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The Championship FFP Thread (Merged)


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I would have thought the taxman might be interested in what documents etc, were backdated or signed as an after thought. Unless they were using two sets of books which is equally dodgy.

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56 minutes ago, Mr Popodopolous said:

Thanks- so that clears that up- think there is a decent chance of things being upheld then?

I would rather people made their own minds up - a checklist for you all:

In respect of the Charge under appeal only (that SWFC breached the FFP regulations):

  1. Are there any allegations of improprieties in the investigation that were not taken into account in the decision?
  2. Are there any allegations of improprieties in the hearing process?
  3. Are the material findings of facts substantiated by the evidence?
  4. Is the decision made one that a reasonable panel could have made based upon those findings?
  5. Is the punishment one that a reasonable panel could have made based upon the decision?

If the answers you get are No, No, Yes, Yes, Yes then the appeal will fail.

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1 hour ago, Mr Popodopolous said:

Interesting paragraph in the verdict- taken from Owlstalk, as my Copy and Paste not so good.

image.png.1a0684d1fada6362c9bd4c2af6daa6

Shaun Harvey- what can we say!! ūüėĪ

Email from him to the other EFL or the relevant EFL top brass.¬†‚¨ÜÔłŹ

The Aston Villa thing is interesting, doesn't state which fixed assets, given this was August 2018 and the sale of Villa Park went through in May 2019- plus the Matt Lawton story on Projected Accounts was numerically very accurate- does it mean the HS2 stuff I wonder? This got some profit on disposal. After their accounting period had expired- the extended one at that.

Create- but this was after the extended Reporting Period had ended.

That is shambolic Governance on his part. Wonder how many of the other top brass were in agreement with his position? It's atrocious!

I think that you are being a tad harsh on Harvey.  The man is not a Professional Accountant or Lawyer or similar and the email does appear to be to those he considers to be friends as well as colleagues, if it was intended to be for general consumption it might have been worded differently.  If you treat it as that sort of email and put in the context of the discussions that had taken place then it makes more sense.  The obvious flaw in SWFC's defences is that here Harvey is talking about a sale to Chansiri, that of course never happened.

There are circumstances where you can have an oral contract that leads to the valid disposal of land.  So there would be nothing wrong with Chansiri and SWFC agreeing to the immediately binding disposal of the stadium on 15 July 2018 and then that agreement later being ("created" or) turned into a binding written contract.  All the significant terms of the binding disposal would need to be agreed, including value, and then that transcation would need to actually take place.  Of course neither of those two rather important points happened.

 

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20 minutes ago, Hxj said:

I think that you are being a tad harsh on Harvey.  The man is not a Professional Accountant or Lawyer or similar and the email does appear to be to those he considers to be friends as well as colleagues, if it was intended to be for general consumption it might have been worded differently.  If you treat it as that sort of email and put in the context of the discussions that had taken place then it makes more sense.  The obvious flaw in SWFC's defences is that here Harvey is talking about a sale to Chansiri, that of course never happened.

There are circumstances where you can have an oral contract that leads to the valid disposal of land.  So there would be nothing wrong with Chansiri and SWFC agreeing to the immediately binding disposal of the stadium on 15 July 2018 and then that agreement later being ("created" or) turned into a binding written contract.  All the significant terms of the binding disposal would need to be agreed, including value, and then that transcation would need to actually take place.  Of course neither of those two rather important points happened.

 

Possibly in some respects,  but it appears that he was having read all this and followed it in depth, willing to let Sheffield Wednesday put it back into the 2017/18 accounts. 

Quote

"Our objective is to try and get the Club to a position that it is not in breach but at all times within the rules"

My response to that is that given this was after the Reporting Period, even the extended one ended, that the deadline had passed- they were in breach- charged like Birmingham were at that time! Possibly Derby too, we'll have to see how that one plays out.

Oral contract, interesting- binding disposal too. Bottom line is though, it doesn't sound like they had it within the required timeframe so should IMO have been charged with the simple overspend in 2018. Harvey and the EFL should not be helping clubs trying to avoid, as such IMO.

Put it this way, had it happened on Parry's watch...I don't think it would have been accepted.

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Good thread on this by Dale Johnson, who is a journo. 

Still one or two loose ends that the report hasn't tied up. 

1) The valuation of Hillsborough of £60m, is this deemed true and fair (profit £38m)- surely it won't just be moved into 2018/19 for FFP?

And

2) What sort of expectations will be on Sheffield Wednesday be under this year- as in will they be able to lose £50m or something stupid owing to a shift in ground sale profit?

