The Championship FFP Thread (Merged)

[Hxj]

On 29/09/2021 at 17:50, Mr Popodopolous said:

Where are those proceeds of intangibles coming from?

This is the group cash flow, so includes proceeds for the football club as well as the parent.  A rough reconcilliation of the £16 million could be:

Football Club 2019 accounts  £3.5 million

Football Club 2021 accounts  £6.7 million

'Brucie Bonus'                          £6.5 million

Total                                        £16.7 million

On 29/09/2021 at 17:50, Mr Popodopolous said:

Relevant as that is the company which 'purchased' Hillsborough and still no sign of the clearing of the loan

The football club accounts show the receipt of two tranches of £7.5 million in deferred consideration for the stadium sale.

[Mr Popodopolous]

8 hours ago, Hxj said:

This is the group cash flow, so includes proceeds for the football club as well as the parent.  A rough reconcilliation of the £16 million could be:

Football Club 2019 accounts  £3.5 million

Football Club 2021 accounts  £6.7 million

'Brucie Bonus'                          £6.5 million

Total                                        £16.7 million

Yeah, kinda agree once I looked into it a bit further I saw it as parts of 2019 and the 2019/20 accounts into one...the main thing I guess is that the EFL don't allow double counting to slip by for P&S as I assume that the new reporting entity will be Sheffield 2 Limited for P&S- although simpler still would be if the club was used in this instance for P&S at least until 2019/20.

8 hours ago, Hxj said:

The football club accounts show the receipt of two tranches of £7.5 million in deferred consideration for the stadium sale.

Ah think we might be cross purposes- the loan I mean is the charge against Hillsborough, Sheffield 3 Limited- Chansiri though seems to be paying up in 8 instalments and that's the first 2 so far, the deferred consideration as you say.

Edited October 5, 2021 by Mr Popodopolous

[Hxj]

3 hours ago, Mr Popodopolous said:

Ah think we might be cross purposes

Ah yes - but as the debt on the stadium is from a third party then to me it doesn't really matter in the same way.

[Mr Popodopolous]

1 minute ago, Hxj said:

Ah yes - but as the debt on the stadium is from a third party then to me it doesn't really matter in the same way.

If Chansiri doesn't pay it or roll over, he loses ownership surely? I assume that scenario won't happen btw. From a P&S angle it seems of little significance anyway.

Edited October 5, 2021 by Mr Popodopolous

[Hxj]

As long as the lender is paid  the amounts due under the loan agreement then they won't care.

Edited October 5, 2021 by Hxj

[Mr Popodopolous]

Saw this on my Twitter feed.

Reading and FFP, small update.

https://star-reading.org/wp-content/uploads/2021/10/STAR-STRUCTURED-DIALOGUE-MEETING-4.pdf

1. Points deduction- still being negotiated, the term significant comes up in conjunction with this. The club do accept that rules were broken and having to change course as a result which possibly helps their cause- likely that they've been quite cooperative as well. Mentions something about an EFL statement relatively soon.
2. They believe that they will be fine this season but that next could pose an issue.
3. Obviously limitations on wages that they can offer. No block on contract extensions but unclear if that vs wages on offer for them or say taking up a year option could clash.
4. Said that they sold some land from Bearwood for housing to create funds.
5. They have said in their view that Parachute Payments now too high, create too big a gap etc.

Point 4, bit of devil in the detail. Sold when? It is/was classed as a tangible fixed asset in the most recent accounts and if it was post June 30th 2021 then it needs excluding from P&S. Not from a cashflow POV but certainly the Profit and Loss account.

The fact that their owner owns all of their fixed assets, in a part of the country where land value is at a premium that could be great for him if he ever turns, gets bored- or has to liquidate relatively quickly for his other business interests (if he has any).

Could even take out loans on them, and default if he wanted a relatively swift out. If he defaulted the assets revert to lender and he could get the cash? Caveat there is in that scenario he no longer cares about Reading or his UK business interests.

Edited October 7, 2021 by Mr Popodopolous

[Mr Popodopolous]

Norwich

They'll probably be back next season- like a lift. Dunno if it's just headline or full results out yet.

