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The Championship FFP Thread (Merged)


Mr Popodopolous

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Looking at this prompted me to have (another) look at Reading's finances- not done this enough of late! ?

It's possible that they have the best possible outcome out of a pretty bad bunch, by Club results 2017/18, Consolidated thereafter. This enabled the sale and resale and leaseback of the Stadium. Least bad might be a better term!

2017/18 Results

Reading FC- and estimated Allowances based on a variety of sources.

Loss

£20,952,868

This was inclusive of a £6,518,222 Profit on the 'Disposal' of the Stadium to Renhe Sports Management Limited (more on whom later). By which I mean they lost approaching £21m despite the Sale and Leaseback.

They also seem not to bother adding such Transactions to the Land Registry either- nothing registered for most if not all, though I think this one might have been for a bit 2-3 years after the event (late June 2018). That's possibly beside the point though. Might be exemptions if sold aboard/to a foreign owner or company whatever.

Allowances:

  • Depreciation- Listed as £1,702,369
  • Women's Football- Says they made a loss of £841,577- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,197,394.
  • Category 1 Academy- Safe bet between £2.5-3m per season?

Doesn't seem to list Impairment of Goodwill or other Intangible Assets or Amortisation on the Club Accounts- they could always dip into the Consolidated and use those as the basis from 2017/18, but that's a loss which is £9m higher...

...Okay then, it's the EFL under their management at the time- let's add real cake and eat it territory shall we...£1,619,666 in Amortisation of Goodwill for the season.

Best case scenario is therefore for 2017/18, an FFP loss of £12,519,862- out of £39m.

2018/19 Results

Renhe Sports Management Limited- this is the company that is the top UK based company in the Group, since Reading's takeover 4 or 5 years ago. Consolidated basically.

Loss

£11,753,640

Allowances:

  • Depreciation- Listed as £689,619
  • Women's Football- Says they made a loss of £1,208,750- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,252,779.
  • Category 1 Academy- Safe bet between £2.5-3m per season?
  • Amortisation of Goodwill- £1,619,666.
  • Also mentions £500k of Impairment under Fixed Asset Investments- not sure how that's treated for FFP?

People might wonder how their losses fell drastically when their expenditure did not. Wonder no more!

I say 'sold', probably mostly if not entirely offset against loans but they cover the cash losses too, the owners- equity etc.

  1. Stadium resold, this time for £37.5m- that's a boost to the profit and no mistake...£11m rise in a year eh!? I say sold, it was to the owner's Chinese/HK company.
  2. The old Training Ground. Another company of the owner.
  3. Residential land- same overseas company who got the ground. Could be the land around the Stadium as was.
  4. Sone Aluko...£3m loan fee to the owner's Chinese club- oddly this was put through not Profit on Transfers and not even in the Consolidated but only the Club, as its own category- "Loan Fees Receivable". These are usually included in Profit on Transfer etc- was classed as Turnover but maybe that's an irrelevant consideration.

Best case scenario is therefore for 2018/19, an FFP loss of £3,488,826.

More significantly though, the underlying loss is enormous- the Accounts suggest that this was despite and including a Profit on Disposal of Tangible Assets totalling £29,929,818 plus the aforementioned £3m on the Aluko loan- seems strange that the Consolidated Accounts don't make a separate category for the £3m loan fee...you can find it by scrolling down to the RPT Notes but it's not exactly clear and obvious.

2019/20 Results

Renhe Sports Management Limited

Loss

£45,032,971

Allowances:

  • Depreciation- Listed as £497,367
  • Women's Football- Says they made a loss of £1,174,279- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,236,491.
  • Category 1 Academy- Safe bet between £2.5-3m per season?
  • Amortisation of Goodwill- £1,619,666.
  • They don't quantify Covid losses to June 2020 but £2-3m? Let's split the difference maybe and go with £2.5m, once factoring in likely cost savings vs Revenue loss, use of furlough etc.

A possible best case scenario is therefore for 2019/20, an FFP loss of £35,051,168.

Remember however, it halves for Covid so it might look a bit like...and this is a rough calculation at this stage.

FFP loss before taking the other half of the combined average to 2020/21 might be £33,511,272 and counting.

They must have exceeded to 2021 and be facing a further battle to comply to 2022...surely??

