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Mr Popodopolous

The Championship FFP Thread (Merged)

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As promised I have found those two links.

https://www.astonvillanewsandviews.co.uk/villa-sell-villa-park-to-themselves-for-56-7-million-why-so-cheap/

This was where it was referenced that they had previously said they were of the view that £200m could be reasonable.

Some key snippets below, some clear key snippets bolded.

Quote

It seems there might be some concern amongst the fans that the ground doesn’t on paper belong to Aston Villa, but it doesn’t bother me in the slightest, as when it comes to any future sale of the club, it would surely have to include Villa park?
So really, nothing has changed, except that we’ve balanced the book as regards to FFP.

I think it was pretty obvious this was going to happen, as nobody could see how we could possibly balance the books otherwise, but what is niggling me, is why so cheap?

Quote

As opposed to Villa Park, which is much loved throughout the game, even if it is a bit dated in places.

When the subject of Villa park being sold came up a few weeks ago, I said that I thought we could probably get away for selling at £200 million, purely because of it’s history and heritage. I think it’s still held more FA cup semis than any other stadium, if memory serves me right and although the trophy is somwhat devalued these days, it’s still important.
Putting a price on that sort of thing is really difficult.

So why only £56 odd million then?
Perhaps that was all that was needed, but this is a one-off thing and surely if the owners had bought it for say, £150 million, I’m not sure why they wouldn’t have, as it gives you a nice big FFP cushion to play with, bearing in mind no money has changed hands, except on paper?

There’s obviously a reason and perhaps it’s just that we didn’t want to be seen as taking the proverbial, in the way Derby have. Or maybe you have to demonstrate fair value, bearing in mind the price Sawaris and Edens paid for the whole club?
But that makes me wonder how Derby have got away with it?

https://www.astonvillanewsandviews.co.uk/thoughts-on-derby-and-are-we-selling-villa-park/

Quote

It seems the powers-that-be are going to clamp down on this sort of thing, but we all know how slow they move and in my opinion it would be a restiction of trade anyway, so you would assume it’s still an option for us, should we fail to get promoted.

The big question for me, is what is Villa Park worth?

The club is valued at £75-125 million, take your pick, it’s all about how much someone wants it.
But given that Villa Park is renowned as one of the finest traditional stadiums in the world, let alone England, you have to wonder what it might be valued at.

You might laugh, but I’d suggest £200 million on paper isn’t out of the question, given some of the figures I’ve seen in the financial world.
Classic stadiums aren’t ten a penny, after all.

Of course, all this assumes we don’t get promoted.
If we do, it won’t matter, at least in the short term anyway.

Make of this what you will...the author seems to be very crowing, across their two pieces?

For balance, they also state that it's as bent as it gets.

Quote

If so, to my mind, this is as legally bent as it gets.
You’re effectively selling the stadium to yourself.
Yet this sort of thing happens all the time in the financial world, as companies are seen as seperate entities from those who own them.
Indeed, it’s already happened in the English game.

They also fail to note that this shell company was actually formed in 2017 and merely moved from the direct group to the direct control of the owners...

Clearly though, the first time £200m was sourced by me, was from an Aston Villa related page! :)

Edited by Mr Popodopolous
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Quelle surprise. 
A Villa fan in denial. 
Truth is pal, you were very very close to breaching the regs. It was widely acknowledged by the whole football world. 
You may have just gotten away with it. Just. 
Suck it up, be grateful that you might’ve just sneaked under, but don’t come here acting high and ******* mighty and that you weren’t pushing the line. Cuz you were. Very close. 

Edited by Harry
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As far as I can see @Harry it's still not a resolved issue, last I've read on the Aston Villa FFP issue is that the PL haven't yet ratified the sale and leaseback, but obviously that doesn't indicate guilt either. 

Still a live case though I'm thinking, and given that Impaiment in 2016, I'm really wondering about the sale price, profit etc. As you rightly say, they appear to have been within a very close range. 

Could an adjustment to the £56.7m for Villa Park tip them into trouble again? Certainly for the 3 years to May 2019.

Could even be a case that any adjustment at all is the difference between compliance and overspend. Bigger the adjustment the buffer the overspend, the bigger the issue. 

Pride Park eg was sold for £81m with an independent valuation commissioned by them though the method or valuer was not stated in 2018 accounts. EFL commissioned valuation came to £49m or £50m. Similarly, Hillsborough at £60m feels overdone.

Villa Park at £56.7m, surely must be worth a close look by the EFL especially on their return, whenever that may be.

Edited by Mr Popodopolous

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11 hours ago, Harry said:

Quelle surprise. 
A Villa fan in denial. 
Truth is pal, you were very very close to breaching the regs. It was widely acknowledged by the whole football world. 
You may have just gotten away with it. Just. 
Suck it up, be grateful that you might’ve just sneaked under, but don’t come here acting high and ******* mighty and that you weren’t pushing the line. Cuz you were. Very close. 

Denial of what exactly?

There is nothing to deny.  We have broken no rules.  Being close to a threshold is a completely different thing to being over it.

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3 hours ago, Delta said:

Denial of what exactly?

There is nothing to deny.  We have broken no rules.  Being close to a threshold is a completely different thing to being over it.

What you don't seem to grasp is that your case is perhaps still live, albeit in a state of hiatus- suspended animation.

I'd say it's up in the air- just because you have not yet sanctioned rules doesn't mean that Investigations couldn't down the line prove it to be the case. I suspect even a small adjustment to the Villa Park sale and leaseback price could throw up problems, to May 2019 at least.

Edited by Mr Popodopolous

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What is interesting is what I've seen on Twitter. This is NOT Aston Villa related but info about the FFP stuff.

Will try to find the original link later but...

