The Championship FFP Thread (Merged)

[Mr Popodopolous]

Let's be fair @AnotherDerbyFan if you as a club are obstructing EFL and the Panel in their legit duties and yes I wrote that in anger on reading the claims, then all bets should be off.

[Mr Popodopolous]

Going to have another crack at recalculation but with old and new figures- again as per the alternate figures posted on here. May as well make a spreadsheet and see how it goes...

Didn't consider also that there was a 3 year FFP period to June 2017- that was the first year the new 3 year rules came into force though I can't see Derby falling foul of that even with recalculated Amortisation.

2014-15 to 2016-17, as why not.

Just for a bit of fun.

T-2, Amortisation straight line so the FFP figures out there seem right.  SwissRamble says a £9m FFP loss? -£9m.

T-1, Amortisation "The Derby way" sees FFP loss at -£15,127,000.  £5.88m is added on using the Extension method. -£21,007,000.

Ooh getting a bit closer...

Original method for 2016/17. T sees a loss of £13,948,000, so -£13,498,000.

The extensions Amortisation method adds £7.54m onto that. -£21,398,000.

Wow, quick calcs or not...

8 figure breach- will Profit on Transfers with straight line and extensions be the saving grace?? Not sure it knocks it down by £11-12m!! The biggest ticket sales in that period were Academy products, which as we know is pure profit on disposal, therefore being unaffected regardless of which method is used. Ince seems the most likely candidate for that particular period?

A full recalculation and resubmission of EFL P&S figures with the extension method could see- well who knows how many failed periods!

What's your thinking @Hxj how far back can this go?

Edited May 11, 2021 by Mr Popodopolous

[Mr Popodopolous]

On a side note, it makes me laugh- a few of them are still going on about the dubious claims about Gibson selling a tax loss.

Because selling a tax loss doesn't affect Profit or Loss Before Tax one iota. There is no Profit on Disposal and nor does a Tax Credit or Loss of any kind affect the FFP figures. Struggling to see the case tbh. We can definitely argue about the ethics or similar, but it's neither a Profit or Loss on Disposal, nor does it appear in the Income Statement- ergo it has zero effect on FFP.

Edited May 11, 2021 by Mr Popodopolous

[Hxj]

1 hour ago, Mr Popodopolous said:

What's your thinking @Hxj how far back can this go?

In reality I doubt that it will go back further simply because too much emotional energy has been spent already. 

The breaches are clearly large and potentially aggravated, but I can see some mitigating factors as well.

I have to say that if I was advising the club I would be seriously looking at a deal with the EFL that resulted in relegation this season, bringing the ground back into the group at the £81 million valuation and wiping the slate clean.

Sitting currently with a transfer embargo, a owner who doesn't want to afford the club, a potential significant points penalty next season and therefore relegation anyway, with potential further FFP failure going forwards is the alternative more alluring?  2021/22 is looking really decidedly dodgy already.

It appears that the penny really hasn't dropped on the DCFC forum yet.  It isn't the failure to comply with accounting standards which will carry the punishment (it sounds pretty minor) it is the impact that the restatement has.  No matter how much they complain about it the amortisation will need to be readjusted to a straight line methodology.  There really is nothing further to say on that point.

Some of the comments on that forum are really quite scary.  After all, as I tell myself after every match I go to, including delights in the old Division 4 when we finished a division below some other side and below Mansfield, Torquay and Halifax, it's all a bit of fun ....

[AnotherDerbyFan]

2 hours ago, Mr Popodopolous said:

On a side note, it makes me laugh- a few of them are still going on about the dubious claims about Gibson selling a tax loss.

Because selling a tax loss doesn't affect Profit or Loss Before Tax one iota. There is no Profit on Disposal and nor does a Tax Credit or Loss of any kind affect the FFP figures. Struggling to see the case tbh. We can definitely argue about the ethics or similar, but it's neither a Profit or Loss on Disposal, nor does it appear in the Income Statement- ergo it has zero effect on FFP.

Wasn't that under the old FFP rules which were a lot more basic, hence including the sale of tax?

[AnotherDerbyFan]

3 hours ago, Mr Popodopolous said:

T-2, Amortisation straight line so the FFP figures out there seem right.  SwissRamble says a £9m FFP loss? -£9m.

