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The Championship FFP Thread (Merged)


Mr Popodopolous

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14 minutes ago, visitingholte said:

Guess this is the right thread for this. Sheff Wednesday will be deducted 12 points from next season.

 

That should put the cat among the pigeons!

Wigan, thanks to underhand tactics by their owner and going into administration, were handed a points deduction conditional on if it would relegate them it would be applied this season, otherwise it would be applied next season.

Wednesday, for financial shithousery offences committed in a previous season, are awarded a points deduction that would relegate them this last season, but in their case it is deferred until next season.

Can someone explain how the two clubs have been treated equally fairly?

Edited by downendcity
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Just in case some of you didn’t read it fully (I didn’t)....this is from an independent board.  Both Wednesday and EFL have 14 days to appeal.  Suspect Wednesday will from a “too big a penalty” point of view.  EFL may do from a “wrong season” point of view.  Other club’s, e.g. Charlton, may take legal advice.

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17 hours ago, Lrrr said:

Has any justification been given for next season regardless of who handed out the punishment 

Something song the lines of the date of the hearing was set before lockdown. This meant it would have originally been after the 19/20 season ended. The intention was always for the (potential) penalty to be applied in the 20/21 season, and it would be unfair for it to be brought forward because of a delay to the season out of everyone’s control. 

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8 minutes ago, AnotherDerbyFan said:

Something song the lines of the date of the hearing was set before lockdown. This meant it would have originally been after the 19/20 season ended. The intention was always for the (potential) penalty to be applied in the 20/21 season, and it would be unfair for it to be brought forward because of a delay to the season out of everyone’s control. 

Unfair to who?

Wigan went into administration at a time that would originally have been after the end of the 19/20 season, were it not for the delay out of everyone's control. Had the season ended as normal, Wigan would have gone into admin during the close season and I think I'm right in saying their 12 point deduction would have been applied next season.

 

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@Hxj

Make you quite right about Bournemouth- saw this Tweet by Kieran Maguire about their 2018/19 accounts.

Total Player Costs- that'd be Wages + Amortisation- 112% of Turnover.

All that while in the PL- in excess of 100% of turnover! ?

I'll lazily assume that £112 in player costs per £100 in income is equating to 112% of income- but FFP trouble ahead?

Howe has left today, wonder if these two are linked...?

Sure they'll raise transfer income, sure their wages will overall come down and sure there will be Covid related exclusions- but is it enough?

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3 minutes ago, Mr Popodopolous said:

@Hxj

Make you quite right about Bournemouth- saw this Tweet by Kieran Maguire about their 2018/19 accounts.

Total Player Costs- that'd be Wages + Amortisation- 112% of Turnover.

All that while in the PL- in excess of 100% of turnover! ?

I'll lazily assume that £112 in player costs per £100 in income is equating to 112% of income- but FFP trouble ahead?

Howe has left today, wonder if these two are linked...?

Sure they'll raise transfer income, sure their wages will overall come down and sure there will be Covid related exclusions- but is it enough?

Bournemouth have quite a few players other teams want. Ake to man City for £40m, Kelly is wanted by Liverpool that'll probably be £15m+, Wilson wants to leave. King and Lerma will get offers. Begovic will probably leave as well, Rico has interested parties. 

They shouldn't have too much of a problem with FFP given the 2019-20 and 20-21 seasons are combined into one block for FFP

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36 minutes ago, BetterRedthenBlue said:

Bournemouth have quite a few players other teams want. Ake to man City for £40m, Kelly is wanted by Liverpool that'll probably be £15m+, Wilson wants to leave. King and Lerma will get offers. Begovic will probably leave as well, Rico has interested parties. 

They shouldn't have too much of a problem with FFP given the 2019-20 and 20-21 seasons are combined into one block for FFP

We still don't know if the EFL- unless it's been confirmed elsewhere- about if the EFL will be doing this.

How do you combine something with such differing loss limits as well- in the EFL it's £13m per season and in the PL it's £35m per season (plus allowable costs).  Could you maybe adjust that aspect to £24m but that in turn could unfairly disadvantage them this season- they'll need to come up with something anyway!

Clearly they will and need to sell players- Ake, Kelly, Wilson, King, Lerma, Begovic, Rico- all could leave. I'd add Brooks as well maybe?

Whether they go straight back up however- will be interesting to see.

Oh yeah, the combination point. That's at UEFA level for UEFA competitions- we don't know yet if the EFL will- or indeed if clubs in the EFL will vote for it, and by the EFL I mean largely the Championship- possibly it'll be decided at the EFL end of season AGM in mid-August?

