale was not by then completed.

I thought there were strict timescales within which Limited Companies were required to produce accounts to HMRC so how would they have got around that issue? 

What a can of worms has been opened thanks to the idiot who failed to carry the sale of asset rules across to the new ffp rules!

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35 minutes ago, downendcity said:

It sounds like Derby included in their stadium valuation the building of a new roof that hasn't been started, yet alone completed, so Im sure it is perfectly acceptable for Wednesday to include in their accounts the profit from the sale of Hillsborough that was yet to take place.:grr:

 @Mr Popodopolous Re Wednesday's accounts I'm sure you've previously confirmed that the publishing of their accounts was delayed way beyond the norm. I'm guessing the concern is that they delayed the accounts so as to enable the stadium sale to be organised so the profit could then be included in the accounts prior to publication. If they were desperate to avoid ffp sanctions, they might have just waited long enough to get valuation organised os as to determine what profit they could then account for , even if the sale was not by then completed.

I thought there were strict timescales within which Limited Companies were required to produce accounts to HMRC so how would they have got around that issue? 

What a can of worms has been opened thanks to the idiot who failed to carry the sale of asset rules across to the new ffp rules!

It's hard to say on Derby and the roof- according to Mel Morris in the interview, he said it was independent of the roof- seemed to indicate that if it was included or done post roof it'd be closer to £180m, but again who knows.

It was. From memory it went like this:

  • Reporting Period- Runs to 31st May 2018
  • Due Date at CH- 28th February 2019

Became:

  • Reporting Period- Now Runs to 31st July 2018
  • Due Date at CH- Now 30th April 2019.

All fairly mundane if it all adds up and the dates are commensurate IMO- problem is they seem not to have been.

That due date saw the following:

  • Accounts signed by Chansiri on 20th June 2019 and by the auditor on 21st June 2019.
  • Transaction at Land Registry- Dated 28th June 2019- which seems fair enough given it can take time so I'm not suggesting it took place after the accounts were signed.
  • Accounts appear on Sheffield Wednesday website on 11th July 2019
  • Accounts appear at CH on 16th July 2019.

Oh yeah, and Sheffield 3 Limited was incorporated at CH on June 21st 2019- but it is also possible that it could've been dormant within the correct reporting period maybe and since then- would seem pretty irregular if not.

Plus- Chansiri declared that if no promotion, they'd have big issues- not a small FFP loss but an 8-figure one. This was at a Fans Forum in December 2018 or January 2019, unsure which.

I thought so too but it seems not- you can be fined but that wouldn't matter so much to Sheffield Wednesday/Chansiri but I was always under the impression there were more meaningful sanctions- some sort of exemption perhaps because they had a transaction in progress? It's all very murky though.

Agreed- wonder if there could be some action against said idiot by the EFL in the coming months/years?

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I notice Derby forum must have noted this thread- mentioned how intrigued we are by the ground thing.

Any Derby fans reading who wonder why this maybe the case- except @DerbyFan who knows this view of course.

Essentially, the reason we are interested is because we do things right financially or with FFP- and all we want is a proper investigation and valuation- and adjustments made if necessary and if the adjustments change the FFP figure then we go from there- that's all, after all we have sold players, held back in the market and tried very hard to stick to these regulations- rules for all or get rid!

PS- if one of you could clear up that revaluation reserve point for Pride Park, it'd help! :laughcont:

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Re-read the article and a couple of interesting bits that maybe go below the radar a bit:

"Clubs already questioning whether rivals such as Derby, Aston Villa and Sheffield Wednesday should have been able to avoid heavy sanctions by purchasing their own stadium are expected to call for clarification about Wednesday's accounts at tomorrow's meeting."

Wow! That WILL be interesting- could be quite a passionate meeting, quite like to be a fly on the wall there.

On the Derby front though it also maybe speaking more widely.

"Insiders suggest the situation is 'about to go nuclear', particularly if the EFL valuation of Pride Park is significantly less than the price paid by Derby.