It was -£5.6m

https://www.dcfc.co.uk/news/2016/03/record-turnover-is-the-highlight-of-derby-countys-201415-financial-results

3 hours ago, Mr Popodopolous said:

T-1, Amortisation "The Derby way" sees FFP loss at -£15,127,000.  £5.88m is added on using the Extension method. -£21,007,000.

Ooh getting a bit closer...

Original method for 2016/17. T sees a loss of £13,948,000, so -£13,498,000.

The extensions Amortisation method adds £7.54m onto that. -£21,398,000.

-£5.6m, -£21m, -£21.4m

Total = -£48m (£9m over limit)

3 hours ago, Mr Popodopolous said:

Wow, quick calcs or not...

8 figure breach- will Profit on Transfers with straight line and extensions be the saving grace?? Not sure it knocks it down by £11-12m!! The biggest ticket sales in that period were Academy products, which as we know is pure profit on disposal, therefore being unaffected regardless of which method is used. Ince seems the most likely candidate for that particular period?

Also, Albentosa, Shotton and Dawkins. Along with Ince, the total difference is likely in the £3m region.

Overall, £6m over the P&S limit.

Saying that, I'll be surprised if they do charge us for the 3 years to 2017. They would surely have charged us with failing at the same time as the 2018 period.

[Mr Popodopolous]

1 hour ago, AnotherDerbyFan said:

Wasn't that under the old FFP rules which were a lot more basic, hence including the sale of tax?

Happy to look further, but I always assumed that Before Tax would preclude such things. I can't see where the Profit or Revenue Streams comes in, fairly sure it was 1 year rules based on fine for overspend if promoted or embargo if not.

The old Rules used to be online but probably would take some finding now. A quick search for the UEFA FFP shows Profit Before Tax as far back as 2012.

I've an open mind on it but it seems strange that it would allow tax loss sales or take figures that include a tax payment or a tax credit- in reducing profit or loss but disallow Profit on Disposal of a Fixed Asset eg.

Definitely recall the old Rules adjusted the latter out, think it was £13m in 2015/16 (ie £13m FFP loss + Allowances + Promotion Bonuses=Accounting figure).

[Hxj]

Derby Appeal decision

2021.05.07 - EFL v Derby County FC Appeal - Decision including Disposition.pdf

[Hxj]

So after a brief scan - my view is looks like Derby fouled up.

1.  They had no Expert Evidence at the Disciplinary Committee.

2.  The EFL's Expert was unchallenged on the key matters.

As the Appeal Tribunal says - you need damn good reasons to ignore the expert, that's why they are there.

As an aside Derby's press release whines that there was no accountant on the panel.  However the panel is made up of one appointee from each party and an independently appointed chair.  So Derby could have appointed an accountant if they so wished.  As I suggested previously maybe they couldn't find one to agree with them!

 

[Mr Popodopolous]

@AnotherDerbyFan

Possible I used Global Derby UK. I will say that the difference might be the £3m in Exceptional Operating Income for the 2014/15 Accounts- Club not Parent. How is this classed for P&S? 

That said you looked run within FFP guidelines and Regulations at all times under GSE, so this wouldn't even be on the radar if Derby had continued like that. Sure you made losses but well within limits 

While I'm at it, what kind of Transaction is the Pride Park sale and leaseback. A few seem to think that Mel Morris via his companies owes the club for it, but that being the case surely it shouldn't have shown £81.1m in the Cash Flow?

That latter bit is unique among clubs who have done it- given the fact it was accepted as a Transaction I wouldn't see the EFL accepting the Ground going back as part of a takeover for £40m including the lot- if it was being paid in instalments, the £81.1m, it would appear in the Cash Flow if at all in that form.

As an aside- in terms of Dcfcfans.uk, a few of them come across as if they're in the Cult of Mel. The vendetta or claiming of agenda thing is just daft- the victimhood is quite incredible and it goes to the top, ie Mel Morris whining in the first case that the EFL had an agenda, an axe to grind and a personal dislike etc etc.