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One I'm quite interested in right now is Stoke.

They've sold nobody of note post 2018/19, their parachute payments drop heftily this coming season as they always do in Year 3. Meanwhile at the same time as that, the total rolling 3 year loss allowed drops to- exclusive of allowable costs- £39m from £61m.

Sale and leaseback- well the property itself is seemingly owned by Stoke City (Property Limited) and has been for a while.

There doesn't appear to have been any change of company structure just yet but they strike me as possible candidates to try and pull a fast one with the sale and leaseback trick...?

For those who are interested:

https://www.frc.org.uk/getattachment/69f7d814-c806-4ccc-b451-aba50d6e8de2/FRS-102-FRS-applicable-in-the-UK-and-Republic-of-Ireland-(March-2018).pdf

154/404 as you scroll down. At the top of the screen- the page number itself, at the bottom, appears to be 150.

Section 17, PPE.

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Some forward looking figures for Bournemouth.  Assuming £25 million loss for FFP 18/19 (£32 million accounts loss) and 19/20 plus estimated lost income and current rules.

Best estimate is that they will comply easily in 2020/21 then the pain really begins to hit.  More about the overall problems faced than the individual detail.

AFCB.thumb.jpg.dc423cf321ea7be669362ea4254255cb.jpg

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43 minutes ago, Hxj said:

Some forward looking figures for Bournemouth.  Assuming £25 million loss for FFP 18/19 (£32 million accounts loss) and 19/20 plus estimated lost income and current rules.

Best estimate is that they will comply easily in 2020/21 then the pain really begins to hit.  More about the overall problems faced than the individual detail.

AFCB.thumb.jpg.dc423cf321ea7be669362ea4254255cb.jpg

Yes, that first year down, isn’t the problem, it’s the ones after that, especially if they have a poor season first up.  They start to lose players, can’t attract players, but still have a big wage bill.  They need to sell the likes of Ake for good money and recruit well for significantly less.

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Reading under John Madejski were a fairly well-run club IIRC.

However, they're no longer owned by him. Appears that their FFP issues are catching up with them...

Looks fairly blatant that their signings of Joao and Puscas in August 2019 within a month or so of being released from a soft embargo were a shit or bust roll of the dice IMO! Whatever the reasoning it was ridiculous.

The ONE thing the EFL- and I guess rival clubs- have to be alert to is that they don't offload at high prices to Beijing Renhe- in 2018/19 there was an Aluko loan there, for £3m!! I struggle to justify that one alone, that should draw a line under dealings profitable to them with Beijing Renhe I think at least in terms of FFP inflation.

John Swift was off to Sheffield United but a bid was rejected quite late it seems- on the flipside, Ejaria amongst other loanees appears not to have been renewed yet.

Moore, Swift, Meite, Joao and Puscas- you'd think some if not all of these constitute saleable assets. By which I mean genuine sales, as opposed to sales, inflated loans or worse still sale with loan back to Beijing Renhe.

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Couple more thoughts on Reading as well.

I think also a couple more saleable assets could be Rafael- well by definition he joined on a free so profit! Not a bad keeper too.

Add Yiadom and Rinomhota- dunno the fees but both cost nothing and decent enough options.  Point is you could get a fee for both, profit.

Loader was one they messed up on! Think Wolves were interested in summer 2019 but they didn't sell. Perhaps fee wasn't much but he's now leaving on a free!! Unsure he developed as hoped.

The more interesting aspect is Howe. Nigel Howe is on or was voted onto EFL Board. He has stated twice this year- possibly more than twice, but certainly twice at least that players need to be sold for FFP.

I'd say he is entirely correct in this assessment yet when it appeared that John Swift was set to move to Sheffield United for £3.5m a couple of weeks ago the plug was pulled.

Perhaps Reading are holding out for more money or looking to encourage a bidding war, but the interesting thing was a claim that the owner- not even the manager but the OWNER- wants to build the side around Swift.

Certainly don't think him and Howe are on the same page. Their FFP compliance is shaky to say the least though.

That said IF the owner is refusing to sell players then more fool him, they'll doubtless get embargoed and beyond.

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I don’t think that the odd sale for less than £5 million will save them.

The accounting losses totalled £50 million in 2018 and 2019 accounts, probably only missed failure due to the 2017 profit.

Looking at a spectacular failure in 2019/20 season.

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Agreed. Bit of a firesale needed?

I'm looking at Reading though and their accounts and wondering exactly why/how they have not yet been more proactive going back to last summer even.