I'm going on best case scenario in parts ie including Goodwill in 2018 vs the fact it was only in the Consolidated and not Club Accounts or pushing Academy Expenditure up to the higher end and perhaps the Covid losses too.

Edited by Mr Popodopolous
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It gets worse if rumours are to be believed @BOSRed

Drinkwater on loan as well, that rumour it still hasn't gone away...

If it is Drinkwater and Rahman on loan, that's Chelsea subsidising at least 90% of their wages...(combined wage=£170k per week, Reading wage cap for new signings=£8.5k per player per week). Like I say Chelsea have a tendency to do favours for Reading...which is odd given how they rightly have a reputation for looking to maximise gains in the market.

I'd be stunned if Reading are now going to a) Sell some key players or b) Are in the process of agreeing to a fair deduction.

Forgot to add, rumours that they might be looking to add a striker...something's not right at all here, Birmingham when they were limited to £600k per year, added luminaries such as Lee Camp and Omar Bogle...Mahoney is decent and Pedersen they made when they shouldn't have, again good signing but this is off the charts entirely. Gary Gardner on loan is also solid but nothing really to go nuts about.

Derby- even with a celebrity manager- under their wage cap, adding Allsopp (relegated with Wycombe), Davies return, Jagielka and Stearman- all 30+ in the case of the 3 CBs, taking a chance on Morrison and Baldock who is 32 IIRC. Wage cap £4k per week lower but...

  1. Dann
  2. Rahman
  3. Hoillet- Okay he's 31.
  4. Halilovic
  5. Dele-Bashiru- Okay young player from Watford, guess he ticks boxes.

3 of those, 4 if Drinkwater comes to pass, these are waaaaaay off the usual Embargo type signings. Reading is close to London and we are in Covid which can push wages down a bit but these are abnormal in the circs...

About Reading and FFP generally, I was told in the Spring that they believe that a fine would be appropriate.

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51 minutes ago, NcnsBcfc said:

@Mr Popodopolous

This whole Chelsea/Reading tie up has got me thinking.

Haven't the two clubs both got Russian owners?

It's got a slightly unethical, underhand feel to it all.

Something isn't right, that's for sure.

Think Reading are now Chinese/Hong Kong owned. They also had Thai owners and before that Russian ones all within the last decade or so!

However like you, I think something is wrong here. Maybe the owners have Business or personal Relationships with each other. 

Gourlay was at Reading for a while, he was at Chelsea for some time. Did a terrible job at Reading by all accounts.

Now loans of young players to trusted or favoured clubs that's one thing. Darren Ferguson at Peterborough and Preston got some from his dad at Man Utd there, normal. Lewis Baker and Miazga again young=normal. Reading from Chelsea, normal.

Loans of two out of favour senior or at least older players with a combined reported weekly wage of £170k is very, very different!!

Given that Reading need all deals Approved by the EFL, and are in a wage cap of £8.5k per week per player, unable to pay loan or transfer fees, 1 year deal cap having failed/breached FFP...The thinness of the squad and the Transfer restrictions, these moves are hard to fathom.

Birmingham on their wage cap under a similar Embargo with a higher Upper Limit (£600k a season/year) signed Camp, Gary Gardner, Mahoney and Omar Bogle on loan. Okay Embargo breached for Pedersen too and a clutch of young players on frees who barely played, possibly Mbrati aside.

If I was a Birmingham fan or director as it stands I'd be pretty disconcerted. Don't get me wrong they got their Just Desserts but the contrast is stark!

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:sub: Charlotte Ram, you forgot that the Stadium sold firstly from Club to new Parent them new Parent to Chinese company plus the £3m loan fee for Aluko from the owners Chinese club in 2018/19. Add that to the list...

Where I do agree with you is that Reading are getting off massively lightly. Hell in some ways but less in others, even more so than Derby.

I've had suspicions about their FFP position, Reading, since I saw the 2018/19 Accounts and thought 'Hmm. That's a big underlying loss'. It proved so a year later.

You might get a better picture looking at both the Club and the Consolidated Accounts- Renhe Sports Management Limited.

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It's all very odd isn't it- there are a few possibilities albeit I don't necessarily consider them to be likely:

  1. Reading have agreed a points deduction with the EFL- broadly in line with the size of the overspend, with perhaps a little bit off for perceived cooperation.
  2. Reading are still talking with the EFL about their punishment.
  3. Reading are set to sell a number of players- for decent fees- by 11pm tonight, all lined up.
  4. No agreement to be reached or sales and charges follow soon- the sooner the better.