They really think do they, that: The EFL, Kieran Maguire, Matt Hughes and probably other journos are all anti them in the first instance- let alone for no discernible reason. More that they give critics a hell of a lot of ammo as a club.

Few thoughts from Nixon.

 

Edited May 12, 2021 by Mr Popodopolous

[Mr Popodopolous]

The waters now seem muddied further having had a quick look at the Written Reasons of this case vs the one last year.

Talks (I think) of a significant Impairment in 2018-19...zero documents in existence relating to the Accounting Treatment- hmm!!

Impairment of Player Registrations does count against FFP but can help later...is that £31m P&S (£38m total loss) for 2019 inclusive of this Impairment then?

Also see the following sets of Written Reasons.

https://www.efl.com/contentassets/873a8914e09740d3b3a8848131ea10b8/efl-v-derby-county---de-novo-decision.pdf

https://www.efl.com/contentassets/873a8914e09740d3b3a8848131ea10b8/efl-v-derby-county---decision-on-new-evidence.pdf

On De Novo issue, note point d especially?

This Impairment charge...Essentially EFL wanted to bring the 2018/19 Accounts into this case, in light of the Impairment Charge contained within.

Point 5 b) Strikes me as on the road to misconduct- again! "Derby has since refused to explain these impairment charges unless the EFL undertakes not to draw them to the attention of the Panel".

"Goodwill Impairment"- this is excluded from P&S calculations, but...

"Derby refuses to explain". Common theme. This new entity was created Summer 2019 and still controlled by Mel Morris...still no Accounts published at CH by any part of the Group for 2 long years. Are they trying to include Player Impairment/Amortisation in among Impairment of Goodwill?

Seems they might be... "Any reasonable accountant with Mr Karran's knowledge and experience should have appreciated that the Goodwill Impairment in those accounts related wholly or in large part to player registrations, as Mr Pearce explains". Goodwill Impairment is not included in P&S- but Impairment of Goodwill is quite clearly a different category to that of Player Registrations. Plus a 44% write-down of valuation in a year they finished top 6??

Impairment between £11.7-19m for the year? On the other hand, the portion of Goodwill Impairment that is linked to Player Registrations should be added back in to the P&S calcs.

Dragging heels on disclosure- well that's no issue, just slap an open-ended Embargo on as a starting point. Embargo them and link it to timely disclosure.

All a bit odd the new bits about Impairment and esp. of Goodwill given the 2018/19 Written Reasons- both cannot be right surely- Sevco 5112 to June 2019- and this was submitted in July 2019, so just after the period and stated to be inclusive of Lampard compensation.

This I assume is the Parent Company results...within limits but not by much- and zero reference to Impairment.

We see it seemingly inclusive of the Lampard compensation- the Birmingham precedent suggests that these Results should have been with the EFL in this timeframe.

What appears to have happened in the above docs is a completely new set of financial data arising, including Impairment of Player Registrations, although they were only stated as "Draft" Accounts in one of the docs. As well as a failure to disclose by Derby and is it even possible that they are declaring that because Gellaw Newco 203 became the new Group, that some Player Impairment tied in with that of Goodwill- like I say Impairment of Goodwill is an irrelevant consideration for P&S... 

Ideal solution to me so far.

1. Recalculate Amortisation for the first 3 year period in question, from ERV to Straight Line or Straight Line with Contract Renewal and let the chips fall where they may.
2. Maybe every year up to and including 2020/21 season as well.
3. Untangle Impairment of Goodwill from that of Player Registration- might be best to use the Sevco 5112 up to 2018/19 or Player Impairment + Goodwill Impairment-Non Player Impairment=Total Player Impairment. The Player Impairment counts vs FFP, the rest does not.

Edited May 12, 2021 by Mr Popodopolous

[Mr Popodopolous]

Quick message for any readers from DCFCFans.

Do I take what I read on your forum too seriously? Quite possibly, yes. Spat from me towards a rival forum albeit certainly not one-way is rather daft...

Do I have strong views on your P&S position and think the EFL need to go for it- yes, but then I would like stricter enforcement of it across the board. Up to and including proper enforcement in terms of the In-Season overspend rule. Wouldn't surprise me if a number of clubs are over limits, Reading has been well documented and I wonder about Stoke as well- reported £87m loss!? That said, no Accounts yet from Stoke so there is some guesswork.

