The Championship FFP Thread (Merged)

[Mr Popodopolous]

BIG losses there, wow.

That said Middlesbrough and Gibson strike me as one of the more sensibly run clubs in general, in this- the FFP era...

Had a quick skimread of that SwissRamble thread and they made it...

However next season, that £1m FFP Profit disappears from view- to be replaced by that £9m as Starting Point assuming the merger and rollup remains in place, but that swing was in no small part due to the realty of being a former Parachute Club- something that any, maybe all of Cardiff, Stoke and Swansea will discover next season. In fairness big sales in 2018/19 and wage bill was dropped £10m in 2019/20, but might they be hemmed in a bit for a while?

Edited March 19, 2021 by Mr Popodopolous

[Mr Popodopolous]

How much will come of it who knows but it's been definitively nailed down, that the EFL WILL be appealing vs the Derby amortisation charge verdict.

https://the72.co.uk/227856/derby-county-to-vigourously-resist-efl-appeals-as-governing-body-takes-next-step-vs-rams/

@Hxj @Davefevs @downendcity  @AnotherDerbyFan

On 17/03/2021 at 15:47, WarksRobin said:

The plot thickens...

I wonder if these two events might have been linked? That said BZI or whatever their exact name was, have form for non takeovers.

[Hxj]

11 hours ago, Mr Popodopolous said:

BIG losses there, wow.

That said Middlesbrough and Gibson strike me as one of the more sensibly run clubs in general, in this- the FFP era...

It looks as if they have managed the transition well.

The wage bill is £30 million, definitely mid-Championship and £18 million of the loss was depreciation on transfer fees.  The balance of fees to be written off at the end of the 2020 accounting period is only £16 million.

They have headroom to lose £80 odd million to 2021 and still meet FFP.

It just demonstrates why Gibson gets annoyed with all the messing around elsewhere.

Edited March 20, 2021 by Hxj

[Hxj]

7 hours ago, Mr Popodopolous said:

I wonder if these two events might have been linked? 

Why would you buy Deby County for the rumoured £60 million with all the rubbish hanging over their heads still.

[Davefevs]

 

[BLRed]

So @Mr Popodopolous, simplifying all the above which is far beyond my understanding, who out of the clubs in the championship are looking down the barrel of the gun come season end? Also, will any of the clubs gunning for promotion be in trouble should they fail to get promotion? Brentford, Swansea, reading et al.

from my brief reading of this thread, sheff weds and derby potentially could be in trouble financially, Birmingham had issues, now resolved but are staring relegation in the face, I thought I read that reading could also be in trouble financially and could have resolved had they sold their left back instead of losing him on a free.

swansea not long ago we’re having issues. Are they in the more financially and relying on promo to get out of it?

[Mr Popodopolous]

On 20/03/2021 at 08:44, Hxj said:

It looks as if they have managed the transition well.

The wage bill is £30 million, definitely mid-Championship and £18 million of the loss was depreciation on transfer fees.  The balance of fees to be written off at the end of the 2020 accounting period is only £16 million.

They have headroom to lose £80 odd million to 2021 and still meet FFP.

It just demonstrates why Gibson gets annoyed with all the messing around elsewhere.

Agreed- one of the better clubs for sure. Think they'll be fine and definitely agree on Gibson and his annoyance at elsewhere and reasons for it being justified.

On 20/03/2021 at 08:51, Hxj said:

Why would you buy Deby County for the rumoured £60 million with all the rubbish hanging over their heads still.

Concur- though reading on their forum their fans or a lot of them seem so blase about it all. One of them however, one of the (few) sensible financial ones reckons it'll be the academy, free transfers and loan market this coming summer mainly.

10 hours ago, BOSRed said:

So @Mr Popodopolous, simplifying all the above which is far beyond my understanding, who out of the clubs in the championship are looking down the barrel of the gun come season end? Also, will any of the clubs gunning for promotion be in trouble should they fail to get promotion? Brentford, Swansea, reading et al.

from my brief reading of this thread, sheff weds and derby potentially could be in trouble financially, Birmingham had issues, now resolved but are staring relegation in the face, I thought I read that reading could also be in trouble financially and could have resolved had they sold their left back instead of losing him on a free.

swansea not long ago we’re having issues. Are they in the more financially and relying on promo to get out of it?