Putting aside the specifics of this FFP case, it is worth noting that there are varied clubs in varied Leagues whose pulling power can exceed their financial limits or on the pitch position for varied reasons...

  1. Man Utd- Of course
  2. Liverpool maybe- Their history etc.
  3. Maybe Chelsea in modern times as they are growing but hard to say.
  4. Man City under Pep a big factor?
  5. Real Madrid- So many European Cups much as I dislike them.
  6. Barcelona in their heyday.
  7. AC Milan- 7 European Cups, still a major club despite an indifferent decade.
  8. Juventus- Most titles in Italian history should play a part even if not quite at their best.
  9. Ajax- certainly in Holland and maybe around- Great history, total football etc.
  10. Bayern Munich- Of course.
  11. Marseille the top in France despite PSG now.
  12. Maybe Benfica due to capital of Portugal and their history.
  13. Could argue Fulham this season at this level, Silva plus West London- could argue Leeds under Bielsa, top manager with a strong rep in the Latin countries.
  14. Boca Juniors and maybe Corinthians in South America- these spring to mind?

You get the idea anyway. Certain clubs can exceed what would be expected due to a glorious history or a top manager or similar...some are arguable while there may be some others to add as well.

However- Reading are a non-descript club in a non-descript part of the world albeit near London, in a fairly non-descript Stadium with a competent manager but one with no grand reputation here or overseas- capped at £8.5k per week apparently, no Transfer or Loan Fees permitted and surely due either an Agreed deduction or charges for FFP.

This activity, in these circs is very very unusual. My checklist could solve a few things but I see it as incredibly unlikely that they would agree to a suitably sized deduction.

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Little update on Reading- looks like they will finally have to give a little in order to sign Carroll.

It's still bizarre as to how they have not yet been charged or agreed to a significant penalty, or at least not to anyone's knowledge in the public domain...but they might be at their limit and have to move one on.

They're still getting off very lightly as things stand. Still, Nixon said 6 players on wages not exceeding £8.5k per week each- they've got their 6.

By my reckoning, before Covid allowances assuming most of the other costs are the same etc, Reading cannot exceed a loss- this is including the usual FFP stuff and in my optimistic scenario whereby 2 Profits on the Ground are included instead of 1, the Goodwill in the consolidated subtracted from the Club- they cannot exceed an Accounting loss of £19m in the season just gone before Covid adjustments, based on the halving formula bit. Maybe less but I'm going on the slightly higher, more cautious side and if I am being over cautious then it would actually be even lower.

If it's a suitable punishment that is being negotiated then this becomes slightly less offensive...but if not.

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A possible further silver lining...although the icing on the cake would be if Reading offloaded a player to the owners other club in order to bring Carroll in!

image.png.359d01337d03cbe2f573e83f76732e02.png

https://www.efl.com/-more/governance/embargoes/embargoes-faqs/

Don't see how they can sign anyone else, ie Carroll, prior to January.

Although it could contradict or go against the 24 Established Players Rule for the FFP Embargo as opposed to Derby's multiple reasons for it.

As for Derby, while their issue rumbles on it's far from clear whether they can sign anyone else but looks highly unlikely- in theory if rumbling on by Jan, they could still have a very quiet window indeed.

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@Davefevs

I remember when the original list came out a week or so into July this was on there. Can only assume that one was rectified but that this is a) An instalment for another player or b) A subsequent instalment for the original player in q.

Actually a bit surprised at this one, in that they appear to have again fallen foul of the same offence so quickly. Have to wonder what's going on there... 

Surely some if not all of them constitute grounds for charges in their own right, unless the Embargo and only the Embargo is the punishment.

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1 minute ago, Mr Popodopolous said:

@Davefevs

I remember when the original list came out a week or so into July this was on there. Can only assume that one was rectified but that this is a) An instalment for another player or b) A subsequent instalment for the original player in q.

Actually a bit surprised at this one, in that they appear to have again fallen foul of the same offence so quickly. Have to wonder what's going on there... 

Surely some if not all of them constitute grounds for charges in their own right, unless the Embargo and only the Embargo is the punishment.

Yes, someone else mentioned it was on original list, so I assume they corrected, then fallen foul again.