Would I be happy to debate Football Finance, FFP- or maybe even Football in general constructively- yes. After all, until his injury Martin was a strong addition for us on a free (in terms of linkup and all-round play- assists- not so many goals though!), Weimann at £2m has been decent value- although injured for most of the season. Wanted Vydra (think in 2018 he was your top scorer?- probably a decent all-round game too) from Burnley when Brownhill was going there- think he would have been a strong addition. Martin we overplayed, he got steadily less effective and eventually got broke.

All that said, my views on the FFP stuff in general terms, these are implacable, I am a very strong believer in FFP and don't think it goes far enough if anything.

Much like Kieran Maguire and Matt Hughes, I'm not necessarily anti Derby- though while I can't speak for them, me personally- I can't abide your owner.

Edited May 12, 2021 by Mr Popodopolous

[Mr Popodopolous]

Well this is pretty unorthodox, possibly incompetent.

Seems Derby formed part of their Valuation mechanism using Transfermarkt.

Transfermarkt as we know is good in the following areas:

*Contract length.

*Often reasonable in terms of transfer fees. 

*Can be a quick way to find Contractual extensions.

Good for use by fans basically and some local journos maybe.

However it's by no means watertight, for example Nick Powell was meant to be ooc this Summer, this site was a key source for reports that suggested it...yet it's 2022.

Therefore for a Professional Football Club to be using it as a factor in respect of Player Valuations, ERV's- that's pretty astonishing!?

Edited May 13, 2021 by Mr Popodopolous

[Mr Popodopolous]

Also on a more mundane note, the Impairment mentioned in one of the sets of Written Reasons in terms of Gellaw Newco 203...

In Summer 2019, it came through to CH that Gellaw Newco 203 had taken over Sevco 5112- and the document suggests that this 'takeover' occurred on June 28th 2018.

The reason I say 'takeover' is that Gellaw Newco 203 became the Controlling Party- even though that itself was controlled by Mel Morris. This meant that the Accounts submitted in March 2019 as Projections and updated in early July 2019 inclusive of Lampard compensation- these were Sevco 5112- whereas the draft ones submitted to the EFL in 2020 were Gellaw Newco 203 Limited.

It is unclear if it is £32.1m in terms of Impairment inclusive of the £22.2m in Player Registration Impairment or if these two are separate. Indeed, these are two separate categories as P&S Regulations themselves suggest but the fact that...

Well from Point 7 c)

Quote

"The EFL received the draft unaudited accounts for Gellaw on 6 March 2020. These showed a large Impairment to Goodwill of £32.1m. Any reasonable accountant with Mr Karran's knowledge and experience should have appreciated that the Goodwill Impairment in those accounts related wholly or in large part to player registrations, as Mr Pearce explains

When you put this in conjunction with a change in controlling entity- Sevco 5112 Limited to Gellaw Newco 203 Limited- this appears to be an attempt to muddy the waters maybe in terms of Impairment that is excluded from P&S and Impairment that is not?

Still can't work out if which of these is most likely...for avoidance of doubt, Impairment of Player Registrations unless there are specific circumstances, counts against P&S in full.

1. Projected 2019 Loss (Sevco 5112)-Impairment of Player Regs-P&S Allowances=Underlying P&S Loss.
2. Projected 2019 Loss (Sevco 5112) + Impairment Player Regs - P&S Allowances=Underlying P&S Loss.
3. Projected 2019 Loss (Gellaw Newco 203 Draft) + Impairment of Player Regs - Impairment of Goodwill - P&S Allowances=Underlying P&S Loss.
4. Projected 2019 Loss (Gellaw Newco 203 Draft) + Impairment of Player Regs - Impairment of Goodwill + Add back in the proportion of Impairment of Goodwill that is linked to Player Registrations=Underlying P&S Loss.

Without any Accounts for 2 years it's hard to judge...I hope there is an open-ended Embargo while their Accounts are missing.

That aside, seen the odd curious suggestion out there that Derby shouldn't be punished as they gained no advantage on the pitch- all I can say is that Birmingham used that in their defences in 2019 (yes they were clearly guilty to the tune of a £9m overspend, this is less clearcut)- and it got short shrift.