ERA3Pc0XUAEJYIH?format=jpg&name=900x900

Looks as if the Sheffield Wednesday case has concluded, or at least the aspect in which they have challenged the lawfulness side of it. EFL vs Derby at the actual breach level, the actual Commission is ongoing.

What is also interesting is that Nick De Marco who seems to be quite prolific in these cases, is representing against the EFL- interesting as he works for Blackstone Chambers- the very company the EFL hired last Autumn as the Investigation developed/progressed. 👀

Hi @29AR you seem to know about the law, or have done from past postings on here- big company sure but is it normal for lawyers  from same ultimate organisation or two different ones to be involved with both sides? Or one to be representing side A- say the club and one to be overseeing the panel? Charles Flint of Blackstone oversaw the Birmingham case for example- think he was the Chairman of the Disciplinary Commission.

 

Edited by Mr Popodopolous

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 ... is it normal for lawyers  from same ultimate organisation or two different ones to be involved with both sides

 

For barristers, yes, common.  They have a different operational set up to other lawyers.

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51 minutes ago, Mr Popodopolous said:

 

@29AR you seem to know about the law, or have done from past postings on here- big company sure but is it normal for lawyers  from same ultimate organisation or two different ones to be involved with both sides? Or one to be representing side A- say the club and one to be overseeing the panel? Charles Flint of Blackstone oversaw the Birmingham case for example- think he was the Chairman of the Disciplinary Commission.

Hi Mr P. Yes, it's not uncommon at all, and to prevent conflicts you would set up 'Chinese Walls'. That just means you take every step to make sure each teams are of different staff, that there is no discussion of the case, no passing of info to the other side, and possibly even working in different offices. I have been in this situation myself dozens of times for M&A deals, and whilst it may feel like sides would talk, they really don't. I've never been under one which wasn't - if anything - over-zealously adhered to. 

It is probably more prevalent in M&A where you could have the same firms - lawyers, accountants etc - all acting for both sides just having independent teams. 

Edited by 29AR
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2 hours ago, Mr Popodopolous said:

What you don't seem to grasp is that your case is perhaps still live, albeit in a state of hiatus- suspended animation.

I'd say it's up in the air- just because you have not yet sanctioned rules doesn't mean that Investigations couldn't down the line prove it to be the case. I suspect even a small adjustment to the Villa Park sale and leaseback price could throw up problems, to May 2019 at least.

Of course I'm aware of this.  However, at this moment in time we are under.  Hence no action from the EFL/PL.

I'm confident that we'll remain under and with a projected overspend of around £25m (your figures), it would have to be a hefty hike on the ground sale to take us over.

You are hoping that we'll be dragged into it.  I see this as little more than straw clutching.  You've speculated all the way through this and being wrong every step of the way.

Out of interest, do you know what figure your lease is for AG?

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18 minutes ago, Delta said:

Of course I'm aware of this.  However, at this moment in time we are under.  Hence no action from the EFL/PL.

I'm confident that we'll remain under and with a projected overspend of around £25m (your figures), it would have to be a hefty hike on the ground sale to take us over.

You are hoping that we'll be dragged into it.  I see this as little more than straw clutching.  You've speculated all the way through this and being wrong every step of the way.

Out of interest, do you know what figure your lease is for AG?

EPL in recent times haven't had a good track record of enforcing punishment or holding clubs to account in any meaningful way- saw an article on it, but maybe that will change with Man City- or indeed the new EFL/PL alignment?

Profit on sale is price paid minus Value on Books...it isn't the fee you stick in the books, it's the profit. That profit due to the Impairment is questionable, this is the crux of the issue. Needs full exploration.

You may well technically be under but there are a lot of unknowns for you to say that you are in the clear,

This is patently incorrect...some of the 'wrong' claims that you have cited by me have come from VILLA pages! Links are there, go read them...the £200m a notable example.

Whataboutery. Besides which, we made no financial gain from the sale of AG, this was possibly a corporate restructure. Again though, what has rent got to do with it- I've not even mentioned how much you are or should be paying on Villa Park.

Corporate restructure or otherwise, it looks like it was an asset transfer- 2006. Just checked, I say 2006, was in the 2005/06 season- from Bristol City FC Limited to Ashton Gate Limited. No gain, no profit it would seem.

Check 2005/06 Bristol City Limited Accounts- it even states the asset transfer in them, if you scroll down to Page 13 of the accounts made up to 31st May 2006 for either, or both of Bristol City FC and Ashton Gate Limited, it's clearly stated.

Accounting regs may have allowed for it at that time, it will have been above board but there was no gain, no loss- merely an asset transfer. Imagine in League One had we done that and banked say a £10m profit in 2006...no FFP regs either, we could've run all over League One that year!

Edited by Mr Popodopolous

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On 16/02/2020 at 19:45, Mr Popodopolous said:

When I say replace, I mean replace perhaps numeriocally but not perhaps calibre or wage wise. Snodgrass goes out, in comes Bolasie and El Ghazi- granted the former left after half a season.

Out goes Grabban, in comes Tammy. Those are not terribly cheap.

I question the stadium sale owing to the Impairment in 2015/16 but I digress, the 2018/19 Accounts will be my new starting point.

Or if you get them in, you sell some key assets to help fund them in order to stick within the below.

It means that if a club are close to breaching FFP regs, you spend lower, you put more of an emphasis on youth and if you exceed these limits you- not just you tbh, any club, then they get dealt with accordingly.

Completely different and more complex case, but as we heard Friday evening. Man City banned for 2 years from European competition- feels pretty well deserved it must be said!

I am not in denial. FFP is a real concern to me. Our spend in the 2016-17 season was ...well reckless ?
But I would have to see evidence of wrongdoing before any action was taken against us.
And so far, I dont see any.

