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The Championship FFP Thread (Merged)


Mr Popodopolous

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This could mean two things.

It could mean for one that the EFL are going to go light in terms of an ideal punishment owing to Covid. Or it could mean- and I hope it means this- that they are looking to press ahead with cases, claims and only amend FFP due to Covid, not abolish or suspend it!

Barnsley Chef Executive too:

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He told BBC Radio Sheffield: “Getting assurances from the EFL, I've realised to be almost impossible, but that being said there are wheels in motion and there are rumours of penalties being handed down relatively soon. Whether that happens or not I'm not sure.

“I do agree with Paul [Conway], our board do, and most of our supporters would after feeling the after-effects of going down [in 2017-18] and Bolton were not penalised until later on.

“If these teams that were charged in that season are not penalised in that same season, the clubs that are following the rules don't benefit from that. There's a huge flaw in the system.

“How can we manage this in a way where clubs are abiding by the rules, trying to be responsible aren't penalised because the process can't be played out in an appropriate amount of time?”

I believe moving forward this will be possible- now it has someone who knows what is going on and is committed to this system in charge! I think this system is/was a bit above Harvey's paygrade tbh- but come back in a year or two under this system if it's still in place and in-season points penalties will be quite possible IMO. As the rules indeed allow for.

Wasn't actually aware Bolton failed FFP two years ago so I'm not quite sure what he is referring to- was admin dodged maybe?

https://offthepitch.com/a/stadium-sales-efl-cases-against-championship-clubs-still-ongoing-and-could-rumble-next-season

This too- I'm no longer a subscriber, it kinda lapsed but maybe I'll need to re-subscribe! This was 20th May and things may have developed from then?

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https://halftimepie.co.uk/2020/06/11/efl-punishments-should-be-applied-in-the-same-season/

Agreed- this is actually 2 years late due to a) Poor oversight and b) Those rules being transitional between the old rules.

However the only thing that makes sense is that the Projected Accounts- 'T'- are applied in full and timely manner! It does mention a perception of sour grapes in the article but think they're spot on.

Those relevant rules in full...

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1.1.12 T means the Club’s Accounting Reference Period ending in the year in which assessment pursuant to Rules 2.2 to 2.9 takes place, and:

(a) T-1 means the Club’s Accounting Reference Period immediately preceding T;

(b) T-2 means the Club’s Accounting Reference Period immediately preceding T-1;

(c) T+1 means the Club’s Accounting Reference Period immediately following T; and

(d) T+2 means the Club’s Accounting Reference Period immediately following T+1.

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2.2 Each Club shall by 1 March in each Season submit to the Executive:

2.2.1 copies of its Annual Accounts for T-1 (and T-2 if these have not previously been submitted to the Executive) together with copies of the directors’ report(s) and auditor’s report(s) on those accounts;

2.2.2 its estimated profit and loss account and balance sheet for T which shall:

(a) be prepared in all material respects in a format similar to the Club’s Annual Accounts; and

(b) be based on the latest information available to the Club and be, to the best of the Club’s knowledge and belief, an accurate estimate as at the time of preparation of future financial performance; and

2.2.3 if Rule 2.5 applies to the Club, the calculation of its aggregated Adjusted Earnings Before Tax for T, T-1 and T-2 in a form approved by the Executive from time to time and which as at the date of these Rules is set out in Appendix 1.

T is most relevant in this case- Projected Accounts for 'T' and real accounts it's T-1 and T-2...

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2.5 If the aggregation of a Club’s Earnings Before Tax for T-1 and T-2 results in a loss, any consideration from Related Party Transactions having been adjusted (if appropriate) pursuant to Rule 2.3, then the Club must submit to the Secretary the calculation of its Adjusted Earnings Before Tax for each of T, T-1 and T-2.

In short, IF the plan to sell Pride Park, Madejski Stadium and most contentiously in terms of Year end, Hillsborough were in those accounts they should have been checked independently in March of 2018!! Pretty sure Sheffield Wednesday's would not have been, Derby's might have been and Reading's who the hell knows- if it's not in there they fail- there and then!

In a similar vein, should Birmingham not have been judged on their one year figure in March 2019- I suppose EFL didn't want or want to risk a double punishment but if it wasn't proposed then it's an overspend...maybe they had big summer sales projected in March 2019, who knows.

Likewise, if Aston Villa's not in there for 'T'- and this is 'T' I'm referring to in all cases, that's a fail- question is the size but a fail nonetheless and points off that same season. Or should be.

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2.9 If the aggregation of a Club’s Adjusted Earnings Before Tax for T, T-1 and T-2 results in a loss that exceeds the Upper Loss Threshold (calculated in accordance with Rule 3) then:

2.9.1 the Executive may exercise its powers set out in Regulation 16.20;

2.9.2 the Club shall be treated as being in breach of these Rules and accordingly The League shall refer the breach to the Disciplinary Commission in accordance with section 8 of the Regulations.

The power and means are there for genuine in-season punishment. Shaun Harvey had other ideas though??