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20 minutes ago, Mr Popodopolous said:

Surely some if not all of them constitute grounds for charges in their own right, unless the Embargo and only the Embargo is the punishment.

With multiple offences and now possibly a repeat offence that certainly shouldn't be the case, but this is the EFL so who knows?

Another possibility is that the process will be dragged out for yet more months and a points deduction applied when Derby are either already down or safe so it has no net effect.

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2 hours ago, Mr Popodopolous said:

Have to wonder what's going on there...

I suspect that Mel has closed his cheque book - to be fair in the grand scheme of things its a little low on the priority list.  Derby would have been formally notifed on Monday that there was another problem, with two business days to resolve.

All the rule breaches are subject to penalties which could include points deductions.

I understand that all transfer fees are paid through the EFL, so there is no need for any club to take any action.

 

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1 hour ago, Hxj said:

I suspect that Mel has closed his cheque book - to be fair in the grand scheme of things its a little low on the priority list.  Derby would have been formally notifed on Monday that there was another problem, with two business days to resolve.

All the rule breaches are subject to penalties which could include points deductions.

I understand that all transfer fees are paid through the EFL, so there is no need for any club to take any action.

 

I read that their Ticket office is shut as well- ouch, during International break I guess...

This is the bit I don't get- surely if there are a string of offences, why no charges for them? Some of them are tied into P&S Returns but some aren't...

On another note, strange goings on at Sheffield Wednesday- they signed 10-15 players this Summer but fans had to take out a civil claim to get refunds for Season tickets. The pro-rata rebate for 2019/20.

https://www.thestar.co.uk/sport/football/sheffield-wednesday/sheffield-wednesday-owls-season-tickets-refunded-after-uncontested-court-claims-3366774

That charge against Hillsborough is but 4 weeks or so away too as per CH and as it stands- 30th September 2021. The Accounts for Sheffield 2 Limited, Sheffield 3 Limited and Sheffield 5 Limited all showing as overdue FWIW ?‍♂️

image.thumb.png.50c77de20e25ab6619b61afe07d18c09.png

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

This is the bit I don't get- surely if there are a string of offences, why no charges for them? Some of them are tied into P&S Returns but some aren't...

Sadly most of the media takes little or no interest. Why put some searching questions to Rick Parry for instance when you can keep rehashing the same pieces about the usual PL clubs then head off down the pub?

As far as I know even David Conn, who actually takes an interest in football finance and has had a good track record, hasn't written a single word on Derby.

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16 minutes ago, chinapig said:

Sadly most of the media takes little or no interest. Why put some searching questions to Rick Parry for instance when you can keep rehashing the same pieces about the usual PL clubs then head off down the pub?

As far as I know even David Conn, who actually takes an interest in football finance and has had a good track record, hasn't written a single word on Derby.

Unsure about a bit of this, there are journos who are good at breaking football finance news and speculation- Nixon given how he engages, then Percy, Hughes, Lawton and as you say albeit perhaps a deeper dive David Conn.

There does seem to be a distinct lack of deeper dives in this case though...then we can add, not a word for example on how Reading having failed P&S yet are able to sign those 6 players- well 4 in particular, the Chelsea loanees, Dann and Halilovic- and still are uncharged for P&S as it stands.

(Okay I know, the £8.5k per week per player limit for up to 6, but Birmingham from 2018, they certainly wouldn't recognise being allowed to make signings while varied issues still disputed).

When Reading get charged or handed a suitably sized mutually agreed deduction that's a different matter of course. With a Business Plan to ensure compliance this year also part of it. I just cannot envisage their owners agreeing to a deduction though, they've shown no inclination in the past, refusing suitable bids for players in 3 successive summer windows and attempting numerous loopholes- so the sooner the EFL crack on the better.

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17 minutes ago, Mr Popodopolous said:

not a word for example on how Reading having failed P&S yet are able to sign those 6 players

That's because the regulations allow it - they had 18 players of the correct standing at the beginning of the season and are allowed 24.

 

17 minutes ago, Mr Popodopolous said:

well 4 in particular, the Chelsea loanees

That's because the regulations allow it - any club can loan a player to any other club for zero consideration, or anything they like.

 

17 minutes ago, Mr Popodopolous said:

uncharged for P&S as it stands.