I would accept if we were charged and convicted and say the club would deserve any penalty.
I see only resentment that we brought good/high priced players. You have highlighted the the more high profile
arrivals at Aston Villa, but not mentioned where we sold international standard players and
had others taken off the wage bill. Transfers were a two-way activity. You pointed out Snodgrass
however we were only paying one third of his wages. Bolasie earns a kings ransom at Everton but i'm yet
to see proof that we were paying all of his retainer. I'm not convinced.

I know many opposing fans wanted to see us lose Grealish and as I said before it nearly did happen, but in
the Championship we should not be a selling club. Its a club that's going to aim to get back where it was. And we
did blood Green, Hepburn-Murphy & Davis our youth graduates but we cannot fill the team with them.
We were promoted relying our 3rd choice Goalkeeper.

I respect Bristol, hope you get promoted soon, but I'm here to stick up for my club. If I was satisfied that we had done
something wrong I'd be the first one to condemn.

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34 minutes ago, AnAstonVillafan said:

I am not in denial. FFP is a real concern to me. Our spend in the 2016-17 season was ...well reckless ?
But I would have to see evidence of wrongdoing before any action was taken against us.
And so far, I dont see any.

I would accept if we were charged and convicted and say the club would deserve any penalty.
I see only resentment that we brought good/high priced players. You have highlighted the the more high profile
arrivals at Aston Villa, but not mentioned where we sold international standard players and
had others taken off the wage bill. Transfers were a two-way activity. You pointed out Snodgrass
however we were only paying one third of his wages. Bolasie earns a kings ransom at Everton but i'm yet
to see proof that we were paying all of his retainer. I'm not convinced.

I know many opposing fans wanted to see us lose Grealish and as I said before it nearly did happen, but in
the Championship we should not be a selling club
. Its a club that's going to aim to get back where it was. And we
did blood Green, Hepburn-Murphy & Davis our youth graduates but we cannot fill the team with them.
We were promoted relying our 3rd choice Goalkeeper.

I respect Bristol, hope you get promoted soon, but I'm here to stick up for my club. If I was satisfied that we had done
something wrong I'd be the first one to condemn.

Thank you for a considered and balanced response.

Fair- it's still in a bit of hiatus atm I think. Feels a bit like it anyway.

Well this is true, unsure why Everton making such losses would give a discounbt but I digress- if anything El Ghazi and Bolasie even if the latter for half a season might be a bit more costly than Snodgrass. It's arguable either way in some respects.

This bit I query. If a clubs finances dictate that they need to sell to hit FFP, then that is what they need to do. Like many at this level- the majority in fact. Leeds are a pretty big club...Wood got a major fee, they sold quite big this summer, thinking of it in a 3 year cycle. Doubtless their costs will have stepped up too- Nottingham Forest another example of a big club fallen on hard times who trade- trade maybe a better term. That is some and you get some credit for that, but while I agree you can't necessarily field a youth team, it's important for the integrity of the competition to see the regs adhered to, in real time. For example, if a Projected set of Accounts in March of the existing season shows a forecast overspend with no paper trail of say a stadium sale or more agreeably, player sales pre arranged in the summer...then points docked there and then.

T=Existing Season club Projected Accounts, and T-1 and T-2=Actual Published/Received Accounts. If a stadium sale that's different but then the EFL must commission an Independent valuation before the end of the season to get an adjustment in at the earliest if necessary. Needs rigorous real time monitoring...this might be coming into play now but under Harvey, there were significant shortcomings!!

Fair enough and thanks- you're clearly a big club and obviously people would to stick up for a club- it is always good to have opposition fans putting the counter view, nothing worse than an echo chamber!

Edited by Mr Popodopolous

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There are a few curiosities or unique elements about this case though, regardless of Profit and Loss. 

It's a bit of a watershed moment, for a few reasons.

1) First genuine test case of a side whose compliance up for debate promoted under the full 3 years of this new system in play. It was really effective from 2016/17. 3 year cycle. Fits perfectly.

2) The 2016 Impairment. How is and was this factored for in the sale price? No other club who have done this had this as a talking point so it's new ground on the Fair Value front. 

3) Press talk of a disconnect between PL and EFL. Rules are clear but different views on enforcement?

4) Approval. Was it gained, sought? Was any approval for the mere act, ie sale and leaseback or the price and EFL approved valuation too?

4) Interesting line last May about Aston Villa being in a soft embargo. This throws up a few possibilities ranging from maybe to laughable but here goes:

A) Was pure speculation.

B) There was one but EFL ratified and ask. 

C)  There was one but that rumoured disconnect meant it wasn't carried over to PL. 

D) There was one but Aston Villa did a Birmingham on steroids, ignoring it 110%!!

E) They miscalculated in a massive way by believing that 'pay the fine' was still the solution so spent accordingly as PL and EFL FFP used to be different, see the QPR debacle! 

5) This last bit is surely mischief making but anyway, Purslow miscalculated the harmonisation in the regulations. 

6) The EFL gave Aston Villa some bespoke deal due to how close they were to bankruptcy. 

7) As we saw with Birmingham, their Projected Accounts submitted in March 2018 showed decent transfer profits. Their real accounts to June 2018 did not...things were reworked and they were dealt with accordingly! What was in Aston Villa's submitted last March?

At that time, many clubs were rumoured to be in breach, see Al Majir blog, and he seems reputable, and the EFL were quite happy to try to let clubs back to balance if possible with minimum fuss. Rules of the game have changed significantly since then, the landscape has seen some big shifts.

I'd be surprised if the EFL don't have some searching questions if and when Aston Villa return basically. Could even argue duty-bound.

Edited by Mr Popodopolous

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Any reference to Villa being on a soft embargo in May 2019 is irrelevant given that they didn't have enough money to pay bills.  At the time, the whole squad was up for sale.

