Sheffield Wednesday charged for FFP

[1960maaan]

22 hours 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.

Here's my concern Dave, the EFL and the EPL are two very different entities, and work and exist in very different worlds . Would an illegal act committed in one (EFL) , be punished in another (EPL)? In theory it could but in practice I'm not so sure. I would imagine there would have to be meetings between the two before any outcome and punishment could even be spoken about. No point in the EFL saying Villa will be docked 15 points, when they next play in the Football League, it may never happen.
There has to be a joint effort in this, otherwise it's pointless. It would lead to possible situations where Qatar could buy a club, throw £billions at it and take the piss out of FFP, then continue in the Prem. Build a top 10 side knowing there would be no come back, as long as they abide by their new Leagues rules.

[Davefevs]

13 hours ago, 1960maaan said:

Here's my concern Dave, the EFL and the EPL are two very different entities, and work and exist in very different worlds . Would an illegal act committed in one (EFL) , be punished in another (EPL)? In theory it could but in practice I'm not so sure. I would imagine there would have to be meetings between the two before any outcome and punishment could even be spoken about. No point in the EFL saying Villa will be docked 15 points, when they next play in the Football League, it may never happen.
There has to be a joint effort in this, otherwise it's pointless. It would lead to possible situations where Qatar could buy a club, throw £billions at it and take the piss out of FFP, then continue in the Prem. Build a top 10 side knowing there would be no come back, as long as they abide by their new Leagues rules.

As I understand it, when the latest rules were drawn up, they were done by EFL and PL, with cooperation agreed where teams needing sanction have moved division.  I think that is why the PL is now investigating Villa, rather than EFL.

Your final para, is why if Villa have breached they get points deduction this season, or relegation and further sanctions when they return to the Champ.  No point any sanctions sitting there - they might never come back down.

[1960maaan]

17 minutes ago, Davefevs said:

As I understand it, when the latest rules were drawn up, they were done by EFL and PL, with cooperation agreed where teams needing sanction have moved division.  I think that is why the PL is now investigating Villa, rather than EFL.

Your final para, is why if Villa have breached they get points deduction this season, or relegation and further sanctions when they return to the Champ.  No point any sanctions sitting there - they might never come back down.

Ah good, didn't realise there were new rules in place. 

I watch with baited breath, and fingers crossed.

[Mr Popodopolous]

Also may depend on how watertight the agreement is- fairly binding contract I'd hope!

It is worth noting that the EFL regs make provision for it,  that gives me hope that a good job has been done!

It basically says that any club promoted or relegated from the Championship will be treated as a Championship club until obligations fulfilled- probably a bit more complex but seems to be along those lines.

[Mr Popodopolous]

Would be interested in the thoughts of @OwlsonlineAdmin about this latest quite large development.

[Mr Popodopolous]

Couple of other points about Sheffield Wednesday,  one of them already partially covered.

1) This deal.  As we know the £60m and profit booked in 2017-18,  but cash flow seems to indicate payment over 8 years. Is/was there a risk that they could benefit twice?  

For example big profit in those accounts then over the following years,  that cash as extra to spend/offset losses with in the subsequent years. Enhanced budget basically.

2)  The question of some of their commercial arrangements. D-Taxis seems to be a running joke on their forum and another company named Elev8 I believe.  The first one especially,  can't find it on CH yet it's one of their sponsors!! The theory I've read is that D-Taxis and also maybe Elev8 are shell companies setup to funnel in a bit more cash.  

Granted it's only £1.5-2m per year combined and it appears to be at market value- not too bothered about it and in any event the EFL probably didn't much mind but just wondering about that too.  Elev8 may well be bona fide but D-Taxis seems very interesting.

[View from the Dolman]

7 minutes ago, Mr Popodopolous said:

...D-Taxis seems to be a running joke on their forum and another company named Elev8 I believe.  The first one especially,  can't find it on CH yet it's one of their sponsors!! The theory I've read is that D-Taxis and also maybe Elev8 are shell companies setup to funnel in a bit more cash...

D Taxis appears to be a trading name (if they are actually trading...!) of D Performance Ltd which is listed as a "49320 - Taxi operation" business at Companies House. 

There's a Facebook page for D Taxis that shows the same logo as that used on the sponsor boards. The latest post from November 2017 is a graphic saying "coming soon". If you call the number listed, after ringing for sometime you get a record message looping saying "D Taxis. Coming soon.". It's a sham of a company.

[CotswoldRed]

Modest mismanagement of debt and cash flow issues = ejection from the football league. (Bury)

Deliberately breaking rules at the expense of others to gain an advantage.... Seems fair that they should face the same imo.