The Aston Villa projected accounts last March, ie 'T' cannot have included Villa Park sale and leaseback because Matt Lawton had a piece not long after the Birmingham verdict warning of trouble ahead for 3 sides- and cited Aston Villa's loss of £60m! That loss would not have included, I assume, promotion bonuses or the payment to Xia but would likely have included HS2- therefore it would have rolled up to around £60m excluding Villa Park sale!

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Two clubs have not yet submitted accounts for last season- no prizes for guessing who? ?

Both naturally extended their Reporting Periods due to Covid. So did some other clubs- Brentford and Reading- but both did submit accounts by the end of April.

Derby is quite interesting due to the number of companies involved!

Gellaw Newco 202 purchased Pride Park as we know. These accounts were due on 19th March 2020 as the company was incorporated at CH on 19th June 2018- could be a CH error but it's possible they forgot to apply for the Covid extension. Showing as almost 3 months late!

This is controlled by Gellaw Newco 204 Limited- or at least in terms of Persons with Signifcant Control. Due 18th March 2020 as company incorporated at CH on 18th June 2019- as above basically!

Gellaw Newco 203 is interesting- because it now is listed as the significant controlling party of Derby. and indeed of Sevco 5112. 

Sevco 5112 still is the controlling party or listed as Persons of Significant Control for Club DCFC Limited, Stadia DCFC Limited and The Derby County FC Academy Limited.

The Consolidated accounts therefore for the club and these, which were once Sevco 5112, are now it would seem Gellaw Newco 203 Limited.

Gellaw Newco 203 Limited are...overdue! Of course. Listed as due by 18th March 2020- as with the above, all made up to 30th June 2019.

As for the smaller companies within that make this all up, ie Club DCFC Limited, Stadia DCFC Limited, The Derby County FC Academy Limited, these all had their due dates moved in line with Covid- the 3 overdue could just be an error. The Derby County Football Club Limited also got their shifting of due at CH date in due to Covid- so even did Derby County Community Trust!

Sheffield Wednesday is easier as there are less companies at least for now, but theirs are not due until 30th July 2020! Was end of April but they of course took advantage...again!

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One club who I believe intend to stick to it, were the first in so to speak.

Birmingham- Bellingham deal linked as on the way, £20m. I think I have a lot less issue with St Andrews sale and leaseback as it looked fair value, the rent seemed fair AND they were already punished, business plan, got wage bill down by 1/6 from 2017/18-2018/19 and have sold.

Unsure which set of accounts it'd go in. Perhaps it doesn't matter but they sold Jota in May or early June 2019, Adams and Vassell this season and now Bellingham- believe they have some high earners coming to the end as well. This at this stage is materially different from Derby, Reading, Sheffield Wednesday, of those clubs still in this League under the microscope. They appear to have been punished and as it stands, behaving themselves.

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Reckon FFP will be done away with. All the clubs have suffered major losses the last few months and to try and legislate now, is going to be a minefield.

Cheats like Villa do prosper - cant see them being punished now.

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On 15/06/2020 at 19:43, Mr Popodopolous said:

Two clubs have not yet submitted accounts for last season- no prizes for guessing who? ?

Both naturally extended their Reporting Periods due to Covid. So did some other clubs- Brentford and Reading- but both did submit accounts by the end of April.

Derby is quite interesting due to the number of companies involved!

Gellaw Newco 202 purchased Pride Park as we know. These accounts were due on 19th March 2020 as the company was incorporated at CH on 19th June 2018- could be a CH error but it's possible they forgot to apply for the Covid extension. Showing as almost 3 months late!

This is controlled by Gellaw Newco 204 Limited- or at least in terms of Persons with Signifcant Control. Due 18th March 2020 as company incorporated at CH on 18th June 2019- as above basically!

Gellaw Newco 203 is interesting- because it now is listed as the significant controlling party of Derby. and indeed of Sevco 5112. 

Sevco 5112 still is the controlling party or listed as Persons of Significant Control for Club DCFC Limited, Stadia DCFC Limited and The Derby County FC Academy Limited.

The Consolidated accounts therefore for the club and these, which were once Sevco 5112, are now it would seem Gellaw Newco 203 Limited.

Gellaw Newco 203 Limited are...overdue! Of course. Listed as due by 18th March 2020- as with the above, all made up to 30th June 2019.

As for the smaller companies within that make this all up, ie Club DCFC Limited, Stadia DCFC Limited, The Derby County FC Academy Limited, these all had their due dates moved in line with Covid- the 3 overdue could just be an error. The Derby County Football Club Limited also got their shifting of due at CH date in due to Covid- so even did Derby County Community Trust!

Sheffield Wednesday is easier as there are less companies at least for now, but theirs are not due until 30th July 2020! Was end of April but they of course took advantage...again!