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Apparently Charlton have requested the EFL to appeal the verdict or the season of the verdict. 

https://londonnewsonline.co.uk/charlton-athletic-request-efl-to-appeal-independent-disciplinary-commission-ruling-on-sheffield-wednesday/

In the Sheffield Wednesday written reasons, worth reading some of the Annexes at the end- laid out 5 scenarios for the sale and leaseback of Hillsborough (and I guess would be applicable for all clubs). Could it have repercussions elsewhere?

It is unclear but I wonder, dependent on what specific scenario this transaction happened under, could the profit be excluded from the P&S calculations in its entirety?

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Reading the written reasons again, seems that Derby and Sheffield Wednesday have been exchanging information with each other about the proceedings/cases. ūü§Ē

Anyway-5 scenarios, sent from James Karran to the club on 30th May 2018! I wonder which Scenario this (and potentially other) transactions would fall under?

Quote

Scenario 1 - Club sells the stadium to a company within the Football Club Group (e.g. to SWFC Holdings Limited)

  • The Executive would propose that the Club's stadium is a material aspect of the football operations. Thus, if the stadium was simply sold to a Group Company within the Football Group structure, the Executive would want the purchasing company to be included within the consolidated results for the purposes of P&S in accordance with Rule 1.1.9 (referenced below).
  • The profit on the sale of the stadium would therefore be adjusted out of the results on consolidation.
  • If the exclusion of the profit resulted in the Club submitting a P&S result in excess of the Upper Threshold, it would be treated as being in breach of the P&S Rules in accordance with Rule 2.9 and the League would refer the breach to a Disciplinary Commission in accordance with Section 8 of the Regulations.

 

Quote

Scenario 2 - Club sells the stadium to a Company outside of the football group but still owned by the Club's owner,

  • The transaction would be deemed as a Related Party Transaction in accordance with the P&S Rules and the onus would be on the Club to support the Fair Market Value of the transaction. The simplest way to do this would be through an independent external valuation of the fixed asset.
  • Depending on the structure of the group or the other assets/operations of the purchasing company, the Club might still be caught by Rule 1.1.9 of the P&S Rules. Such a circumstance would be if the 'Newco' on purchasing the stadium carried out the match day and non-match day catering and hospitality operations. The purchasing company would be consolidated for the purposes of the P&S rules resulting in the profit on the sale of the stadium being adjusted out of the P&S results.
  • If the purchasing Company is deemed to be a separate operation to the Club Group and the fixed asset can be proven to have been purchased at Fair Market Value, the profit on the sale of the fixed asset would be included in the Club's P&S calculation.¬†

Now I think this transaction would fall into Scenario 2 or 3, personally. Unsure which Scenario of the two however!

Quote

Scenario 3 - Club sells the stadium to the Owner as an Individual

  • The assumption within this scenario is that the Stadium is purchased by Mr Chansiri as an individual not as a corporate entity.
  • The Owner is at the top of the Football Club Group, however as he is not a corporate entity the transaction would not be caught by Rule 1.1.9 of the P&S rules with reference to Section 1161 of the Companies Act (in references below).
  • The transaction would be deemed as a Related Party Transaction in accordance with the P&S Rules and the onus would be on the Club to support the Fair Market Value of the transaction. The simplest way to do this would be through an independent external valuation of the fixed asset.
  • If the value of the sale is proven to be at Fair Market Value, the profit would be allowable for the purposes of the P&S rules.
  • Dependent on the level of profit generated, the club would fulfil the P&S requirement and the current embargo would be lifted.
  • Please note, if the Owner purchases the stadium through a new corporate entity rather than as an individual, it would be captured within Scenario 1.

Is Sheffield 3 Limited a corporate entity or purchase as an individual?? As that is the company who own it!- as per the Land Registry and sale. This in turn is owned by Sheffield 5 Limited (was Sheffield 4 but this was wound up and eventually had its final rites on Boxing Day 2019).

Quote

Scenario 4 - Club sells the stadium to a 3rd party not connected to the owner or the Club

  • If the purchasing entity is not deemed to be a Related Party in accordance with P&S Rules (reference below) to either the Owner or the Football Club, then the transaction will be deemed as a sale of the stadium to a third party.
  • The profit on the sale of the fixed asset would be accounted for in the Club's 2017/18 financial end.
  • Dependent on the level of profit generated, the club would fulfil the P&S requirement and the current embargo would be lifted.