I'll give it a go!

Brentford should seem aok IMO,  Look at who they sell and for how much- they have started to spend more and up the wage bill but they also sold Griffin Park or the land on which it stood to help fund new ground- that's a legitimate profit as far as I can see, because disposing of a former ground/the land of it seems aok to me, actually getting rid. Long story short I don't see them being in issues.

Reading surely are heading for issues and Richards has now gone to Bayern on a free according to reports- personally I'd like to see them docked points in March some of these clubs as per the original FFP regs, any club over in March should be docked points in April unless they have a binding sale of a player in the summer- ie arranged now but to be sold in summer but still falling within the Accounting Period. Maybe they're walking the line very tightly, also read Stoke are coming close- once Parachute Payments gone they might have issues but not as urgent as Reading. Sheffield Wednesday got docked 12, halved to 6 and then were allowed to move Stadium forward into 2018/19 when it was originally sold, EFL appealing clearance for Derby and will post some figures I saw online for them summarised nicely by someone else heading into 2021/22 almost irrespective of this case- ironically an EFL win on this appeal and a restatement of accounts would help them moving forward but surely push them into breach in prior Accounts.

In terms of Sheffield Wednesday I have to wonder if there aren't still grounds for the EFL here, for example I'd be looking at a) Company Structure and b) The justification for the rolling forward. Ideally they'll go down and be hamstrung a bit more, knowing that if they spend to come back up it'll still carry over in some respects but I hope the EFL are looking at aspects.

Birmingham resolved off it, in serious issues on it- Swansea it's hard to say, they seem to have been selling players tbh and came down at the same time as Stoke but went into cutback mode much quicker it seemed. Their 2019/20 Accounts could be instructive.

In terms of hamstrung- not hard sanctions but restrictions- I wonder about Blackburn and Nottingham Forest to name 2.

[Mr Popodopolous]

Shaun Harvey- he speaks!

https://offthepitch.com/a/interview-former-football-league-ceo-games-impossible-job

Sadly half and maybe more of it behind a paywall but he suggests that keeping 72 clubs in existence was deemed a success- wonder if (justifiably) tighter FFP enforcement might have made more owners throw in the towel jeopardising clubs- some in particular.

Of course I think that's the wrong approach for football, but it might explain a thing or two. Maybe parts of this interview are online- I used to be a subscriber...

Quote

• Shaun Harvey who ran the EFL for six years says the board’s policy was a “rescue culture” with success measured in terms of keeping its 72 clubs alive for the whole season.
• Harvey left the EFL in 2019 amidst heavy criticism about governance and commercial deals. Harvey is saying that no club entered administration until the final days of his reign.
• Yorkshireman has been advising Wrexham’s new owners, Ryan Reynolds and Rob McElhenney, on their takeover and operations.
• Harvey says that salary caps “anomalous” with a competitive industry, but says Wrexham won’t be spending their way into the league.

This might well start to explain a few things...

Edited March 24, 2021 by Mr Popodopolous

[AnotherDerbyFan]

On 20/03/2021 at 01:30, Mr Popodopolous said:

How much will come of it who knows but it's been definitively nailed down, that the EFL WILL be appealing vs the Derby amortisation charge verdict.

https://the72.co.uk/227856/derby-county-to-vigourously-resist-efl-appeals-as-governing-body-takes-next-step-vs-rams/

@Hxj @Davefevs @downendcity  @AnotherDerbyFan

I wonder if these two events might have been linked? That said BZI or whatever their exact name was, have form for non takeovers.

I expect to hear something from next week onwards. I'm still certain we won't get any form of punishment, but we'll see.

Can't see it being linked to be honest. You can only get strung along for so long before enough is enough - 1 year on from when talks started, 4 months on from it going through "imminently", and 3 months on from "sending the money over".

14 hours ago, Mr Popodopolous said:

Agreed- one of the better clubs for sure. Think they'll be fine and definitely agree on Gibson and his annoyance at elsewhere and reasons for it being justified.

Concur- though reading on their forum their fans or a lot of them seem so blase about it all. One of them however, one of the (few) sensible financial ones reckons it'll be the academy, free transfers and loan market this coming summer mainly.

It's hard to see it being anything else without selling the academy graduates already in the team (Buchanan, Bird, Knight, Sibley). Come the summer, we won't have many other players worth anything, in fact, we won't have many players left at all.

