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Derby charged for a breach of spending rules


Taz

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47 minutes ago, Mr Popodopolous said:

Damn, missed it have I?

On catchup?

Yep spot on.

To add though, Aston Villa may not be getting away with it, Bournemouth were punished under the old regulations so I don't see how that case can be reopened- the old ones allowed for a massive fine n a sliding scale if promoted or a transfer embargo or not- suppose you could try to increase the fine, stick an embargo on or both. Retrospective rule changes to apply rules that came into force from 2016/17 season to a one season case in 2015 though can't be done IMO.

I'm of the view that Aston Villa's promotion should have been blocked one way or another. Technically they surely were in breach in March 2019 FFP submissions once those added to the 'real' 2 years of accounts...T-2 and T-1=Actuals and T=Projected for the existing season.

Doubt they were compliant in those so the points penalty should've been applied there and then...no playoffs, no promotion! Which the rules allowed for...doubt the Ground sale was thought of by March 2019, but subsequent to that!

Where is it declared that Aston Villa were in breach ?

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2 hours ago, AnAstonVillafan said:

Where is it declared that Aston Villa were in breach ?

In fairness, I'm possibly jumping the gun.

It's complex with Aston Villa, Real Accounts vs Projected Accounts...

We'll never know what was in a clubs, any clubs Projected Accounts. However, do we think there was a stadium sale in the accounts made up in March 2019? If not, that should've been instant fail as per the EFL's own regulations- IF in breach.

Based on maths though, and given the losses even factoring in the deductions, and the fact that your rolling figure meant you couldn't lose much last season allowed for last season- look at how parachute payments fall in Year 3, look at a likely reduced Profit on Player Sales- fee received-remaining net book value=Profit on Transfer, or loss as the case maybe. I make it maybe £10m plus allowable costs. Could be £15m plus allowable costs AT BEST.

I assume wages came down  by £5-10m,  which is fine but it's nowhere near enough in the context. In that I am including loanees leaving, I am including Terry, Samba contracts up- yet we also need to factor in loans of El Ghazi, Bolasie and Tammy in August- Bolasie was cancelled in January, half season loans for Mings and Hause- and 50% addition of the amortisation for Kalinic and Guilbert.

I suppose I can't state it categorically but barring the stadium sale- which is still a live issue, I don't see how it isn't a fail. Only question might be by how much!

Unless your wage bill net of bonuses also came down by a further  £25-30m, I don't see how there isn't a breach of some description!

  1. RPT Sponsorship deals? Get tested for fair value and the context of the division and the surplus excluded from the calculations.
  2. Equity- Limits.
  3. Cash- Limits.
  4. Revaluation of Stadium- Fairly sure that doesn't count towards FFP now.

I'm sure there are a few more rules that I can't remember off hand too.

It appears to be a live investigation though, probably quite a complex one.

I also think the EFL under Harvey have messed up certain things.

How it seemed to work is that if the number was compliant in March or May whenever, it was automatically passed and then it was returned to be investigated later...it's a mess, or should I say what he presided over was a mess!!

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43 minutes ago, Mr Popodopolous said:

In fairness, I'm possibly jumping the gun.

It's complex with Aston Villa, Real Accounts vs Projected Accounts...

We'll never know what was in a clubs, any clubs Projected Accounts. However, do we think there was a stadium sale in the accounts made up in March 2019? If not, that should've been instant fail as per the EFL's own regulations- IF in breach.

Based on maths though, and given the losses even factoring in the deductions, and the fact that your rolling figure meant you couldn't lose much last season allowed for last season- look at how parachute payments fall in Year 3, look at a likely reduced Profit on Player Sales- fee received-remaining net book value=Profit on Transfer, or loss as the case maybe. I make it maybe £10m plus allowable costs.

I assume wages came down  by £5-10m,  which is fine but it's nowhere near enough in the context. In that I am including loanees leaving, I am including Terry, Samba contracts up- yet we also need to factor in loans of El Ghazi, Bolasie and Tammy in August- Bolasie was cancelled in January, half season loans for Mings and Hause- and 50% addition of the amortisation for Kalinic and Guilbert.

I suppose I can't state it categorically but barring the stadium sale- which is still a live issue, I don't see how it isn't a fail. Only question might be by how much!