[downendcity]

4 hours ago, Mr Popodopolous said:

Couple of other points about Sheffield Wednesday,  one of them already partially covered.

1) This deal.  As we know the £60m and profit booked in 2017-18,  but cash flow seems to indicate payment over 8 years. Is/was there a risk that they could benefit twice?  

For example big profit in those accounts then over the following years,  that cash as extra to spend/offset losses with in the subsequent years. Enhanced budget basically.

 

Is Diane Abbott their financial director?

Using that sort of accounting you could probably afford free broadband for everyone!

[downendcity]

4 hours ago, View from the Dolman said:

D Taxis appears to be a trading name (if they are actually trading...!) of D Performance Ltd which is listed as a "49320 - Taxi operation" business at Companies House. 

There's a Facebook page for D Taxis that shows the same logo as that used on the sponsor boards. The latest post from November 2017 is a graphic saying "coming soon". If you call the number listed, after ringing for sometime you get a record message looping saying "D Taxis. Coming soon.". It's a sham of a company.

Surely we've all used taxi companies that. when you are waiting and ring them to chase them up, always say, "coming soon"

[Mr Popodopolous]

54 minutes ago, downendcity said:

Is Diane Abbott their financial director?

Using that sort of accounting you could probably afford free broadband for everyone!

It gets better- could be something entirely different of course, but under finance lease obligations- suggests a rent on a £60m transaction of a mere £271,000 per season/reporting period!

Possibly decreasing in the preceding few years- certainly might be if a average of between 2-5 years an accurate reflection!

It's under debtors the £7.5m within one year and £52.5m in subsequent years.

In terms of actual cash flow from the disposal of said stadium, it appears to say "Proceed on disposal of tangible fixed assets"- £1,044,000"- obviously listed as £1,044, but that's always x 1,000.

[Mr Popodopolous]

Reading the Sheffield Wednesday forum,  a poster I've praised before named MK Owl reckons £60m may well be right as Hillsborough would cost £120m to rebuild and assume 50% depreciation etc.

Now that's all well and good but given a valuation of £22.25m under that very method?  Yeah with that one I'm struggling!

@Robbored I believe you post on Owlstalk.  Any chance you could raise the point?  Thanks.

[Robbored]

9 minutes ago, Mr Popodopolous said:

Reading the Sheffield Wednesday forum,  a poster I've praised before named MK Owl reckons £60m may well be right as Hillsborough would cost £120m to rebuild and assume 50% depreciation etc.

Now that's all well and good but given a valuation of £22.25m under that very method?  Yeah with that one I'm struggling!

@Robbored I believe you post on Owlstalk.  Any chance you could raise the point?  Thanks.

I haven’t visited Owlstalk since the beginning of the season and after Leeds had beaten us at AG. I’m registered there so I could revisit I guess.

[22A]

Widening the scope of this thread, I see Man C tried to stop UEFA investigating their financial transactions.           But failed! 

If UEFA do find "discrepancies" will the stop bid increase any punishment then issued?

[1960maaan]

15 hours ago, Mr Popodopolous said:

Reading the Sheffield Wednesday forum,  a poster I've praised before named MK Owl reckons £60m may well be right as Hillsborough would cost £120m to rebuild and assume 50% depreciation etc.

Now that's all well and good but given a valuation of £22.25m under that very method?  Yeah with that one I'm struggling!

Wouldn't the value of the ground be the value of the ground now, and not what 'could ' be built in its place? 
It's a bit like the projected accounts, which I've always had a problem with, you can state. anything unless you are tied in somehow. What's to stop you saying it was state of the art when we built it, and to rebuild it as state of the art now would cost £1Billion . I said before with projected accounts, Villa could have said if we don't go up we will have a fire sale and bring in £150million. Then as they have gone up they just laugh and wave as they sneak off to the Prem. 
I don't pretend to know the nuances of FFP and Football accounts, but this seems another way to muddy the waters. 

[downendcity]

4 minutes ago, 1960maaan said:

Wouldn't the value of the ground be the value of the ground now, and not what 'could ' be built in its place? 
It's a bit like the projected accounts, which I've always had a problem with, you can state. anything unless you are tied in somehow. What's to stop you saying it was state of the art when we built it, and to rebuild it as state of the art now would cost £1Billion . I said before with projected accounts, Villa could have said if we don't go up we will have a fire sale and bring in £150million. Then as they have gone up they just laugh and wave as they sneak off to the Prem. 
I don't pretend to know the nuances of FFP and Football accounts, but this seems another way to muddy the waters. 