Why the EFL appear not to have acted yet, so far as we can see- why their fans on HobNobAnyone, well a proportion have seemed quite blase about it, hell they don't even mention FFP all that much! None of it makes any sense when as you say their accounting losses in the last two seasons are huge. I suppose the EFL are still assessing things but they look on course for a major failure as you say based on 2019/20!

Osho was another given he was from academy who they might have been able to sell- he's just left on a free! £51m in fact their two year football club losses- despite being inclusive of some £14.6m in profit on disposal of fixed assets and inclusive of a £3m loan fee for Aluko!

Or if we use Renhe as the benchmark, that was 'only' £41m in 2 years but included £29m in fixed asset sale disposal profits and the aforementioned joke of a £3m Aluko loan fee.

Here we go, as I thought- possibly conflict between owner and CEO over this issue- well I don't wish to sensationalise, more like disagreement! Could it simply be strongly opposing views?

He's one of their key saleable assets and they HAVE to start selling without necessarily replacing to anything like the same standard, for FFP.

Is their owner stupid- again more fool him but they'd be looking at a big deduction IMO. Sheffield Wednesday one of the 'big hitters'- a team who people possibly were worried wouldn't be docked points or punished that severely have just been docked 12.

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Currently it looks like the Championship table will open with Sheffield Wednesday and Derby County on -12 with Stoke and Reading getting an in year deduction of say 12 points.

mmm - could be an interesting relegation battle - all but over by Christmas!

And people still whine about the Lansdowns!

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Surely Reading and Stoke still might have time to rectify with significant player sale profits. That would of course weaken them on the pitch a fair bit and may plunge them into the mire anyway.

I'm slightly wary of Reading pushing at the loophole with their owners Chinese club and selling for inflated fees to them, loaning for inflated fees to them or worst of all, selling and then loaning back to Reading for significant fees- EFL should be all over that.

Stoke, it's not entirely clear their company structure but then I've not looked into it fully. Stoke City (Property Limited)- both that and the football club are under Stoke City Holdings Limited.

I could see scope for fixed asset sale and leaseback, albeit they may need to make some mergers, changes of control or whatever. Again EFL should be all over it!

As for what you say, Lansdowns very good owners in many ways.

Oh yeah, Sheffield Wednesday IF the £38m profit (a joke of a valuation) is counted in full in 2018/19 accounts, this gives them good headroom into 2020/21? That is still a big unknown though.

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Someone I know did some work on it which I stuck on here back in November/December time when they were charged.

Part One

Year Valuation listed- DRC £ Cost/Valuation as determined by Directors, listed as 1990 and unchanged in the explanation £ Starting Net Book Value £ Additions at cost £ Depreciation £ Adjustment to Revaluation- Surplus/Deficit £ New Net Book Value £ Revaluation Reserve £ Adjustment to Revaluation Reserve £ New or Unadjusted Revaluation Reserve £ Statement at Original Cost £ Adjustment to Statement at Original Cost £ Depreciation Based on Statement at Original Cost £ New Original Statement at Net Cost £ Question Marks        
1990 15,150,000 (1990) 8,000,000 (1990) 2,345,000 94,000 N/A 5,561,000 8,000,000 N/A N/A N/A 1,918,000 (1990) N/A 107,000 (1990) 1,811,000 (1990) Revaluation Reserve        
1991 15,150,000 (1990) 8,000,000(1990)  8,000,000 186,000 N/A N/A 8,186,000 6,189,000 6,189,000 6,189,000 2,104,000 (1991) 86,000 (1991) 107,000 (1990) 1,997,000 (1991) Adjustment to Revaluation Reserve        
1992 15,150,000 (1990) 8,000,000 (1990) 8,186,000 739,000 N/A N/A 8,925,000 6,189,000 N/A 6,189,000 2,104,000 (1991) N/A 107,000 (1990) 1,997,000 (1991)          
1993 15,150,000 (1990) 8,000,000 (1990) 8,925,000 423,000 N/A N/A 9,348,000 6,189,000 N/A 6,189,000 2,104,000 (1991) N/A 107,000 (1990) 1,997,000 (1991)          
1994 15,150,000 (1990) 8,000,000 (1990) 9,348,000 526,000 N/A N/A 9,874,000 6,189,000 N/A 6,189,000 2,104,000 (1991) N/A 107,000 (1990) 1,997,000 (1991)          
1995 15,150,000 (1990) 8,000,000 (1990) 9,874,000 1,721,000 N/A N/A 11,595,000 6,189,000 N/A 6,189,000 2,104,000 (1991) N/A 107,000 (1990) 1,997,000 (1991)          
1996 15,150,000 (1990) 8,000,000 (1990) 13,719,000 4,919,000 N/A N/A 18,638,000 6,189,000 N/A 6,189,000 2,104,000 (1991) N/A 107,000 (1990) 1,997,000 (1991)
Where does the extra £2,124,000 come from? Includes other Fixed Assets maybe