Because negotiations are ongoing - there will have to be an announcement within the next month or so.  Bear in mind that firstly we are omly 5 weeks from the end of the accounting period and that an agreed decision requires 14 days notice of the offer from the EFL, plus a signoff from an independent person, someone who would qualify as a DC chair.

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11 minutes ago, Mr Popodopolous said:

Unsure about a bit of this, there are journos who are good at breaking football finance news and speculation- Nixon given how he engages, then Percy, Hughes, Lawton and as you say albeit perhaps a deeper dive David Conn.

Yes the occasional snippet of information sneaks out but no critical appraisal of what is going on at the clubs concerned or the EFL.

This from outlets who like to claim they care about the football pyramid and cry crocodile tears when a club like Bury goes out of business.

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4 minutes ago, Hxj said:

That's because the regulations allow it - they had 18 players of the correct standing at the beginning of the season and are allowed 24.

 

That's because the regulations allow it - any club can loan a player to any other club for zero consideration, or anything they like.

 

Because negotiations are ongoing - there will have to be an announcement within the next month or so.  Bear in mind that firstly we are omly 5 weeks from the end of the accounting period and that an agreed decision requires 14 days notice of the offer from the EFL, plus a signoff from an independent person, someone who would qualify as a DC chair.

Yeah fair enough, suppose I'm a bit impatient- I'll wait a while and hopefully news will emerge in due course, may try and extrapolate Reading's P&S (using my original formula) to 2021 in the meantime.

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On 30/08/2021 at 15:56, Mr Popodopolous said:

Looking at this prompted me to have (another) look at Reading's finances- not done this enough of late! ?

It's possible that they have the best possible outcome out of a pretty bad bunch, by Club results 2017/18, Consolidated thereafter. This enabled the sale and resale and leaseback of the Stadium. Least bad might be a better term!

2017/18 Results

Reading FC- and estimated Allowances based on a variety of sources.

Loss

£20,952,868

This was inclusive of a £6,518,222 Profit on the 'Disposal' of the Stadium to Renhe Sports Management Limited (more on whom later). By which I mean they lost approaching £21m despite the Sale and Leaseback.

They also seem not to bother adding such Transactions to the Land Registry either- nothing registered for most if not all, though I think this one might have been for a bit 2-3 years after the event (late June 2018). That's possibly beside the point though. Might be exemptions if sold aboard/to a foreign owner or company whatever.

Allowances:

  • Depreciation- Listed as £1,702,369
  • Women's Football- Says they made a loss of £841,577- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,197,394.
  • Category 1 Academy- Safe bet between £2.5-3m per season?

Doesn't seem to list Impairment of Goodwill or other Intangible Assets or Amortisation on the Club Accounts- they could always dip into the Consolidated and use those as the basis from 2017/18, but that's a loss which is £9m higher...

...Okay then, it's the EFL under their management at the time- let's add real cake and eat it territory shall we...£1,619,666 in Amortisation of Goodwill for the season.

Best case scenario is therefore for 2017/18, an FFP loss of £12,519,862- out of £39m.

2018/19 Results

Renhe Sports Management Limited- this is the company that is the top UK based company in the Group, since Reading's takeover 4 or 5 years ago. Consolidated basically.

Loss

£11,753,640

Allowances:

  • Depreciation- Listed as £689,619
  • Women's Football- Says they made a loss of £1,208,750- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,252,779.
  • Category 1 Academy- Safe bet between £2.5-3m per season?
  • Amortisation of Goodwill- £1,619,666.
  • Also mentions £500k of Impairment under Fixed Asset Investments- not sure how that's treated for FFP?

People might wonder how their losses fell drastically when their expenditure did not. Wonder no more!

I say 'sold', probably mostly if not entirely offset against loans but they cover the cash losses too, the owners- equity etc.

  1. Stadium resold, this time for £37.5m- that's a boost to the profit and no mistake...£11m rise in a year eh!? I say sold, it was to the owner's Chinese/HK company.
  2. The old Training Ground. Another company of the owner.
  3. Residential land- same overseas company who got the ground. Could be the land around the Stadium as was.
  4. Sone Aluko...£3m loan fee to the owner's Chinese club- oddly this was put through not Profit on Transfers and not even in the Consolidated but only the Club, as its own category- "Loan Fees Receivable". These are usually included in Profit on Transfer etc- was classed as Turnover but maybe that's an irrelevant consideration.

