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The Championship FFP Thread (Merged)


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In layman's terms, preparing to get it wrong :laugh:...

I would like to buy someone's car- but I would loan them the money in order to purchase it.

They bank the profit on said sale in their sole trader accounts but are yet to receive the cash- they are yet to receive the cash but will receive it, in the form of a loan.

In other words barring a write off which I dare say will come down the track, I pay someone to take their car off their hands- but I nonetheless want the loan repayments- plus rent of course, Villa Park will have rent- so I receive rent for said car as well!

Rent as loan repayments?

For FFP at least this is a whole new level.

Financing via loans, repayable on demand in exchange for an asset.

Edited by Mr Popodopolous
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5 hours ago, Mr Popodopolous said:

Not even looked at the consolidated accounts yet but this raises interesting questions.

Couple of million of the profit was related to a grant but....

 

 

 

 

 

 

 

 

2015 Tangible Assets- Inclusive of Villa Park etc which became Investment Property.jpg

FAIR Value of the Investment Property on relegation 2015-16..jpg

Explicit classification of what there was and what was stated at FAIR Value..jpg

A further Impairment in 2016-17- no list of property classification changes.jpg

Sudden restatement of Investment Property to Fixed Assets for 2016-17, done in 2017-18.jpg

Profit on Disposal....jpg

...Yet unanswered questions well and truly.jpg

One further note- relating to the Prior Year Adjustment.

The cost therefore shoots up- yet the NBV is far below this, hence the significant profit on sale possibly- this is at Cost not Fair Value which it was until 2017- the latter is exceeded by the Cost which seems unusual based on Precedent?

Curiouser and curiouser?

Prior Year Adjustment.jpg

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3 hours ago, Mr Popodopolous said:

In layman's terms, preparing to get it wrong :laugh:...

I would like to buy someone's car- but I would loan them the money in order to purchase it.

They bank the profit on said sale in their sole trader accounts but are yet to receive the cash- they are yet to receive the cash but will receive it, in the form of a loan.

In other words barring a write off which I dare say will come down the track, I pay someone to take their car off their hands- but I nonetheless want the loan repayments- plus rent of course, Villa Park will have rent- so I receive rent for said car as well!

Rent as loan repayments?

For FFP at least this is a whole new level.

Financing via loans, repayable on demand in exchange for an asset.

 

Delta will be posting a reply on this ........

696759705_aboveboard.jpg.9d02d2e51f5a4b0686ce2009610a9af2.jpg

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The precise wording of that UEFA rule- for comparison purposes if anything!

Quote

h) Excess proceeds on disposal of tangible fixed assets

The profit on disposal of tangible fixed assets (including, but not limited to, a club’s stadium and training facilities) in a reporting period must be excluded from the break-even result with the following two exceptions:

i) If a tangible fixed asset other than a stadium or training facilities is not being replaced, 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 historical cost of the asset which was recognised as a tangible fixed asset in the financial statements of the reporting entity;

ii) 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 full cost of the replacement asset which is recognised, or to be recognised, as a tangible fixed asset in the financial statements of the reporting entity;
  •  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.

https://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/02/56/20/15/2562015_DOWNLOAD.pdf

All a bit dry but rather watertight I'd say!

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8 hours ago, Mr Popodopolous said:

Seems they didn't reduce the wage bill at all- I assumed it would've been down by £5-10m but even excluding promotion bonuses it stayed flat at best!

I also assumed- wrongly possibly- that Amortisation of Player Registrations would've come down- nope it increased!

£36.3m profit on Villa Park is curious, given we've been told that it's easily worth what it was sold for...

In the cash flow statements, there is/has been the princely sum of £10,000 received on "Proceeds from disposal of tangible fixed assets".

In fact, further digging suggests that this is all still due.

The rent might be £2.6m per year but it's not explicitly stated as such.

Now as I've mentioned before, UEFA have a rule that would negate all of this. Let's assume rent £2.6m per season?

UEFA with such transactions take 50 years of rental payment unless the ground has been disposed of truly in a genuinely arms length transaction and put that then subtract the profit for FFP purposes...profit negated at best if they eliminate loss on disposal of fixed assets, and a £90-95m loss at worst if you don't!

Seems to be though on early reading, this stadium sale, payable in the form of loans due from NSWE Stadium Limited. 👀 Seems a bit similar to both Birmingham and Sheffield Wednesday from that respect- though I can't see anything wrong with the price or rent in Birmingham's case.

As always, very interested in your thoughts @Davefevs

Bit of a rubix cube this...will be interesting to see what everyone thinks.

Personally speaking at this time, I'm struggling to fathom how the stadium sale is right. It might be that the price is right- it might be that the Profit is right- but I don't see how both can be right.