 

Quote

Scenario 5 - The Stadium is sold after the Club's new financial year end (30th June 2018) to any party

  • The sale of the stadium would be accounted for post year end.
  • The Club's results for the 2017/18 financial period would not include the profit on the sale of the stadium.
  • If the exclusion of the profit resulted in the Club submitting a P&S result in excess of the Upper Threshold, it would be treated as being in breach of the P&S Rules in accordance with Rule 2.9 and the League would refer the breach to a Disciplinary Commission in accordance with Section 8 of the Regulations.

Would Sheffield 3 Limited be deemed a company outside the Football Group but still owned by Chansiri, or would it be a sale to the Owner as an individual but via a new corporate entity.

Interested to know what we all think!

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Scenario 3 is what was supposed to happen, but Scenario 5 actually happened.  The structure used falls within Scenario 2.

2017/18 failures are old hat.

Still waiting on the 2018/19 failures and then the 2019/20 and 2020/21 ones!

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8 hours ago, Hxj said:

 

Scenario 3 is what was supposed to happen, but Scenario 5 actually happened.  The structure used falls within Scenario 2.

2017/18 failures are old hat.

Still waiting on the 2018/19 failures and then the 2019/20 and 2020/21 ones!

Scenario 5 yep, Scenario 2 or 3- I can't make my mind up but will defer to you on that!

Does that not depend on a few factors, not least as to whether the stadium sale is just bumped into 2018/19? If it is I don't see them failing until the 3 years until 2021/22 at the earliest! That £38m profit would be a strong cushion in order to keep them within limits albeit not by a huge amount.

I should also add, the corporate structure is, er, interesting! This surely muddies the waters significantly. Will make a post on it when I've pulled a timeline or a rough timeline with facts together.

That said if the valuation is knocked down, then surely failures before 2021/22 are possible- question then is what is the Fair Market Value of Hillsborough, and what is a fair rent based on this! I certainly don't believe it to be £60m but it could be who knows.

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I think we need to await the Derby decision as that will have to refer to stadium valuation methodologies.

It will also depend on what the reset FFP loss position will be at 31 July 2018.  That is another area that needs more transparency.

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Agreed.

Yes, more transparency needed- seems oddly silent on that, the Sheffield Wednesday verdict- in terms of loss resetting and targets.

From reading the written reasons for the Sheffield Wednesday case, it states the following paragraphs and points with respect to valuation:

James Karran, email to the club I think in April or maybe May 2018. Point is it's within and before the conclusion of that Reporting Period. Paragraph 26, points a) and e) feel pertinent.

Quote

26. The EFL, through JK, reviewed the information supplied and raised certain queries, including queries about the proposed stadium sale. These were as follows:

"a.  Can you please provide any external valuation you have received prior to setting the sale price. 

 e.  Can you please explain how the sale is reflected within the cash flow forecast? There looks to be an issue of shares of £40m rather than receipt of land sale. This then seems to be used immediately to pay working capital loans.

That's the first suggestion of a price or a valuation- £40m- though it is notable that no Independent valuation seemed to be provided, certainly not at this stage.

Quote

31.  The evidence indicates that the Club at this stage was focusing principally on obtaining a suitable valuation, the precise basis for which being uncertain. There were it seems other discussions in which the Chairman was involved at this time that might have led to the purchase of the stadium by some other party.

No valuation yet obtained. The scenarios can kick in here, not least Scenario 4 ie the third party one. I wonder why these came to nothing- one aspect is likely that the price offered absolutely would not have been £60m!

Bit below isn't all of Paragraph 35 but a potentially key snippet of it. John Redgate of Sheffield Wednesday emailed Chansiri to say that the auditors said that- email sent 19th July 2018. Redgate is no longer at the club, along with Meire- both left during 2018/19 IIRC. Would have to check the dates to be sure but I know neither are at the club for whatever reason.

Quote

35.  "...If we were to sell the stadium there is a form of words that would be acceptable which would say ... for a minimum consideration of £40m. That way if the figure is higher we can use the final agreed figure once know (sic). "

Still no decision by 19th July 2018- clock approaching midnight. (well the end of July 2018). What do they mean exactly by "agreed figure"?? Agreed between which parties- surely the figure is the one the Independent valuer gives, or the EFL hired Independent valuer gives, end of! This adds weight to what you've said many times @downendcity about the valuation/sale price just being enough to ensure compliance in all these cases.

Draft Heads of Terms- Paragraph 51- suggested minimum price of £40m- these terms were never executed. It's a long email which I can't be bothered to write out entirely. Sale to Chansiri as an individual not via a company- so it was stated. Were dated 1st July 2018 but actually says they were produced on 6th August 2018. Paragraph 53 suggests that the auditors said they were at the time, happy enough to treat these as having taken place before the end of July 2018.