Part Two

Year Valuation listed- DRC £ Starting Net Book Value £ Additions at cost £ Depreciation £ Transfer to SWFC Adjustment to Revaluation- Surplus/Deficit £ New Net Book Value £ Revaluation Reserve £ Adjustment to Revaluation Reserve £ New or Unadjusted Revaluation Reserve £ Statement at Original Cost £ Adjustment to Statement at Original Cost £ Depreciation Based on Statement at Original Cost £ New Original Statement at Net Cost £ Question Marks          
1997 23,350,000 (1997) 18,638,000 £610,000 N/A Yes £4,339,000 23,587,000 4,339,000 N/A 4,339,000 19,248,000 17,244,000 N/A 19,248,000
Differences between SWFC PLC and SWFC in particular with Revaluation Reserve, but also on cost and valuation
         
1998 23,350,000 (1997) 23,587,000 1,375,000 N/A N/A N/A 24,962,000 4,339,000 N/A 4,339,000 19,248,000 N/A N/A 19,248,000 As above          
1999 23,350,000 (1997) 24,962,000 552,000 N/A N/A N/A 25,514,000 4,339,000 N/A 4,339,000 19,248,000 N/A N/A 19,248,000 As above          
2000 23,350,000 (1997) 25,514,000 88,000 N/A N/A N/A 25,602,000 4,339,000 N/A 4,339,000 19,248,000 N/A N/A 19,248,000 As above          
2001 26,200,000 (2001) 25,602,000 31,000 N/A N/A 566,000 26,199,000 4,339,000 (2000) 566,000 (2001) 4,905,000 (2001) 19,248,000 N/A N/A 19,248,000
Still the differences, but less of a gap- the difference maybe a Revaluation Reserve on other assets
         
2002 26,199,000 (2001) 26,199,000 35,000 516,000 N/A N/A 25,718,000 4,905,000 (2001) -98,000 4,807,000 15,795,000 -3,453,000 -423,000 15,372,000
Suddenly costs are aligned on valuation/cost- still a difference in Revaluation Reserve though
         
2003 26.199,000 (2001) 25,718,000 (2002) 24,000 517,000 N/A N/A 25,225,000 4,807,000 (2002) -98,000 4,709,000 15,795,000 N/A -739,000 15,056,000 The sudden fall in 2001/02          
2004 24,800,000 (2004) 25,225,000 (2003) 105,000 496,000 N/A -1,164,000 23,670,000 4,709,000 (2003) -1,164,000 3,545,000 15,795,000 N/A 739,000 15,056,000            
2005 24,335,000 (2005) 23,671,000 (2004) 44,000 489,000 N/A ADD BACK DEPRECIATION 1,529,000 24,775,000 (2005) 3,545,000 1,529,000 5,074,000 16,002,000 44,000 ADJUSTED- 1,371,000 14,631,000            
2006 24,335,000 (2005) 24,755,000 (2005) 42,000 498,000 N/A N/A 24,299,000 (2006) 5,074,000 N/A 5,074,000 (2005) 16,002,000 N/A ADJUSTED AND CUMULATIVE- 1,687,000 14,315,000            
2007 25,100,000 (2007) 24,299,000 (2006) 30,000 498,000 N/A ADD BACK DEPRECIATION- 1,485,000 25,500,000 (2007) 5,074,000 (2006) 1,482,000 6,566,000 16,032,000 30,000 ADJUSTED AND CUMULATIVE- 2,008,000 14,024,000            
2008 25,100,000 (2007) 25,500,000 (2007) 75,000 503,000 N/A N/A 25,072,000 6,566,000 -181,000 6,385,000 16,032,000 N/A ADJUSTED AND CUMULATIVE- 2,329,000 13,703,000            
2009 25,100,000 (2007) 25,072,000 (2008) 39,000 504,000 N/A N/A 24,607,000 6,385,000 N/A 6,385,000 16,032,000 N/A ADJUSTED AND CUMULATIVE- 2,650,000 13,382,000            
2010 21,800,000 (2010) 24,607,000 (2009) 224,000 504,000 N/A ADD BACK DEPRECIATION- 1,511,000, but also -3,638,000 22,200,000 (2010) 6,385,000 (2009) -2,309,000 4,076,000 16,256,000 N/A ADJUSTED AND CUMULATIVE- 2,792,000 13,284,000            
2011 21,800,000 (2010) 22,200,000 (2010) 4,000 504,000 N/A N/A 21,700,000 4,076,000 (2010) -179,000 3,897,000 16,260,000 N/A ADJUSTED AND CUMULATIVE- 3,297,000 12,963,000            
2012 21,800,000 (2010) 21,700,000 (2011) N/A 466,000 N/A N/A 21,234,000 3,897,000 -141,000 3,756,000 16,260,000 N/A ADJUSTED AND CUMULATIVE- 3,622,000 12,638,000            
2013 21,800,000 (2010) 21,234,000 (2012) 28,000 466,000 N/A N/A 20,796,000 3,756,000 -141,000 3,615,000 16,260,000 28,000 ADJUSTED AND CUMULATIVE- 3,947,000 12,341,000            
2014 22,250,000 (2014) 20,796,000 (2013) N/A 439,000 N/A ADD ON 1,518,000 PLUS ADD BACK DEPRECIATION 1,758,000 23,633,000 3,615,000 3,163,000 6,778,000 (2014) 16,288,000 N/A ADJUSTED AND CUMULATIVE- 4,272,000 12,016,000            
2015 22,250,000 (2014) 23,633,000 (2014) 250,000 445,000 N/A N/A 23,438,000 6,778,000 -119,000 6,659,000 16,288,000 250,000 ADJUSTED AND CUMULATIVE- 4,,598,000