This is sort of the major problem with sale of stadia that are not open market transactions. Where it is a "sale" to a related third party the vendor and purchaser are effectively one and the same, and the transaction is a really a paper transaction. The participants in the transaction are therefore relatively free to determine the sale price that suits them.

If you or I wanted to do something similar e.g. transfer our home to the children then we could agree the value that best suits all parties, but if , say inheritance tax issues subsequently arose HMRC would have access to plenty of open market sale compatibles to judge whether the price we agreed on the transfer was reasonable.

 From all the various information we have seen on the ffp thread, it seems to me that the clubs that have tried this route have done so on the basis that as there is no active market in the sale of football stadium there is little, or no, evidence of  sales achieved on which anyone ( the EFL) could challenge their valuation figures. The Derby fan that has posted on the ffp thread suggested that Pride Park's value was enhanced because they have plans for improvements and a new roof. That's a bit like you buying my house and me saying that as I have plans to put in a swimming pool and build a kitchen extension the purchase price will be £40000 more than the house next door!

As for projected accounts, Ive wondered how the EFL monitored clubs finances during the 3 year period. For example, had they been checking clubs accounts after the first and second years, it would have given them a pretty clear idea of clubs that looked like they might have issues with ffp, and should have paid special attention to these clubs activities in the meantime ( things like player sales or purchases) and then prioritised those clubs projected accounts for attention. Had that been the case then these stadium transactions should have jumped out immediately.

As it is , it looks like the EFL were on the back foot and even now, half way through the following season, don;t seem to be getting anywhere with the valuation issue.

 

 

[Mr Popodopolous]

54 minutes ago, downendcity said:

This is sort of the major problem with sale of stadia that are not open market transactions. Where it is a "sale" to a related third party the vendor and purchaser are effectively one and the same, and the transaction is a really a paper transaction. The participants in the transaction are therefore relatively free to determine the sale price that suits them.

If you or I wanted to do something similar e.g. transfer our home to the children then we could agree the value that best suits all parties, but if , say inheritance tax issues subsequently arose HMRC would have access to plenty of open market sale compatibles to judge whether the price we agreed on the transfer was reasonable.

 From all the various information we have seen on the ffp thread, it seems to me that the clubs that have tried this route have done so on the basis that as there is no active market in the sale of football stadium there is little, or no, evidence of  sales achieved on which anyone ( the EFL) could challenge their valuation figures. The Derby fan that has posted on the ffp thread suggested that Pride Park's value was enhanced because they have plans for improvements and a new roof. That's a bit like you buying my house and me saying that as I have plans to put in a swimming pool and build a kitchen extension the purchase price will be £40000 more than the house next door!

As for projected accounts, Ive wondered how the EFL monitored clubs finances during the 3 year period. For example, had they been checking clubs accounts after the first and second years, it would have given them a pretty clear idea of clubs that looked like they might have issues with ffp, and should have paid special attention to these clubs activities in the meantime ( things like player sales or purchases) and then prioritised those clubs projected accounts for attention. Had that been the case then these stadium transactions should have jumped out immediately.

As it is , it looks like the EFL were on the back foot and even now, half way through the following season, don;t seem to be getting anywhere with the valuation issue.

 

 

They should IMO- the EFL that is- be looking through 20, 30 years of accounts- over a given period , checking against, this would be in conjunction with the independent valuations they seemed to commission and analyse!

In the case of Sheffield Wednesday- well they should be asked to explain and document precisely how a Depreciated Replacement Cost of £22.25m in 2014- it's listed in their accounts- rises to £60m? Value in use and Depreciated Replacement Cost are two useful methods here! EFL should be really honing in on this. Evidence, documented evidence- maybe later I will post some figures going back to 1990 or not long after about Hillsborough using each valuation at that method- should have to provide evidence to the fullest extent as covered by their regulations.

They should also be also looking at the cost- until 2014 or 2015, their accounts showed both this and the Depreciated Replacement Cost.

In the case of Derby, they suggested that the roof thing would have enhanced it quite significantly beyond £80m IIRC. Anyway their valuation at DRC was £55m in 2007 and for some reason, it was not disclosed in 2013, which is curious! EFL should be looking at Derby's accounts since the construction of Pride Park- yes there were additions but Derby- well I don't know but they seemed to stop stating at cost upon the 2007 revaluation which is unusual when set against other clubs- things seemed to diverge a bit around 2007/08, again the EFL must ask for and insist on the evidence to the fullest extent as covered by their regulations.

They (by which I mean the EFL) should be really forensic here- if they don't then they're at least partially failing once more!