According “her indoors the Company Secretarial Administrator”, they have 3 months after those due dates to file. The newco’s have 21 months to file as you say but they have until the end of the due month. Even if they are in by the end of June, they probably won’t show for a couple of weeks due to CH backlog. 
Don’t shoot the messenger. :) 

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12 minutes ago, Port Said Red said:

According “her indoors the Company Secretarial Administrator”, they have 3 months after those due dates to file. The newco’s have 21 months to file as you say but they have until the end of the due month. Even if they are in by the end of June, they probably won’t show for a couple of weeks due to CH backlog. 
Don’t shoot the messenger. :) 

The 3 month extension? That figures, thanks.. Was given to all companies in the wake of Covid related issues IIRC. It seems telling though that thje two to really stretch it out are those two- originally due end of March, so now end of June- I wonder why the Newcos are showing as overdue, perhaps they forgot to put in for it which is odd given one owns the ground, another is the controlling party of the one that owns the ground and the other is the controlling party of the club.

Incidentally, I may have misinterpreted this but it seems Sheffield Wednesday's hearing is underway! Read online, EFL seem to have brought things forward...?

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17 minutes ago, Mr Popodopolous said:

The 3 month extension? That figures, thanks.. Was given to all companies in the wake of Covid related issues IIRC. It seems telling though that thje two to really stretch it out are those two- originally due end of March, so now end of June- I wonder why the Newcos are showing as overdue, perhaps they forgot to put in for it which is odd given one owns the ground, another is the controlling party of the one that owns the ground and the other is the controlling party of the club.

Incidentally, I may have misinterpreted this but it seems Sheffield Wednesday's hearing is underway! Read online, EFL seem to have brought things forward...?

They may not have done, they had to apply before they became overdue so maybe they were just too late. It's also worth noting that CH have been really struggling to keep up with demand. So many companies either restructuring or going to the wall completely, they are taking weeks to reply to mail apparently.

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As an aside, though it might happen, Aston Villa fans on Twitter appear to take it as red that because UEFA have made some Covid related amendments that the EFL has been too. In fact, it has not yet been scrapped/relaxed/deferred/averaged- whatever the UEFA arrangements were.

I'd struggle to justify suspending it for a year in some ways, due to the differential between the two divisions and the split among clubs. Covid related losses yes, but beyond that...? If you suspend it for a year, then clubs can gamble further knowing that judgement day wouldn't come for a year, maybe two- maybe in the PL and if not would destabilise the League further financially.

I'm not entirely convinced that you would get a majority of Championship clubs- it's 16/24 now needed whereas before it was 18/24- who would vote for it. Covid loss adjustments aside of course. If eg they want Aston Villa investigating would clubs vote for a suspension/averaging of 2 years into one? I don't know!

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It has but I think the hearing is meant to last this week, assuming they tried to bring it forward to allow for appeal time to try and get it finalised by end of season?

It's a long way from the original regs which was meant to have in-season breaches heard at the time, ie the existing season- if a club over in Year 3 from Projevcted Accounts submitted in March, then referred to Disciplinmaru Commission in late March/early April!

Very interesting post from Owlstalk too...

Quote

Chansiri also banged on about having 'friends in the EFL'.   So, make of that what you will.

 

  • A genuinely helpful and knowledgeable EFL advisor, who just happened to give out (rather obviously) duff info..?

      or

  • Someone who was 'helping' him out by finding a way around the rules?  Interestingly, no longer employed by the EFL

 

Sorry, but either way, Chansiri and his accountancy team should have understood that you can't transfer a transaction made in July one year, into accounts from the previous year. It's just silly, and confirms that he is (frankly) not the sharpest tool in the box, and very naive. It is his job to get this stuff right FFS, and had he not spunked away so much money on dross during previous seasons, he would not have even had to entertain selling the club's home.

I know what my money is on...I wonder if a certain ex EFL CEO was shall we say less than helpful to enforcement of their own regs?? ? ?

I've always wondered about this bit...?

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10 minutes ago, AnAstonVillafan said:

Cheat is possibly an unfair and strong term but I DO believe there are unresolved issues in that 3 year period which the EFL must reinvestigate as and when you return- remember new regime, Parry and Harvey seemed to or seem to have very different ideas about how strictly or otherwise FFP should be enforced.

Derby and Sheffield Wednesday seemed to be declared clear in 2019, or May 2019, let alone summer of 2018- yet an investigation seemed to be launched in September 2019, problems were found and there they are both charged and one has EFL hearing starting today. Point is that club statement isn't necessarily the final word on the matter.

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Read about Aston Villa and been doing a bit of reading about sale and leaseback etc.

Now this might be irrelevant, red herring, specialist but:

Quote

"Amounts due under non-cancellable operating leases are as follows"

A definition of Operating Lease:

Quote

3. Operating Lease

Operating Leases are a popular option for schools and colleges as a means of supporting on-going equipment investment.

This facility is suitable if you will not need the equipment for its entire working life. Payments appear on your profit and loss account and as the asset is only kept for a defined period, the value of the asset and corresponding finance liability does not appear on your balance sheet.

The finance company will take the asset back at the end of the agreement.

Find out more about our Operating Leases here.

Sounds like a questionable transaction to me- who knows what the fine detail of these sale and leasebacks are for a start. Though Reading's looks okay and so does Birmingham in terms of lease length and rent payable.