"It could mean that the EFL, which will rubber-stamp the appointment of its new chairman, Rick Parry, tomorrow, will have to accept it made a mistake in signing off Derby's accounts and look to impose sanctions. That, however, would most likely lead to a legal challenge from Derby, the club hinting as much in a statement issued last Friday".

Certainly doesn't sound like either set of clubs are about to back down.

Also notice that on Saturday, it's Middlesbrough v Sheffield Wednesday...chairman suing FL vs one who pushed it to and maybe beyond acceptable limits on Hillsborough- Gibson and Chansiri in the same Directors area??

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Gemune question, not having a djg for any reasonable contributors who post on here and support Aston Villa, Derby and Sheffield Wednesday.

IF that fixed asset loophole hadn't been opened up seemingly in error or had been noted sharpish and closed that same season ie before any- and I include Reading- of the stadia sale and leaseback and indeed the other fixed assets applicable what could be done?

I accept Derby sold players so are in a slightly different boat to the others, especially Aston Villa and Sheffield Wednesday, plus their losses seemed borderline but still.

@DerbyFan @OwlsonlineAdmin

Any reasonable Aston Villa fans on here? Quite interested to see 'the plan' in the event of that loophole being shut soon after it opened or better yet not made available in the first place from fans of sides who did it. Mainly Aston Villa abd Sheffield Wednesday though but I also suspect less of Tomori, Mount, Wilson, Jozefzoon. Maybe 2-3 of them?

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4 hours ago, Mr Popodopolous said:

Gemune question, not having a djg for any reasonable contributors who post on here and support Aston Villa, Derby and Sheffield Wednesday.

IF that fixed asset loophole hadn't been opened up seemingly in error or had been noted sharpish and closed that same season ie before any- and I include Reading- of the stadia sale and leaseback and indeed the other fixed assets applicable what could be done?

I accept Derby sold players so are in a slightly different boat to the others, especially Aston Villa and Sheffield Wednesday, plus their losses seemed borderline but still.

@DerbyFan @OwlsonlineAdmin

Any reasonable Aston Villa fans on here? Quite interested to see 'the plan' in the event of that loophole being shut soon after it opened or better yet not made available in the first place from fans of sides who did it. Mainly Aston Villa abd Sheffield Wednesday though but I also suspect less of Tomori, Mount, Wilson, Jozefzoon. Maybe 2-3 of them?

Loophole   = I can get away with this

Airtight      = I can't get away with this

watertight = oh bollocks

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8 hours ago, Mr Popodopolous said:

Gemune question, not having a djg for any reasonable contributors who post on here and support Aston Villa, Derby and Sheffield Wednesday.

IF that fixed asset loophole hadn't been opened up seemingly in error or had been noted sharpish and closed that same season ie before any- and I include Reading- of the stadia sale and leaseback and indeed the other fixed assets applicable what could be done?

I accept Derby sold players so are in a slightly different boat to the others, especially Aston Villa and Sheffield Wednesday, plus their losses seemed borderline but still.

@DerbyFan @OwlsonlineAdmin

Any reasonable Aston Villa fans on here? Quite interested to see 'the plan' in the event of that loophole being shut soon after it opened or better yet not made available in the first place from fans of sides who did it. Mainly Aston Villa abd Sheffield Wednesday though but I also suspect less of Tomori, Mount, Wilson, Jozefzoon. Maybe 2-3 of them?

You won't find me defending the route we went, to enforce FFP clubs should be penalised for failure to comply

 

However given that the EFL is very unique in how clubs that hit its top division via relegation are rewarded the current system isn't fit for purpose. 

Barely 4 years ago, with the odd exception, clubs could buy players of a decent ability for low to mid 7 figure fees but when Newcastle and Villa dropped their reliance on a quick return saw them decimate the market and blow fees sky high, the choice was either try and compete or just let them go up, come down, go up etc unchallenged. 

Owners want the PL riches, fans want the PL status so you make decisions, right or wrong. 

To make FFP fair then parachute payments aren't counted or owners can match it with equity providing there is proof of funds not payday loans. 