Whether a club gains an advantage is immaterial, the mere act of trying to gain an advantage through a) Overspending or b) Inflating the amount that a club could seemingly legitimately spend through creative means is sufficient for a punishment if proven. In short, success or failure is immaterial- Reading may well find this out in 2021/22. It feels like clutching a little.

Edited May 14, 2021 by Mr Popodopolous

[Owl Visiting]

Do you like our new away shirt @Mr Popodopolous?

 

[Mr Popodopolous]

Very good, @Owl Visiting !

[Mr Popodopolous]

As for Derby, read in a few places- as I've said before and elsewhere- that maybe the Stadium would be part of any package for any prospective takeover. Seen one explanation that debt owed for Stadium wiped in exchange for return...only is it so simple?

in 2018- June 28th to be precise- Pride Park was sold from Derby County FC- or is it Sevco 5112 Limited- in exchange for £81.1m, so the story went. This came with a) An operating lease and b) Perhaps more importantly, terms and conditions from the EFL. Profit on Disposal was £39.9m, £40m or something like that. I think the DRC basis is more reliable than the Profit one for P&S purposes as it seems to be much more commonly used in football, whereas Profits as we know can go up as well as down- much like Derby County since 2019!  Mainly down in their case- EFL and their wise judgements in other matters such as Keogh are also to be applauded.

Some clubs have either written it off vs loans and put it through Profit and Loss, or in one case Trade Receivables- and as for Sheffield Wednesday, paid in 8 instalments of £7.5m apparently!

Derby could claim this as part of justification in any future sale- and the EFL need to show no clemency in general and irrespective of ownership which makes a story by Nixon, suggesting that a change of ownership by August could see any possible points penalty reduced- an alarming one. I'm sure the EFL are all across this possible issue, ie the Ground and Fair Value vs Past Transaction feeding into any takeover.

As an aside, any case- and appeal- should be decided purely on merits, not otherwise. Though there's always EFL Regulation 16.20 if certain criteria met...don't need any Disciplinary Commission for that- and I'd slap it right on owing to past behaviour that feeds into a trust deficit if the aggregated P&S loss for the last two seasons exceeds £15m, but falls below £39m.

Anyway, the Claim is that cash due from Uncle Mel to Derby for Pride Park gets written off as part of any takeover, in order for Pride Park to return to Club Ownership as the other part of the equation.

Should the Accounts therefore show the following:

That of course is Pride Park. So far, so mundane.

Not really much to add- but the bits about Cash Flows from investing activities means what is shelled out and received during the year....Great boost for the Cash Losses part of P&S as well- £81.1m! The other stuff is instalments or Purchases and Sales- ie not fees received but Instalments of Fees Received under Sale of Intangible Assets. £81.1m is a pretty big instalment- fits with the Sale Price, which I also believe is shown at the Land Registry as having been that same Sale Price! Surely if it was writing off debt owed to Mel Morris in exchange for Pride Park, then there would be some kind of equivalent number- unsure you can have it both ways, otherwise the Transaction didn't take place as stated and the EFL should reopen that from another angle.

See the last part of Note 23- that will be Pride Park- given it didn't happen before, Pride Park to Gellaw Newco 202 Limited- and the final sentence "No balance outstanding at the year end". Corresponds with the Cash Flow Statement- would HMRC have a view if it went back as part of an overall package as well, for say £40-60m including debt paid down, Club, the entire Group and Pride Park.

Little to add that seems greatly different, except from Sevco 5112...

Slightly differs, by £3,493 in terms of the sales under Common Ownership. Purchases of £284,392 newly incurred in 2017/18 and Sales of £81,100,000- but the bit in common was "outstanding amount owed at the balance sheet date"- Purchases. They still owed £284,392 for Purchases...suggesting that the Sale for all intents and purposes was presented as a genuine one. To clarify, the bit listed as still owed is the Purchases part...the bit about Sales is declared as no balance outstanding.

Anything which casts that into doubt should get the EFL on the case...

Edited May 17, 2021 by Mr Popodopolous

[Mr Popodopolous]

Hi @Son of Fred which bit with respect to FFP compliance- or otherwise- are you unsure about?