11,940,000

 

 

       

£60m sale price/valuation, this is quite the uptick!

Yes it switched from valuation or revaluation model to cost in 2015/16 and yes there was some work- such as a new pitch and scoreboard carried out in Chansiri's early days but still struggling just a tad to square that with a surge from £22.25m, perhaps £24m in 2014 inclusive of land, to £60m sale price! Had it sold for say £30-35m- possibly even then a bit generous given Elland Road was £20m in 2017- then I wouldn't really be wondering.

Just to clarify as well, Part One is Sheffield Wednesday PLC, 1990-97. Then it transferred ownership- transferred not sold, not sold at leased back but transferred no loss and no gain.

Part Two is it under Sheffield Wednesday Football Club Limited, 1997-2015.

I'd love to know the mechanics of how valuations surge in that way!

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With respect to Derby, I read something interesting on their forum. Was posted in January 2020 around the time of the charge but brought up again- seems interesting!

Now we know the Fair Value regs but it is quite interesting to see it verified like this- if of course it has any veracity!

The poster claims to have a passable track record though so...

Quote

Colleague who has more knowledge than I do and has a direct interest re getting paid for some legal work he has done for DCFC understands that the point of dispute on the stadium is to do with whether or not it was an 'arms length transaction'.

If it was an arms length transaction then it does not matter what was paid for the stadium. If it was to interested parties (ie. Uncle Mel) then it has to be at a 'fair value'. The beef is apparently confusion over what was asked approval for and what actually happened.

I am not giving an opinion as to who is right or wrong so dont shoot the messenger just passing on a bit of info from the same person who told me that investment was delayed pending an EFL statement which turned out to be correct.

Might Derby have therefore intimated to the EFL at the time that it was in fact truly arms length, thereby negating the need for an independent check then gone ahead and sold it on their valuation then?? ?

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THIS could be interesting.

https://www.getreading.co.uk/sport/football/up-nine-championship-clubs-lend-18713049

Seems up to NINE Championship clubs are backing Charlton on the points deduction being in the wrong season for Sheffield Wednesday.

@Davefevs @chinapig @downendcity @Hxj

I would also ask significantly why this was NOT the case or seemed not to have been the case when Gibson wanted an investigation there and then into Aston Villa, Derby and Sheffield Wednesday's finances in 2019.

This is what we have needed since at least January 2019 though when it became clear that Aston Villa were likely to blaze past FFP. We need the clubs to act as one here!

Derby and Sheffield Wednesday breaches appear to have been up to 2018- as for 3 years to last season, we have no idea as neither have deigned to release the accounts yet. ?‍♂️

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1 minute ago, Mr Popodopolous said:

THIS could be interesting.

https://www.getreading.co.uk/sport/football/up-nine-championship-clubs-lend-18713049

Seems up to NINE Championship clubs are backing Charlton on the points deduction being in the wrong season for Sheffield Wednesday.