Unless your wage bill net of bonuses also came down by a further  £25-30m, I don't see how there isn't a breach of some description!

  1. RPT Sponsorship deals? Get tested for fair value and the context of the division and the surplus excluded from the calculations.
  2. Equity- Limits.
  3. Cash- Limits.
  4. Revaluation of Stadium- Fairly sure that doesn't count towards FFP now.

I'm sure there are a few more rules that I can't remember off hand too.

It appears to be a live investigation though, probably quite a complex one.

I also think the EFL under Harvey have messed up certain things.

How it seemed to work is that if the number was compliant in March or May whenever, it was automatically passed and then it was returned to be investigated later...it's a mess, or should I say what he presided over was a mess!!

I think there has been a lot of putting 2+2 together with Villa and ffp.

Most feel that Villa pushed the financial boat out in an attempt to gain a quick return to the prem, and spent accordingly in their first 2 seasons back in the championship. I'm sure I read that Villa had borrowed against their 3rd season parachute payment during the second season back in the championship, so this very much gave the feeling that last season really was s**t or bust for them. Throw in the financial problems at the start of last season ( although strictly speaking they did not directly affect ffp, but were more about cash flow at the time), and it sounded like there could well be ffp problems around the corner.

Finally, when it was revealed that they had "sold" Villa Park, in the same way as Derby, Wednesday and Reading I can't be the only person asking why they had done so and to my mind, and I am sure for most that have taken any interest in the ffp issues over the last year, the obvious conclusion is that it was the only way open to them to balance the books of ffp.

In light of the EFL's action against Derby because of the overvaluation of Pride Park, there must be questions raised about the valuation of Villa Park and as a result, the impact on the ffp accounts if a lower valuation results.

You final paragraph is telling. I understand that the EFL's cock up meant that none of these clubs broke the ffp rules by selling their stadium to related third party companies. However, given that the intention of the new rules was to make it possible for ffp issues to be addressed, identified and penalised during the same season, when the EFL were contacted by clubs wanting to take this coarse of action, surely the EFL would have realised the likely reason for their so doing. If so, then the obvious issue then would be the danger of inflated valuations but this could have been addressed by the EFL instructing their own valuations at the same time so that any dispute could be addressed and resolved, one way or another before the final ffp assessment.

Niaive administration on the part of the EFP at best. Negligent ( on behalf of all the clubs not resorting to stadium sales) at worst!

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5 minutes ago, fgrsimon said:

So if selling your ground to yourself is above board as long as it is valued correctly, what's now to stop all other Championship clubs that own their own ground, doing it and giving themselves a FFP boost? 

It's not the selling of the ground, more the valuation put on the grounds by the clubs themselves. 

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1 hour ago, fgrsimon said:

So if selling your ground to yourself is above board as long as it is valued correctly, what's now to stop all other Championship clubs that own their own ground, doing it and giving themselves a FFP boost? 

The other knock on is the new "owner" becomes responsible for maintenance, depreciation and all the other corresponding costs. He could allow the football club to maintain concession stalls and take income, to also take a lumpy share of ticket sales, while meanwhile passing on a rent of £10 a month. Bingo, said club is quids in.

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12 minutes ago, Mad Cyril said:

The other knock on is the new "owner" becomes responsible for maintenance, depreciation and all the other corresponding costs. He could allow the football club to maintain concession stalls and take income, to also take a lumpy share of ticket sales, while meanwhile passing on a rent of £10 a month. Bingo, said club is quids in.

In the same way that the EFL are charging Derby because the stadium was not valued "at fair value". I think the same principle would apply to any future rents to avoid exactly that to which you refer..

 

 

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I have to say I think Derby have a case. It feels very much a case of the proverbial bolting of the door. 

It seems obvious that they have found a way around the rules but I don't think it has been swept under the carpet at all from Derbys side of things.

Unless there its something more to this I would be very surprised if there was any retrospective punishment for Derby once it's all played out, they've been open and transparent taking at face value that the efl signed off their transactions at the time. It seems to me that the efl have little basis for the charge. 

Sheffield Wednesdays is a little different because of the timings as they seem to have commenced after their year end but who knows what conversations were had with the efl.

It just seems barmy to me that a set of rules allow infrastructure expenditure not to count towards ffp but the sale of infrastructure does count towards ffp. Sort the rules out first then start punishing clubs.