As far as I can see it's not altogether clear how it feeds in with respect to Derby's position. Or indeed, am I mistaken on this.

Edited May 20, 2021 by Mr Popodopolous

[Davefevs]

QPR.

Another club, doing better than us on 50-60% of our budget.

[Hxj]

On 14/05/2021 at 00:57, Mr Popodopolous said:

Well from Point 7 c)

Quote

"The EFL received the draft unaudited accounts for Gellaw on 6 March 2020. These showed a large Impairment to Goodwill of £32.1m. Any reasonable accountant with Mr Karran's knowledge and experience should have appreciated that the Goodwill Impairment in those accounts related wholly or in large part to player registrations, as Mr Pearce explains

When you put this in conjunction with a change in controlling entity- Sevco 5112 Limited to Gellaw Newco 203 Limited- this appears to be an attempt to muddy the waters maybe in terms of Impairment that is excluded from P&S and Impairment that is not?

Still can't work out if which of these is most likely...for avoidance of doubt, Impairment of Player Registrations unless there are specific circumstances, counts against P&S in full.

The Goodwill shown in the Gellaw 203 accounts (the new parent) is more than likely to have been created on the acquisition of the football club shares by the new parent.  Goodwill = Fair Value of the assets on acquisition less the amount paid.  The football club prepares its accounts to 2019 and devalues it's intangibles by £22 million.  The parent prepares its accounts and has to review the value of its goodwill and has decided that the asset acquired (the football club) is worth £32 million less than it thought it was partly because of the large impairment in value, so it impairs its goodwill by £32 million.

The two adjustments are connected but considered in a different way and other factors come into play in valuing the goodwill over and above the intangible write-down in the subsidiary, so the figures will rarely be the same.

The football club impairment counts for FFP limits.  Neither the creation nor the impairment of the goodwill in the parent count for FFP limits.    

[Mr Popodopolous]

Credit where it's due to QPR- they were first in with their ridiculous attempt to swerve FFP in 2014, b (£60m debt write off or similar) but they seem on the right road- sold Eze for good money, made a profit on Manning and Osayi-Samuel too. Think all 3 were academy products- possible they if not for Covid but with the same Incomings and Outgoings, might have made a profit in this stand alone season, but certainly in a decent position.

Also, had a quick look at CH earlier- Stoke City Accounts have been submitted but not yet out...along with the Holdings. Barnsley too but nothing to write home about, as in can't see them being anywhere a breach or similar.

Luton- credit where it's due. £3.35m Profit last season following Player Sales! Oddly doesn't appear to mention the Wage Bill explicitly but I suppose that will be in the 2020 Holdings when they're out. Based on a quick scan, the entire cost of running the club was £21.933m (not entirely but rounding)- the total cost, ie Cost of Sales + Administrative Expenses. Appears to be a 13 month period rather than 12 as well. Whether the consolidated will improve things a bit or make them a bit worse, who knows but the point is that unsurprisingly, they're nowhere near an FFP breach as it stands.

Edited May 25, 2021 by Mr Popodopolous

[BLRed]

Right, so cutting through all the jargon and as a latest update, when can we expect reading, Derby et al to get sanctioned for their multitude of financial misgivings?

[Mr Popodopolous]

Still ongoing basically- my suspicion is that Derby wouldn't be sent down with a deduction this year although the Verdict was reached on 7th May 2021- a day before the end of the season so maybe.

Reading are yet to be charged but plenty of speculation suggests they will be- should know a short time after June 30th in their case.

I'm also interested in Stoke and maybe from a Soft Sanctions POV, Blackburn.

[BLRed]

What if the likes of Swansea. Could have sworn I read a short while ago they were needing to balance the books. If they don’t go up, they surely will be forced to sell. How can they continue to fund ayew and his 80k wages?  

[Davefevs]

20 minutes ago, BOSRed said:

What if the likes of Swansea. Could have sworn I read a short while ago they were needing to balance the books. If they don’t go up, they surely will be forced to sell. How can they continue to fund ayew and his 80k wages?  