@Davefevs @chinapig @downendcity @Hxj

I would also ask significantly why this was NOT the case or seemed not to have been the case when Gibson wanted an investigation there and then into Aston Villa, Derby and Sheffield Wednesday's finances in 2019.

This is what we have needed since at least January 2019 though when it became clear that Aston Villa were likely to blaze past FFP. We need the clubs to act as one here!

Because Ashton wanted a role at the EFL so didn't want to upset big clubs perhaps?

As a club that plays by the rules we have been disappointingly unwilling to put our head above the parapet.

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6 minutes ago, chinapig said:

Because Ashton wanted a role at the EFL so didn't want to upset big clubs perhaps?

As a club that plays by the rules we have been disappointingly unwilling to put our head above the parapet.

Not just talking about us but point taken.

Agreed- though it is reported that the club are disappointed with those pulling these kinds of stunts- I wonder what the difference it is a year on though, at least 8 clubs supporting Charlton yet when there was something quite significant, it got voted down entirely!

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Might also add augurs well- as and when Aston Villa return I'd have thought all clubs would be united as one there, pretty much in terms of demands for an investigation/punishment?

Sometimes Aston Villa fans ask me on Twitter why I am so critical. Well it appears the Matt Lawton story about the big 3 Championship clubs who may have been in breach was broadly correct.

It stated Aston Villa losses for the season may have been as high as £60m.

Now consider:

Think was £68-69m- BUT minus £30m for Lerner promotion bonus-£15-16m for promotion costs inclusive of the bonuses- that's a nice easy £23m.

I already have factored in the HS2 would've been in there but costs of promotion would not have been and neither would Xia bonus- bith were contingent on promotion.

Profit on Villa Park- that article pretty much nailed on! £60m or close to- that's a full 12 point overspend over the 3 years and 3 for a deliberate breach as per Birmingham- may get one back due to terrible opwner and one back for not disregarding soft embargo but Matt Lawton- always said he's good.

This surely means that the stadium sale and leaseback must have been arranged/inserted AFTER the projected accounts. Given it was paid for in the form of Loans Receivable, wonder what the hell happened with the EFL analysis! Even a 5-6 points in the season in March/April would have knocked them out of playoff contention.

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28 minutes ago, Mr Popodopolous said:

Might also add augurs well- as and when Aston Villa return I'd have thought all clubs would be united as one there, pretty much in terms of demands for an investigation/punishment?

Sometimes Aston Villa fans ask me on Twitter why I am so critical. Well it appears the Matt Lawton story about the big 3 Championship clubs who may have been in breach was broadly correct.

It stated Aston Villa losses for the season may have been as high as £60m.

Now consider:

Think was £68-69m- BUT minus £30m for Lerner promotion bonus-£15-16m for promotion costs inclusive of the bonuses- that's a nice easy £23m.

I already have factored in the HS2 would've been in there but costs of promotion would not have been and neither would Xia bonus- bith were contingent on promotion.

Profit on Villa Park- that article pretty much nailed on! £60m or close to- that's a full 12 point overspend over the 3 years and 3 for a deliberate breach as per Birmingham- may get one back due to terrible opwner and one back for not disregarding soft embargo but Matt Lawton- always said he's good.

This surely means that the stadium sale and leaseback must have been arranged/inserted AFTER the projected accounts. Given it was paid for in the form of Loans Receivable, wonder what the hell happened with the EFL analysis! Even a 5-6 points in the season in March/April would have knocked them out of playoff contention.

I get the feeling you would have enjoyed that.

You really do have to let this go.

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7 minutes ago, AnAstonVillafan said:

I get the feeling you would have enjoyed that.

You really do have to let this go.

Haha true and true!

The numbers do stack up however and it begs the question as to what the he'll the EFL were playing at with respect to a number of clubs in March 2019. 

I say stack up, possibly £1m either way divergence. I suppose the one remaining interesting q might be what statute of limitation.

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I note that Sheffield Wednesday have not yet published their accounts for 2018/19 owing to the EFL situation/dispute.

Thought this might be the case- interestingly they're not under any kind of embargo and it states that should an appeal be unsuccessful, it- the sale- will be stuck in the 2018/19 accounts.

Now this is problematic for a number of reasons!