24 clubs, realistically 18, chase that pay day, and most of us are reliant on the whim of an owner. 

 

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5 hours ago, OwlsonlineAdmin said:

You won't find me defending the route we went, to enforce FFP clubs should be penalised for failure to comply

 

However given that the EFL is very unique in how clubs that hit its top division via relegation are rewarded the current system isn't fit for purpose. 

Barely 4 years ago, with the odd exception, clubs could buy players of a decent ability for low to mid 7 figure fees but when Newcastle and Villa dropped their reliance on a quick return saw them decimate the market and blow fees sky high, the choice was either try and compete or just let them go up, come down, go up etc unchallenged. 

Owners want the PL riches, fans want the PL status so you make decisions, right or wrong. 

To make FFP fair then parachute payments aren't counted or owners can match it with equity providing there is proof of funds not payday loans. 

24 clubs, realistically 18, chase that pay day, and most of us are reliant on the whim of an owner. 

 

One of the problems seems to be determining exactly what ffp rules are trying to address.

I still think the original and continuing reasoning was to prevent clubs sending beyond their means and jeopardising a clubs future, very much following on from Portsmouth's fall from the premier  league and subsequent financial nightmare. As the riches on offer from the premier league get ever greater, the temptation for owners to push the financial boat out in the quest for promotion gets ever stronger and this makes the need for financial control even more important.

Bolton is the latest example showing why clubs need some sort of external protection from themselves. While Bury have never been in the premier league, their owners stated desire to get to the championship was behind their financial problems in overstretching themselves.

Many fans think ffp is there to create a more level playing field. While it doesn't do that, perhaps the issue of parachute payments needs to be addressed somehow because the imbalance parachute payments creates  that you point out is, effectively, causing other clubs to spend more just trying to complete with those clubs that have the additional spending power that parachute payments give them.

Despite parachute payments giving relegated clubs a marked advantage over the rest, that is still not enough for some clubs,  as some ( Villa and West Brom are examples) are effectively spending the whole 3 years worth in 2 years, by borrowing against the third year's fund. I think it is pretty clear that had Villa failed to gain promotion they would have been up **** creek without paddle , and possibly not just as far as ffp is concerned. It is almost becoming the case that rather than giving relegated clubs a financial buffer to make the adjustment to the championship more manageable, it just becomes a war chest/fighting fund for a quick promotion, but with huge risk attached if that fails. Perhaps this is why parachute payments need to be looked at within ffp,

 

 

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7 hours ago, OwlsonlineAdmin said:

You won't find me defending the route we went, to enforce FFP clubs should be penalised for failure to comply

 

However given that the EFL is very unique in how clubs that hit its top division via relegation are rewarded the current system isn't fit for purpose. 

Barely 4 years ago, with the odd exception, clubs could buy players of a decent ability for low to mid 7 figure fees but when Newcastle and Villa dropped their reliance on a quick return saw them decimate the market and blow fees sky high, the choice was either try and compete or just let them go up, come down, go up etc unchallenged. 

Owners want the PL riches, fans want the PL status so you make decisions, right or wrong. 

To make FFP fair then parachute payments aren't counted or owners can match it with equity providing there is proof of funds not payday loans. 

24 clubs, realistically 18, chase that pay day, and most of us are reliant on the whim of an owner. 

 

You touch on something that is not usually factored in, the complicity of fans. Every club has its share of fans demanding their club spend big with money it doesn't have and some owners will do just that because it gains them short term popularity.

My sympathy for fans of clubs in financial trouble is tempered by the fact that there was usually no sign of them being concerned when their club was spending recklessly and jeopardising its future.

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1 hour ago, chinapig said:

You touch on something that is not usually factored in, the complicity of fans. Every club has its share of fans demanding their club spend big with money it doesn't have and some owners will do just that because it gains them short term popularity.

My sympathy for fans of clubs in financial trouble is tempered by the fact that there was usually no sign of them being concerned when their club was spending recklessly and jeopardising its future.