Given we posted a £25m P&S loss in 18/19, amortisation jumping from just under £5m in that period to £25.1m in 19/20 (slightly offset by a reduction in wages {c£10m?}), I'm expecting another rabbit to be pulled out of the hat just to get us under the 20/21 limit to be honest. I'm already bracing myself for the backlash from you when those account eventually come out 

Once we reach a conclusion with the EFL hearing, it won't be much of a wait until we get to see the 18/19 and 19/20 accounts which will provide a much clearer picture going forward.

14 hours ago, Mr Popodopolous said:

I'll give it a go!

Brentford should seem aok IMO,  Look at who they sell and for how much- they have started to spend more and up the wage bill but they also sold Griffin Park or the land on which it stood to help fund new ground- that's a legitimate profit as far as I can see, because disposing of a former ground/the land of it seems aok to me, actually getting rid. Long story short I don't see them being in issues.

Reading surely are heading for issues and Richards has now gone to Bayern on a free according to reports- personally I'd like to see them docked points in March some of these clubs as per the original FFP regs, any club over in March should be docked points in April unless they have a binding sale of a player in the summer- ie arranged now but to be sold in summer but still falling within the Accounting Period. Maybe they're walking the line very tightly, also read Stoke are coming close- once Parachute Payments gone they might have issues but not as urgent as Reading. Sheffield Wednesday got docked 12, halved to 6 and then were allowed to move Stadium forward into 2018/19 when it was originally sold, EFL appealing clearance for Derby and will post some figures I saw online for them summarised nicely by someone else heading into 2021/22 almost irrespective of this case- ironically an EFL win on this appeal and a restatement of accounts would help them moving forward but surely push them into breach in prior Accounts.

In terms of Sheffield Wednesday I have to wonder if there aren't still grounds for the EFL here, for example I'd be looking at a) Company Structure and b) The justification for the rolling forward. Ideally they'll go down and be hamstrung a bit more, knowing that if they spend to come back up it'll still carry over in some respects but I hope the EFL are looking at aspects.

Birmingham resolved off it, in serious issues on it- Swansea it's hard to say, they seem to have been selling players tbh and came down at the same time as Stoke but went into cutback mode much quicker it seemed. Their 2019/20 Accounts could be instructive.

In terms of hamstrung- not hard sanctions but restrictions- I wonder about Blackburn and Nottingham Forest to name 2.

For the current 2021 period, my 3 would be Reading, Stoke and Cardiff. Derby would be 4th. I'm amazed Reading have so far escaped punishment. They were very close to the limit in 2019 so I find it hard to believe they are still within limits given their transfers since. Stoke and Cardiff must be pretty close too given their wage bills, bloated squads and parachute payments reducing. I don't see any others being in danger.

For 2022, a lot depends on how well the recently relegated teams have cut their wage bill and dealt with amortisation. Along with Stoke and Cardiff, I think Swansea and Huddersfield may struggle (without promotion). Reading and Derby would also remain on my watch list. Forest will need to cut their wage bill to stay within limits, but shouldn't be too tricky for them to achieve that.

[Lrrr]

Bournemouth were only profitable 1 season in the PL

 

[GrahamC]

9 minutes ago, Lrrr said:

Bournemouth were only profitable 1 season in the PL

 

Absolute myth of a club.

Cheated FFP by a country mile to get into the Prem, if they can’t get back during their parachute payments era they are in big trouble, even with one of Putin’s mates propping them up.

[downendcity]

2 hours ago, Lrrr said:

Bournemouth were only profitable 1 season in the PL

 

 

Ive mentioned before reading an article that detailed that Bolton made a profit in only 1 of their 11 years in the premier league!

[Mr Popodopolous]

On 24/03/2021 at 17:10, AnotherDerbyFan said:

I expect to hear something from next week onwards. I'm still certain we won't get any form of punishment, but we'll see.

Can't see it being linked to be honest. You can only get strung along for so long before enough is enough - 1 year on from when talks started, 4 months on from it going through "imminently", and 3 months on from "sending the money over".

It's hard to see it being anything else without selling the academy graduates already in the team (Buchanan, Bird, Knight, Sibley). Come the summer, we won't have many other players worth anything, in fact, we won't have many players left at all.