£21m profit last season, although what tipped the balance between profit and loss was the sale of Buendia between the end of the season and the end of June 2021, ie their Reporting Period.

https://www.pinkun.com/sport/norwich-city/buendia-sale-crucial-to-ncfc-profit-8441064

In other words, FFP wise etc they'll remain in a strong strong position when they inevitably come back down this season. Upper loss limit- subject to equity- of £72m. (2 x PL, 2 x Championship).

Covid losses wise, from the beginning of the outbreak probably to the balance sheet date or end of that reporting period, they are claiming £30m.

The profit on disposal bit is also a bit misleading- without seeing the full accounts it is hard to say.

Edit- found it. £59.552m.

Edited October 27, 2021 by Mr Popodopolous

[Mr Popodopolous]

Blackburn

Appear to have 'sold' the training ground and just in time as well- a week before the EFL regs on profit on disposal of fixed assets being included in FFP results changed.

https://www.lancashiretelegraph.co.uk/sport/19676622.blackburn-rovers-training-ground-sold-16-6m-new-venkys-company/

£16.6m is the sale price although the Net Book Value isn't broken down by asset- hard to say what the profit is because the Tangible Fixed Assets- are stated as a pair, not individually.

Some Blackburn fans think it's a convenient excuse in order to transfer some valuable land to Venkys.

Stoke were mooted to have considered selling the Stadium too, although the Land Registry has not updated since June 2nd.

 That £30m Impairment also needs careful scrutiny.

Edited October 27, 2021 by Mr Popodopolous

[chinapig]

39 minutes ago, Mr Popodopolous said:

Blackburn

Appear to have 'sold' the training ground and just in time as well- a week before the EFL regs on profit on disposal of fixed assets being included in FFP results changed.

https://www.lancashiretelegraph.co.uk/sport/19676622.blackburn-rovers-training-ground-sold-16-6m-new-venkys-company/

£16.6m is the sale price although the Net Book Value isn't broken down by asset- hard to say what the profit is because the Tangible Fixed Assets- are stated as a pair, not individually.

Stoke were mooted to have considered selling the Stadium too, although the Land Registry has not updated since June 2nd.

 That £30m Impairment also needs careful scrutiny.

So another bogus 'sale' then.

If Steve had listened to my advice years ago he would have nailed Scotty's laundry basket to the floor, making it a 'fixed' asset and sold it to one of his companies for £30m.

I got Mel Morris' valuers to confirm the figure and Shaun Harvey had already given me the nod but would Steve listen? Would he ****.

Edited October 27, 2021 by chinapig

[Mr Popodopolous]

18 minutes ago, chinapig said:

So another bogus 'sale' then.

If Steve had listened to my advice years ago he would have nailed Scotty's laundry basket to the floor, making it a 'fixed' asset and sold it to one of his companies for £30m.

I got Mel Morris' valuers to confirm the figure and Shaun Harvey had already given me the nod but would Steve listen? Would he ****.

Depends on what the profit is I guess but on the face of it yes. Could be a cash flow issue but given that they stated FFP...

My mistake- BRFCST applied to have it listed as one in 2017, but it was rejected.

£16.6m is far lower. Who knows what the book value is...£16.6m-Cost/Carrying Value whatever=Profit or otherwise. Benefit might well be pretty limited and not least given the fact that 2019/20 and 2020/21 are a combined average.

There are some Blackburn fans though who think that this move is for the benefit not of the club and FFP necessarily, but Venkys or individuals employed by the club. Only time will tell but entirely possible that it's a paper transaction only.

Edited October 27, 2021 by Mr Popodopolous

[Davefevs]

Birmingham:

a club probably around the size of ours (bit smaller) have losses of £33.5m offset by £26m of player profit.

Good barometer for us where player profit was £2.8m.

[Mr Popodopolous]

I looked at the segments of when the figures were first released at the end of September and it reckoned a small profit for the club- those are consolidated with Birmingham and the other parts of the BSH.

Haven't looked at these in depth, in the more detailed results. Will try and find the link.

When you say a bit smaller are you talking historically, off the pitch or just financially? Because finances aside, I certainly make Birmingham a bigger club historically by a number of metrics.

Here we are- 170 pages! Certainly haven't looked myself...

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1028/2021102800480.pdf

Edited October 28, 2021 by Mr Popodopolous

[Davefevs]

35 minutes ago, Mr Popodopolous said:

I looked at the segments of when the figures were first released at the end of September and it reckoned a small profit for the club- those are consolidated with Birmingham and the other parts of the BSH.