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https://almajir.net/2018/09/03/editorial-efl-questions/

This is from last year @Delta but it genuinely is worth a read. Al Majir is just one of the sources I use but the truth is that May 2019 you had the takeover and were fine for cash and not yet in breach of FFP- the soft embargo was FFP related in May 2019. The embargo was in summer 2018 as you had the significant cashflow issues...but those cashflow issues were distinct from FFP. Like Bolton in fact- whereas Birmingham had cash but were in FFP trouble.

Your 2018 embargo was a registration embargo for the reasons you state- insufficent money to pay bills, think there was something about a tax bill too. Both embargoes but two quite different types and reasons behind them.

Edited by Mr Popodopolous

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May 2019, we were a PL side (transfer window opens June 1st).

May 2018, we were in all sorts of financial difficulty and could not sign anybody.  I have no idea whether we were on any sort of embargo but it really didn't make much difference anyway as we couldn't afford to bring anyone in.

A registration embargo is what Birmingham were placed on (and subsequently cleared of breaching).  This is because they signed Pederston and argued that if the EFL decided not to register him, they would have loaned him out.  The panel decided that the EFL had not been clear enough. 

 

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You were rumored to have been under a soft embargo in May 2019. That could just have been a hangover from the EFL granted.

Window opened before June 1st actually, we sold Kelly mid May 2019 but it has often been June 1st- I assumed it was as well.

You were technically a PL side having won the playoffs but the official handover or transfer- it's a formality granted- takes place early June I believe.

It's an unanswered question for sure- maybe good, maybe bad, maybe meaningless but if the soft embargo thing is true, well it could've been pre approval of the ground sale.

I'd hope the EFL would have tightened up their procedures between Pedersen and May 2019. 

There could easily be different takes on enforcement- it's a live issue.

Just imagine for one minute- and this is clearly a big no surely in reality, that you signed all those players while under a soft embargo? Signed them but the PL didn't carry over the soft embargo...the amount of issues you would be in back in the EFL would be enormous.

On a serious note, the jury is out BUT if the ground value adjusted and the FFP figures adjusted accordingly and you found guilty of a breach to May 31st 2019 here is my proposed punishment- as punishments should fit the crime, IF the crime proven of course:

  1. The points penalty based on the overspend, so that would be 12 on a sliding scale downwards. Say the overspend is like Birmingham that'd be 7 points.
  2. Deliberate overspend as per Birmingham? Arguable but that's another 3 points.
  3. One point back for abiding by soft embargo in summer 2018.
  4. IF proven, just for the sake of argument, say it's proven that you are guilty, Parachute Payments either docked or removed from the FFP calculations. You'd have benefitted from the season in the PL buit if proven, the Parachute Payments should be off limits, whether in reality or for FFP. Either way that would ensure you don't benefit from them IF you were found guilty.
  5. EFL Business Plan perhaps, like Birmingham.
  6. Resetting of FFP limits to a £13m limit for the first season back at this level- like Birmingham, it'd have to be set somehow to have a target for 2020/21 IF found guilty.

I think that's a fairly broad palette.Oh and it wouldn't reset the clock to zero, merely the excess limits to bring it back to £13m + youth, infrastructure etc.

That's my proposal IF found guilty. Number 4 I couldn't see happening though- as big a fine as possible or as close to the Parachute Payments over 2 years would be a reasonable equivalent. Fine would have to count towards FFP though.

Edited by Mr Popodopolous

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I think that any rumors of embargos in May 2019 can safely be dismissed.

The Birmingham decision came in March 2019 so the EFL wouldn't have had too much time to tweak wording.  Whilst it's true that there could be different takes on enforcement, a precedent was set and the odds are that any future panel would follow the decision/precedent set by the original panel.

I think you are clutching at straws with a ground adjustment.  With Derby's being set at around £49m, it makes ours look cheap at £56m.  Furthermore, can you really see the EFL nit picking over a couple of million on a ground sale?  If it was 20 or 30 m then yes but not 4 0r 5 million.  Nobody is going to be that precise.  You are just setting yourself up for disappointment if you think otherwise.

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The precedent thing might have validity in some areas but in other areas, it's really a new type of case IF there is a breach. If being the real key term.

I don't know, because Matt Lawton is a pretty reliable source on these issues- him, John Percy and Matt Hughes seem to have strong contacts either in clubs or at the EFL. Anyway what I think CAN be safely dismissed is the idea that you'd be under a soft embargo but breach it by spending £100m...that would leave the EFL with no choice but to look to impose huge sanctions and I'm sure no club would really chance that. Possibly the Soft Embargo was lifted the day your Registration was officially transferred to the PL- see Golden Share. I was mischief making slightly on the idea that you'd disregard a soft embargo by spending £100m- I don't believe that but I do believe that there may have been one in May 2019, but that it may have been lifted or cleared.

Where the Precedent thing would apply is in terms of the sliding scale of points to loss ratio. There is one- you think they wouldn't punish minor breaches? How come they are seeking to dock Birmingham 3 points for the Business Plan issue- granted a minor breach might mean a minor punishment but if you think the EFL would be looking to let say a minor breach go entirely then that wouldn't be the case.

It does not necessarily make it look cheap because it was sold to a Related Party and Accounting and valuation rules are applicable- but I see what you are saying, yes.

https://pbs.twimg.com/media/D2SEpMeX0AI4h7S.png

This appears to be the sliding scale and this is line with what media said- if an adjustment took you into overspend then the EFL WOULD be duty-bound to investigate and charge if necessary.

Any breach would surely get a points deduction- how could it not? The question is the size of the breach and whether there are mitigating and aggravating factors.I would also add that based on the Birmingham case, an EFL 'agreed' Business Plan and a loss limit of £13m for the existing season, would be on the table- as it was what Birmingham had last season and part of that might still be in force.