Given we posted a £25m P&S loss in 18/19, amortisation jumping from just under £5m in that period to £25.1m in 19/20 (slightly offset by a reduction in wages {c£10m?}), I'm expecting another rabbit to be pulled out of the hat just to get us under the 20/21 limit to be honest. I'm already bracing myself for the backlash from you when those account eventually come out 

Once we reach a conclusion with the EFL hearing, it won't be much of a wait until we get to see the 18/19 and 19/20 accounts which will provide a much clearer picture going forward.

For the current 2021 period, my 3 would be Reading, Stoke and Cardiff. Derby would be 4th. I'm amazed Reading have so far escaped punishment. They were very close to the limit in 2019 so I find it hard to believe they are still within limits given their transfers since. Stoke and Cardiff must be pretty close too given their wage bills, bloated squads and parachute payments reducing. I don't see any others being in danger.

For 2022, a lot depends on how well the recently relegated teams have cut their wage bill and dealt with amortisation. Along with Stoke and Cardiff, I think Swansea and Huddersfield may struggle (without promotion). Reading and Derby would also remain on my watch list. Forest will need to cut their wage bill to stay within limits, but shouldn't be too tricky for them to achieve that.

No punishment but I wonder if the EFL might be like with the Birmingham appeal going for some sort of technical but non punished victory in order to uphold some sort of rule/rule change. Though Birmingham got a reprimand, the Guilty Verdict might well mean that Business Plans are now an Absolute Obligation as opposed to Best Endeavours. Maybe the EFL are looking to uphold the principle of Straight Line Amortisation.

A fine would be the most pointless of all- don't think these count towards FFP costs so if all the EFL are aiming for is a fine then...may as well pack up and go home- assume they're aiming at Points or upholding a legal principle.

Agreed. They have form for it too.

Clubs can't be punished for the 3 years to 2019/20 I thought. Being rolled up, averaged, amalgamated and Covid losses excluded I think the 3 years to 2021 might have you fine but not by much. This is assuming no restatement for FFP via Amortisation- Stadium Sale Profit remains on the books until the end of 2020/21. Rabbits from the hat would be interesting...

1. Stadium Sold- Lease, Rent. Already done- and talking of Rent, I wonder how a £1.1m Rent was reconciled with Fair Value considering all the other Transactions were between 4-5.5%, ie annual Rent as a % of Sale Price. Once all the clubs who have done this publish Accounts for Stadium leaving the Group, how is non matchday Revenue treated in the Accounts?  Not just talking Derby but all of the clubs seemingly have sold to Companies outside the Group- Risk and Reward with Sale and Leaseback? I think all of these transactions could by the EFL, require further Investigation down the line to make sure all is as it should be.
2. Those MSD loans- could Training Ground have been sold before that? Reading have done it...
3. Debt Writeoffs? Excluded from FFP calcs as per QPR case and I suspect Nottingham Forest on takeover though that bit is uncertain- certainly should be. The Interest aside.
4.  RPT Sponsorship? Has to be Fair Value. It'll help but not necessarily a gamechanger.
5. Impairment of Player Registrations? Legitimate Accounting tactic and a cost that goes against FFP but knocks it down moving forward- wondering if 2018/19 huge loss could be linked to a large Impairment of Player Registrations, frontloading Amortisation into a favourable year. That still would struggle to reconcile with the forecasted uptick for 2019/20.

The 2018/19 and 2019/20 Accounts will be very interesting. One thing that confuses me- one thing not to publish the Club, Sevco 5112 and Gellaw Newco 203 Limited but I don't get the lack of info given that they're not necessarily affected by FFP for Club DCFC, Derby County FC Academy and Stadia DCFC. They're part of the Group of course but Player Amortisation is in a sense an irrelevance to them, as stand-alone companies?