Haven't looked at these in depth, in the more detailed results. Will try and find the link.

When you say a bit smaller are you talking historically, off the pitch or just financially? Because finances aside, I certainly make Birmingham a bigger club historically by a number of metrics.

Here we are- 170 pages! Certainly haven't looked myself...

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1028/2021102800480.pdf

Financially.  

[Mr Popodopolous]

Had a little thought on Blackburn though I'm perhaps clutching a bit. @Hxj you might have an idea.

The EFL regulations on Fiixed Asset sales state effective from 2021/22 and the accounting reference period that covers it.

Blackburn Rovers and Athletic was the entity that sold it then the direct parent seems to be Venkys London Limited. Therefore the assets included in that will be likely to be included in the higher entity on the balance sheet.

Blackburn 12 month accounts run until June 30th, however the Venkys London Limited seem to run until March 31st.

Given the wording of that regulation could the EFL challenge the inclusion of the Training Ground sale and leaseback given that the immediate parent of Blackburn runs from April 1st-March 31st? Therefore the reference period of Venkys London Limited includes the bulk of 2021/22.

Clutching- just a tad! 

Edited October 31, 2021 by Mr Popodopolous

[Ska Junkie]

On 28/10/2021 at 15:23, Davefevs said:

Birmingham:

a club probably around the size of ours (bit smaller) have losses of £33.5m offset by £26m of player profit.

Good barometer for us where player profit was £2.8m.

Not too many Jude Bellingham deals around to be fair Fevs. No club can rely on that sort of deal.

[Mr Popodopolous]

2 hours ago, Ska Junkie said:

Not too many Jude Bellingham deals around to be fair Fevs. No club can rely on that sort of deal.

Agreed. We could be a couple of million better off than Birmingham albeit before Player Sale Profits- which is where they surged ahead of us. Their segmented fias per the BSH accounts looked like it might have been as follows- all in HK$.

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

Edited November 1, 2021 by Mr Popodopolous

[Mr Popodopolous]

One thing I forgot to add- or that should be one person I forgot to tag.

@Coppello you might know a bit about this kinda thing- the Blackburn thing, is there any theoretical possibility that a technicality could trip them up here given that the immediate parent of the club runs to a different period to the club itself? Of course the simplest solution is that they align the Venkys London Limited to a 15 month period to take up to 30th June 2021 and then all bases pretty much are covered- but if not...?

Backdating as we know is not allowed and that would be a reasonable charge if it appeared in the accounts to 31st March 2021...and if it appears in the accounts to 31st March 2022, that surely falls within the reference period bit.

The EFL FFP regulation change (dunno if the PL did likewise).

Quote

1.1.2      Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude:

Quote

(b)           with effect from, and including the Accounting Reference Period covering Season 2021/22, profit/loss on disposal of any tangible fixed asset.

Just wonder if there could be grounds for a challenge on relatively obscure/technical grounds- not so much about a fail, more about the inclusion and adjustment of the results to then and the periods that cover it. Nothing much more than a technicality but technicalities can count!

Edited November 1, 2021 by Mr Popodopolous

[Davefevs]

11 hours ago, Ska Junkie said:

Not too many Jude Bellingham deals around to be fair Fevs. No club can rely on that sort of deal.

The point I was making is that we can expect losses of £30m+, I.e. sane as Brum w/o Bellingham.

[Hxj]

21 hours ago, Mr Popodopolous said:

Given the wording of that regulation could the EFL challenge the inclusion of the Training Ground sale and leaseback given that the immediate parent of Blackburn runs from April 1st-March 31st? Therefore the reference period of Venkys London Limited includes the bulk of 2021/22.

No - Accounting period used is either the formal company/group accounts to a date ending in the required period (May to July) or specially prepared accounts to a date ending in that period if the company/group has a different accounting period. 

Edited November 1, 2021 by Hxj

[Mr Popodopolous]

1 hour ago, Hxj said:

No - Accounting period used is either the formal company/group accounts to a date ending in the required period (May to July) or specially prepared accounts to a date ending in that period if the company/group has a different accounting period. 

Thanks. No grounds then?

The Blackburn one is quite odd though because as I say, the parent runs April 1st-March 31st and the club itself runs between July 1st-June 30th. It will be included then as expected if all boxes ticked.