  1. While I see the logic, it is true that they have benefited from it by cushioning the need to cut costs more drastically to an extent through the profit being on the books, this has to be mitigated in some way. One year targets that feed into ones for 2020-21 and possibly 2021-22 would do this, as in the stadium sale would help for 2018-19 but couldn't be of use beyond that.
  2. Feeding into point 1- is it the full £38m? This profit lifted them from at least one embargo I think though it's hard to keep track.
  3. Will this valuation/profit be challenged? Certainly should be- given how the EFL's valuation diverges so significantly in the case of Pride Park.
  4. What will the rent be? Chansiri can charge what he likes but the EFL have to substitute in a fair market rent.
  5. Why no Embargo- even a soft one- what sort of message does this send with respect to Governance!

https://www.thestar.co.uk/sport/football/sheffield-wednesday/exclusive-sheffield-wednesday-are-late-filing-their-accounts-again-why-2933813

Edited by Mr Popodopolous
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On 02/08/2020 at 12:20, Mr Popodopolous said:

Reading under John Madejski were a fairly well-run club IIRC.

However, they're no longer owned by him. Appears that their FFP issues are catching up with them...

Looks fairly blatant that their signings of Joao and Puscas in August 2019 within a month or so of being released from a soft embargo were a shit or bust roll of the dice IMO! Whatever the reasoning it was ridiculous.

The ONE thing the EFL- and I guess rival clubs- have to be alert to is that they don't offload at high prices to Beijing Renhe- in 2018/19 there was an Aluko loan there, for £3m!! I struggle to justify that one alone, that should draw a line under dealings profitable to them with Beijing Renhe I think at least in terms of FFP inflation.

John Swift was off to Sheffield United but a bid was rejected quite late it seems- on the flipside, Ejaria amongst other loanees appears not to have been renewed yet.

Moore, Swift, Meite, Joao and Puscas- you'd think some if not all of these constitute saleable assets. By which I mean genuine sales, as opposed to sales, inflated loans or worse still sale with loan back to Beijing Renhe.

 Just curious, but how would the EFL be able to regulate the sale of players to clubs abroad (even if they have the same owners)? I wouldn't think that any league would have the authority to scrutinize the amount for a player sale to another club without kicking up a storm with other clubs and their player valuations? Obviously the Aluko loan is highly questionable especially at that loan fee. I just don't know what could be thrown at them?? Am I missing something with that?

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25 minutes ago, visitingholte said:

 Just curious, but how would the EFL be able to regulate the sale of players to clubs abroad (even if they have the same owners)? I wouldn't think that any league would have the authority to scrutinize the amount for a player sale to another club without kicking up a storm with other clubs and their player valuations? Obviously the Aluko loan is highly questionable especially at that loan fee. I just don't know what could be thrown at them?? Am I missing something with that?

Disallow it for FFP purposes- just one idea- but you're right it's very difficult- the Aluko loan is a nonsense but okay- say for example Reading were to sell several of their players to Beijing Renhe for £30m fees in total and then loan them back- could they refuse to register them at the earliest opportunity? They couldn't let it pass IMO, you're right though it's not altogether easy to see what could be done- sure I've read something about UEFA and similar transactions- Nottingham Forest seem like they might do something similar from time to time but it's fair to say the fees and wages are not even in the Aluko £3m loan ballpark, let alone 

Embargoes pending investigation another idea maybe- you can bank the money but you ain't playing them when loaned back- if they 'sold' for arguments sake Joao, Puscas, Moore- Rafael maybe- these are decent players with for one reason or another some kind of resale value IMO- and banked £20-30m and loaned them back to play that season that would blatantly be taking the piss for want of a better term. They were under a soft embargo in summer 2019 or until late in that Reporting Period anyway, EFL need to be watching them like a hawk- most clubs including Reading- all but Derby in fact or so I've read use the straight line amortisation method though that of course is Book rather than Market value. 

The only real loopholes though, the gaping ones in the EFL system at this time seem to be:

  • The Fixed Asset Sale and Leaseback debate.
  • This theoretical one with Reading.

For sure, their FFP hole looks potentially not insignificant so they could sell the players but that would merely cover some of the problems, not enable significant reinvestment- an embargo pending further action may keep feet to the fire.

Here's a revealing line, from late April- maybe it was around the time of their accounts being released- the one on player wages- owner made the personal decision it would seem!

I should also add, I criticise Reading but I'm quite sure Nigel Howe DOES accept that players need to be sold- he's publicly stated it twice, maybe three times in 2020. It's the owner that is the issue, so it seems looking between the lines.

If they want to go down the Birmingham or Sheffield Wednesday route they know what to do.

Edited by Mr Popodopolous
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The other part of the issue in general is the EFL and inconsistent, often slow enforcement of their own regulations- happy to go through one or two now.