Also:

Quote

Accounts receivable financing is typically structured as an asset sale. ... This method can be similar to selling off portions of loans often done by banks. A business receives capital as a cash asset replacing the value of the accounts receivable on the balance sheet.30 Jul 2019

I maintain, for FFP it has to be suspect.

I'm interested too that the Lease Receivables in NSWE UK do not extend beyond 5 years. This calls market value into question if the lease does not extend some way into the future.

To me, the only true fair one might be if it was a 100% arms length transaction with a) A bank b) A finance company c) A property management company. I am sure there are other examples but those are 3 that spring to mind that would pay a genuine price and charge a genuine rent.

I get the impression that Aston Villa, Derby and Sheffield Wednesday on those terms would not pass muster! Birmingham might well do, Reading it's hard to say but location and price in their favour.

Just imagine though- you're a club needing an asset sale and leaseback deal to pass FFP. A bank know this to be the case, or a finance company, or a property management company- are they really going to offer £56.7m and rent at £2.6m per year? They're a commercial company- they'll look to squeeze the best deal they can! Same for Derby, same for Sheffield Wednesday! £60m for Hillsborough, £81.1m for Pride Park- having a laugh!! How can or should it be truly commercial if there is no counterparty pressing for a good deal.

Put it this way, the club would need it much more than the Institution- it'd be nice to have for the latter but commercially it'd make no sense- a nonsense if the Institution big enough to afford such a transaction!

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This is quite the scoop for Reading Live!? Something tells me it's lost in translation, or an extrapolation of UEFA decision to EFL but anyway...?

In the article two very interesting bits.

Quote

Thankfully from Reading's perspective Financial Fair Play is being waved by the authorities this year so they can breathe a sigh of relief - temporarily at least.

Waved- waived surely? Makes my first doubt kick in.

Quote

It's a very concerning time for everyone at the club. The decision to scrap FFP this year is a slight relief, but it should not distract from the bigger picture.

To summaries, Reading Live have apparently beaten all other media outlets in the world or the UK anyway- reliable journos who deliver FFP news that perhaps shouldn't be in the public domain e.g. Matt Hughes, Matt Lawton, John Percy- David Conn as well, though these other areas.

These small nuggets contained within an article, to the news about FFP in the Championship?? Strange times indeed! :yes:

If it's UEFA one they are referring to, then to say it's been scrapped is of course a simplification!

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Some on Owlstalk appear to be looking for a straw and gripping it hard. ?

Quote

Thats the way I see it and I believe the club have the evidence to that effect. There are also issues re time delay of land registration but that has to do with the Land Register Service , who I know from experience are very slow to sort the paperwork out.

While it's not uncommon for the Land Registry to be slow, the fact it was dated as a sale on June 28th and out by the end of August suggests that it does not take a year to filter through, although it's possible I guess! Past precedent for sales would suggest not however, Aston Villa's did not take anymore than a month or two! Birmingham and Reading, who knows- don't think it's there yet! Derby, I assume took somewhat less than a year but nobody really considered looking at that time as it'd have been under wraps until accounts came out- Derby were the trend setters.

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They're perhaps similarly chippy on OwlsOnline too, at times it seems.

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Defence should be an overwhelming bias against our club by scouser Parry, eager for revenge of any type 

Quote

I believe the club would be very justified in ensuring that Parry has no say in the decision as there is clearly a risk of his not being objective given his previous involvement with LFC and the Justice campaign

Quote

We seem very confident in our case. The EFL more or less had to pursue their claims which took a turn when Pavictimbastardrry got involved. Down to the adjudication team to make sense of it and interpret events how they happened. Cannot see the hearing lasting long but the aftermath could drag on.  

Do they want vinegar with their chips??

Seems they make such claims of possible conflict of interest, but have no view whatsoever on the guy who signed off their last accounts from the auditors, having been either a current or a relatively recent ST holder at Hillsborough as a friend found last summer. :whistle2:

He's been signing them off for years but never any controversy until now tbh! The accounts were in 2017/18, dated as signed June 2019- in an article in September 2015 that guy was stated in an article as "having a season ticket passion at Hillsborough". I don't have the precise wording to hand but that's pretty recent isn't it??

As it goes I do now!

https://archive.weareumi.co.uk/yorkshire/2015/09/28/news/golf-s-loss-was-firm-s-gain-6443/

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It was a small matter of 38 years ago that John Warner joined BHP as a chartered accountant. But those first steps on the ladder were not what I would expect from the immaculately dressed polite, almost reserved, gentleman in front of me. After university he spent a year “playing golf and working in a pub” before a “significant” number of job interviews followed.

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Out of the office, he and his wife take their dog walking on the North York Moors and the Dales to blow away any lingering cobwebs. The golf is still a hobby as well, with an aim to play the top 100 courses, as well as a season-ticket passion for Sheffield Wednesday. John is a fascinating mix. He has deep knowledge and understanding of the older traditions - which firms lose track of at their peril – and of the 21st Century needs of an accountancy business.

Sheffield Wednesday's auditors? BHP.

Guy on the accounts from said auditors, the Senior Statutory Auditor- John Warner!

?

Further backup of course.