Paragraphs 54 and 55 are interesting- once again can't be bothered to write them all out but suggests a lot of communication between Club and EFL, plus Club and potential valuers between 6th-15th August 2018. Mentions a minimum purchase price of £37.5m.

However, Paragraph 55 suggests that this was amended from a minimum purchase price of £37.5m to £42m- with yet another version of the Heads of Terms.

So far, we have:

  1. £37.5m
  2. £40m
  3. £42m

Nothing satisfactory in terms of a concrete Independent valuation that I can see so far, the above numbers are classed as "minimum purchase prices", nothing satisfactory in the Cash flow statement- on that point alone see Aston Villa's cash flow for 2018/19! 17th August 2018 was when this latest- final?- set of Heads of Terms was sent to the EFL by Katrien Meire.

Quote

57.  Simply to put matters in a chronological perspective, the proposed sale to DC personally was not completed as might have been anticipated, namely within 2-3 months of 16 August 2018. The sale, by way of a Sale and Leaseback Agreement, in fact took place to a company called Sheffield 3 Ltd (a corporate vehicle of DC) which was incorporated on 21 June 2019. Completion of the sale at £60 million took place on 28 June 2019. The Stadium was then immediately leased back to the Club on a 30-year lease with a commencement date on that day. 

Heads of Terms appear not to have constituted a legally binding contract in any event. EFL and Sheffield Wednesday do not come out well- neither appeared to take proper legal advice with regards to this matter. Certainly not relevant to English law, property law or accounting law- Chansiri seems to have used his Thai lawyers for guidance!!

Onwards!

Paragraph 105 suggests a valuation of £40 million and annual rent of £3 million. Quite long again but this was included within the notes of a meeting between EFL and Sheffield Wednesday on 3rd August 2018- that seems more commercially feasible to me! Struggling to see how they reach £60m.

From Katrien Meire to Shaun Harvey and Nick Craig (Ex CEO of EFL and current Director of Legal Affairs of the EFL respectively). Sent I think on 6th August 2018 at around 9am. This was contained within Paragraph 111.

Quote

"As discussed, we would like to understand at what point today you will be able to communicate the possibility of the club selling the stadium to the club's owner. I have attached (JK's) last email which outlines the different scenarios. We would be talking about scenario 2 or 3 and our question is whether the Fair Market Value can be based on the value of our insurance for the stadium. As discussed on Friday, we don't agree with the idea of third party valuation report that uses a depreciated replacement cost".

Is Insurance Value a justifiable proxy for Fair Market Value?? Seems suspect to me- Depreciated Replacement Cost feels much more sensible. Is it possible that the only third party valuation report they could get would give them this (sensible and justifiable equivalent I believe) for Fair Market Value- as in DRC. Interested in your thoughts @Coppello - Value of Insurance as the basis for Fair Market Value?

Potentially this bit offers some answers- finally? Meire sends email to John Redgate, very basic Heads of Terms as per her description. He then sends to BHP, and has spoken to John Warner over there- could say JW's advice is just the ticket- Warner's subsequent email to Meire was as follows:

Quote

"I have just spoken to auditors.

They are ok with what's proposed as long as the sale document is dated 31st July so once we have a draft I will send them a copy to review.

As to the independent valuation we will need this to be yield based on the rent of (sic) the repairing responsibility being with the Club".

I'm still none the wiser though as to whether £60m is a fair and accurate valuation. Always thought 5-6% a fair rental return on transactions- ie sell for £60m, £3-3.5m in annual rent over x years?

There is also the suggestion, though perhaps not fully material to this, that Harvey and Craig didn't focus their minds to this properly as they were either about to go on holiday or on holiday. That's a paragraph a bit further down- we've all done to be fair, if holiday or annual leave on the horizon minds can wander a bit! There were other top brass on hand who should have kept on top of it though, so it's pretty poor by the EFL in a lot of respects- even though I'm ultimately on their side here.

Purely as an aside, I wonder if the industry or the relevant Professional Body would be asking questions of auditors here- or is that simply a red herring.

Just to clarify on my Aston Villa based point, essentially IF Cash Flow is a criteria for consideration then their transaction would fail in 2018/19. Because Statement of Cash Flow showed nothing!

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Some Reading claims incoming. In general with FFP, I am working with some assumptions here- the 3 year position won't be judged until after the closure of the Transfer window- not least due to Covid19 and the delay in the season. Maybe any transfer outbound between now and the window closing can be backdated to the end of the Reporting Period of 2019/20, if the club so chooses.