You will also be aware that IF you win the Carling Cup, UEFA will have something to say surely about your accounts. Because UEFA rules specifically exclude fixed asset sale transaction profits from their calculations- so a place in Europe would be open to question. As the UEFA 3 year loss limits are €30m plus allowable costs.

Edited by Mr Popodopolous

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On 18/02/2020 at 10:55, 29AR said:

Hi Mr P. Yes, it's not uncommon at all, and to prevent conflicts you would set up 'Chinese Walls'.

In China, they’re just called walls. 

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In terms of one of the other clubs, ie Sheffield Wednesday, I'm still struggling with the £60m sale price for Hillsborough.

Will post some snippets later, from accounts to give context. All I do know is that it was revalued on a Depreciated Replacement Cost basis 2014 at £22.25m.

Make of this what you will?

Sheff Wed 2014 accounts and talk of valuation etc.jpg

Asset inflation in Sheffield must be through the roof? Granted there is/has been a Revaluation Reserve and there were some additions stated at cost, but I still think around £30-35m all told.

 

Edited by Mr Popodopolous

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For comparison purposes, the year before the sale and leaseback was meant to have occurred- still using the 2014 revalued figure as a starting point...

All seems reasonably consistent- and actually does going back to 1990 within certain ranges.

year before sale and leaseback was meant to have been.jpg

Seems like they suddenly started carrying it at cost in 2016!

However transitional arrangements between old accounting and FRS 102 or not, I see nothing to justify an automatic upswing- the flip-side is that they were carrying it well below what they should've beem for over 2 decades. I don't see how the two stack up.

sheffield wednesday 2016.jpg

Final year with the big distinction between Cost and Value- 2015.jpg

Because even if that cost figure is the new one, I struggle to see how the value or cost have shifted so much in 4 short years- or was it 5!

Edited by Mr Popodopolous

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Will look at Aston Villa and their stadium price or otherwise later, or tomorrow.

Ah screw it, why not- have it to hand!

 

Villa fixed assets Pre Impairment to May 31 2015.jpg

2016- the Year of the Impairment- Villa Park included within Freehold Land and Buildings.jpg

The Year after the Impairment.jpg

Year Two after the Impairment.jpg

Now in fairness, it is consistently, has been consistently, carried at cost it seems BUT the Impairment makes a difference, absolutely.

We have to assume there are some reasonably in line calculations with fair value based on what we know because in 2007.

As we can see, in 2007 the Fair Value Adjustment on takeover was made- this was the new Value of the Tangible Fixed Assets, however it stated "Provisional Fair Value". There appears to have been no adjustment, in fact the closest from the data we have available that we can see was the Impairment in 2016.

As we can see, as of 2006-07, the Fair Value of the Fixed Assets was equal to the Book Value following Revaluation. Actually, it wasn't quite! Maybe that takes into account historical differences in depreciation? Was broadly the same anyway, save for about £600k difference.

It is therefore fair to state, IMO that there will be undoubted questions to answer, to be answered- fair to state it at this stage.

Fair Value Adjustment- Provisional, 2006-07.jpg

Fair Value confimrnation, Provisional- 2006-07.jpg

Edited by Mr Popodopolous

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I've worked out the mistake I made I think- wasn't factoring in Tangible Fixed Assets before Additions, plus was focusing on Tangible Fixed Assets only under the relevant bit for Villa Park, whereas I should've factored in the whole lot at that stage.

It goes Acquisition of Subsidiaries at Book Value + Fair Value Adjustment (Provisional)=Provisional Fair Value.

Point is that these seem broadly in line or were at the time and there was no broad adjustment, apart from the obvious e.g. Additions, Depreciation- up or down- made until the Impairment.

Edited by Mr Popodopolous

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Now this COULD be a valid argument.

For Sheffield Wednesday, taken from Owlstalk.

Quote

Valuation of commercial property isn't straightforward. The value can often be more about the lease than the bricks and mortar. For instance, an empty shop in a town centre isn't worth a great deal but sign a 25 year lease with Marks and Spencer and its a good solid investment and worth much more. If Chansiri has a lease with the club it would make the transaction more credible and if it is for say £3m-£4m a year for 25 years,  it would back up the £60m valuation as you would expect a return of 4 - 6% if renting to a  'blue chip' company which Chansiri would be classed as based on his wealth.

The problem with this is, that it assumes a £3-4m lease per year.

The Accounts suggest the following:

Well for some reason, it won't let me take a full on snapshot of the two years but...

As we can see they are paying or will in the season just gone, if this is accurate, be paying £369k per year rent on Hillsborough AT MOST! Certainly in Year 1. That 2nd attachment is the figures for the corresponding years. 2017. Seems they paid £98,000 i 2016/17 on finance leases.

This means that if this is right, they're paying the princely sum of £271k per season on a £60m transaction!! Some assumptions here as the rent not disclosed anywhere else...0.45% yield!

Possible rent on Hillsborough.jpg

The Prior year finance leases.jpg

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A while ago I DID wonder about Bodymoor Heath or otherwise. Would it class as income for FFP purposes? The article really doesn't make it clear on first glance.

I did point out a while back that the chairman of HS2 in that area was a certain Steve Hollis...wouldn't be a former Aston Villa chairman would it?

https://wmgrowth.com/article/steve-hollis-announced-as-the-new-chair-of-the-west-midlands-combined-authority-hs2-growth-delivery-board

http://www.railtechnologymagazine.com/Rail-News/former-aston-villa-chair-announced-as-wmca-hs2-growth-delivery-chair

👀

Which year did it fall in- was it income or Infrastructure spending?