Quote

JOHN WARNER, BHP’s (formerly Barber Harrison & Platt) quietly spoken managing partner, has chalked up an impressive 38 years at the firm, the Yorkshire and Derbyshire chartered accountancy practice.

That’s a good innings by any standards.

When he started at the firm in 1977, the Queen’s Silver Jubilee and punk rock were dominating the nation’s consciousness.

https://www.accountancyage.com/2015/06/19/best-practice-bhps-john-warner/

So I suppose the q is, would a season ticket passion at the club you are auditing especially with FFP issues looming and a contentious transaction taking place be a slight risk of a conflict of interest?

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Reading OwlsTalk is an interesting one. Mixed views on the case of course but a couple of key points- one which highlights further the fact the EFL, Harvey may have messed up/fudged the issues 2 years ago- not just with them btw.

Makes no mention of Projected Accounts- which is odd. I very much doubt even Sheffield Wednesday would claim that the ground sale would have been in March 2018 Projected Accounts. Without that, they fail- just a question of by how much!

This case will set a real precedent- will determine how those against others who have pulled similar accounting tricks

Little mention on that thread of the £22.25m valuation at DRC in 2014 either, or the fact that the EFL may have different criteria to that which the club chose? That's an unknown tbh, the last bit. In other words, both could be right just that one might be wrong for FFP! I'm really struggling with such a rise from February 2014 to summer 2018/2019 however!

Fair enough though, this post offers a bit more balance.

Quote

In all seriousness though, how dodgy do both things look to the (admittedly) untrained eye?

 

Ground sold July 18, accounted for March of the same year.

 

Ground worth, oh I don't know 20-30m at best, valued conveniently at 60m, which is the amount needed to cover FFP losses.

 

 

Whatever the outcome, I am sorry to say that (and to quote George from Blackadder goes Forth).. someone looks as guilty as a puppy sat next to a pile of poo.

I hope Shaun Harvey can be called as a witness...where there are messes in the EFL, he is never far away it seems!!

They certainly don't mention that their auditor has been an ST holder at Hillsborough in recent history. 2015 and maybe more recent than that.

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Some interesting takes on FFP out there. 

Reading a bit more of that OwlsTalk thread. Apparently insurance value is equivalent to market value??

I'm no valuer but that seems at odds with what I Do know and have read up on valuation and valuation methods. I think the argument by that poster is that insurance value=ideal sale price. Not quite sure how that would work- anyone?? 

They also cited the method of DRC which was of interest. Replacement to the same specificactions at todays prices, adjusted for obsolescence/depreciation. 

Fair enough. They didn't seem to mention though that in February 2014 it was valued using this said same method and came in at £22.25m.

Aston Villa. They're bullish as ever on Twitter. For a start a reasonable chunk of their fans (OK, twitter output) appear to believe that the UEFA adjustment to FFP means it's suspended and carte blanche. Less so in recent days tbh. 

The prices they're suggesting are bullish though. In a post covid world? 

Grealish - £80m

McGinn- £50m

Mings- £35m.

£165m in sales- in Covid times-for albeit their 3 best players. For a relegated side. Bullish certainly!!

A side who if they came down would like all other sides who drop straight back have Year 1 and 2of parachute payments then... :tumbleweed:

It could be idiots giving the rest a bad name but I really can't abide their fanbase in decent chunks, based on this, Smith, Purslow, Grealish...they're easy to dislike put it that way!

As for FFP at this level, still nothing decided yet it seems.

Quote

Bowen on FFP: "I'm not 100% certain whether it will be waived, it will need clarification. They are still in discussions, whatever they decide the club has to make sure it's in line and in the strongest situation for next season." #readingfc

So that ReadingLive 'scoop' may have jumped the gun a tad! :laughcont:

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There is but one factor for Derby I had kind of overlooked.

I wonder if, the stadium sale- not only was to cover the losses on release but maybe was to cover Impairment of Player Registrations over a number of years. Because unlike Impairment of Tangible Fixed Assets, these quite rightly count towards the FFP loss. If the EFL's valuation of Pride Park indeed was £49-50m, this blows a huge hole in it.

Reason I bring it up today is that the accounts for the following are due today- and indeed no update suggests the following overdue but could be Covid related technical glitches:

  • Gellaw Newco 202 Limited
  • Gellaw Newco 203 Limited
  • Gellaw Newco 204 Limited

These were all due on 18th or 19th of March 2020 and are quite material, and here is why- just to remind and refresh:

  1. Gellaw Newco 202 Limited purchased Pride Park of course. Or the company controlled ultimately by Mel Morris which purchased it. Was at CH on 19th June 2018, accounts made up to 30th June 2019- due 18th March 2020 so before lockdown as it goes!
  2. Gellaw Newco 204 Limited- This is fairly simple or appears to be, being the company who controls Gellaw Newco 202 Limited- again the ultimate controlling party is Mel Morris. This took control the date of the Stadium Purchase, 28th June 2018...
  3. ...Gellaw Newco 201 Limited- A short-lived company, incorporated at CH on 19th June 2018 which was the controlling party of Gellaw Newco 202 Limited- but not for long! Because on sale day, they were no longer in control and this was Gellaw Newco 204 Limited! Special Resolution to wind up this company on the same day and finally came through at CH on 21st July 2019. Had only a cursory look but the company that wound it up is also the same as, or linked to the company who do their accounts.