It just feels out of kilter, one way or another as of now.

I don’t understand the property stuff in fairness.

But I really would like to see them relegated.

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4 minutes ago, Delta said:

Never mind Villa Talk - You guys have hit the headlines here:

https://www.heroesandvillains.info/forumv3/index.php?topic=55680.525

Post# 536 onwards

 

There's a thread on a Bristol City forum that I glance at everytime a financial statement comes out about us. Looks like its attracted a couple of Villa fans too (anybody off here?).

It's basically the internet equivalent of a child jumping up and down saying it's not fair!!!

A site called OTIB and in the FPP thread. 
 

Jesus, what a bellend that Pompousopolous is.

 

@Mr Popodopolous  I presume it's you they are referring to, and confirming what we have all long suspected! :)

 

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:D

Fame at last! Always for some reason, had a slight preference for the other BCFC- always seen them as the more working class side etc?

I look forward to reading his greater expertise on accounting and valuation methods/regulations.

Fair's fair though- if he actually does have it I genuinely do look forward to having a look.

Edited by Mr Popodopolous
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4 hours ago, Mr Popodopolous said:

:D

Fame at last! Always for some reason, had a slight preference for the other BCFC- always seen them as the more working class side etc?

I look forward to reading his greater expertise on accounting and valuation methods/regulations.

Fair's fair though- if he actually does have it I genuinely do look forward to having a look.

BCFC are traditionally south Birmingham, AVFC are traditionally north Birmingham - Both traditionally working class.

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11 hours ago, Delta said:

BCFC are traditionally south Birmingham, AVFC are traditionally north Birmingham - Both traditionally working class.

Okay maybe then- thanks- always had an impression of Aston Villa as more middle class, maybe it's a modern football thing? Certainly a lot of establishment fans :laugh:...not just a certain HRH but Mervyn King, David Cameron to name 2.

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Still struggling to work out how it's justifiable to stick the profit in the P&L for that season?

Loans Receivable- have Villa loaned the money to NSWE UK to purchase the stadium? That must be wrong, my interpretation.

Wasn't aware loans receivable counted as relevant income/profit for FFP anyway. :whistle2:

 

Villa FFP.jpg

Villa arrangements for the FFP.jpg

The Profit.jpg

The Debtors part of the jigsaw.jpg

Profit offsetting loss.jpg

No lump sum in the cash flow as such.jpg

Profit and loss account.jpg

The context in the headline.jpg

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23 hours ago, Mr Popodopolous said:

@AnotherDerbyFan

I'm interested in why you're rallying with Villa on this- you've been charged post Investigation, and you should for purposes of equitable treatment want some kind of Investigation for them on their return to the Championship over this 3 year period and this ground sale and leaseback, whenever that might be.

Investigation and guilt/charge are two very different concepts of course. However I'd suggest the EFL have the right to investigate that 3 year period.

In general.

Villa Park, if Other Loans Receivable at £56.7m refers to that, appears surely that it might be getting paid for off the back of loans- could be that it is paid for via loans from the owners but has to be paid back which is curious.

How does FFP at Championship level deal with this?

That's unique among the 5 btw.

Derby and Reading had it appear in their cash flow statement the year of sale.

Birmingham and Sheffield Wednesday had it appear in Other Debtors.

Both of these methods imply that the money will be going to the club either now, or later and it will be a true transaction. Price or rent terms or similar are a different matter, some seem more realistic than others.

This though implies that the cash will be loaned to Aston Villa over god knows what time frame- loaned, not paid for a transaction- loans maybe written off sometime in the future but valuation aside, I struggle to see how this is compatible with a £36m profit on disposal in the here and now!

@Coppello @Drew Peacock @martnewts 

You all are strong on accounting IIRC, any ideas??

@Mr Popodopolous as I think you have identified later the stadium sale proceeds have not been received in cash at the year end hence the debtor "other loans receivable".

The reason for this may well be that the transaction wasnt completed prior to the year end so the accounting entry would have been debit other loans receivable with the proceeds amount, credit profit/loss on disposal of fixed assets for the proceeds.

Then to get to the actual profit on disposal there would have been a credit to fixed asset cost (in the balance sheet fixed assets note) with a debit to profit/loss on disposal of fixed assets then a debit to depreciation on fixed assets (in the balance sheet fixed assets note) with a credit to profit/loss on disposal of fixed assets this then leaves the profit on disposal of fixed asset in the profit and loss account and the debtor other loans receivable in the balance sheet.

Is the other loans receivable amount shown as a current asset? If so then it should be repayable within a year of the balance sheet date.

 

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15 minutes ago, martnewts said:

@Mr Popodopolous as I think you have identified later the stadium sale proceeds have not been received in cash at the year end hence the debtor "other loans receivable".