A quick skimread of the Q and A preview/exerts, has Purslow stating compliance with FFP.

Seems taxpayers funded their new academy, due to HS2?!

Edited by Mr Popodopolous

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According to an HS2 Spokesman last year, 10% of Bodymoor Heath was required for HS2.

Academy expenditure does not count towards FFP of course.

That article doesn't really discuss FFP though so it's still a bit of an unknown quantity in that respect- or is it that the money banked offsets losses but then the academy expenditure or Infrastructure expenditure- however we want to classify it- quite rightly doesn't count as a loss under FFP?

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1 hour ago, chucky said:

*Me on this thread still*

confused trailer park boys GIF

Mr too for all the property stuff. Mr P had built a wealth of knowledge in this area. 

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55 minutes ago, Davefevs said:

Mr too for all the property stuff. Mr P had built a wealth of knowledge in this area. 

I think Mr P is on a roll, has built up a head of steam and momentum so that nothing will stop him now!

 

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I was having a bit of a think and I do remember seeing something which could help to shed some light on the process for at least some of these.

Middlesbrough by luck revalued in 2018...seems to show a calculation or set of calculations of some kind.

 

Middlesbrough- how the process done transparently maybe..png

A possible precedent for calculation process.jpg

Throws fresh doubt on Hillsborough's surge in valuation between 2014 and the time of sale?

As we can see it's valuation + additions + additions + additions.

Using the above method, a rough and early calculation therefore for that might be:

 £22.25m 

PLUS £250,000 (2015)

PLUS £920,000 (2016)

PLUS £41,000 (2017)

PLUS £115,000 (2018)

Let's assume you add in the Revaluation Reserve too? Don't know if you take it from 2014 or 2018 price- but it's between £6-7m.

Plus Eliminate Depreciation between 2014 and 2018 on disposal.

Still £30-35m and maybe less!

I'm struggling to see how it's anymore?

Edit: Additions appear to be measured at cost.

Edited by Mr Popodopolous

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FFP turned round Premier League clubs’ losses and helped restore Liverpool

David Conn
David Conn
Uefa’s desire to encourage long‑term investment instead of owners bankrolling losses on wages is working
 

In the days after Manchester City were found to have seriously breached Uefa’s financial fair play rules by overstating their sponsorships from Abu Dhabi

companies, some of the ensuing discussion rapidly diverted from that guilty finding to questioning the merits of FFP itself. Approved by Uefa in the 2009 season after years of wondering how to drag European football from overspending on players’ wages, FFP has since transformed top division clubs’ finances overall, and was introduced by the Premier League in 2013.

City’s impatient ambitions after the great fortune of the 2008 takeover by Sheikh Mansour of the Abu Dhabi ruling family were based on him bankrolling mega-spending, rather than the FFP principle that clubs should not spend more than they make in revenues and not rely on owner funding. Mansour’s executives were adversarially hostile to FFP and threatened to sue Uefa in 2014 as its club financial control body (CFCB) assessed City’s deficit at around €180m, far greater than the €45m allowable then.

The idea has grown that FFP was specifically introduced after the big clubs lobbied to prevent Manchester City competing with them, based on the new Abu Dhabi fortunes. Senior people who were involved in developing the regulations reject that; one recalled that discussions about incorporating financial discipline into Uefa’s licensing system continued for years and the detailed work began on creating FFP in 2008.

City were in crisis then, at risk of becoming a classic illustration of the need for such rules. Their owner for a single season, the former prime minister of Thailand Thaksin Shinawatra, had backed heavy spending but was then accused of corruption in his homeland and had his assets frozen. City made a loss of £33m but Thaksin had no more money to fund it. That year, 13 clubs in the Premier League, the world’s richest, made losses, and six subsequently fell into some form of crisis after their owners decided they could no longer keep pouring the money in.

Mansour’s purchase was a startling reversal of City’s luck over the previous 30 years – apart from inheriting the City of Manchester stadium after the 2002 Commonwealth Games. City could have fallen like Portsmouth, or Leeds, or Bolton, then in the Premier League, who finally went into administration last year after their owner, Eddie Davies, called a halt after writing off £180m, or Málaga, the Spanish club whose crisis was cited by Uefa when FFP was finally introduced.

The then Uefa president, Michel Platini, had talked about debt being the issue, but as accountants worked on the principles, they formed the view that debt can be taken on for investment purposes, but losses, overspending, was the key problem driving clubs into trouble.

Platini and his officials notably said at the time that they were not aiming to stifle investment in football but to encourage it for long‑term development. Owners’ money could not count to reduce allowable losses if it was just paying excessive wages but they could make unlimited investment in stadium improvements, youth development and other infrastructure.

Uefa can point to Liverpool’s recovery since then as an example of the system working as they hoped. In 2009-10, Liverpool were falling into financial crisis under the debt‑loading ownership of Tom Hicks and George Gillett; they finished seventh in the Premier League, made a loss of £20m and owed the Royal Bank of Scotland £200m.

When crisis bit and RBS in effect took control of the failing club, John W Henry ultimately bid and fought the court battle to buy the club partly because he believed FFP made it a viable prospect. A private equity investor and owner of the Boston Red Sox, Henry believed from his business experience that if unlimited spending on players backed by owner funding were allowed, nobody could compete with a Gulf state. However, the FFP framework restricting losses meant that his FSG ownership could plan for rebuilding Liverpool through its revenues.

In almost 10 years since his FSG takeover, they have not put money in to bankroll player signings, but have advanced a £110m interest-free loan to build the new main stand, ending years of Anfield stadium stagnation. Revenues have grown steadily as the recruitment of players and, transformationally, Jürgen Klopp as manager have improved the team’s performances.