Very true China.

While most think we are now being run the "right way" and benefiting from so doing, it's not long ago that many of our own fans were sceptical when the club introduced it's new strategy ( the 5 pillars). Many were also pretty scathing in their criticism of  SL's attempt to make the club self sustaining, suggesting that he was using ffp as an excuse for not being prepared to put his hand in his pocket. 

As commented elsewhere on this thread, one of the problems at this level is the huge financial imbalance created by parachute payments, which give a small number of clubs a massive advantage over the rest. It almost forces clubs to overspend, in a vain attempt to match relegated clubs' ability to buy or retain stronger squads. It does seem that the EFL needs to find a way of addressing this problem, in order to make the policing of ffp more realistic and meaningful.

 

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6 hours ago, downendcity said:

Very true China.

While most think we are now being run the "right way" and benefiting from so doing, it's not long ago that many of our own fans were sceptical when the club introduced it's new strategy ( the 5 pillars). Many were also pretty scathing in their criticism of  SL's attempt to make the club self sustaining, suggesting that he was using ffp as an excuse for not being prepared to put his hand in his pocket. 

As commented elsewhere on this thread, one of the problems at this level is the huge financial imbalance created by parachute payments, which give a small number of clubs a massive advantage over the rest. It almost forces clubs to overspend, in a vain attempt to match relegated clubs' ability to buy or retain stronger squads. It does seem that the EFL needs to find a way of addressing this problem, in order to make the policing of ffp more realistic and meaningful.

 

To my mind you have to do one of two things - either make parachute payments unallowable towards FFP or allow owners who can afford it and are willing to do so invest amounts up to the value of parachute payments without falling foul of FFP. That would though hit clubs who can`t afford to do that but are being run sustainably as they would never be able to break into the system - much like us with the current parachute payment situation. It would just push the problem further down the pyramid.

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I have never understood why the rules regarding parachute payments have not been strengthened such that parachute payments can only be used to satisfy current contracts I. E. those contracts in being at the point of relegation. They cannot be used for new contracts or as money for transfers etc. 

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Parachute payments definitely a thorny issue- they need reform for sure.

Not counting them for FFP is a good idea. So too is the idea of having them set aside for existing commitments- most notably wages.

A write down of assets ie player value also acceptable plus also I guess clauses that may carry over from PL.

Other variants I would also add, but maybe harder to police. You could let it be used under FFP but for high earners that the club needs to ship out- ie high earners who are either ineligible or loaned out- think UEFA have some version of it for FFP, in that certain players cannot be registered in CL if a club in moderate breach.

Or tie parachute payments to sales of better players, released in segments- but this probably would be the least realistic because you need a taker on both sides!

How do you police that, prove intent or otherwise? Dunno if you can!

A further problem I have is the differential in loss limit. No problem with £13m + allowables in the Championship but the problem is if a side has spent 2 years or more in the PL, the PL loss limit is £35m per season.

In layman's terms, it means that a regular side at this level can lose up to £13m + £13m + £13m- and say £5m per year in allowables ie youth etc, that's £54m. Fine!

However PL side can lose up to in penultimate PL season £35m + £35m in relegation season- and then £13m + allowables at this level. £88m assuming that the allowables remain the same but that PL doesn't include these...BIG difference, £98m if not.

That's before we even look at how parachute payments are used!! The one thing I am unsure on is whether that £35m is inclusive or exclusive of the allowables and if it's the latter then that may help a bit...

This is why I have the biggest issue with Aston Villa. £35m loss limit, x 2, latterly one, 3 years of parachute payments totalling nearly £90m yet still the stadium sale and leaseback despite all the inbuilt advantages!? Oh and the utter arrogance, lack of humility of their fanbase. The slick ****** Purslow too!

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I also wondered a bit earlier what the precise nature of Gibson's legal action vs the EFL might entail.

Whether for example, it could be not just about the stadium deals but also the projected accounts- or more accurately the apparent failure to factor these in.

