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Sheffield Wednesday charged for FFP


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5 minutes ago, slartibartfast said:

If it goes on like this ,we could be promoted by default ! :P

This is the EFL! Wednesday could be the ones promoted, it’ll save the EFL from having to deal with it & issue any sanctions that way, it feels like that’s what they basically did with Villa! Everyone knew they were ‘dodgy’ but promotion they got & the EFL didn’t have to risk upsetting a ‘big club’!

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8 minutes ago, BetterRedthenBlue said:

https://www.efl.com/news/2019/november/efl-statement-sheffield-wednesday-charged/

What's interesting is it mentions about the sale of the stadium... I wonder if Derby are starting to sweat. 

If Wednesday's stadium sale does create a precedent, I wonder what the implications might be for Villa, who also "sold" Villa Park in a similar way?

@Mr Popodopolous might be able to fill some gaps here, but the only thing that might separate Wednesday from other clubs who sold their stadiums, is that there were question marks about the timings of the transaction(s) in Wednesday's case. Having said that, it always seemed to me that Villa's accounts and ffp submissions seemed to fly under the radar and were pretty grey area generally.

If a precedent is created , then it will be doubly interesting to see how much the profit from selling Villa Park kept them the right side of ffp limits.

 

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Knew it- knew it!!

Would this have happened if Shaun Harvey still there?

Knew it though...their transaction...wonder how much they failed by?

What's not altogether clear is if it is the amount they sold it for, the accounting period- or both?

If it's the latter, still serious questions for Derby in particular. Possibly Aston Villa but £56.7m doesn't seem wildly overstated and then Reading though £26.5m I wonder about whether it's even wrong...

Not to claim any credit haha, because I'm sure this was being looked at from the get go but I do recall actually posting evidence of and specifying on here, huge gaping holes in the transaction in full a full 6 or 7 days on here before it was reported in the media about the EFL inquiring about the accounting period. :laugh:

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As for Aston Villa, Derby and Reading I believe the EFL will still be scrutinising the fair value or otherwise of their transactions.

Plus of course Sheffield Wednesday- unsure how they would go back and revisit it given it'd mean a compounded punishment?

Imagine if just for the sake of argument, that they have done this, failed FFP and overvalued the ground though?? Just in theory of course... :o

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It does appear (as @Mr Popodopolous has investigated on the main ffp thread) that Wednesday fudged the sale of their ground to fall inside the necessary 3 year period so that they didn’t bust the £39m limit (£57m according to Kieran Maguire).

It appears the EFL has recognised this as cheating FFP, and has charged them.

Based on the penalty sliding scale applied to Birmingham, there are a series of points deductions / reductions that could be applied:

  • 12 points deduction for being £15m+ Over the £39m limit
  • That might be reduced by 1 point for 1st offence (Brum got that)
  • up to 9 points for it being an aggravated offence

re the last bullet...cheating the system / falsifying your accounts by applying a false date for the sale has got to see a hard stance taken.

So we are looking at a points deduction of between 11-20 points.  I think it will be on the severe end.

Mel Morris might still be worried.  Gary Monk might want to hire an accountant before choosing his next club ?

Great work by Mr P on the Champ thread.

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Thanks @Davefevs you saved me some work! ? @ZiderEyed Dave has summed it up!

My guess was between closer to 15 than 10 at the minimum and 20 points but yes 11-20 sounds about right range.

Falsifying accounts if proven is far from a mere FFP issue too I'd suggest.

In terms of differences to Derby, short answer the reporting period.

However Derby, Reading- and yes Sheffield Wednesday are still being investigated fgor the sale price. If the sale price is wrong then the excess if we're going by the book should be stripped from FFP calcs- I reckon that's £25-30m for Sheffield Wednesday, the others I am unsure on.

Then once that factored in, those figures are re-assessed and if there's a fail on the new results then it's the Independent Disciplinary Commission. Aston Villa too I believe are being investigated by the PL though that one has gone a bit quiet.

Because of the clarity of when the stadia transactions took place in the other cases, then it would likely at this stage be a simple FFP result Minus Adjustment=New FFP result. Fail or Pass and the consequences would become apparent in time. The results being tested for these IMO would be to 2018/19 ie season just one.

The funny thing is that if Hillsborough at £60m significantly overvalued, that's surely further charges on top of these already quite serious ones!

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Cheers Dave.

If I was to take a guess purely on those guidelines, I'd say 13 or 14 points- 12 for breach, 3 for aggravated and 1 for compliance with soft embargoes.

That said this doesn't take into account the nature of this case, is purely using the Birmingham formula- and for compliance with soft embargoes is at least cancelled out if not more than by their accounting delays etc.

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According to BBC Sport the EFL are concerned that the valuation of Hillsborough was close to 60 million when West Ham's ground was sold for 40 million and Reading 25 million both of which are in or close to the capital where property prices are at a max.

Also checking if stamp duty was paid and another concern that the deal is financed over 8 yrs when money paid for property is normally immediate.

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Just now, Sir Geoff said:

According to BBC Sport the EFL are concerned that the valuation of Hillsborough was close to 60 million when West Ham's ground was sold for 40 million and Reading 25 million both of which are in or close to the capital where property prices are at a max.

Also checking if stamp duty was paid and another concern that the deal is financed over 8 yrs when money paid for property is normally immediate.

Could be even worse if they think they’ve overvalued too.  My speculation above was purely based on them falsifying / fudging dates.