[Mr Popodopolous]

1 hour ago, 1960maaan said:

Wouldn't the value of the ground be the value of the ground now, and not what 'could ' be built in its place? 
It's a bit like the projected accounts, which I've always had a problem with, you can state. anything unless you are tied in somehow. What's to stop you saying it was state of the art when we built it, and to rebuild it as state of the art now would cost £1Billion . I said before with projected accounts, Villa could have said if we don't go up we will have a fire sale and bring in £150million. Then as they have gone up they just laugh and wave as they sneak off to the Prem. 
I don't pretend to know the nuances of FFP and Football accounts, but this seems another way to muddy the waters. 

Should be, but it's not cut and dry.

PL punishments agreed with FL are supposed to cover this outcome- remember EFL are still looking at these and the situation can certainly change if necessary- perhaps one way around it could be for the EFL to insist on a higher standard of proof- ie binding contracts for players sold in certain eventualities. Or to look to- and this may prove more difficult- take the accounts projected in March as the standard- as the precedent. Perhaps a mandatory 10 point penalty for falsification of projected accounts beyond acceptable margins of error and ratio, albeit this would need to be imposed in a subsequent period, on top of any other charges might be ideal- clubs would think twice then!

Talking of Aston Villa, their transaction puzzles me for a number of reasons.

[Mr Popodopolous]

Because having looked afresh at some of these.

Excluding the Sheffield Wednesday one, the rest all are fine subject to valuation it would appear. They also tick the box of a company set up for this purpose, but still commonly owned. Fair enough?

Except, when I look at the Villa Park deal it was sold to NSWE Stadium Limited.

Which sounds like a new company but is a grey area. It was already within the group, unlike the others which were setup for this purpose. Surely if you sell within a group, is there not a chance that it balances and therefore could cancel out for the group accounts- as in recording a profit when sold to an existing company within the same group?

NSWE Stadium Limited was an existing company. Previously known as initially- and god knows, but initially, Vilden Limited Changed to Aston Villa Limited, then in March it became Recon Football Limited- and not long before the transaction it became what it is now, NSWE Stadium Limited- to reflect the new owners presumably! Could be for tax purposes, but that's a different issue?

The parent company under Tony Xia was Recon Group Limited.  Initially though Recon Sports- this is now NSWE UK Limited- again to reflect the new owners, the name change.

The names seemed to keep getting shifted around, and the third and final one in this period was known as: Aston Villa Limited until 7th August 2017, then changed to Recon Sports Limited for about 2 months until 9th October 2017, then changed back to Aston Villa Limited on 23rd March 2019.

I suppose my main question is, do changes of ownership and name reset the clock to zero, make it a new company again- hence how a transaction of a sale made within the existing group could be classed as a profit?

EDIT: The company  that the stadium was listed under, within the most recent accounts was known as Reform Acquisitions Limited when Xia purchased Aston Villa. He kept it as that until 13th July 2017 when he changed it to Recon Acquisitions Limited then it seemed to be changed on the same day to Recon Sports Limited!

Now known as NSWE Sports Limited, changed to that in October to reflect the new owners presumably, but again all pre-existing within the group at time of sale, let alone time of new owners getting on board!

The companies now are called:

1. NSWE Stadium Limited- The ones who brought the ground, used to be Recon Football Limited in its last incarnation.
2. NSWE UK Limited- The overall group/parent company, whatever you wish to call it. Most recently known as Recon Group!
3. NSWE Sports Limited- Company was last listed under Recon Sports Limited, under Lerner was Reform whatever it was, Acquisitions or something.

[Drew Peacock]

Don't follow the name follow the number, the name is irrelevant for what you are trying to do.

[Mr Popodopolous]

Do you mean the Company number?

I was just trying to get a handle on it tbh. What I do know for sure, is that it was sold from a company to another within the existing group.

[Drew Peacock]

2 minutes ago, Mr Popodopolous said:

Do you mean the Company number?

I was just trying to get a handle on it tbh. What I do know for sure, is that it was sold from a company to another within the existing group.

Yes, the company number.

Accounting wise that doesn't sound like a 3rd party sale.  Tax wise it could be, depends on the group tax structure.

[Mr Popodopolous]

7 minutes ago, Drew Peacock said:

Yes, the company number.

Accounting wise that doesn't sound like a 3rd party sale.  Tax wise it could be, depends on the group tax structure.

Thanks- I'll look through all of those and see if they've changed over the years.

Tax doesn't really apply for FFP as such, but so far it sounds like yeah maybe not a 3rd party sale...could be tax based, depending on that of course.

It is interesting thinking back that Purslow was pushing for some sort of public statement from the EFL, so I've read in varied places, to confirm that they had passed FFP. None has been forthcoming to date- he certainly declared that they had passed.

Perhaps I'm getting my group structure types mixed up however!