Year 1- Real. Year 2- Real, Year 3- Projected by the CLUB. If eg the Year 3 Projections don't include a ground sale- thinking very specifically Sheffield Wednesday and then quite possibly Aston Villa and Derby- well that's a big mismatch right there.

I wonder if this rule and apparent failure to utilise it could be at the heart of his actions here.

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7 hours ago, Mr Popodopolous said:

I also wondered a bit earlier what the precise nature of Gibson's legal action vs the EFL might entail.

Whether for example, it could be not just about the stadium deals but also the projected accounts- or more accurately the apparent failure to factor these in.

Year 1- Real. Year 2- Real, Year 3- Projected by the CLUB. If eg the Year 3 Projections don't include a ground sale- thinking very specifically Sheffield Wednesday and then quite possibly Aston Villa and Derby- well that's a big mismatch right there.

I wonder if this rule and apparent failure to utilise it could be at the heart of his actions here.

The ironic thing is that Gibson has previously allowed the club to be liquidated so he could take over so his morals aren't all that. 

Also weren't there some dodgy intercompany transactions in their accounts that bent the rules a little while ago? 

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2 hours ago, OwlsonlineAdmin said:

The ironic thing is that Gibson has previously allowed the club to be liquidated so he could take over so his morals aren't all that. 

Also weren't there some dodgy intercompany transactions in their accounts that bent the rules a little while ago? 

Interesting stuff, how long ago was that? Will have to look up on it...football in 1980s did have some significant financial issues though. I thought he saved them from bankruptcy though.

Other clubs had I believe used liquidation prior to this to escape issues. Modern equivalent maybe Leicester gaining promotion in 2002-03, while in the same season they went into administration? Before any points deduction regulations etc.

The second one is quite interesting. I'm not fully sure it counted towards FFP- certainly given FFP is measured on profit (or at our level mainly loss!) before tax, then any profit gained on sale of a tax loss certainly should not!

Is a bit different too, because at that time the regulations allowed for a fine (possibly a hefty one) if promoted, an embargo if not.. and that's it!

No points deductions, demotion from top 2, top 6, probably nothing in the way of projected accounts for the current season either.

I do get the point you're making, that Gibson hasn't always adhered letter and spirit but both numerically and timescale wise there is a definite difference timescale wise!

Example.

Club Sells their ground in May 2018, let's say- or that's when it shows at Land Registry. Done within right reporting period etc, appears in 2017/18 accounts.

Because of the 3 year rolling period thing- it solves issues from 2015/16-2017/18, it provides a cushion in 2018/19 once 2015/16 drops off and provided it isn't blown that season, it helps all the way until the end of 2019/20. Only truly disappears off the calculations in the season commencing 2020/21!!

If it's at true fair market value and consistent with the correct accounting period, then it's acceptable I suppose- but it can't be right!

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49 minutes ago, Mr Popodopolous said:

Interesting stuff, how long ago was that? Will have to look up on it...football in 1980s did have some significant financial issues though. I thought he saved them from bankruptcy though.

Other clubs had I believe used liquidation prior to this to escape issues. Modern equivalent maybe Leicester gaining promotion in 2002-03, while in the same season they went into administration? Before any points deduction regulations etc.

The second one is quite interesting. I'm not fully sure it counted towards FFP- certainly given FFP is measured on profit (or at our level mainly loss!) before tax, then any profit gained on sale of a tax loss certainly should not!

Is a bit different too, because at that time the regulations allowed for a fine (possibly a hefty one) if promoted, an embargo if not.. and that's it!

No points deductions, demotion from top 2, top 6, probably nothing in the way of projected accounts for the current season either.

I do get the point you're making, that Gibson hasn't always adhered letter and spirit but both numerically and timescale wise there is a definite difference timescale wise!

Example.

Club Sells their ground in May 2018, let's say- or that's when it shows at Land Registry. Done within right reporting period etc, appears in 2017/18 accounts.