Agree wholly on Reading, 100%. Stoke's position also looks suspect to me, given despite in Year 1 of Parachute Payments and good sales, they still made a loss of £15m I think. Not sold much since- maybe a lot of incoming loan fees and covering of decent chunk of wages, but their finances look to be heading only one way. Cardiff I can't make my mind up on- they still have the benefit of the PL season and the higher loss limit of £35m for that as do Stoke...whereas for us as clubs at this level for 4 seasons it's £13m x 4/4 x 3=£39m (Plus Allowable Costs etc) and Reading for that matter, for Stoke and Cardiff I think it's: £35m + £13m + £13m + £13m=£74m/4 x 3=£52.5m. However stay down and they're onto the £39m level. Cardiff aren't until 2022/23 at the earliest and the Sala case could impact on it- Kieran Maguire thinks they made a provision for that fee in Impairments and if they are found not to be due to pay it, that would increase their PL Profit. Still if they stay down, they might have a hard landing for 2021/22 but some will depend on that Sala case- their wage bill is mooted to be £30m and I am assuming it's been £30m this and last season but their 2019/20 Accounts will be instructive.

Very confused about Reading. If they stay down this year it's surely big issues FFP wise, but given their loss in 2018/19 was propped up by £29m in Fixed Asset Sale and Leaseback and £3m Aluko loan fee- amazed they've escaped punishment. They may well be under soft sanctions and there is a good article or two from 2019 about this. Some of it is dated but still seems quite relevant today. The underlying losses for 2019/20 must be huge though.

https://www.mikethornton.xyz/ffp-ps-rules-and-sanctions/

https://www.mikethornton.xyz/new-ffp-tests/

Reading have been under Soft Sanctions for the whole of this season I think- and I think a variety of clubs may fall into that zone, it's where club and EFL quietly work to cut expenditure to stay within limits, but then how much input the club gets is unclear maybe it's a bit like Birmingham and the Imposed Business Plan. EFL making that so public was perhaps a mistake, albeit an understandable one.

One good way to keep clubs honest is to set the Business Plan and check against it in March- if Projected Accounts exceed limits when combined with prior two seasons actual accounts, that should be an automatic Fail with the appropriate Points Deduction imposed. It's the soft sanctions and restrictions that could also impede a few clubs. Blackburn seem like candidates, maybe Nottingham Forest too- Bournemouth I think the EFL may have had words with when they got relegated, reading between the lines of a Fan Q&A I think that's very plausible. Swansea have been selling players quite well but will it be enough, Huddersfield it's hard to say, I don't really think they've been splashing the cash- Reading seem like big candidates to go from Soft to Hard Sanctions surely.

On my Risk and Reward Point, example would be:

1. Operating Lease for Sale and Leaseback.
2. Risk and Reward therefore Transfers to the Landlord.
3. The club- in this case there are several- irrespective of FRS or similar, recognises 100% of Stadium Revenue- Matchday or perhaps more significantly, non Matchday Commercial Events- in their Accounts.

Unsure how that would stack up neatly, therefore the EFL I think would have the right to look again at all of these Transactions.

Edited March 30, 2021 by Mr Popodopolous

[Mr Popodopolous]

Now some of this will be linked to Covid of course but..

 

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-city-accounts-bet365-breaking-5252211

No idea if their Accounts are out yet or if the local paper have got the Headlines a bit early but...probably within the next week?

There is a Player Impairment in there apparently, that of course goes against FFP.

£87m loss LAST season. £87m!? Think there was an Impairment Charge of £43m or thereabouts. They claim it's in accordance with EFL Guidance apparently.

Edited March 31, 2021 by Mr Popodopolous

[Davefevs]

7 minutes ago, Mr Popodopolous said:

Now some of this will be linked to Covid of course but..

 

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-city-accounts-bet365-breaking-5252211

No idea if their Accounts are out yet or if the local paper have got the Headlines a bit early but...probably within the next week?

There is a Player Impairment in there apparently, that of course goes against FFP.

£87m loss LAST season. £87m!? Think there was an Impairment Charge of £43m or thereabouts.

Wow!!

[Mr Popodopolous]

8 minutes ago, Davefevs said:

Wow!!

That's incredible really. Puts Bournemouth's hefty loss in the shade somewhat, albeit higher revenue up there- £43m in Player Impairment...due to Covid they say- I predicted £35-40m losses, knock off a likely few million in Revenue and I'm in the right ballpark before the huge Impairment but wow is all that needs to be said!

Can't see how they'd be allowed to carry that forward as part of Covid Costs...? Some of it perhaps but all of it....?

Edited March 31, 2021 by Mr Popodopolous

[Mr Popodopolous]

A quick reminder of the rule:

Quote

1.1.2  Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude costs (or estimated costs as the case may be) in respect of the following:

(b)  amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

What Stoke might be trying to do/claim:

Quote

(f)  in respect of Seasons 2019/20 and 2020/21 only, COVID-19 Costs.