The reason for this may well be that the transaction wasnt completed prior to the year end so the accounting entry would have been debit other loans receivable with the proceeds amount, credit profit/loss on disposal of fixed assets for the proceeds.

Then to get to the actual profit on disposal there would have been a credit to fixed asset cost (in the balance sheet fixed assets note) with a debit to profit/loss on disposal of fixed assets then a debit to depreciation on fixed assets (in the balance sheet fixed assets note) with a credit to profit/loss on disposal of fixed assets this then leaves the profit on disposal of fixed asset in the profit and loss account and the debtor other loans receivable in the balance sheet.

Is the other loans receivable amount shown as a current asset? If so then it should be repayable within a year of the balance sheet date.

 

Thanks for the response @martnewts .

Yep, seems not received yet- other loans receivable. Interested in the use of the term 'loans' as well but that could be a red herring.

Land Registry suggested it was there by 21st May 2019, or sold on that date anyway- 10 days before the year/reporting period ended.

Do you by the balance sheet fixed asset note mean Tangible Assets?

Other Loans receivable amount seems to be under 'Debtors'. It's listed as being Repayable on Demand.

Convinced that there could be a case to answer for that 3 year period, given that the transaction was very much the difference between compliance and FFP.

 

Balance Sheet Fixed Assets note in full.jpg

Note in the Consolidated Accounts in detail.jpg

Consolidated overall.jpg

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26 minutes ago, Mr Popodopolous said:

Thanks for the response @martnewts .

Yep, seems not received yet- other loans receivable. Interested in the use of the term 'loans' as well but that could be a red herring.

Land Registry suggested it was there by 21st May 2019, or sold on that date anyway- 10 days before the year/reporting period ended.

Do you by the balance sheet fixed asset note mean Tangible Assets?

Other Loans receivable amount seems to be under 'Debtors'. It's listed as being Repayable on Demand.

Convinced that there could be a case to answer for that 3 year period, given that the transaction was very much the difference between compliance and FFP.

 

Balance Sheet Fixed Assets note in full.jpg

Note in the Consolidated Accounts in detail.jpg

Consolidated overall.jpg

@Mr Popodopolous Yes tangible assets note 

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30 minutes ago, martnewts said:

@Mr Popodopolous Yes tangible assets note 

So they've disposed of the ground held at cost- even though as recently as 2017 it was held as Investment Property under Fair Value, and eliminated the depreciation- suddenly restated in 2017/18 accounts to Tangible Fixed Assets as cost- which was about £20m or so more than when it was Investment Property as held at Fair Value.

My concern is that it is classed under Other Loans and the category in turn was Debtors but yet the profit on disposal in the here and now was stuck in the P&L- all seems a bit...curious.

How that fits with FFP as well, is a puzzle, to me anyway. 😆

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On 04/03/2020 at 11:31, Mr Popodopolous said:

@AnotherDerbyFan

I'm interested in why you're rallying with Villa on this- you've been charged post Investigation, and you should for purposes of equitable treatment want some kind of Investigation for them on their return to the Championship over this 3 year period and this ground sale and leaseback, whenever that might be.

Investigation and guilt/charge are two very different concepts of course. However I'd suggest the EFL have the right to investigate that 3 year period.

In general.

Villa Park, if Other Loans Receivable at £56.7m refers to that, appears surely that it might be getting paid for off the back of loans- could be that it is paid for via loans from the owners but has to be paid back which is curious.

How does FFP at Championship level deal with this?

That's unique among the 5 btw.

Derby and Reading had it appear in their cash flow statement the year of sale.

Birmingham and Sheffield Wednesday had it appear in Other Debtors.

Both of these methods imply that the money will be going to the club either now, or later and it will be a true transaction. Price or rent terms or similar are a different matter, some seem more realistic than others.

This though implies that the cash will be loaned to Aston Villa over god knows what time frame- loaned, not paid for a transaction- loans maybe written off sometime in the future but valuation aside, I struggle to see how this is compatible with a £36m profit on disposal in the here and now!

@Coppello @Drew Peacock @martnewts 

You all are strong on accounting IIRC, any ideas??

How am I rallying with Villa? I only pointed out that UEFA rules have no relevance to Championship clubs, with the exception of fluking at cup win. I don't believe I've commented on whether Villa should or shouldn't be investigated. However, I'l give you my view now. The EFL had the opportunity to investigate and punish Villa before they officially became a Premier League Club. Now they're in the Premier League, it's down to them to investigate and punish if necessary. If Villa go down this season, then the EFL can investigate them again for the relevant 3-year rolling period (18/19, 19/20 and  projected 20/21). If they find some wrong-doing in relation to their stadium sale in 18/19, then I'd support a punishment for them. If Villa survive relegation this season but go down in the future, then I would oppose the EFL investigating Villa for selling their stadium.