Irrespective, the above suggests what I alluded to a while ago- Nigel Howe IS trying to sell players for FFP or at least respecting this fact- he has publicly stated this at least twice maybe more in recent months that Player disposals were required in order to hit targets- Swift given the Sheffield United interest was prime candidate No.1 for a sale/move- the fact that the CEO who is quite well respected within the game has been excluded from the conversation is odd to say the least. Owner is just refusing to sell him (Swift) verbatim by the looks.

That's not to say they can't sell others- Rafael joined on a free, experience in Serie A, Liam Moore is on the books- high earner too- Meite, Puscas and Joao all feel saleable- have I missed anyone. Point is selling Swift isn't a total deal-breaker, as long as they dispose of other saleable players- and by dispose I mean do so properly not laughable transactions with Beijing Renhe- see £3m loan fee for a somewhat past his best Aluko-FFS!

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With respect to Derby County, we are still awaiting accounts for the following entities, at CH. Will write due date next to them!

Quote

Derby County:

  1. The Derby County Football Club Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
  2. Club DCFC Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
  3. Stadia DCFC Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
  4. The Derby County FC Academy Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
  5. Sevco 5112 Limited- (30th June 2020- took the 3 month extension from 31st March 2020 which was applicable to all with Covid).
  6. Gellaw Newco 203 Limited- (18th March 2020- seemed not to be any Covid related extension stated).

For clarity purposes, Club DCFC is event catering, Stadia DCFC is classified as "Other Sports Activities", the Academy and Football ones- self-explanatory.

Sevco 5112 is the parent company for Club DCFC, Stadia DCFC and The Derby FC Academy Limited.,

Gellaw Newco 203, this would be the ultimate company in the group- it is directly both above the Club and Sevco 5112. Quite why the separations is unclear as most if not all of this would be consolidated for FFP purposes anyway- or should be!

Gellaw Newco 203 was incorporated on 28th June 2018 and became the Parent of Sevco 5112 on 28th June 2018- as per CH. "Took over" Derby on 28th June 2018, became the Person with Significant Control on this date- this shifts the controlling party from Sevco 5112 in the prior year and the "Person with Significant Control" is no longer Mel Morris- except it is really as he owns the lot!

EDIT: A quick search and Kieran Maguire 2 years ago suggested Stadia DCFC Limited was related to sponsorship and broadcasting.

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Sheffield Wednesday. This is a bit about the structure too.

Quote

Sheffield Wednesday Football Club Limited  (31st July 2020- took the 3 month extension from 30th April 2020 which was applicable to all with Covid).

Regarding the other companies and the structure, let's see.

Quote

Sheffield 2 Limited- incorporated at CH on 21st June 2019. They then proceeded to shorten the Accounting Period from 30th June 2020 to 31st July 2019- aligned with the Club.

On 9th April 2020, they proceeded to extend the Accounting Period through to 31st July 2020. Therefore the accounts appear not to be due at CH until 21st June 2021! How that works I've no idea.

Quote

Sheffield 3 Limited- As above essentially. As we know, Hillsborough is registered with this company.

Quote

Sheffield 4 Limited- This was the controlling party of Sheffield 3 Limited.

Shortened accounting period in line with the other Companies to the end of July.

The reason I say was is that on the day of the sale, there was a Special resolution to wind up.

Voluntary Liquidator appointed on 2nd July 2019, with a Declaration of Solvency that said same date.

Final Gazette dissolved, dated 26th December 2019.

Quote

Sheffield 5 Limited- The current controlling party of Sheffield 3 Limited.

Seemed to already have the Accounting Period in place to 30 June 2020- but of course to align have moved it to 31 July 2020.

As we might have noted, Sheffield Wednesday Holdings Limited was mentioned in the Written reasons, as an example of a company who may purchase Hillsborough. This was based in Hong Kong, but not listed in a way that accounts publicly viewable.

They also appeared to become the parent/overall company for Sheffield Wednesday- purchased some 21m shares in 2018/19 and in June 2019, a share for share exchange made the club wholly owned subsidiary of Sheffield Wednesday Holdings Limited.

This document on Sheffield 4 Limited looks interesting:

Quote

Non-cash consideration

"SHARES ALLOTTED IN EXCHANGE FOR THE TRANSFER OF THE ENTIRE ISSUED SHARE CAPITAL OF SWFC HOLDINGS LIMITED"

I might have to re-read some documents but it appears that the shareholding in SWFC Holdings Limited transferred to Sheffield 2 Limited after Sheffield 4 Limited was wound up- as we know, Sheffield 3 Limited is now controlled by Sheffield 5 Limited as opposed to Sheffield 4 Limited.