In short, they appear to be trying to get 1.1.2 (b)- ie the Impairment of Player Costs rightly not an excluded Cost- put into/included as part of the category of (f) ie the Covid-19 Costs. This would be surely to save them with respect to FFP/P&S.

Article from last December on this issue.

https://inews.co.uk/sport/football/financial-fair-play-rule-change-covid-19-efl-transfer-value-800073

The double whammy moving forward is that- or so their fans might think assuming it's even accepted in its entirety- this frees up costs moving forward and pure profit as well...suspect it won't be that simple however.

Edited April 1, 2021 by Mr Popodopolous

[Mr Popodopolous]

Also Birmingham or the owners based in the Far East of Birmingham appear to have sold St Andrews- but the club won't benefit as it's already out of the control ie under Birmingham City Stadium Limited which is linked to the HK based Group but not necessarily Birmingham City PLC. Or sold the Company or somesuch.

 

[Davefevs]

8 hours ago, Mr Popodopolous said:

That's incredible really. Puts Bournemouth's hefty loss in the shade somewhat, albeit higher revenue up there- £43m in Player Impairment...due to Covid they say- I predicted £35-40m losses, knock off a likely few million in Revenue and I'm in the right ballpark before the huge Impairment but wow is all that needs to be said!

Can't see how they'd be allowed to carry that forward as part of Covid Costs...? Some of it perhaps but all of it....?

I read some stuff recently that COVID losses re impairment was more around you sold a player for £2m that would’ve been worth £6m pre-COVID, and that you had to prove you’d had a £6m offer pre-COVID.

However it comes as no surprise that clubs might try to use for impairment in the amortisation area.  However I’d question the validity when Stoke’s accounts are for summer 2020, when COVID impacts were much less, were expecting revenues to be restored this season etc etc.

It seems as if they’re trying to pull a fast one.  I suspect some of the asset value is COVID, but I suspect the larger part is a sustained spell in this division and players proving they weren’t as good as the transfer fee (and therefore amortisation profile) they paid.

[Hxj]

20 minutes ago, Davefevs said:

I read some stuff recently that COVID losses re impairment was more around you sold a player for £2m that would’ve been worth £6m pre-COVID, and that you had to prove you’d had a £6m offer pre-COVID.

The problem you have is that is more of an accounting issue than an FFP issue.  Under the accounting standards for intangible assets you need to review these at the end of each accounting period.  The value at that date needs to reflect any material changes to the period and the amounts included in the balance sheet must reflect the reality of the position when the accounts are signed off.  Signing off May 2020 accounts in March 2021 would require you to look at the period to March 2021 and decide what input your intangibles will have in generating income in the future looking forwards from May 2020.  Large impairments are inevitable.

The gaming will then come into how you maximise the amount that falls outside FFP as 'ignored due to Coivd' and how much intotal you can push through the period to the end of this season to fit within the FFP limits to 20/21.  

[Davefevs]

Thanks.

[Mr Popodopolous]

7 hours ago, Hxj said:

The problem you have is that is more of an accounting issue than an FFP issue.  Under the accounting standards for intangible assets you need to review these at the end of each accounting period.  The value at that date needs to reflect any material changes to the period and the amounts included in the balance sheet must reflect the reality of the position when the accounts are signed off.  Signing off May 2020 accounts in March 2021 would require you to look at the period to March 2021 and decide what input your intangibles will have in generating income in the future looking forwards from May 2020.  Large impairments are inevitable.

The gaming will then come into how you maximise the amount that falls outside FFP as 'ignored due to Coivd' and how much intotal you can push through the period to the end of this season to fit within the FFP limits to 20/21.  

Before I get onto the main points, will any club fail in a 3 year period to 2019/20 or 2020/21 in isolation? Doubtful given that it was rejigged last Summer- it's the average of 2019/20 and 2020/21 loss as the 3rd year in the cycle this time around?

Accounting moreso agreed, but FFP too. Will the Football League accept £41m or however much it was in its entirety for P&S? In terms of what can be attributed to Covid I mean. They're certainly out there in terms of clubs who have done this, no club has come close thusfar. They appear to have knocked 50% or approaching 50% off their Carrying Amount- this was as per the 2018/19 Accounts £83,084,000.