These are the relatively straightforward bits.

Gellaw Newco 203 Limited. This was incorporated on 18th June 2018, therefore accounts made up to 30th June 2019, were due on 18th March 2020, Seems fairly minor because it is small beer...no wait, it's the Controlling Party/Person with Significant Control for Derby!!

Now some fun begins. These companies all took the 3 month extension without problem but keeping track of them is a bit tricky!!

  1. The Derby County Football Club Limited- Controlling Party, Gellaw Newco 203 Limited.
  2. Club DCFC Stadia Limited- Sevco 5112 Limited
  3. DCFC Stadia Limited- Sevco 5112 Limited
  4. The Derby County Academy Limited- Sevco 5112 Limited
  5. Sevco 5112 Limited- Gellaw Newco 203 Limited.

Some fun and games here, because although Derby have the revenue of all of these, give or take, they appear to have hived off some of the wages and varied other costs to Sevco 5112 Limited!

The last 3 are all controlled by Sevco 5112 Limited, Derby County FC Limited controlled by Gellaw Newco 203 Limited and Gellaw Newco 203 Limited listed as the Person of significant control for Sevco 5112. Controls the lot?

Oh look, Internet never forgets- Gazette winding up Order for Gellaw Newco 201! :)

https://www.thegazette.co.uk/notice/3060647

Liquidators here from the same company as the auditors for Derby in general? Dunno what to make of it. Smith Cooper the company in q.

As for the football club, well the Controlling party used to be Sevco 5112 Limited, which in turn controlled by Gellaw Newco 203 Limited which ultimately controlled by Mel Morris for The Derby County Football Club Limited that is. Now it appears to have cut out the middle man aka Sevco 5112 Limited.

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 Hi @AnAstonVillafan

Cheating is an emotive and loaded term but there's a difference between blatant and subtle cheating. Exceeding limits knowingly during a 46 game season and then selling a stadium 10 days before Accounting Reporting Period ends has a feeling of unfinished business to me, at least from the perspective of other clubs and the EFL.

Not least post Parry, post Bury. The precedent set by reopening cases with respect to Derby and Sheffield Wednesday.

This fixed asset business is a loophole that EFL (I'm looking at Harvey) should have twigged and closes back in 2016 or 2017 at the latest.

Should've had a standardised amortisation method too or had in rules that they reserve the right to judge it all straight line and adjust for FFP purposes where necessary.

Riaz can speak for himself but any thoughts on the technical points? 

1) The method of payment for Villa Park. Loans Receivable and it appears to have slightly differing terms- NSWE Stadium Limited sheds a bit of light. 

2) Cash flow and payments. Nothing in the cash flow statement for Aston Villa Limited or NSWE UK. Not a deal breaker or clinching factor in itself but raises eyebrows. 

3) The valuation. We have no idea what method was chosen, indeed we don't for any of the stadium transactions. There clearly are multiple ways in which such an asset can be valued but the EFL have their own criteria.

Pride Park is a useful reference point- Derby's apparent independent valuation £81.1m, EFL's was £49-50m.  That's a significant and material divergence.

4) Exceptional Operating Income. Now the EFL as the I understand it are meant to be judging these applications for all clubs on a case by case basis for FFP purposes in real time. The year of the Projected Accounts perhaps though it be retrospective as well. It's HS2?

Well the issue I have is that Exceptional Operating Income appears x 2 for the same issue. Exceptional surely means significant hence a one off.

Clearly was recurring so I think there is a case to be made for exclusion of the second batch for FFP purposes if nothing else. 

5) Projected Accounts. Now this bit is very interesting. As fans we have no idea what goes in. I can't speak for other clubs but I do recall talk of a £60m loss from 22nd March 2019. Projected Accounts- and at this time time you were on a bit of a charge but in no way guaranteed promotion.

As such, promotion bonuses would surely not have been in there. Neither would the Xia payment in the event of promotion quite likely. However I reckon the HS2 may well have been and other issues would broadly have stacked up. 

This suggests to me and the sums would stack up, that your stadium sale was not in there as per March 1st submission of Projected Accounts.

Given the Xia and promotion payments would automatically have been I believe excluded anyway, this suggests that the stadium sale was decided after the submission of these Projected Accounts at start of March of the existing season, that all Championship clubs do.

A basic reading of the regs shows that 2 seasons of real accounts and one of Projected Accounts if exceeding limits is a basis for punishment or a Disciplinary Commission there and then!! 

Interested indeed in your thoughts.

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13 minutes ago, Mr Popodopolous said:

 Hi @AnAstonVillafan

Cheating is an emotive and loaded term but there's a difference between blatant and subtle cheating. Exceeding limits knowingly during a 46 game season and then selling a stadium 10 days before Accounting Reporting Period ends has a feeling of unfinished business to me, at least from the perspective of other clubs and the EFL.