My point is that given the structure, can Sheffield Wednesday withhold accounts from EFL or consolidated accounts until summer 2021?? Or am I misreading that.

In any case, I feel they are somewhat fortunate to get -12 in 2020/21! EFL won't be appealing the date of sanction.

It's theoretically possible on this structure point, that the new controlling party is Sheffield 2 Limited.

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1 hour ago, Mr Popodopolous said:

With respect to Derby County, we are still awaiting accounts for the following entities, at CH. Will write due date next to them!

For clarity purposes, Club DCFC is event catering, Stadia DCFC is classified as "Other Sports Activities", the Academy and Football ones- self-explanatory.

Sevco 5112 is the parent company for Club DCFC, Stadia DCFC and The Derby FC Academy Limited.,

Gellaw Newco 203, this would be the ultimate company in the group- it is directly both above the Club and Sevco 5112. Quite why the separations is unclear as most if not all of this would be consolidated for FFP purposes anyway- or should be!

Gellaw Newco 203 was incorporated on 28th June 2018 and became the Parent of Sevco 5112 on 28th June 2018- as per CH. "Took over" Derby on 28th June 2018, became the Person with Significant Control on this date- this shifts the controlling party from Sevco 5112 in the prior year and the "Person with Significant Control" is no longer Mel Morris- except it is really as he owns the lot!

EDIT: A quick search and Kieran Maguire 2 years ago suggested Stadia DCFC Limited was related to sponsorship and broadcasting.

The Derby County Group went through a complex reorganisation which was structured for legal and tax reasons (so at least one owner knows the value of advice!), but resulted in a fairly simple outcome.  The split resulted in three parts, the 'Football Part (GN203)", the "Stadium Part (GN204)" and the "Debt Part (Sevco 5113)", all owned by Morris but in separate chains. 

The latter is actually interesting in that Morris effectively wrote off £55 million that he had lent the club, possibly as part of planning for the disposal of the "Football Part" and the "Stadium Part"?

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3 hours ago, Hxj said:

The Derby County Group went through a complex reorganisation which was structured for legal and tax reasons (so at least one owner knows the value of advice!), but resulted in a fairly simple outcome.  The split resulted in three parts, the 'Football Part (GN203)", the "Stadium Part (GN204)" and the "Debt Part (Sevco 5113)", all owned by Morris but in separate chains. 

The latter is actually interesting in that Morris effectively wrote off £55 million that he had lent the club, possibly as part of planning for the disposal of the "Football Part" and the "Stadium Part"?

0kay thanks, that makes sense- I suppose I'm just looking at it through the prism of FFP- but the usual business rules would apply! :laugh:

Sevco 5113? Know little about that! 2nd bolded bit- planning for a future takeover maybe.

Incidentally- yet more Derby news! Nigel Howe's presence also appears to be getting questioned too- these are both clubs that have utilised various FFP loopholes though Derby much more aggressively!

https://www.dailymail.co.uk/sport/football/article-8648935/EFL-pressure-remove-Derby-County-CEO-Stephen-Pearce-board-stadium-row.html

Some useful article snippets!

Quote

The EFL are facing calls from clubs to remove Derby chief executive Stephen Pearce from their board due to potential conflicts of interest in their disciplinary process.

Interesting.

Quote

A number of executives at other clubs are understood to have lobbied the EFL that Pearce’s presence on the board is untenable in such circumstances as his role is to uphold rules his club are alleged to have broken and they are considering whether to begin a formal process to engineer his removal.

Wonder if Mr. Ashton might be amongst their number...¬†ūü§Ē

Bit of flesh on the bones.

Quote

‚ÄėIt‚Äôs not personal but this is poor governance,‚Äô one executive told¬†Sportsmail. ‚ÄėStephen is a very nice guy and able administrator but even he must acknowledge the conflict of interest issue, even if it‚Äôs just perception.‚Äô

Could be purely perception, could be reality. Doesn't sound like it's personal for sure, more the risk of conflict of interest- and then even maybe just a perceived risk of one!

Quote

The presence of Reading chief executive Nigel Howe on the board has also been questioned as they have also been the subject of an EFL investigation into the sale of their stadium, although they have yet to be charged.

Unclear if that's done and dusted or still ongoing. Reading do appear to be under some kind of restrictions in the market though that could merely be for the FFP losses irrespective of this angle.

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All I can say though, is that I'm pretty convinced that it would be firewalled- Corporate firewalling- keep those club relevant executives away from decisions directly involving their club, job done!

Will be ridiculous if the EFL had nothing like that in place!