Liverpool were always a big club and similar growth would not produce a Champions League victory and impending Premier League title for many others. The issue of “competitive balance” is real, as success is consolidated in a few rich clubs, but that was not the problem FFP was designed to solve. The richest clubs were carrying off the trophies before, as they do, but unlimited spending was no rational model for football competition, because a club needed a Gulf state backer, as City and the Qatar-owned Paris Saint-Germain had, or a Russian oligarch as Chelsea had, to fund the necessary wage bill.

In 2017, after six years of FFP, clubs across Europe’s top divisions recorded an overall profit for the first time, €615m, finally reversing years of losses. Premier League clubs were also transformed into profit immediately FFP was introduced in 2013, although City and a small group of other clubs had voted against it.

City got through their initial years of massive losses by agreeing a settlement with Uefa in 2014, involving relatively modest restraints. Making agreements with Uefa to enable large initial investment is now built into the FFP system. City are now looking to build a global football empire and not share more money to facilitate competitive balance: they led the campaign by the Premier League’s “big six” in 2018 to have more of the international TV rights than the other 14.

Contrary to some of the fury expressed this past week, City have not been found guilty of breaching FFP rules by exceeding permitted loss limits. The finding, which City are appealing against, is that they overstated their Abu Dhabi sponsorships in their accounts and in their submissions to Uefa, a different issue entirely.

Not City or championship, but an interesting read about Premier League ffp background, and reasoning behind it, especially that it was not brought in to protect big clubs from big spending foreign investors. 

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Courtesy of Kieran Maguire.

Dave covered it on another thread but unsure whether to use Deepdale Holdings or PNE FC Limited as the marker.

Interesting to see a breakdown of Football staff related salary costs- ie a specific line about players and management.

Looks like Football staff related costs about 88% of total staff costs according to a quick calculation. Wonder if it's broadly the case at most?

Even quite a large jump in wages- albeit from a low base! Combine that with rising amortisation and Depreciation of Player costs- I've only really used Amortisation so interesting to see how the latter would be measured, and no notable player sales...even quite a well run club like Preston losing not far off £15m!! A club who seem to have or seemed to have quite a low cost base.

Accounts due this week or early next:

Barnsley, Nottingham Forest, QPR and though they've gone up, Aston Villa because of a possible but still unknown FFP question that could become a live issue again.

Birmingham's 6 month results to December 31st 2019 also due in Hong Kong within the next 7 days or so.

Luton's might be due too.

Edited by Mr Popodopolous

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QPR's accounts are apparently at Companies House- both Holding and club.

Final year of Parachute Payments last season- interesting to see if they hit FFP issues this or next season- they seem to be run much differently to a few years ago however.

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https://www.telegraph.co.uk/football/2020/02/25/championship-clubs-discuss-proposals-new-financial-rules/

Behind Premium which I don't have but seems there is a Championship meeting this week to discuss new/changes to the FFP regulations.

Hopefully the stadium loophole will be shut off for starters- well stadium and fixed assets in general!

Edited by Mr Popodopolous

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QPR lost £10,387,000. Final year of Parachute Payments, the net difference I think would be Parachute Payments-Solidarity Payments- so that's the amount to lop off this years when guessing.

Fair play- got the wage bill down by £6.7m!

Interesting to see that included within the Finance costs of £1,007,000 is the Amortised cost charge of the FFP fine- £977,000! IF- and I stress this is included as part of their overall loss, that's an example of fines having a bit of a knock on effect, a drag on expenditure!

Edit, it appears not to. Pointless!

Edited by Mr Popodopolous

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Remember as well that NSWE Stadium Ltd until middle of May last year- as per CH at least- was part of the group, until mid May when it was taken under the dfirect control of the owners.

This means that as far as CH is concerned at least- and that's all that we can go on at this time- this was part of the group albeit a subsidary by the time of the March 2019 submission of the Projected Accounts.

Could this make a difference in judging compliance or otherwise?

Edited by Mr Popodopolous

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On 20/02/2020 at 11:52, chucky said:

*Me on this thread still*

confused trailer park boys GIF

Ditto, just waiting for the news that Villa are going to start on minus 30 points when they get relegated!

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I'd also add that as well as the points penalty if guilty, the parachute payments should also be a hot topic. 

I'd like to see it be the case that any- any- side who has overspent their way up gets stripped of parachute payments or has them excluded from the Ffp calculations. 

More realistic perhaps is a formula. Quite simply  eg 

Exceed FFP by 20% and Year 1 Parachute Payments £40m. Well you only receive £40m or have £10m of that stripped out of the calcs.

Year 2 is £33m I believe. Same again, £8.25m removed or disregarded for FFP purposes. 

Any thoughts @Davefevs

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3 hours ago, Mr Popodopolous said:

I'd also add that as well as the points penalty if guilty, the parachute payments should also be a hot topic. 

I'd like to see it be the case that any- any- side who has overspent their way up gets stripped of parachute payments or has them excluded from the Ffp calculations. 

More realistic perhaps is a formula. Quite simply  eg 

Exceed FFP by 20% and Year 1 Parachute Payments £40m. Well you only receive £40m or have £10m of that stripped out of the calcs.

Year 2 is £33m I believe. Same again, £8.25m removed or disregarded for FFP purposes. 

Any thoughts @Davefevs

Nah....too soft.

If deemed to be “cooking the books” and the punishment is for a retrospective season, and that season resulted in unfairly in gaining promotion, they should take the points penalty and not be able to use any of their Parachute Payments over any years they they are entitled to receive them.

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2 minutes ago, Davefevs said:

Nah....too soft.

If deemed to be “cooking the books” and the punishment is for a retrospective season, and that season resulted in unfairly in gaining promotion, they should take the points penalty and not be able to use any of their Parachute Payments over any years they they are entitled to receive them.