Not least post Parry, post Bury. The precedent set by reopening cases with respect to Derby and Sheffield Wednesday.

This fixed asset business is a loophole that EFL (I'm looking at Harvey) should have twigged and closes back in 2016 or 2017 at the latest.

Should've had a standardised amortisation method too or had in rules that they reserve the right to judge it all straight line and adjust for FFP purposes where necessary.

Riaz can speak for himself but any thoughts on the technical points? 

1) The method of payment for Villa Park. Loans Receivable and it appears to have slightly differing terms- NSWE Stadium Limited sheds a bit of light. 

2) Cash flow and payments. Nothing in the cash flow statement for Aston Villa Limited or NSWE UK. Not a deal breaker or clinching factor in itself but raises eyebrows. 

3) The valuation. We have no idea what method was chosen, indeed we don't for any of the stadium transactions. There clearly are multiple ways in which such an asset can be valued but the EFL have their own criteria.

Pride Park is a useful reference point- Derby's apparent independent valuation £81.1m, EFL's was £49-50m.  That's a significant and material divergence.

4) Exceptional Operating Income. Now the EFL as the I understand it are meant to be judging these applications for all clubs on a case by case basis for FFP purposes in real time. The year of the Projected Accounts perhaps though it be retrospective as well. It's HS2?

Well the issue I have is that Exceptional Operating Income appears x 2 for the same issue. Exceptional surely means significant hence a one off.

Clearly was recurring so I think there is a case to be made for exclusion of the second batch for FFP purposes if nothing else. 

5) Projected Accounts. Now this bit is very interesting. As fans we have no idea what goes in. I can't speak for other clubs but I do recall talk of a £60m loss from 22nd March 2019. Projected Accounts- and at this time time you were on a bit of a charge but in no way guaranteed promotion.

As such, promotion bonuses would surely not have been in there. Neither would the Xia payment in the event of promotion quite likely. However I reckon the HS2 may well have been and other issues would broadly have stacked up. 

This suggests to me and the sums would stack up, that your stadium sale was not in there as per March 1st submission of Projected Accounts.

Given the Xia and promotion payments would automatically have been I believe excluded anyway, this suggests that the stadium sale was decided after the submission of these Projected Accounts at start of March of the existing season, that all Championship clubs do.

A basic reading of the regs shows that 2 seasons of real accounts and one of Projected Accounts if exceeding limits is a basis for punishment or a Disciplinary Commission there and then!! 

Interested indeed in your thoughts.

I wouldn't want to be in Mrs Popodopolous's shoe if she overspends on the household budget!  :)

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On 24/06/2020 at 17:29, Mr Popodopolous said:

In the article two very interesting bits.

Thankfully from Reading's perspective Financial Fair Play is being waved by the authorities this year so they can breathe a sigh of relief - temporarily at least.

Waved- waived surely? Makes my first doubt kick in.

To summaries, Reading Live have apparently beaten all other media outlets in the world or the UK anyway- reliable journos who deliver FFP news that perhaps shouldn't be in the public domain e.g. Matt Hughes, Matt Lawton, John Percy- David Conn as well, though these other areas.

These small nuggets contained within an article, to the news about FFP in the Championship?? Strange times indeed! :yes:

 

Hmmm...?.

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12 hours ago, Mr Popodopolous said:

There is but one factor for Derby I had kind of overlooked.

I wonder if, the stadium sale- not only was to cover the losses on release but maybe was to cover Impairment of Player Registrations over a number of years. Because unlike Impairment of Tangible Fixed Assets, these quite rightly count towards the FFP loss. If the EFL's valuation of Pride Park indeed was £49-50m, this blows a huge hole in it.

I suppose my point on Impairment thinking about things further, was that if they Impaired in say 2018/19 and some in 2019/20, they could release with a residual value of £0 and no loss on release shown on the balance sheet, Profit and loss, or Intangible Assets section, and the stadium sale profit would cushion this blow in 2018/19 and 2019/20 if they stayed down.

This would make the accounts look more orthodox, on a quick reading- no great loss on Intangible Assets who have been released as it's already been accounted for through Impairment. By Intangible Assets I specifically mean Player Registrations or whatever the exact term is- Impairment on Intangible Assets excluding these isn't included within (I don't think) FFP calcs, whereas obviously and correctly Impairment of Player Registrations is!

Didn't reckon on the £31-32m downward valuation using the EFL's own criteria...

It's just a theory but I wonder if it might have some merit...?

On this note, I don't get why the EFL cannot run more than one case concurrently it seems, with the Sheffield Wednesday hearing still ongoing.

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I've refreshed my memories on the shifting categorisation and valuation or cost of Villa Park in the last few years. Doing a bit of a deep dive.

In 2014/15, it appeared to be bundled under Tangible Fixed Asset though no certainty either way.

I am looking at the Aston Villa Limited accounts here. Villa Park was listed as the selling party in the transaction I believe, even though NSWE UK/Recon Group and before that Reform Acquisitions Limited the prior overall group company.