Now I hold my hands up here! Pearce was not elected to the Board until summer 2019- well after the Stadium sale and leaseback occurred. I also believe the EFL surely must have a corporate firewall or equivelant.

Howe OTOH, WAS elected to the EFL board within the relevant time frame. He left Reading and went back but he was elected as per an article on 4th July 2017. It's also unclear whether we should use Reading FC or Renhe Sports Management Limited in terms of the FFP results. Both Kieran Maguire and Swiss Ramble seem to use the club but it could be either IMO.

Timeline:

  1. July 4th 2017, Howe joins the EFL Board.
  2. July 10th 2017, Howe is replaced by Gourlay at Reading.
  3. Sometime in 2017/18, the Madejski Stadium is sold to (and leased back from) the immediate parent- which is odd from a consolidated accounts POV- Renhe Sports Management Co Limited. There is still no sign of this on the Land Registry, but only the Accounts! £26.5m, £750,000 annual rent- so far so meh! Still bits of it don't correspond but who cares, pretty meh as I say- at this point! Think was over 25 years the annual rent.
  4. In December 2018, Howe returns to Reading- as Gourlay has left somewhat of a mess. Still on the EFL Board.

Sometime in 2018/19:

  1. Renhe Sports Management Limited invoiced Prestige Fortune Asia Limited £37,500,000 in respect of the disposal of the Madejski Stadium. This will have been reflected in the Renhe accounts but not the Reading ones as it was already with Renhe- but Renhe are the parent of Reading. Annual rent £1,500,000 over 24 years. The Reading owner is also the owner of Prestige.
  2. The Reading Football Club Limited invoiced Sun Elegant Group Limited £13,000,000 in respect of the disposal of the club's training facilities at Hogwood Park. Included in loans from group undertakings. The Reading owner is also the owner of Sun Elegant. This of course is in the Club accounts but also reflected in the parent company/consolidated in UK accounts.
  3. The Reading Football Club Limited invoiced £3,000,000 to Beijing Renhe Football Club in respect of the loan of a player. Sone Aluko! The ultimate owner is their owner- Ms Xiu Lu Hawken is a director of the Chinese club. Obviously in the club but by extension, the consolidated/parent accounts.
  4. RFC Bearwood Limited invoiced Prestige Fortune Asia Limited £4,833,333 in respect of the disposal of the residential part of the land owned by the company. Obviously in RFC Bearwood accounts but reflected in the consolidated. As with Point 1, Prestige is owned by the owner.

Actually pretty shocking seeing it all in black and white! I wonder about the rise of £11m in terms of sale price in a year for the Madejski Stadium- though the rent did double I guess!

In the interests of balance, these are big big numbers but the profit was less.

For example, the profit in 2017/18 Madejski Stadium sale was only £6.5m or thereabouts. Hence the so far, so meh!

The following season however, the profit for Renhe was £29.9m on disposal on fixed assets and £3m on Aluko. With the probable exception of the Aluko and the 2017/18 deals, the rest were paid for in loans/other borrowings etc.

For the club it was only £8,173,614 plus of course the revenue boost from the Aluko loan. Without the exceptional items, the losses for both are huge and maybe one is a few million better off than the other but in the grand scheme they seem to have big FFP issues whichever you use!

Reading of course in terms of FFP and angry chairmen/fans/social media tend to fly below under the radar- largely as they are Reading :) but their accounts are shocking!

Edited by Mr Popodopolous
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Talking of Reading, interesting thread.

Seems they may well be under a soft embargo. One or two of their fans do not appear to 'get it' and suggest spending £100m and taking the 12 points- can't think the EFL would let that happen!

This is the second summer on the bounce, so it's an indicator of trouble IMO. Think my suggestion some time ago about split between Howe and the owner may have a bit of merit- with respect to this anyway.

I also don't see how they can spend big if under a soft embargo- that is a suggestion by him on one of the points. Didn't Birmingham get battered somewhat for buying Pedersen under a soft embargo?

As for Reading, it absolutely makes me ******* laugh their fans pleading poverty when they had a wage bill of I think around or approaching £40m in 2018/19- to finish in bottom third or maybe pushing midable was it.

When they signed Joao and Puscas in summer 2019 not long after release from a soft embargo- EFL shouldn't make that mistake again!

Moaning that they can't sign Ejaria- again I struggle to see how they splash the cash given an apparent soft embargo. Anyone?? @Davefevs @Hxj @Coppello

Further claim.

Like I say, selling Swift is no deal-breaker but there had better be no preferential or quietly get back to balance and spend a little treatment- remember Howe is on the EFL Board.