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1 minute ago, Sir Geoff said:

According to BBC Sport the EFL are concerned that the valuation of Hillsborough was close to 60 million when West Ham's ground was sold for 40 million and Reading 25 million both of which are in or close to the capital where property prices are at a max.

Also checking if stamp duty was paid and another concern that the deal is financed over 8 yrs when money paid for property is normally immediate.

In view of that, what the **** do the EFL think about Pride Park's £80m valuation?!

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11 minutes ago, downendcity said:

In view of that, what the **** do the EFL think about Pride Park's £80m valuation?!

Always hard if not impossible to second guess the EFL but I believe that is still being investigated- along with the valuations for the transactions by Reading and yes Sheffield Wednesday.

PL are meant to be doing likewise with Aston Villa.

Presumably figures will then be adjusted downwards if they are found and the FFP figures assessed afresh- probably not too quick a process!

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Just remember- valuation methods can shift but...

2014- Depreciated Replacement Cost, which I am lead to believe is a legitimate and sensible method to value a property such as a football stadium?

£22.25m.

Revaluation Reserve? £6,778,000

Even if we factor out any Depreciation subsequent to 2014- and I'm not so sure on that but let's for now just because, but the Revaluation Reserve itself Depreciates- then how on earth can they consider it to be correct, to sell it for £60m 4-5 years on to a company owned by their owner?

Around £30-35m IMO- and that's if we eliminate deprecation incurred between 2014-2018!

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1 minute ago, Lanterne Rouge said:

Surely HMRC will be all over this too - false accounting possibly?

Mr P might know a bit more about the actual financial accounting practices, it’s possible as a business they’ve accounted for things in ‘post-period notes’ which is fine for hmrc....but not ffp.

There will be some owners having a little sweat tonight.

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13 minutes ago, Up The City! said:

Upon Villas eventual return to the Championship,  they should immediately be demoted to league one and stripped of parachute payments. 

Make an example of them. It's not right that clubs can get away with it by being promoted and gaining all the riches that comes with that.

If they were to get a points deduction (by the PL) this season, that sent them down, they would only get 2 years PPs, rather than 3.

The EFL acted too slow.  I’d want to see them relegated from the Prem....without a points deduction, they might grow into a solid Prem team and never come down. An 8-10point deduction now, would see them miles off safety.

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6 minutes ago, Mr Popodopolous said:

Ah almost forgot!

Are Sheffield Wednesday- and then the other clubs need looking at the same too- all paying market rent on these transactions? I have my doubts...

Another area that needs to be looked at, with adjustments made if necessary.

IIRC, on the ffp thread the rent Derby are paying was mentioned, and I think I worked out that it represented a yield of something like 1.5% ( based on the valuation of £81m). Perhaps Mel Morris needs to speak to Steve Lansdown if that's the best return he can get for an £80m investment!

The bottom line is the everyone is pretty certain that the stadium sales were carried out in order to avoid ffp problems - in the absence of anything else, for what other reason would the football club lose it's major asset?

If so, it would explain  the huge disparity between the various stadia valuations, as each was valued based on the figures each club needed to achieve to cover their individual ffp problem. It would also explain why rental figures seem very low  -  a full market rent would increase the annual costs the club would then incur, which in turn would increase losses against future ffp.

Of course, it could be the case that each stadium was properly and correctly valued and each club is now paying a properly established and market rent , but believe that and you believe we paid £10m for The Snake! 

When it arose initially, Derby was the club we all made a fuss about, but with hindsight the real villains of the piece ( see what I did there?) are AV. If the figures quoted earlier in the thread, comparing the stadium valuations with West Ham's stadium sale at £45m, then Villa not only cheated the ffp system but in so doing secured promotion and the financial rewards that come with it. This was exactly the situation the new rules were meant to avoid, but the inept EFL looks like it will have again failed the majority of clubs that have worked hard to bring their finances in order so that they comply without resorting to financial slight of hand.

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29 minutes ago, Davefevs said:

If they were to get a points deduction (by the PL) this season, that sent them down, they would only get 2 years PPs, rather than 3.

The EFL acted too slow.  I’d want to see them relegated from the Prem....without a points deduction, they might grow into a solid Prem team and never come down. An 8-10point deduction now, would see them miles off safety.

I'm the last person wanting to defend the EFL over ffp, however, I think the stadium sale issue caught them on the hop. I wonder if the EFL realised that when the new ffp rules were drafted the person drafting them "forgot" to include stadium sales in the section regarding sale of fixed assets.

When clubs then stated they had not broken any ffp rules, the EFL were wrong footed. However, everyone could see the clubs involved were cheating ffp and because of this, and to regain their integrity, the EFL should have immediately pursued the question of the validity of the valuations. As it is it look like Wednesday are in the frame, not so much because Hillsborough was grossly overvalued, but because they falsified the timing of the transaction in the accounts - even this could have been identified ages ago - as demonstrated by our own financial rottweiller,  Mr Popodopolous!

As for Villa, I remember reading their forum 2 summers ago, at the time they were suffering major financial problems with cash flow, when their then owner was struggling to get his money out of the country. Not only were their fans really worried about their survival, when they were saved by bringing in new owners, they strongly suspected they would have major ffp problems that season. If all the warning signs were there at the start of the season, and with Villa being in contention for a play off place after Christmas, you would have thought the EFL would be all over them like a rash when their accounts were presented and especially when the stadium sale was identified.

 

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