In 2015/16, as per Delta, Vila Park was classified as an Investment Property. Investment Property is held or in the books at fair value. It contained Villa Park, the hotel and possibly some other buildings- but certainly recall Villa Park and the Hotel being mentioned. Strangely in 2015/16, this was stated as if in the 2014/15 accounts on the Balance Sheet despite not appearing as such in the prior accounts but no matter. Separated out, reclassified whatever- these were at Fair Value in May 2016. Now I'm confused about why Villa Park, the hotel and possibly some other buildings were apparently classified as this but anyway?

As per the FAIR VALUE of the Investment Property in May 2016, this was perhaps net of Impairment in total £36,804,318. Before Impairment- this reduced it to £34,203,227 as there was an Impairment in the year of £2,601,091.

As per your own Accounting Policy for Investment Property that season:

Quote

Investment Property

Properties held by the Company rentals or for capital appreciation are accounted for as Investment Properties. An Investment Property is initially recognised at cost and then measured at fair value at each accounting period with the movement being taken to the profit and loss account.

Well was at Fair Value so I can only assume they were doing it right. Fair Value though is the price to sell in an arms length transaction etc.

Same policy the following season, for Investment Property. No change, Fair Value remains the same.

Then it gets odd.

Suddenly it seems reclassified from Investment Property to Tangible Fixed Assets. This is in the Aston Villa Limited accounts to May 31st 2018.

Quote

Prior Year Adjustment

During the year, the company amended its accounting policy for the value of the investment property owned by the parent and let within the group from revaluation model to cost model, to be classified as Tangible Fixed Assets following the adoption of the Amendments to FRS 102 - Trienniel Review 2017. The impact of this change in Accounting Policy is to decrease the net book value of Investment Property, decrease Profit for the financial year ending 31 May 2017, and decrease opening reserves by £1,339,791.

Reading that Trienniel Review, I also came across the following:

Quote

Section 5 Statement of Comprehensive Income and Income Statement

Items to include and exclude from operating profit Clarification that should an entity choose to disclose operating profit, any profit / loss on the sale of property, plant and equipment, investment property and intangible assets should be included, and any profit / loss on the disposal of a discontinued operation should be excluded from such a measur

Makes me wonder about the Exceptional Operating Income (which appeared twice) being included in the main income statement- by which I mean HS2. That is operating profit though and tbh it was listed separately but for FFP...

https://www.frc.org.uk/getattachment/fad30eea-aa8f-4961-beda-a7d8128e3165/FS-01-FRS-102-Triennial-Review-2017-(Dec-2018).pdf

https://www.frc.org.uk/getattachment/de3cb6ac-e4d8-4086-91b0-ab32d081ec7f/FS-02-FRS-102-Transition-to-TR2017-Amendments-(Dec-2018).pdf
 

Quote

2) use the historical cost of the property, and depreciate/impair the asset as if it had always been carried at cost.

An entity has a free choice but the availability of information and the work required to determine the carrying value at the transition date, prior year end and current year end may lead an entity to take the transitional exemption for ease.

Not even looked at the NSWE UK accounts for a while yet. Is worth noting though that the NSWE Stadium Limited was apparently a shell company under the control, at the least the immediate control of Aston Villa Limited until 16th May 2019 as per CH, on which date the Owners took control. Was also named Recon Football Limited until 13th May 2019- was called Aston Villa Limited until 23rd March 2019.

There was evidence of switch around of the same names between different companies within the group during the Championship years. If you look at the naming history, certainly switching between Recon Football Limited, Recon Sports Limited, Aston Villa Limited...I'm wondering why...?

This is clearly a way to get cash in circumventing the equity limits via the backdoor. For me anyway. Could it even have been a debt write off by the back door- because we're to believe that a shell company suddenly has £56.7m in loans to give to a heavily loss making football club in exchange for Villa Park. Or could it be that the football club is supposed to have loaned £56.7m to NSWE Stadium Limited in exchange for Villa Park- again laughable within FFP?

Under Lease Receivables, this shows no less than 1 year £2.6m, Later than 1 and not later than 5 years, £7.8m.

As we can see that's 4 or maybe even 5 years rent of £10.4m for a £56.7m transaction.

Aston Villa are and maybe innocent at this point in time but there are to me serious, serious questions to answer on return I'd say.

You spend £56.7m and rent in Lease Receivables shown is due to come to £10.4m! Doesn't seem wildly commercial to me...?

Indeed, if it is for longer it should be disclosed, surely!

FRS 102 states that:

Quote

A lessee shall make the following disclosures for operating leases:

(a) the total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years; and

(iii) later than five years

This last one appears to be an issue.

Derby's sale and leaseback shows it beyond 5 years. Well below market rate but nonetheless it shows it.

Reading's too- first below market rate arguably, 2nd maybe less so- but it shows beyond 5 years.

Birmingham's actually looks quite commercial and is well beyond 5 years, shows it quite transparently.

Sheffield Wednesday's is the most opaque of all but enough about them for now...

@Davefevs @Riaz and @Coppello Surely Aston Villa can't be in the clear if they return or when they return?

Edited by Mr Popodopolous
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