Regarding the likes of Derby, I disagree on the EFL's decision to renege on the EFL Executive's decision to approve the stadium sale, amortisation policy, and all FFP/P&S accounts, unless the club were not as transparent as they claim or there was some other 'improper' practice.

Your comment regarding deducting 50 years lease cost off the value is another no go. Why should a club selling it's ground at it's book value be penalized for selling it? It would prevent an owner doing it purely for P&S purposes, but punish those who have a valid reason for it. Let's say an owner wanted extra investment into his club. Selling the stadium 'to himself' would make it more affordable for the investor to buy into the club whilst offering a safety net regarding the stadium to the owner and the fans.

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1 hour ago, Mr Popodopolous said:

So they've disposed of the ground held at cost- even though as recently as 2017 it was held as Investment Property under Fair Value, and eliminated the depreciation- suddenly restated in 2017/18 accounts to Tangible Fixed Assets as cost- which was about £20m or so more than when it was Investment Property as held at Fair Value.

My concern is that it is classed under Other Loans and the category in turn was Debtors but yet the profit on disposal in the here and now was stuck in the P&L- all seems a bit...curious.

How that fits with FFP as well, is a puzzle, to me anyway. 😆

The stadium was sold so appears on the P/L. However, the money doesn't have to change hands straight away.

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24 minutes ago, AnotherDerbyFan said:

The stadium was sold so appears on the P/L. However, the money doesn't have to change hands straight away.

Thanks, I get that bit. I have an issue with the fact it seems to be in the form of loan. Had it been 'Other Debtors' that sits a bit easier.

Wondering how such transactions are treated for FFP purposes.

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40 minutes ago, AnotherDerbyFan said:

How am I rallying with Villa? I only pointed out that UEFA rules have no relevance to Championship clubs, with the exception of fluking at cup win. I don't believe I've commented on whether Villa should or shouldn't be investigated. However, I'l give you my view now. The EFL had the opportunity to investigate and punish Villa before they officially became a Premier League Club. Now they're in the Premier League, it's down to them to investigate and punish if necessary. If Villa go down this season, then the EFL can investigate them again for the relevant 3-year rolling period (18/19, 19/20 and  projected 20/21). If they find some wrong-doing in relation to their stadium sale in 18/19, then I'd support a punishment for them. If Villa survive relegation this season but go down in the future, then I would oppose the EFL investigating Villa for selling their stadium.

Regarding the likes of Derby, I disagree on the EFL's decision to renege on the EFL Executive's decision to approve the stadium sale, amortisation policy, and all FFP/P&S accounts, unless the club were not as transparent as they claim or there was some other 'improper' practice.

Your comment regarding deducting 50 years lease cost off the value is another no go. Why should a club selling it's ground at it's book value be penalized for selling it? It would prevent an owner doing it purely for P&S purposes, but punish those who have a valid reason for it. Let's say an owner wanted extra investment into his club. Selling the stadium 'to himself' would make it more affordable for the investor to buy into the club whilst offering a safety net regarding the stadium to the owner and the fans.

Okay fair enough, you seem fair minded enough- you're right little relevance- I think they have the right idea on certain issues though.

EFL investigate based on the info they have/had to May 2019 yep, PL on the info they have yep- and the 3 year bit to 2021 all okay. Holding over an investigation for the future all good, however I do think an Investigation commending in 2020 if they come down for the 3 years to May 2019 would be alright- a precedent is and can be set, see Man City.

Closer to home yourselves and Sheffield Wednesday- perhaps further evidence came to light or maybe- and this is where it could get really messy- but maybe, could it be possible, that Shaun Harvey approved the transactions for yourselves and the other clubs and exceeded his authority in doing so? Thinking largely how the stada were sold, profit, value etc. The amortisation policy, I think the EFL will find it harder to make that stick, unless they have a concrete policy that states a given amortisation method is required e.g. They should have one if possible, but whether that's feasible...

Okay that was purely aimed at P&S then- valid reasons could be alright, but I have a bit of an issue with selling assets to commonly owned companies or related parties which can ultimately put extra revenue in for wages/transfers etc. IF the club don't profit on it, or the EFL hired valuer comes first and the price set then, not after the event. Could it be done at Book/Net Book Value, transfer rather than sale in order to secure it in the event of future investment.

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34 minutes ago, Mr Popodopolous said:

Interesting thread by Mike Thornton on the other loans stuff.

Accounting does seem to be about Interpretation and arguments as well as hard and fast regs, to a point?

Don't know about hard and fast, but fast and loose would seem a more appropriate description!

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