I guess for simplicity purposes it'd be the Blackburn as opposed to Venkys London Limited accounts that would be the relevant ones for FFP.

Did say I was clutching a bit though.

[GreedyHarry]

On 27/10/2021 at 18:48, Mr Popodopolous said:

Depends on what the profit is I guess but on the face of it yes. Could be a cash flow issue but given that they stated FFP...

My mistake- BRFCST applied to have it listed as one in 2017, but it was rejected.

£16.6m is far lower. Who knows what the book value is...£16.6m-Cost/Carrying Value whatever=Profit or otherwise. Benefit might well be pretty limited and not least given the fact that 2019/20 and 2020/21 are a combined average.

There are some Blackburn fans though who think that this move is for the benefit not of the club and FFP necessarily, but Venkys or individuals employed by the club. Only time will tell but entirely possible that it's a paper transaction only.

My boss is a Blackburn fan and he thinks it’s been sold purely to ease cash flow. No corroboration of that but if he is representative of Blackburn’s fan base then they are not supportive of it. Not supportive at all.

[Mr Popodopolous]

On 02/11/2021 at 07:56, GreedyHarry said:

My boss is a Blackburn fan and he thinks it’s been sold purely to ease cash flow. No corroboration of that but if he is representative of Blackburn’s fan base then they are not supportive of it. Not supportive at all.

Thanks. I got the impression that Venkys are still rather distrusted up there. They've made a right mess of things to put it politely but perhaps have stabilised aspects now? They do keep the club afloat however despite all of their unusual actions.

There have been reports that it helped to an extent with FFP but FFP can also tie into cash flow- see the cash losses requirement- so it could be both in a sense- the 2021 accounts should reveal all either way.

[Mr Popodopolous]

Now that Derby and Reading are sorted- at least for the moment, Business Plan etc. Blackburn look theoretically possible but less of a major priority so we'll put them down a notch.

Stoke

I started some calculations a while back but will use Swiss Ramble for now. Credit to Swiss Ramble. Basically by my calculations, Upper Loss Limit to 2021 was £55.5m by dint of PL relegation, one PL season and 3 Championship=£55.5m.

£23m + £8m + Half of £43m=£52.5m in used losses so far.

By my calculations before FFP etc, they cannot exceed an FFP loss of £6m in 2020/21 in order to remain compliant. That's in addition when looking at it from an accounting POV, the estimated £7m in allowable costs that they have in a typical season and whatever the Covid costs are...although the Impairment has slashed the amortisation charge and I hope is still under rigorous and ongoing investigation...Year 3 vs Year 2 of Parachute Payments also sees a drop although some of Year 2 will be deferred into Year 3 by dint of Covid. In short, they need to cut that loss by £37m to remain compliant and even if they do, into this season it's down to the £39m and the end of Parachute Payments...quite a lot of departures though albeit helped by that Impairment.

Surely there is a real chance that Stoke have failed FFP to 2021...although having said that, they are not on the Embargo list unlike Derby or Reading.

Edited November 24, 2021 by Mr Popodopolous

[Davefevs]

I’d say Stoke likely to be in a bit of bother, a) when they announce 20/21’s accounts and b) 21/22 projections.  You’d imagine they’d already submitted 3 year projections anyway as they must’ve already been on EFL radar from 19/20’s position.

The might well be on for a points deduction when submissions go in.

[Mr Popodopolous]

1 hour ago, Davefevs said:

I’d say Stoke likely to be in a bit of bother, a) when they announce 20/21’s accounts and b) 21/22 projections.  You’d imagine they’d already submitted 3 year projections anyway as they must’ve already been on EFL radar from 19/20’s position.

The might well be on for a points deduction when submissions go in.

Stoke fans don't seem all that worried or more to the point it isn't now a huge topic of conversation from a quick search but you might well be right.

Although there is a big difference between that and a certain club who had a reasonable portion of fans who actively gloated they had the EFL on strings, their owner had the EFL on strings and the like- never seen any kind of fan reaction like that at our level or for so long FFS. Their accounts- Stoke's are usually out around November/December but not technically due until end of Feb 2022.

My little point on that club though, Derby- never seen the like! 

Edited November 24, 2021 by Mr Popodopolous

[Hxj]

Just to point out that SR's tweet contains errors:

Firstly there is no limit for 2019/20 as no test (this is only implied).