Best case scenario is therefore for 2018/19, an FFP loss of £3,488,826.

More significantly though, the underlying loss is enormous- the Accounts suggest that this was despite and including a Profit on Disposal of Tangible Assets totalling £29,929,818 plus the aforementioned £3m on the Aluko loan- seems strange that the Consolidated Accounts don't make a separate category for the £3m loan fee...you can find it by scrolling down to the RPT Notes but it's not exactly clear and obvious.

2019/20 Results

Renhe Sports Management Limited

Loss

£45,032,971

Allowances:

  • Depreciation- Listed as £497,367
  • Women's Football- Says they made a loss of £1,174,279- so let's go with that.
  • Community Trust/Spending etc- Dunno if I should go with Total Resources Expended or Expenditure on Raising Funds, or on Charitable Activities- Restricted, Unrestricted or Total. Anyway the quickest answer is probably Total Expenditure- £1,236,491.
  • Category 1 Academy- Safe bet between £2.5-3m per season?
  • Amortisation of Goodwill- £1,619,666.
  • They don't quantify Covid losses to June 2020 but £2-3m? Let's split the difference maybe and go with £2.5m, once factoring in likely cost savings vs Revenue loss, use of furlough etc.

A possible best case scenario is therefore for 2019/20, an FFP loss of £35,051,168.

Remember however, it halves for Covid so it might look a bit like...and this is a rough calculation at this stage.

FFP loss before taking the other half of the combined average to 2020/21 might be £33,511,272 and counting.

They must have exceeded to 2021 and be facing a further battle to comply to 2022...surely??

I'm going on best case scenario in parts ie including Goodwill in 2018 vs the fact it was only in the Consolidated and not Club Accounts or pushing Academy Expenditure up to the higher end and perhaps the Covid losses too.

Here we go.

Part 2. I am and have been pretty generous- perhaps erroneously so- with my interpretations in places, ie a Stadium Profit from Club to Holding then Holding to other company in successive seasons, inclusion of the Goodwill even though it's only in Renhe rather than Reading FC for 2017/18.

Renhe Sports Management Limited

Starting point is a £35,051,168 FFP loss in the season just gone- and remember I'm assuming that the Academy Spend=£3m per season, that the Covid losses in 2019/20 were £3m.

Sadly there is no way of quantifying for sure without the actual data but can only go on searches online with guesstimates of wage savings for individuals who left. Transfer Profit remains about the same but Meyler was paid off in 2019/20 so that we can lop off- Accounts says that cost £1,186,500.

Bowen left, possible years salary payoff or remaining on the payroll too.

Possible savings:

  1. Remaining Amortisation on Barrow- think he went for £1.5m, final year of deal so that means that it's about the same as 2019/20. Say £10-15k per week in wages as well.
  2. I read somewhere that Marc McNulty's weekly wages were £45k per week?? Seems fanciful though, would Dundee United cover the full whack in a Pandemic season for that? Or 10 months worth anyway, I dunno- say £1-2m.
  3. Mannone was finally released- fee around £2m, 3 year deal- so say £667k per year in Amortisation and I've read £17k per week in wages. £884,000 there.
  4. Read that Popa was on £15k per week- £780k per year, released Summer 2020. Is less than clear where he was in 2019/20 though. Joined on a free, left on a free so no Amortisation as such.
  5. Blackett listed as £12k per week at Reading. £624,000 per year therefore. Joined for £1.62m according to one source, hence £405k per year in Amortisation.
  6. Adam left on a free, joined on a free- £15-20k per week perhaps?
  7. Osho and Obita as Academy Products have zero book value but they did have wages- £1,200 and £12,000 per week respectively according to a quick search.
  8. McCleary- one site said £21,000 per week.
  9. Gunter- much the same, another site said £22,000 per week.

Further possibles:

  1. Pele- £31,000 per week on loan.
  2. Ejaria- Loan wages listed as £7,800 per week.
  3. Miazga- One site suggested £12,750 per week, maybe that was the contribution of Reading.
  4. Masika- was there for 5 months, suggested £8,500 per week.
  5. Boye- No idea. One site suggests £8k per week.
  6. Virginia- Suggested he is on £10k per week, who knows how much Reading paid.

Total theoretical cost reductions and savings:

£14,702,600

I am possibly at the high end with some of the wages- Barrow, Adam to name 2.