Yeah agreed- was also thinking about what clubs might vote for too though, balancing idealism with realism.

However yeah I'm inclined to agree- get up unfairly, lose your Parachute Payments as well as take the points penalty would seem to fit the crime.

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https://www.telegraph.co.uk/football/2020/02/27/championship-clubs-propose-salary-cap-20-million-force-drastic/

Sadly this is behind a paywall so I can't see the full article but this is a proposal, doubt it has the required 2/3 majority yet and they want the EFL to conclude their ongoing cases vs Birmingham, Derby and Sheffield Wednesday before any talk of changes.

No agreement on any changes reached however- but it's quite a radical proposal!

Edited by Mr Popodopolous

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Really I shouldn't extrapolate fans and their mindset from forums but Villa can just reek of entitlement- at least in their online offerings- see the bolded bit.

Quote

I'm not an expert on the situation re Derby, but from what I can gather they are in trouble for overpricing their stadium to the tune of double it's worth.

We have done nothing of the sort so I don't fear us being persecuted by the EFL, they should be so lucky to have us in their league. Especially if West Brom and Leeds go up....

I don't want to go down but if we do I have absolutely no doubt we will start next season in a much much much better situation then 4 seasons ago, and when we come back we will come back to the PL a much much much stronger squad than the one that will go down.....

Overpricing double? More like 2/3 or 60%.

They also fail to factor into their calculations the Impairment of Villa Park in 2015/16 and justification of it, let alone a possible reversal or partial reversal.

Now this may or may not be decisive but they might look at the whole picture?

Edited by Mr Popodopolous
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1 hour ago, Mr Popodopolous said:

Really I shouldn't extrapolate fans and their mindset from forums but Villa can just reek of entitlement- at least in their online offerings- see the bolded bit.

Overpricing double? More like 2/3 or 60%.

They also fail to factor into their calculations the Impairment of Villa Park in 2015/16 and justification of it, let alone a possible reversal or partial reversal.

Now this may or may not be decisive but they might look at the whole picture?

I see irony & tongue in cheek are not your strong points.

You have campaigned for us to sell assets in order to comply.  We have sold assets - Just not the ones that YOU wanted us to sell.  Rules are in place to satisfy FFP, not the warped vengence of the Bristol City fans who seem to make the rules up as they go along.  Since when has selling an asset been a loophole?  Just because you never thought about selling a ground before, does not make it a loophole.

Oh and he was wrong - If we go down, we'll come back up with a much weaker squad as Grealish, Mings & McGinn would all likely leave.

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32 minutes ago, Delta said:

I see irony & tongue in cheek are not your strong points.

You have campaigned for us to sell assets in order to comply.  We have sold assets - Just not the ones that YOU wanted us to sell.  Rules are in place to satisfy FFP, not the warped vengence of the Bristol City fans who seem to make the rules up as they go along.  Since when has selling an asset been a loophole?  Just because you never thought about selling a ground before, does not make it a loophole.

Oh and he was wrong - If we go down, we'll come back up with a much weaker squad as Grealish, Mings & McGinn would all likely leave.

Hmmmm. With respect, and again online vs reality differ I get this- but your fanbase seem to have an entitled element...it's hard to tell online especially if there is irony & tongue in cheek.

Value vs Impairment...still a debating point! Not saying definitely guilty or innocent but it's a debating point! Can't deny that. 

You might want to read how UEFA deal with Sale and Leaseback type transactions...they basically exclude it from the calculations- it's a loophole because the EFL possibly ****** it when implementing the new rules- had they applied UEFA ones correctly then they might have continued to exclude fixed asset profits or losses from transactions.

Think he means stronger than you had 4 years ago in 2016/17- clearly you'd be weaker than this season but would still suspect you to be playoff contenders at worst.

According to a QPR blogger too, they have a specific method if it isn't excluded from the calculations:

Quote

It would be inherently wrong for any football authority to dictate to clubs that they cannot sell any of their assets, including their ground, and, of course, these sales have to be recognised correctly in their published accounts. However, the authorities do have plenty of leeway when it comes to the FFP submissions and the solution to this ridiculously short-sighted thinking is quite simple. Rather than recognise the whole of the profit gained by selling their main asset, clubs should have to deduct the cost of 50 years leasing back the stadium. By simply adding that clause to their FFP regulations the EFL would stop this ill-conceived practice overnight.

Quote

As much as I’d like to take the credit for this idea, it is already in place in UEFA’s FFP regulations which state that “If a club demonstrates that it is replacing a sold fixed asset, then the profit on disposal recognised in the income statement can be taken into account as a relevant income up to: ……….. the difference between the proceeds on disposal and the present value of 50 years’ minimum lease payments in respect of the replacement asset to be used by the club under a lease/rental arrangement.”

If this criteria was applied to Derby, who I understand are leasing Pride Park back at £1.1 million per season, their £39m profit from selling Pride Park (it was sold for £80m less its value in their books of £41m) would actually show a loss of £16m for FFP purposes. I can’t begin to envisage what possessed the EFL decided to leave this very sensible safeguard out of their FFP regulations.

Okay so basically in layman's terms I take that as meaning.

Say your Profit on Sale was £30m- ie £56.7m-NBV of £26.7m so that's a £30m profit.

Your minimum lease payment is I don't know, £600,000 per year.

I'm plucking figures out of the air here, with the sale price the starting point to illusrate my example then under UEFA regs it would be Profit-50 x minimum Lease- which is £30m-£30m.

Voila- as if by magic, no FFP profit! UEFA clearly are much better at this than Shaun Harvey was! 🙃

That's a little bit of genius actually...makes a ground sale and leaseback to a related party automatically not worth it in all but the most exceptional cases!! :clapping:

Edited by Mr Popodopolous

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