Quote

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.

I question how much real time in-season planning for T onwards- ie the existing season when Projected Accounts submitted occurs- let alone T+1 and T+2 with respect to the forward projections. I could be wrong but the evidence to date suggests that it has been somewhat patchy in terms of EFL oversight- 'T' is a significant difference to the old rules- T+1 and T+2 are certainly new ground as well.

Bit more on these below.

Quote

2 Profitability and Sustainability

2.1 Rules 2.2 to 2.9 shall apply with effect from Season 2016/17.

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

As we can see, the submission of 'T', combined with the real accounts for the last two can form a nice basis for ongoing assessment IMO- it gives you good basis to work from if you are the EFL Executive- any significant and unexpected submissions can be analysed there and then I'd suggest.

Quote

2.8 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 Lower Loss Threshold, then the following shall apply:

2.8.1 the Club shall provide, by 31 March in the relevant Season, Future Financial Information to cover the period commencing from its last accounting reference date (as defined in section 391 of the 2006 Act) until the end of T+2 and a calculation of estimated aggregated Adjusted Earnings Before Tax until the end of T+2 based on that Future Financial Information;

That Lower Loss Threshold of course is £15m and anything over that- I don't suppose it means an insubstantial amount but you know talking sensibly excess means basically £15m+, higher than £15m in FFP losses but below £39m in FFP losses means that you need to as a Club submit by end of March the future FFP projections for not only the next season but the one after! You can keep a tight leash on clubs IF you so desire and you know what you're doing...you have the info with last two seasons and current one Projected- and any significant divergence looking forward or unlikely one in terms of the likely info will raise eyebrows I'm sure- or should if you're the regulator!

This last bit too.

Quote

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.

Now I take that to be if over limits in that existing season, you get referred in that existing season to the Disciplinary Commission. If done correctly! If you have a points tariff which is now in play and precedent has shown it, it should become more straight forward and harmonised over time.

There's more though- those upper and lower limits btw are £5m at lower end and £39m at upper for 3 years in Championship. For a year in PL it's £35m upper, £5m lower. I think most clubs will tend to come in over the 3 year loss limit in existing seasons for lower levels, ie between £15-39m in terms of an FFP loss.

Quote

4 Duty of Disclosure

4.1 The Executive may require a Club to provide such further information as the Executive deems necessary (acting reasonably) for the purposes of enabling the Executive to assess whether a Club has met (as applicable) the Profitability and Sustainability Rules or not.  By way of example, and without limitation, additional information may be requested where:

4.1.1 any submission is incomplete;

4.1.2 there are insufficient assumptions; or

4.1.3 additional evidence is required to support certain assumptions.

4.2 Any such request shall be made in writing (including by email to the Finance Director or equivalent) and shall be responded to in full within 5 Normal Working Days of any such request being made.

Now this one is interesting because though I remember it was a bit of a transitional phase between old and new rules and for some reason the EFL at the time did not have a points tariff in place- Late Again Harvey- but Birmingham were in breach or over limits in March 2018, almost certainly- but they said 'Oh we'll just fall into line- not by much but that is enough- through summer 2018 transfer profits'. EFL appeared to have taken it at face value, perhaps Birmingham did in fact believe these would transpire, read it was sell on money for Butland and Gray- would have kept them in line but they would have failed moving forward ie to summer 2019.

Anyway this sell on did not happen as intended/hoped and we all know how it played out but it sounds like the EFL Executive should have more strongly exercised 4.1.2 and certainly 4.1.3! I I dunno if taking it at face value cuts it for me given it is a material item and the club are relying on something that may or may not happen that is totally out of their hands, to pass FFP in the 3 years to 2018!

Where is the evidence, where is the paper trail to show that this is pretty much failproof, that it will 100% cast iron be rectified come the summer ie June 30th- is this not just wishful thinking by the club are the sort of debating points here!

There I go- only two points I said! ?

Edited by Mr Popodopolous
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Selling players and leasing them back from a same owner club will be the foundation stone of a mockery statue to the FL. Rules should have been in place to enforce punishment long ago. I seem to recall Watford being told you cannot loan more than 7 or so players from a same owner 'sister' club. At that time FFP was not so much in the news or 'in service'. Watford soon adapted. 

Unless automatic relegation of at least one division is the punishment and a clear and precise set of rules are in place to follow the FFP arrangement is not fit for purpose.

We are seeing law suits starting to flow now and I think while Parry was brought in to clean this up so far the evidence suggests he is found wanting.

It's a sorry state of affairs.

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