However there are a few factors to consider as well...

New loanees added

  • Gibson- One site suggests £5k per week.
  • Semedo- One site suggests £4,500 per week.
  • Esteves- One site suggests £2,600 per week??

Ejaria was in the region of £3m though Reading seem to suggest no fees paid in Post balance Sheet. £3m/4=£750k in Amortisation to be added plus another site suggests that his permanent deal=£14k per week.

Oh and Aruna joined end of Jan- 20 weeks wages, whereas his weekly wage stated at £5,000 per week...another possible £160,000 to add back.

Total theoretical costs to add back to the subtraction- plus the unknown such as Paunovic and Bowen:

£2,267,200

Seems remarkable that they should or could theoretically have cut costs by £12m and then surged to playoff contenders from bouncing around the bottom and lower midtable for 3 seasons.

All the same and despite this, I believe that they have breached ie exceeded the Upper Loss Limit in other words, the question is by how much- and there are some fairly generous interpretations in there such as Club and then Consolidated, enabling inclusion x 2 of Stadium Profit, inclusion of Goodwill in Club for 2017/18 to offset even though only in Renhe.

Ah plus the significant Covid costs of course, but then I imagine that they will cancel each other out- ie not even considering them much, but if say £10m hit in Revenue to Covid, add it on and cancel out.

Is an utter farce though, that even with my generous interpretation in 2017/18 and all those assets sold- Stadium and then Stadium again, old Training Ground, land around the Stadium and the 'privilege' of Aluko- £3m kerching, for a year/season, that a club should be anywhere near breaching the Upper Limits??

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Some of the comments by Mel Morris are quite interesting about the wider FFP landscape.

  1. He references the Marriott extension annulment and refers to another club who could not extend a player that they could have made millions on- both kill the P&S. I assume he means Richards at Reading, who went to Bayern on a free.
  2. Suggests that all but two clubs who got promoted failed P&S in the year of their promotion?? I'm unsure about that, is he perhaps looking at the headline figure and not excluding Promotion Bonuses- Promotion Bonuses are excluded because they are not costs that would otherwise be incurred in the event of non-promotion.

Either way if that is close to true, it really makes a mockery- Point 2 I mean- of the "Projected Accounts" Regs, submitted in March etc.

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On 02/09/2021 at 17:46, Mr Popodopolous said:

Yeah fair enough, suppose I'm a bit impatient- I'll wait a while and hopefully news

John Percy

@JPercyTelegraph

·

49m

#ReadingFC set for heavy deduction of up to 9 points after breaching financial rules. Like Derby, Reading are in talks with the EFL over an "agreed decision" as per regulation 85.

 

That should make your day!

  • Robin 1
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Birmingham City's results for 2020/21 are due tomorrow- at the Hong Kong end.

Probably look properly Friday, don't anticipate any P&S issues given Bellingham and Adams profit plus varied other moderate sales but it will give an early indicator as to what kind of revenue % hit we can expect when ours are out either later this year or early in 2022.

You can actually release accounts fairly quickly for the season just gone- it's just that clubs choose not to often, until a good chunk if not all of their 9 months are up and maybe a bit longer.

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Regarding Sheffield Wednesday, feels like there are some blurred lines.

Their new top company is Sheffield 2 Limited of course and it took me a while to work out but it seems that their accounting period for that not that it is stated clearly, is from incorporation date to end of reporting period although it should cover the 2019/20 season, it perhaps covers a bit of 2018/19- as IIRC it was founded at CH on June 21st 2019.

There's a few bits that I wonder about...

Sheffield Wednesday- 2019/20- August 1st 2019-July 31st 2020.

image.png.d0d75c9112a7ae8ee6cc87b7312d41e9.png

About £15m in Profit on players/employees in those 2 seasons- I assume that the Confidential settlement payment could be the Bruce money, although surely that could come under profit on disposal of players/employees. This is the August 1st 2019-July 31st 2020 period and the same for the season before.