Because of the 3 year rolling period thing- it solves issues from 2015/16-2017/18, it provides a cushion in 2018/19 once 2015/16 drops off and provided it isn't blown that season, it helps all the way until the end of 2019/20. Only truly disappears off the calculations in the season commencing 2020/21!!

If it's at true fair market value and consistent with the correct accounting period, then it's acceptable I suppose- but it can't be right!

In 86, he let the club go as it was easier and cheaper to takeover the new entity than be saddled with the debts. 

"On 21 May 1986, the club called in the Provisional Liquidator and shortly afterwards, the club was wound up. In August, Rioch and 29 other non-playing staff were sacked by the Official Receiver and the gates to Ayresome Park were padlocked. Some players left, while others stayed under Rioch and coach Colin Todd. Without the £350,000 capital required for Football League registration, the death of the club was announced on Tyne Tees Television, and it seemed inevitable that the club would fold permanently. However, Steve Gibson, a member of the board at the time, brought together a consortium involving Bulkhaul Limited, ICI, Scottish and Newcastle Breweries and London businessman Henry Moszkowicz. With ten minutes to spare, Middlesbrough F.C. avoided missing the deadline and completed their registration with the Football League for the 1986–87 season with both a change of crest to a circular crest with the lion in the middle and the words "Middlesbrough Football Club 1986" around the circle, and a change of name to Middlesbrough Football and Athletic Club (1986) Ltd. With the gates to Ayresome Park having been closed by the bailiffs, Middlesbrough were forced to play their opening game of the season at Hartlepool United's home ground, Victoria Park"

 

 
 
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On 29/09/2019 at 11:35, OwlsonlineAdmin said:

In 86, he let the club go as it was easier and cheaper to takeover the new entity than be saddled with the debts. 

"On 21 May 1986, the club called in the Provisional Liquidator and shortly afterwards, the club was wound up. In August, Rioch and 29 other non-playing staff were sacked by the Official Receiver and the gates to Ayresome Park were padlocked. Some players left, while others stayed under Rioch and coach Colin Todd. Without the £350,000 capital required for Football League registration, the death of the club was announced on Tyne Tees Television, and it seemed inevitable that the club would fold permanently. However, Steve Gibson, a member of the board at the time, brought together a consortium involving Bulkhaul Limited, ICI, Scottish and Newcastle Breweries and London businessman Henry Moszkowicz. With ten minutes to spare, Middlesbrough F.C. avoided missing the deadline and completed their registration with the Football League for the 1986–87 season with both a change of crest to a circular crest with the lion in the middle and the words "Middlesbrough Football Club 1986" around the circle, and a change of name to Middlesbrough Football and Athletic Club (1986) Ltd. With the gates to Ayresome Park having been closed by the bailiffs, Middlesbrough were forced to play their opening game of the season at Hartlepool United's home ground, Victoria Park"

 

 
 

Thanks. I found it independently myself later.

At this time, football was in a bad financial state, I am assuming he liquidated or sought to liquidate it to buy debt? Middlesbrough and Gibson were not the first club to go down this route- there was precedence! Not saying I agree with it though, but again I refer you to Leicester 2002 administration. Definite similarities!

Still all told, I agree with Gibson in the main on this specific issue- maybe not so much about the cheats thing but looking at how they sold players etc, showed restraint in the market- I have to agree and IF there was a significant overvaluation and the readjusted amount takes into FFP breach, sanctions must follow for all clubs who have done this.

If the accounting period vs transaction discrepancy is proven or unable to be explained sufficently then further sanctions must follow- that's just one case AFAIK though, that's additional to the debate over the valuation.

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Maybe jumping the gun here and it's still early, only just out etc.

Put it this way, even when judged on one year- eg 2018/19 £13m + allowables, unless this is incomplete, it's possible that Birmingham as per their HKSE Results have failed FFP AGAIN!!

They're in HK$ which doesn't help but early indications make me think it's possible at least.

https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0930/ltn20190930601.pdf

https://www1.hkexnews.hk/search/titlesearch.xhtml?lang=en

They appear based on this, not to have done their stadium sale and leaseback thing after all, or at least not within that reporting period- unless it would show up somewhere else of course.