They also made a significant Impairment in 2017/18- obviously this was all pre Covid and a more routine one on relegation from the PL.

Feels too big an amount just to let go- if we take their Reported Amortisation and Impairment in the year to 2020, albeit we won't know for full until the Accounts published it means that their 

On a sidenote, they've once again been kicking off about the Regulations.

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-championship-financial-fair-play-5234227

Back to the matter in hand.

Quote

There is £31.9m in amortisation – the automatic devaluation of a player over the course of their contract, so an £8m player on a four-year deal is worth £6m on the balance sheet after one year, for example – and £43m in what is described as "an impairment review".

Essentially they will have cut if it's allowed to stand in its entirety their Carrying Amount cost by about 80-90%. Their Annual Amortisation cost by a similar %. This feels excessive- I wonder how many other clubs for 2019/20 albeit Accounts coming out this year have tried to put through Carrying Value Impairment as a Covid Related Cost to this level.

I'll be happy to look again etc but I'm unsure it stacks up to allow such a large Impairment to be written off as Covid Costs.

I also wonder if some of last years Parachute Payments would appear in 2020/21 Accounts owing to the suspension of the Season. So long as there's not double counting...

Edited April 1, 2021 by Mr Popodopolous

[Mr Popodopolous]

Might also add, they released Imbula with a year and a bit of his contract- Feb 22nd 2020 his final Release date, PRIOR to Covid, that could be part of the Impairment bill and this part should be added back for FFP.

Berahino finally left in Summer 2019- given no Impairment Cost of note in 2018/19 Accounts this could be included within the 2019/20 one, albeit he was sacked, but surely should be added back for FFP.

Seen the fee listed as £12.51m for a 5.5 year contract in his case- signed January 2017.  50-60% of the Fee was remaining. Could Impairment be a factor here too- should the Impairment be allowed/written off for FFP- or added back? Assuming of course that these two were not already included in their £29m Impairment in 2017/18.

Edited April 1, 2021 by Mr Popodopolous

[Hxj]

29 minutes ago, Mr Popodopolous said:

Before I get onto the main points, will any club fail in a 3 year period to 2019/20 or 2020/21 in isolation? Doubtful given that it was rejigged last Summer- it's the average of 2019/20 and 2020/21 loss as the 3rd year in the cycle this time around?

They won't and I didn't mean to imply that they could. 

The more general point that I was trying to make was that this is not just an FFP issue as that is the second stage.  The first stage would be arriving at the accounts correctly.  Applying that to any one club is difficult as it is very much fact dependent.

I can easily make an argument that a substantial impairment is due in 2020 accounts as no significant income was received to March 2021 due to covid.  I can equally make a strong argument that that has to be covid related.  The first is simply the correct accounting and cannot be challenged.  How far the second one goes is interesting.

 

 

Edited April 1, 2021 by Hxj

[Hxj]

7 minutes ago, Mr Popodopolous said:

Might also add, they released Imbula with a year and a bit of his contract- Feb 22nd 2020 his final Release date, PRIOR to Covid, that could be part of the Impairment bill and this part should be added back for FFP.

Not sure why FFP comes into play, I think you might have this one the wrong way around.  I wouldn't want to reduce their losses.

[Mr Popodopolous]

2 minutes ago, Hxj said:

Not sure why FFP comes into play, I think you might have this one the wrong way around.  I wouldn't want to reduce their losses.

I think I might!

What I mean is it should be included as usual, ie not excluded for FFP in the case of Imbula and maybe Berahino though unsure how Impairment of remaining fee or indeed payoff brought about by sacking for Drink Driving would be treated. Of course it maybe moot had it been written off in 2017/18.

Edited April 1, 2021 by Mr Popodopolous

[Mr Popodopolous]

ALMajir on Birmingham- seems the Land Registry for the 2019 Sale and Leaseback not yet updated.

https://almajir.net/2021/04/01/bsh-stadium-sale/

[Mr Popodopolous]

Brentford Accounts out- a £9m loss last season but they're nowhere near FFP due to the rollup, past prudence, big profits on Player Sales- but their Operating Costs ie Wages and Amortisation seem to have risen sharply.

https://www.brentfordfc.com/news/2021/april/brentford-fc-release-annual-accounts/

As for Bournemouth and their losses- they've made good cutbacks tbh, maybe EFL had words on relegation too?