[Drew Peacock]

Company numbers cannot change.  That is the entity.

 

[Mr Popodopolous]

Thanks.

Ultimate parent undertaking now is in Luxembourg, maybe that makes a difference but if the consolidated accounts in UK are a company, that makes it possibly a group based transfer/transaction whatever.

Could be the case I guess that they've shifted the group company or whatever around in the last year?  Only their accounts will show I suppose.- the ultimate controlling party is based in Luxembourg though, that bit at least, seems to be fairly clear-cut.

[Mr Popodopolous]

Could be a red herring, but I notice that for all 3 out of Aston Villa, Derby and Sheffield Wednesday ground sales, the Land Registry lists each of them under the category of "Additional price paid transaction".

Only had a quick look at the relatively basic (ie free) data but that's interesting- or not?

Elland Road was repurchased by owner for £16,805,723.12 in June 2017- 28th June 2017 in fact a year to the day before Pride Park deal and 2 years to the day before Hillsborough (at least as per the Land Registry) in a cheaper city and possibly as a slightly less modern ground, is worth 3-4 times this?? Guessing the £20m price for Elland Road that was cited was with and inclusive of VAT or some such. Still, what a differential between Hillsborough and Elland Road??

http://landregistry.data.gov.uk/data/ppi/transaction/55BDCAE6-F3C5-521D-E053-6B04A8C0DD7A/current

[Davefevs]

4 hours ago, downendcity said:

This is sort of the major problem with sale of stadia that are not open market transactions. Where it is a "sale" to a related third party the vendor and purchaser are effectively one and the same, and the transaction is a really a paper transaction. The participants in the transaction are therefore relatively free to determine the sale price that suits them.

If you or I wanted to do something similar e.g. transfer our home to the children then we could agree the value that best suits all parties, but if , say inheritance tax issues subsequently arose HMRC would have access to plenty of open market sale compatibles to judge whether the price we agreed on the transfer was reasonable.

 From all the various information we have seen on the ffp thread, it seems to me that the clubs that have tried this route have done so on the basis that as there is no active market in the sale of football stadium there is little, or no, evidence of  sales achieved on which anyone ( the EFL) could challenge their valuation figures. The Derby fan that has posted on the ffp thread suggested that Pride Park's value was enhanced because they have plans for improvements and a new roof. That's a bit like you buying my house and me saying that as I have plans to put in a swimming pool and build a kitchen extension the purchase price will be £40000 more than the house next door!

As for projected accounts, Ive wondered how the EFL monitored clubs finances during the 3 year period. For example, had they been checking clubs accounts after the first and second years, it would have given them a pretty clear idea of clubs that looked like they might have issues with ffp, and should have paid special attention to these clubs activities in the meantime ( things like player sales or purchases) and then prioritised those clubs projected accounts for attention. Had that been the case then these stadium transactions should have jumped out immediately.

As it is , it looks like the EFL were on the back foot and even now, half way through the following season, don;t seem to be getting anywhere with the valuation issue.

 

 

I thought they had to be at “arm’s length”?

[Mr Popodopolous]

In terms of the arms length principle,  I believe that for FFP such transactions are fine provided that they are at a genuine fair/fair market value.

This is currently- so far as we can see- being tested with the independent valuations.

One curious note.  Reading's sale and leaseback thusfar seems not to have shown on the Land Registry.

Possibly that when company who brought Reading, Renhe Sports, purchased Reading they also purchased the ground as part of it hence the commercial arrangement.

They pay £750,000 rent on a £26,500,000 transaction.

Plus, this week sometime,  I aim to post Sheffield Wednesday's valuations,  values,  Revaluation Reserves etc since the early 1990s.

Good starting point as that was the period from which stadia transitioned from terracing to all-seater. Unlike Derby or Reading,  they're still at the same ground!

[reddoh]

6 hours ago, 22A said:

Widening the scope of this thread, I see Man C tried to stop UEFA investigating their financial transactions.           But failed! 

If UEFA do find "discrepancies" will the stop bid increase any punishment then issued?

Man C went through ACAS which is a Advisory, Conciliation and Arbitration Service they ruled that as no decision has been made they could not make a ruling. nothing to see here. 

[Mr Popodopolous]

9 minutes ago, reddoh said:

Man C went through ACAS which is a Advisory, Conciliation and Arbitration Service they ruled that as no decision has been made they could not make a ruling. nothing to see here. 

CAS- Court of Arbitration for Sport.

Highest court for sporting disputes- however yes,  in the absence of a UEFA decision they can't do much.

The fact that Man City tried to get the investigation kicked out though is interesting. Certainly inadmissible at this stage.