Bit puzzled as to why there isn't a bigger profit on transfers given Adams, Jota sales.

I mean, I treat it with caution because I struggle to fathom how they would set themselves up to fail again given a) What happened last time and b) They were working under/with an EFL BUSINESS PLAN!!

Actually, b) Maybe part of the issue. ;)

Serious note, I struggle to see how they would land themselves in it over successive periods- Governance??

EDIT: I suppose it is possible that their apparent stadium sale and leaseback will show up in UK Accounts, but not the Hong Kong ones- that aside I'm struggling to see how they haven't failed FFP once again even when we disregard 2016/17 and 2017/18 results so they can't be punished twice for the same losses.

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Okay, done a bit more research etc.

Seems that- and maybe I misinterpreted this at the time- their 3 year cycle reset from last season. So in 2018/19 because of the sanction in 2017/18 that brought about a new 3 year cycle?

In a way I can understand it, but in a way that doesn't seem right! Means that if you breakeven or make a legit profit over the following 2 years you can basically lose £39m + allowables in 2018-19 , that can't be right- that'd be ridiculous! Sure that wasn't how the media reported it after they got docked the points?

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Possibly futile, but I helped someone I know to draft an email to the EFL yesterday.

Usually they respond to people with at least "we cannot discuss any individual cases". Will post any reply that they get on here- they've (via me) asked them for something specific which likely wouldn't betray commercial confidentiality- but tbh may not exist.Typo in first bolded word may not help!

Quote

To whom it may concern,

 
Good morning. 
 
I am interested in the Birmingham Cirty case from last season.
 
Without going into anything confidential or commercially sensitive, could you please advise- I believe it was in the media at the time but not fully sure- of a link to a press release if one exists of the criteria that Birmingham City were judged on subsequent to the 3 year period that ended in 2017/18? So therefore the criteria for 2018/19, and perhaps subsequent to this.
 
Was it a new 3 year period of £39m + allowable costs, or was it £13m in 2018/19 + allowables?
 
Thank you.
 
Yours faithfully,
 
My mate (advised my me)

 

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I remember mentioning this or getting at it in the past, but glad to see it confirmed.

Answer of course was...

Now I am pretty bloody surprised that you can just revalue or get revalued a tangible asset (ie stadium) upwards just like that and bank the profit selling it to NSWE Stadium Limited (formerly the same company known as Recon Football Limited, Aston Villa Limited and initially I believe Vilden - as far as I can see there is no Revaluation Reserve, nor is this a new company created within the group to do the transaction but an existing one renamed! (Owners changed, granted).

Is there no expectation of a regular assessment ie annual of impairment and grounds for reversal, or adjustment- or is it simply fine as and when a company sees fit? No limitations on time either?

They certainly didn't reverse the full impairment or it would have been a bigger profit- reckon Villa Park book value (not the same as market value) in 2017/18 was around £28-29m.

Hopefully the attachments work- definitively proves it is an existing company within the group. If is an existing within the group, is there no scope for it to be classified as a transfer, inter or intra company- in which no money changes hands, no profit?

nswe stadium ltd.png

nswe 2.png

Edited by Mr Popodopolous
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Oooh a reply from the EFL to my mate!! :bounce: Going to read that statement now, but possibly read it before anyway.

Quote

 

Dear X,

 

Thank you for your e-mail.

 

You can find the statement released in relation to the decision on Birmingham City on our website, here.

 

We hope that this helps to answer your query.

 

Thank you for contacting the EFL.

 

Kind Regards

 

X

Supporter Services Department

EFL

 

Well, that was a waste of time :laugh:- directed me back to the statement and judgement.

Can't see anything specific in there but will re-read and see if there's anything I've missed.

Edited by Mr Popodopolous
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Sounds about right @Davefevs .

Though worth pointing out that it seems to take place under Randy Lerner's ownership.

Are there not rules in place about this kind of thing (the upstairs, downstairs valuations, not the owners!) though? Don't mean FFP, talking accounting and even legal.