Also read that the £60m figure in part due to Covid- some TV Revenue deferred into 2020/21, so long as there's no double counting.

Edited April 1, 2021 by Mr Popodopolous

[Mr Popodopolous]

Sheffield United. Yes in PL but will surely be back here in 2021/22.

PROFIT in 2019/20 of £17.5m, which also included £11m in Covid losses. That said they had all of Year 1 TV money that year due to extension to 13 months. On the flipside, it also meant 13 months of wages and amortisation, worth factoring that in when it comes to costs.

Point is they'll have no FFP issues at all for a while IMO. Wages will also fall contractually if relegated, Parachute Payments, higher loss limit in PL etc. Had they kept Wilder...

Saw it in an article, they pulled out a snippet you might both find interesting @Davefevs @Hxj

The club brought back as per the arrangements for the sale of the club Brammall Lane, the Training Ground (Shirecliffe), the site of the Ground also included a hotel, and there was office space mentioned.

Total for the package? £38m.

Hillsborough, an aging ground with minimal work done on it post Euro 96? In isolation, £60m.

Same city but what a differential!? Could be a big Covid markdown but this was already in the works before Covid.

[Mr Popodopolous]

Interesting post on the Stoke forum on this subject.

Quote

As regards no. 3 I have talked before about conversations I have had with an accountant friend who is involved in professional sports club finances including football clubs. He says Stoke have been rightly hugely critical behind the scenes of the Championship FFP rules which are anything but fair and in his opinion are ludicrous, trying to reduce every team to the lowest common denominator.

I own up to not understanding the technicalities but basically what he says is that a Championship club is the only business where an owner is not allowed to spend his own money to improve the club even if he can prove he has the money and the club will not be put into debt through his investment as no interest will be accrued and although it will show up in the accounts as a loan that is only to enable the owner to take out the money if the business no longer needs it. If for example you own a haulage company and you may want to increase the size of your fleet as you think you have a great chance of making much more profit if you have more lorries on the road. However at the moment your business's finances won't run to buying more lorries without incurring a huge loan and the resulting interest. However you as owner are a multi-millionaire can buy the lorries with your own money thus increasing the profitability of your haulage business. Not in the Championship though - the only tier of football in the country that prevents owners from investing their own money in their club.

I know from my accountant friend how frustrated Stoke are with the situation but how little success they are having convincing other clubs. He says it is similar at Derby who found a way of creating money by selling the ground to Mel not illegally. However he says instead of saying well done for creative accounting the rest of the clubs just whinged and moaned about unfair investment. He claims Middlesborough in particular were pushing for punishment but Stoke on the other hand were one of very few clubs who supported Derby. 

Sounds about right. Stoke have been complaining about these on and off for about a year and a half. Sounds like most clubs are not in agreement however!

SwissRamble and the calculations- albeit to 2018/19 and Projections beyond in a pre Covid world, before the rejigs of FFP due to Covid maybe why...

https://twitter.com/SwissRamble/status/1211569645939023872/photo/1

Based on that, then it is T-3 as T-2, T-2 as T-1 and T as the average of T and T-1.

£23m + £8m=£31m. The way it was rejigged- yet another advantage to PL and ex PL clubs, £35m x 1 + £13m x 3/4 x 3=£52.5m.

Average loss for 2019/20 and 2020/21 after Covid allowances and allowable costs can be £21.5m- ie a total of £43m.

Moving into 2021/22 IF rules still in play and IF Stoke still at this level, that shifts to- by the way the Profit on Player Sales for 2019/20 feels optimistic- anyway it shifts to:

New Allowable losses of £39m- so down £13.5m and Parachute Payments slipping away.

A shift of £28.5m based on that- but at the same time £15m in improvement from 2017/18 to 2018/19- which means it gets worse by £13.5m and maybe it's more depending on Impairment and how EFL treat for P&S, how much Profit on Sales etc. Need full analysis, scrutiny and if necessary punishment.

Hell even if that Impairment is accepted in full, it's a £46m loss or £44m loss unsure which, for 2019/20. £39m with Allowable costs and maybe £5-6m lopped off for Covid Revenue losses. Unsure how they haven't failed yet tbh.

Edited April 2, 2021 by Mr Popodopolous