Although the cash flow has it down as follows...⬇️

Proceeds from disposal of players/employees.

image.png.ab1bb01b8e4a33d92a2596f91dbab131.png

Sheffield 2 Limited headline bit- made up to 31st July 2020

image.png.8e32d378bd10bf2a793dbd708c74259f.png

I hope that the EFL have noticed a risk of double counting. Because that incorporates a bit of the 2018/19 reporting period ie the final month and 10 days or so...clearly we disregard impairment of goodwill but it looks to me that yes there is a bit of extra income and expense by dint of the reporting periods not overlapping and one or two other bits to be reconciled, but they must not be allowed to double count that profit because it appears that there could be a risk of it- hope the EFL make the relevant adjustments for P&S.

Cash Flow for the relevant period

image.png.3d4e993336c9195958a1cdc4716506b1.png

Where are those proceeds of intangibles coming from? Why the approaching £9.5m gap- is it a risk of accounting for bits of it twice, certainly seems to be only player registrations shown as disposed of in the relevant section.

As a curious aside, the accounts appeared to be signed off after the due date.

image.png.2df0ba0115c9ddd3b710b46bdbc01f6d.png

Well may have been from the 28th June 2019, anyway.

image.png.0361a3970dc0c2c9f5a875744d9b871f.png

 

Like I say signed off/approved on 10th September 2021, when the accounts were due on 31st July 2021.

On a side note, those Sheffield 3 Limited accounts are overdue. Relevant as that is the company which 'purchased' Hillsborough and still no sign of the clearing of the loan or partial payment to New Avenue Projects secured against Hillsborough- maybe it's been done and just not updated. :dunno: If it rolls over, does it update?

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I said I would look at Birmingham and now I will. Had a quick look the other day.

They made a profit in 2020/21, albeit mainly through the sale of Bellingham. The overall BSH made a loss but the segmented results saw a profit- less clear is the basis for the claim by their now former CEO that the wage bill was slashed. £18m was one estimate I read, but again less than sure...

I might add they got their results out on time, in a mere 3 months- it can be done. It's quite hard to follow their results financially in the consolidated format. It's  in HK$...

Their income seemed to be only 60% or thereabouts of what it was in 2019/20. The bottom line is that they seem to have made a profit and when you add in Covid allowances it's a bigger profit, then added in is P&S allowances it gets better still.

image.png.0b8ac144cfb7e5ded603989050148e02.png

As we can see, that's mostly Bellingham- cutting the amortisation cost also helps from a profit and loss POV albeit irrelevant cash wise in terms of ongoing costs. (Although less amortisation=less fees paid which can also help with cash in the long run potentially).

We can also see that the segmented results show a clear profit.

image.png.584c41361cc5361a39fd837fd7248647.png

Revenue appears to be down in terms of HK$ for the football club about HK$76,971,000. Assume that a good chunk of that would be attributable to Covid.

The bit about Other Income- and it's related to the football club- confuses me. Is it added to the revenue from external customers or included within.

Nothing dodgy or substantial about it, merely unsure how to account for it.

image.png.0751f8f08facb2ac709913d945b7e99e.png

image.png.db76f1e19297bc9c38d6bacc660c19b5.png

The bit about wage bill for the club having plummeted- well anyway they seem like they should be fine with FFP for a couple of years but have to wonder about that claim that I mentioned earlier in the post.

image.png.c569890d5e960096e83e41dabec181c8.png

Gone up a bit, if anything. Bear in mind though that is for the entire group but last time ie 2019/20, the wage bill of the club was a good chunk of the entire group wage bill.

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0930/2021093002012.pdf

Better analysis than mine too below. Not really mentioned FFP though his one but about the accounts more widely.

https://almajir.net/2021/10/04/bsh-accounts-analysis-end-of-year-june-2021/

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Hull made a loss of £8.5m albeit in League One and in a Covid season.

Some fans must have left ST cash in the club as I wasn't aware that they were open for games or at least not enough to make some revenue- anyway they have plenty of issues but FFP appears not to be one. The fans and ownership are at loggerheads, have been for some time- and there was talk of a possible takeover for Hull a while back. The club also seem to be repaying the ownership their loans or some of them at least!

Their total wage bill was stated as £8,443,408 last year and £17,751,492 in 2019/20. Total club wage bill, inclusive of tax and all employment costs.

Amortisation also plummeted- from £7,819,444 in 2019/20 to £2,085,214 in 2020/21.

There seems to be headroom if a) They get a new owner b) If they get an investor or c) If the current ownership have a change of heart and decide that they want to start spending again.

Possible too that the club are now paying rent to their ownership for some or more than some of their fixed assets, but I've not really looked at that in depth.

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