Sometime later, I'm going to try to get a handle on it with this.

https://www.icaew.com/-/media/corporate/files/technical/financial-reporting/financial-reporting-faculty/financial-reporting-webinar-slides/2018/2018-09-27-accounting-for-impairments-under-frs-102--final-web.ashx?la=en

Looks quite fun ? but also quite long...Think under US Accounting standards, such a move wouldn't be permissible.

For FRS 102, on early reading and my general understanding it doesn't look too easy to justify- certainly the EFL seemingly waving it through seems below par about right under Harvey and co?

Edited by Mr Popodopolous
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3 hours ago, Davefevs said:

I’ll let you read fully and summarise! ?

Some lightish reading while I listen to City on the radio-! ;) Owers summary will get me through...

One thing I did note briefly in the FFP rules though it's unclear if it is exceptional items or not under the new or old regs.

Quote

 

2.4 The following items may be the subject of an application for treatment as a Permitted Exceptional Item under these Rules by a Championship Club:

2.4.1 The timing of transfer fund receipts and their subsequent use in financing replacement players (for example where a Championship Club recognises a transfer receipt in one Reporting Period but then utilises those funds for player purchases in a subsequent Reporting Period);

2.4.2 Post year end player sales proceeds which can be demonstrated to have been used to fund previous losses;

2.4.3 Costs (net of any insurance proceeds) associated with a career ending injury;

2.4.4 Exceptional litigation and associated professional fees;

2.4.5 Exceptional bad debts; and

2.4.6 Stadium revaluation losses or reversal of losses including depreciation adjustments to the extent that these are recognised in the profit and loss account in line with FRS 15 or equivalent International Accounting Standard.

2.5 By way of further illustration in the event a Championship Club suffers a material loss through, say, its major contracted sponsor being unable to fulfil its financial obligations under that contract or where a material bad debt arises through the liquidation of another football club both these items would be covered by 2.4.5 above.

2.6 The League may from time to time add to the list of Permitted Exceptional Items set out in paragraph 2.4 without requiring an amendment to these Rules.

2.7 The following items cannot be the subject of an application for treatment as a Permitted Exceptional Item under these Rules by a Championship Club:

2.7.1 profit / loss on the disposal of player registrations;

2.7.2 amortisation / impairment of player registrations (subject to 2.4.3 above); and

2.7.3 any costs associated with a change in team management including, by way of example and without limitation, termination payments to former managers, or compensation fees to former clubs.

 

These need to be applied for, and heavily scrutinised against the backdrop of the FFP situation of the club, not just granted- well that's my interpretation anyway!

Reversal of losses seems like the closest thing to reversal of impairment- and I'd suggest on first glance that suddenly reversing a loss, revaluing a tangible fixed asset (okay, stadium!) back up 3 years on from a major impairment of £44.8m is well outside the spirit of the regs- but not just the spirit and should've if at all possible been excluded from FFP calcs! Seems incredibly convenient...or valued by an independent valuer before the all-clear given. That latter point also would go for Derby, Reading, Sheffield Wednesday- and if they've done it, Birmingham.

That could be another element of Gibson's case perhaps, regarding the regs not being applied correctly.

Unsure of 11.3.1 still applies but if it does:

Quote

11.3.1 the overall objective of seeking to prevent any attempt to circumvent the Financial Fair Play Objectives as defined in Regulation 18.1 of the Regulations of The League;

It well and truly could be considered to cover the above!!

Under duties of disclosure- and this is most definitely under the new regs, but in part it's unclear where the old ones end and the new ones start.

Quote

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

Okay, Middlesbrough considering suing Derby probably doesn't fall under this either! Neither for that matter arguably does Middlesbrough considering legal action vs the EFL.

Still think- though maybe clutching at straws- that the EFL not making a public statement as Purslow purportedly wanted declaring that they had passed FFP could end up making things interesting. Certainly if they make a quick return!

Edited by Mr Popodopolous
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