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Was reading a few of the articles. 

Interesting line in the one by David Conn, especially relevant to all the ground sales I'd have thought. 

'and the league is understood to have had its own independent valuation of Pride Park carried out, using different criteria according to its rules'. 

I'm assuming that at least in part is referring to valuation methods. I'd have thought that Depreciated Replacement Cost or Value In Use would be the only acceptable ones for this type of transaction. Certainly for FFP purposes.

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4 minutes ago, Mr Popodopolous said:

Was reading a few of the articles. 

Interesting line in the one by David Conn, especially relevant to all the ground sales I'd have thought. 

'and the league is understood to have had its own independent valuation of Pride Park carried out, using different criteria according to its rules'. 

I'm assuming that at least in part is referring to valuation methods. I'd have thought that Depreciated Replacement Cost or Value In Use would be the only acceptable ones for this type of transaction. Certainly for FFP purposes.

Unless Derby included “non-football stuff” in their valuation?

We don’t know if Derby are telling the truth either. 

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22 minutes ago, Davefevs said:

Unless Derby included “non-football stuff” in their valuation?

We don’t know if Derby are telling the truth either. 

Yeah, good point. They apparently had big plans for a roof and concerts on a rolling basis, not just the summer. Hats off if they actually manage that but I have my doubts as to the feasibility. 

Very true. Yet maybe it's not so much the executive of the EFL who approved it, as a certain Ex EFL CEO. 

Unsure that would stand unless it was approved by a sufficient number. Surely if he himself approved it, he would risk having exceeded his authority.

Some sort of legal claim against said ex EFL CEO might be a wise move by the EFL if there is evidence that he has excreded his authority. Could certainly strengthen their case?

If @DerbyFan still reads this site, very interested to know their take on the latest goings on.

Oh yeah, that Derby statement neglected two key details:

1. Which company carried out the valuation? 

2. Which method was used. I'm surprised that accounts are exempt from disclosure of this now...or they seem to if these sales are anything to go by.

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10 hours ago, kit said:

I have to say I think Derby have a case. It feels very much a case of the proverbial bolting of the door. 

It seems obvious that they have found a way around the rules but I don't think it has been swept under the carpet at all from Derbys side of things.

Unless there its something more to this I would be very surprised if there was any retrospective punishment for Derby once it's all played out, they've been open and transparent taking at face value that the efl signed off their transactions at the time. It seems to me that the efl have little basis for the charge. 

Sheffield Wednesdays is a little different because of the timings as they seem to have commenced after their year end but who knows what conversations were had with the efl.

It just seems barmy to me that a set of rules allow infrastructure expenditure not to count towards ffp but the sale of infrastructure does count towards ffp. Sort the rules out first then start punishing clubs.

 

11 minutes ago, Mr Popodopolous said:

Was reading a few of the articles. 

Interesting line in the one by David Conn, especially relevant to all the ground sales I'd have thought. 

'and the league is understood to have had its own independent valuation of Pride Park carried out, using different criteria according to its rules'. 

I'm assuming that at least in part is referring to valuation methods. I'd have thought that Depreciated Replacement Cost or Value In Use would be the only acceptable ones for this type of transaction. Certainly for FFP purposes.

While it might appear that the EFL is attempting to bolt the proverbial stable door, I don't think that is the case.

Yes, we and the clubs know the EFL created this loophole with their inept drafting of the new ffp rules. It also looks pretty clear that Derby ( and Wednesday I believe) discussed the sale of their stadia with the EFL before proceeding , and indeed got the OK to do so. This is not the clubs getting round the rules, but merely being aware of the loophole inadvertently created. We would all agree that they broke the spirit of the rules, but did not  break the rules from a legal standpoint.

However, unless their is evidence to the contrary, what the EFL did not sanction was clubs using "inflated " valuations on the stadia in order to maximise the "sale" profit and avoid ffp sanctions, and let's be honest that is the only reason any of these clubs "sold" their stadiums.