They are fine.  Last season of PPs just ending, but sold Rosen for £10m so will be fine.  Bit if cloth cutting next season if they don’t go up, but probably just a case of Ayew moving on.

[Mr Popodopolous]

2 hours ago, BOSRed said:

What if the likes of Swansea. Could have sworn I read a short while ago they were needing to balance the books. If they don’t go up, they surely will be forced to sell. How can they continue to fund ayew and his 80k wages?  

 

1 hour ago, Davefevs said:

They are fine.  Last season of PPs just ending, but sold Rosen for £10m so will be fine.  Bit if cloth cutting next season if they don’t go up, but probably just a case of Ayew moving on.

Agreed. Made a Profit last season IIRC, as you say sold Rodon. Ayew to go, cheaper replacements for the PL loanees?

That reminded me, Cardiff's position will be interesting too.

While they didn't get wage bill high in PL, also not sold many, they were on the 2 year PP schedule as up then straight down. Maybe Fulham's position as well but probably not- still not released Accounts for 2019/20, like Cardiff.

[Mr Popodopolous]

Looks like it might drag on for a while, though the Article is short of a few possible details.

https://www.skysports.com/football/news/11696/12317470/derby-and-efl-wrangle-over-alleged-accounting-irregularities-could-last-months

Putting aside the outcome, the Process and the speed- for all clubs accused of this and the Integrity of the Competition- surely has to be better. Or maybe more accurately how the process is run.

Edited May 26, 2021 by Mr Popodopolous

[Mr Popodopolous]

On 24/05/2021 at 14:25, Hxj said:

The Goodwill shown in the Gellaw 203 accounts (the new parent) is more than likely to have been created on the acquisition of the football club shares by the new parent.  Goodwill = Fair Value of the assets on acquisition less the amount paid.  The football club prepares its accounts to 2019 and devalues it's intangibles by £22 million.  The parent prepares its accounts and has to review the value of its goodwill and has decided that the asset acquired (the football club) is worth £32 million less than it thought it was partly because of the large impairment in value, so it impairs its goodwill by £32 million.

The two adjustments are connected but considered in a different way and other factors come into play in valuing the goodwill over and above the intangible write-down in the subsidiary, so the figures will rarely be the same.

The football club impairment counts for FFP limits.  Neither the creation nor the impairment of the goodwill in the parent count for FFP limits.    

I agree, that indeed is what Goodwill on Acquisition of shares is for. In other words, owing to an Impairment of £22m in the Player Registrations, a knock on effect is to add £32m- or another £10m to the decrease in value?

Yeah, but is there not a chance that the system could be being gamed here? EFL seemed to think so if that snippet of the Written Reasons was anything to go by. Sevco 5112 seems to have been the basis for FFP/P&S Assessments.

The last page, Note 26 of the Sevco 5112 Limited Accounts for 2015/16- or which ran from August 2015-August 2016 shows provision for a Fair Value Adjustment and none was made. Plus the section of the Accounts showing the Impairment made in 2015/16.

To add to the slight confusion, Club Accounts were used in 2015/16 but as we can see Impairment of Goodwill on Acquisition...

Seems to offer a bit more detail.

I wonder if they tried to put through some kind of "Fair Value Adjustment" to the Intangible Fixed Assets as bits seem to feed in.

Possibility. Mel Morris acquired through a New Entity the Club, and wrote down the Player Registrations/Intangible Fixed Assets to their "Fair Value" but is intending to Account for it or some of it under Goodwill rather than the correct method. Muddying the waters, blurring the picture?

As an aside, given that Derby's underlying loss prior to FFP exclusions was in excess of £40m in 2017/18 and was around £37m- I say Derby, I mean Sevco 5112 as per the EFL Written Reasons from last August, it surely cannot have been the case that the £37m loss included a £22m Player Registration Impairment- would have meant total Wages/Operating Costs fell by £25m in 2018/19 assuming Revenue remained similar. Maybe £20m if Revenue bumped up.