I don't understand why they appear to be getting extra time- they surely could've failed to 2020, ie to June 2020- they've released a lot of players but you can't backdate much in the way of wage savings. Player sales yes, possibly- I also don't understand how if they cannot spend- as in Point 1- they can spend big as of Point 5- the accounts alone indicate soft embargo at best territory.

If they've been selling property again, or selling and leasing back property again the EFL need to keep right on their case. Hell even if they haven't, that and Howe's role on the Board needs investigation in itself, and if clubs- not unreasonably arguably in the circs- have been given until the end of the Summer window to assess their position ie the extended summer window after transfers closed, allowed to backdate sales into the 2019/20 season due to Covid etc, then the EFL need to keep watching them closely and act accordingly if the time comes.

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https://www.footballlaw.co.uk/articles/birmingham-city-fc-small-heath-big-breaches-efl

A thread on the Birmingham saga.

No grand problems with Birmingham given their cutbacks and 9 points but what I can only assume to be another Shaun Harvey masterpiece, this bit of the Business Plan.

Quote

Thirdly, the buyers’ market created by the Business Plan, and notwithstanding the usually limited transfer activity in a January transfer window, was exacerbated by the EFL sending a media release to chairpersons of all EFL Championship clubs indicating the conditions of the Business Plan

ūü§¶‚Äć‚ôāÔłŹ

This surely gives a club avenues when it comes to contesting a charge- buyers market and all that. Business Plan is fine but sending it to all the other clubs, dunno what I think of that! Wonder if Harvey himself had any input into the Business Plan- would sooner let a club run it than him!

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Thinking the same. They can't even sign Ejaria it seems on a permanent deal- this was arranged in summer 2019- such is their position. Certainly not under the agreed terms.

Why some of their fans seem to think that they can go on a spending spree irrespective to try and gain promotion this season is beyond me.

Or the idea of taking - 12 and spending a lot, fairly sure that wouldn't fly.

Maybe under the old regime but not now! Released from soft embargo summer 2019, late June maybe, then in August Joao and Puscas arrive! Good players but doubt low wages.

Disconnect between Owner and CEO strikes me as problematic times.

I'd say they're somewhere between Birmingham summer 2018 and Sheffield Wednesday summer 2019.

If they go into the current season with the current squad, well surely they could struggle.

Surely too they would be in breach of FFP to 2020 as it would mean nobody sold- though as I said before maybe clubs would have until closure of window in mid October to rectify.

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I thought John Redgate had left Sheffield Wednesday but clearly not.

https://www.dailymail.co.uk/sport/football/article-8652645/EFL-members-shocked-conduct-Sheffield-Wednesday-director-John-Redgate.html

Seems he would like a club facing charges/a Disciplinary Hearing to have the ability to veto the composition of the Independent Panel. 

Fairly sure clubs won't go for that!

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On 22/08/2020 at 09:10, Davefevs said:

Reading could well be the next ‚Äúbig-mess‚ÄĚ club. ¬†Think they‚Äôll be bottom 6-8, even a relegation chance.

You might well be right!!

Surely Howe isn't/wasn't the massive spendthrift pushing things, including Joao and Puscas within a month-6 weeks of exiting a soft embargo? That's pretty implausible so...

Oddly- the standard of logic must be a thing with teams who play in Blue and White :whistle:¬†- Reading fans seem or some of them seem to think it's a green light to open the cheque book?¬†ūüėē¬†I somehow doubt the EFL will accept that!

When I say open the cheque book, I obviously don't mean under embargo limits, more like spending spree/gamble on promotion.

I do wonder if their owner and his placeman might say '**** it' and try to sign Ejaria despite the soft embargo. There would be major consequences of course, probably more than Birmingham but I wouldn't put it past them!

Edited by Mr Popodopolous
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The new chief exec's purported LinkedIn doesn't exactly shout that they've recruited a sharp operator...

...he also appears to have started a company (C&E SPORTING MANAGEMENT LIMITED) earlier this year and he is personally a registered intermediary with the FA - that sounds like a potential conflict of interest.

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Nice find! Conflict of interest eh??

Done a little more research, Howe will be remaining as Vice-Chairman apparently.

Sounds like a placeman the new guy. Reading fans or some of them still appear to think it opens the door to big spending- and that gamble and go up=fine, stay down=points. The rules since 2016 are much more multilayered and complex.

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Drive a coach and horses through the rule book ,spend like its gone out of fashion then get a let off by the EFL ..

It is because big billy bollocks (Wayne Rooney’s Derby ) is a bigger club than Wednesday so we have to be lenient .

Wonder if S/Weds will start legal action against the EFL and seek to have their points rescinded.

 

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