As I've mentioned previously, I think the clubs thought they were home and dry once they had the OK from the EFL and once their ffp accounts had been approved last season. The EFL realised that the furore this has caused risks ffp lacking any future credibility and being blown out of the water ( no doubt prompted by Steve Gibson's that of legal action against the EFL).  As Mr P says, it is the valuations not being at fair value that the EFL are pursuing, and the question of fair value is, I believe , contained with the EFL rules regarding sale of assets and I think t also contained within UEFA's ffp rules.

There is no vindictiveness about wanting the EFL to be successful, but when you see that 2 of the clubs involved in stadium sales ( Villa and Derby) not only squeezed asset of the play offs, but in Villa's case , secured promotion, then unless the EFL can bring clubs in line on ffp and punish offenders, then what is the point in us, or any other club, operating prudently in order to comply when there clubs put 2 fingers up to the EFL and other clubs to gain an advantage i.e. cheating.

 

 

 

 

 

 

 

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Probably already been said here but the points deduction amount is thought to be 21.

The trouble the Football League find themselves in is that they like to belittle themselves, hence feeling the need to inexplicably prefix English to 'The Football League', and then equally meekly dish out pathetically weak penalties; thus leaving themselves open to ridicule whereby they now want to dish out a slightly larger one leaving themselves much more open to an appeal. 

If they had exact written constitutional penalties for all to see in the first place it would be balanced, fair and a deterrent. Since they do not they are the subject of ridicule and rightly so leaving clubs to continually flout weak rules. Sadly the only way to do a u turn here is to do it slowly or risk the wraith and costly appeals of many clubs. 

Frankly when a rule like this is broken the club should be automatically relegated and start the season at 0 points from now. There is even a slot ready for them picking up the already organised fixtures of Bury. 

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38 minutes ago, Mr Popodopolous said:

Yeah, good point. They apparently had big plans for a roof and concerts on a rolling basis, not just the summer. Hats off if they actually manage that but I have my doubts as to the feasibility. 

Very true. Yet maybe it's not so much the executive of the EFL who approved it, as a certain Ex EFL CEO. 

Unsure that would stand unless it was approved by a sufficient number. Surely if he himself approved it, he would risk having exceeded his authority.

I wonder if thus might indeed be the case.  Shaun Harvey said “yeah, it’s fine’, not the EFL.  Similar to Villa claiming it’s all been agreed by the EFL, when perhaps it was Harvey.

Some sort of legal claim against said ex EFL CEO might be a wise move by the EFL if there is evidence that he has excreded his authority. Could certainly strengthen their case?

If @DerbyFan still reads this site, very interested to know their take on the latest goings on.

Oh yeah, that Derby statement neglected two key details:

1. Which company carried out the valuation?

I thought we already had established it was a company owned by a self-proclaimed Derby fan (or was that Wednesday).

2. Which method was used. I'm surprised that accounts are exempt from disclosure of this now...or they seem to if these sales are anything to go by.

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16 minutes ago, havanatopia said:

Probably already been said here but the points deduction amount is thought to be 21.

The trouble the Football League find themselves in is that they like to belittle themselves, hence feeling the need to inexplicably prefix English to 'The Football League', and then equally meekly dish out pathetically weak penalties; thus leaving themselves open to ridicule whereby they now want to dish out a slightly larger one leaving themselves much more open to an appeal. 

If they had exact written constitutional penalties for all to see in the first place it would be balanced, fair and a deterrent.

They were published as part of the Birmingham verdict.  We (the public) just hadn’t seen them before.

Since they do not they are the subject of ridicule and rightly so leaving clubs to continually flout weak rules. Sadly the only way to do a u turn here is to do it slowly or risk the wraith and costly appeals of many clubs. 

Frankly when a rule like this is broken the club should be automatically relegated and start the season at 0 points from now. There is even a slot ready for them picking up the already organised fixtures of Bury.

That penalty should be available if rule breaking severe enough.

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13 minutes ago, bcfcredandwhite said:

Will FFP go for Villa when they are back in the Championship next season?

Villa are already under some form of investigation by the Premier League.  The Villa owners gone a bit quiet since, having previously been very bullish that everything was in order and agreed by the EFL, even though there appears to be nothing in writing.

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49 minutes ago, bcfcredandwhite said:

Will FFP go for Villa when they are back in the Championship next season?

If there is an ffp issue carried over from the last 3 seasons, then the answer has to be yes.