As a further aside, still no Confirmation Statement- due in August 2020- for Sevco 5112. Gellaw Newco 203 seems to be top of the tree but it's not entirely clear given a) Lack of Confirmation Statement for Sevco 5112 , b) No Accounts for any of the companies for 2 years now and c) The Persons with Significant Control for the Club, the Academy, Club DCFC and Stadia DCFC are all listed as being Sevco 5112. I still have to wonder if they've tried to bundle up any Impairment of Player Registration with that of Goodwill. ie "These players I adjudge to be worth less than their Book Value, so I'll include it in the Goodwill on Acquisition".

Edited May 26, 2021 by Mr Popodopolous

[Hxj]

To be honest@Mr PopodopolousDCFC have created more than enough problems for themselves without us helping out .

The amortisation on intangible assets must only be included in the accounts of the company owning the assets. The goodwill adjustment is extraneous fluff. 

They admitted misleading the EFL with regards to their accounts - they failed to tell the EFL until just before the hearing what their amortisation policy actually was - and they didn't tell their auditors either.

Add to that that they couldn't produce a single piece of paper proving their methodology - they changed numbers mid-season when it looked bad -  oh and the LAP basically called the liars (they didn't use the word, but you have to read between the lines and "at the worst seriously misleading" means "you've been caught telling whoppers").

The official release from DCFC is laughable and just creates confirmation bias for their own supporters. "We've only been caught out on one issue - so no problems" um - but you have still been caught out.

The offence accepted is serious enough for a points deduction to be handed out.

The second offence of using an unacceptable amortisation policy is, in itself, not a major issue.  What it does do however is force DCFC onto a straight line policy as that is the default.

That policy probably tips DCFC into a significant FFP failure for at least the three year period ending 2018, and possibly 2017 and 2019.  Taking into account the aggravating factors of misleading the EFL and using an unacceptable amortisation policy you might see a 15 point deduction sometime next season.

 

 

 

 

[havanatopia]

6 hours ago, Mr Popodopolous said:

I agree, that indeed is what Goodwill on Acquisition of shares is for. In other words, owing to an Impairment of £22m in the Player Registrations, a knock on effect is to add £32m- or another £10m to the decrease in value?

Yeah, but is there not a chance that the system could be being gamed here? EFL seemed to think so if that snippet of the Written Reasons was anything to go by. Sevco 5112 seems to have been the basis for FFP/P&S Assessments.

The last page, Note 26 of the Sevco 5112 Limited Accounts for 2015/16- or which ran from August 2015-August 2016 shows provision for a Fair Value Adjustment and none was made. Plus the section of the Accounts showing the Impairment made in 2015/16.

To add to the slight confusion, Club Accounts were used in 2015/16 but as we can see Impairment of Goodwill on Acquisition...

Seems to offer a bit more detail.

I wonder if they tried to put through some kind of "Fair Value Adjustment" to the Intangible Fixed Assets as bits seem to feed in.

Possibility. Mel Morris acquired through a New Entity the Club, and wrote down the Player Registrations/Intangible Fixed Assets to their "Fair Value" but is intending to Account for it or some of it under Goodwill rather than the correct method. Muddying the waters, blurring the picture?

As an aside, given that Derby's underlying loss prior to FFP exclusions was in excess of £40m in 2017/18 and was around £37m- I say Derby, I mean Sevco 5112 as per the EFL Written Reasons from last August, it surely cannot have been the case that the £37m loss included a £22m Player Registration Impairment- would have meant total Wages/Operating Costs fell by £25m in 2018/19 assuming Revenue remained similar. Maybe £20m if Revenue bumped up.

As a further aside, still no Confirmation Statement- due in August 2020- for Sevco 5112. Gellaw Newco 203 seems to be top of the tree but it's not entirely clear given a) Lack of Confirmation Statement for Sevco 5112 , b) No Accounts for any of the companies for 2 years now and c) The Persons with Significant Control for the Club, the Academy, Club DCFC and Stadia DCFC are all listed as being Sevco 5112. I still have to wonder if they've tried to bundle up any Impairment of Player Registration with that of Goodwill. ie "These players I adjudge to be worth less than their Book Value, so I'll include it in the Goodwill on Acquisition".

Like I said in THE Derby thread.. straight 2 points deduction now, 18 to start next season and 10 million fine. If they appeal double the fine and points deduction. 

Stop messing about and get on with their fully deserved demotion.

Adams Park is a lovely little ground and they make a decent chip.