Secondly SR's loss limits are incorrect.  The £55.5 million mentioned by @Mr Popodopolous is the correct one.

Edited November 25, 2021 by Hxj

[Mr Popodopolous]

Bit of Stoke, one or two interesting posts on their forum.

The numbers that we have in the public domain don't look wildly comfortable FFP wise let's say...I wonder the stadium has been sold as well as the Impairment trick? Land Registry seemed not to have updated since early June 2021...To caveat, Stoke are not on the Embargo list so in theory...would be strange if they were falling foul but but not under embargo?

I would hope fwiw that the Impairment is still under active investigation, using real data and comparable evidence etc. As in "Signed off okay...for now, not forever". See also Derby and Sheffield Wednesday.

However it doesn't sound like it's an FFP settlement?

Interesting to see how this will play out. I seem to recall that Percy stated something about a sale and leaseback in late May 2021- but as we know such transactions cannot be backdated and anything after the reporting period would/should be excluded from P&S calcs.

Here we go, the evening of 27th May 2021- Stoke's (as far as public domain goes) Reporting Period runs to 31st May 2021...as we know from the SWFC case, backdating is not permitted and as we know from the change of regs, as I said the profit would be excluded if sold in this season.

https://www.telegraph.co.uk/football/2021/05/27/stoke-city-could-forced-sell-stadium-avoid-breaching-financial/

Edited November 30, 2021 by Mr Popodopolous

[Davefevs]

@Mr PopodopolousBlackburn’s accounts.  I guess this us why they had to sell Armstrong and their training ground.

 

[Mr Popodopolous]

On 18/12/2021 at 11:53, Davefevs said:

@Mr PopodopolousBlackburn’s accounts.  I guess this us why they had to sell Armstrong and their training ground.

 

Thanks Dave. Had a bit of a look in depth and will look at Kieran's analysis too- the fact that their turnover isn't far off what it was in 2019/20 is interesting- they either did a bit like what Derby eg did and the cash stayed in the club and they got to go for free in 2021/22 as with some of their season ticket holders or a lot of fans voluntarily kept it in the club. Them and Millwall didn't see their turnover have a huge hit but then I don't suppose they have huge commercial revenue eg so how much of a marker we can draw for our accounts is unclear- April 1st 2020-March 31st 2021 as well in this instance which is a bit unusual.

I've always thought that Blackburn were walking rather than crossing the line FFP, ie losses on a 3 year rolling period right up to but not necessarily over limits. What interests me here is that the EFL regs from 2021/22 don't just disallow profit on fixed assets from FFP for the season 2021/22 but the accounting reference period that covers it- to me accounts that run for VLL from April 1st 2021 to March 31st 2022- is that not an accounting reference period that covers 2021/22? Still unconvinced they exceed, more like very close without the training ground sale and leaseback given a Category A Academy, Infrastructure Depreciation and what appears to be a decent Community spend, Blackburn Rovers Community Trust- perhaps it was also to give them some headroom to try to extend the following either for on the pitch gain or to protect assets in the event its needed...

As it stands...contracts that expire summer 2022

1. Kaminski
2. Nyambe
3. Lenihan
4. Rothwell
5. Brereton-Diaz

To lose most let alone all of them on frees or pre-contracts- or significantly below value would be disastrous for them IMO. Possibly Kaminski and Brereton-Diaz have options but in theory those two- well all 5 but thinking those two might also be of some interest in Europe, can speak to clubs outside of England from January I believe for pre-contracts if they don't move quickly. Brereton-Diaz has already attracted rumoured interest from Sevilla- pre-contract- and Rothwell was linked with Rangers on a free.,

Edited December 20, 2021 by Mr Popodopolous

[Hxj]

On 20/12/2021 at 20:14, Mr Popodopolous said:

What interests me here is that the EFL regs from 2021/22 don't just disallow profit on fixed assets from FFP for the season 2021/22 but the accounting reference period that covers it- to me accounts that run for VLL from April 1st 2021 to March 31st 2022- is that not an accounting reference period that covers 2021/22?

Nope.

Where the accounting period for the football cub (or football group) doesn't end in the period from 31 May to 31 July separate accounts need to be drawn up to a date in that period, which will be the relevant accounts for FFP purposes.