If that is the case, then it beggars the question as to why Villa were able to gain promotion, if, as we were led to understand, one of the purposes being the new ffp rules was that assessment could be carried out, and, where appropriate, punishment applied during in the same season. The new rules, and penalties it allows, would enable a points deduction to be given that could then prevent a team gaining promotion  and prevent them gaining from breaking the financial rules, as has beneath case in the past with Bournemouth, QPR and Leicester.

If Villa did breach ffp last season, and would then be punished if relegated, then why wasn't this addressed last season before they gained promotion?

While we know these clubs took advantage of a loophole inadvertently created, but I also have that horrible feeling that had the offending clubs been us, Wigan and Millwall the EFL would have been out of the staring blocks quicker than Roadrunner. That Derby and Villa are big clubs, and were both in contention for promotion, makes me think the EFL were loath to open pandora's box ( Rudolph was probably there first anyway!), especially having given the clubs the OK to sell their stadia, with the risk of a complex legal dispute that could throw the end of the season into disarray.

Anyway we are where we are, so it's better late than never!

 

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On 16/01/2020 at 13:29, RidgeRed said:

Is that the Famous Club rule? You do know Derby were once famous don't you? If that's escaped your notice I believe Bailey & Fam will have to carry the can.

I know. 

I harbour slim (and perhaps misguided) hope that the EFL may find some balls of their own now their distant cousins at the RFU have effectively relegated Saracens due to similar financial failings. If rugby can effectively kick one of its biggest teams out of the top division, with a total points deduction of 70 and a fine of over £5million, then surely the EFL can make a statement decision at some point.

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5 minutes ago, ExiledAjax said:

I know. 

I harbour slim (and perhaps misguided) hope that the EFL may find some balls of their own now their distant cousins at the RFU have effectively relegated Saracens due to similar financial failings. If rugby can effectively kick one of its biggest teams out of the top division, with a total points deduction of 70 and a fine of over £5million, then surely the EFL can make a statement decision at some point.

Exactly this. Financial doping. 

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2 hours ago, downendcity said:

 

However, unless their is evidence to the contrary, what the EFL did not sanction was clubs using "inflated " valuations on the stadia in order to maximise the "sale" profit and avoid ffp sanctions, and let's be honest that is the only reason any of these clubs "sold" their stadiums.

 

This is probably the key point i.e. what was the sign off given by the f.a. I haven't seen anything that says with any certainty what it was.

I also think if you have an independent valuation that can argue that the ground was worth that value and even if it seems high but the assumptions used have some sort of credence then I think it's tough for the efl to prove this.

There just isn't a market for football grounds in derby to test the value against. The land is relatively easy, the stadium is not. I think there is wide spectrum of values you could land on, it boils down to poor legislation again it should have something along the lines of related party sales are to be reviewed by independent parties agreed by efl and club.

Fix the legislation and move on.

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30 minutes ago, kit said:

This is probably the key point i.e. what was the sign off given by the f.a. I haven't seen anything that says with any certainty what it was.

I also think if you have an independent valuation that can argue that the ground was worth that value and even if it seems high but the assumptions used have some sort of credence then I think it's tough for the efl to prove this.

There just isn't a market for football grounds in derby to test the value against. The land is relatively easy, the stadium is not. I think there is wide spectrum of values you could land on, it boils down to poor legislation again it should have something along the lines of related party sales are to be reviewed by independent parties agreed by efl and club.

Fix the legislation and move on.

You are right that there is no established and active market for football stadia, so no evidence of sales for comparable in the way there would be in the residential market. This I think is one of the things Derby ( and the other clubs) banked on as not only is there a massive variation between the lowest valuation ( Reading at £28m I think) to Derby's at £81m, but in each case the valuation, and subsequent profit from sale was sufficient to avoid ffp penalty. The cynic in me doesn't believe in truly independent valuation so that I would have expected all clubs' valuations to have come in at the figure the respective owner needed and wanted!

If the EFL are really naive and obtain one valuation, then it will just become a legal argument as to who valuation is the correct one and given they approved the stadium sales in the first place, and if Derby have a half decent lawyer, I would expect the EFL to lose. I would hope that the EFL would "belt and braces" their case by obtaining more than one valuation, and hopefully all would be in the same ball park and well below Derby's valuation, as this would give Derby little wriggle room.

 

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