Derby - Administration on the cards

[havanatopia]

17 hours ago, Mr Popodopolous said:

Just on a side note, not read the article yet but I wonder whether Derby have any creditors in addition to players.

Be it employer tax contribution, NI, pension obligations, local small business suppliers- those tend to get shafted quite big whenever a club goes into administration, St John's Ambulance or is that free, I honestly don't know and lastly the basic other costs ie gas, electricity, water and the like.

Might also add, IIRC the original deferrals from last year might also be outstanding, unsure if this is still the case.

Craig Hope!!!!!!

14 hours ago, Davefevs said:

Ouch. From memory sacking him was a clever way of avoiding having to pay up his contract mutually.  Another eff up by Morris.

How some of these chaps end up with access to sufficient money, the ability to convince a previous owner and the morons at the Football League that one is a decent chap and then royally screw up the business plan always gets me scratching my head.

There is a lot more bent to this game than meets the eye. Not to mention a distinct lack of brain power right across the board.

The likes of Bury, Bolton and Derby all seem to follow a similar pattern. 

It's just a shame the PL have insufficient tentacles since the day of the split.

[Mr Popodopolous]

https://dcfcfans.uk/topic/36602-keogh/page/7

It's probably unfair to extrapolate a fanbase from a forum, but it would appear like Mel Morris and the club itself, that Derby fans are fairly shameless. Small minority perhaps?

Naturally the club will be appealing the decision. Could part of that be down to buying time for a takeover in order to settle general liabilities.

One bit that confuses me slightly, is that a quick Google Search suggests the amount that an Employment Tribunal can order is £25k, rising to £86k in 2019 or 2020 IIRC?

Though if he's been found to have been wrongly dismissed, surely he does indeed merit £2m, or whatever the exact figure for the remainder was. I'm glad he didn't give up the case however.

[Mr Popodopolous]

Couple of interesting lines I've seen elsewhere about Derby.

Football Insider suggested Derby have enlisted agents to help find buyers for key players, out of sheer necessity.

Of more interest, Matt Hughes in the Daily Mail . Some possible figures on the MSD loans.

Total loans, £30m, over 5 years I think it said or maybe repayable. Interest rate 9%.

Would Dell have to accept an early repayment if one dame about? Penalty clauses if early finish- the potential interest rates on that though, splendid stuff!

[Mr Popodopolous]

On a more positive note (for Derby) I do read their forum from time to time and a number that arises is £2m per month.

That's the total suggested wage bill. Certain caveats to the numbers, is this eg consolidated or club, with empty grounds and no events or fans since March, those staff might be furloughed and unpaid respectively in the case of matchday staff, have they taken advantage as companies are legally entitled to do in these times, of the delays to taxation portion of the wage etc.

For all my criticism of them though and for all these caveats and unknowns, Consolidated Account  state wages including pension and tax as £46.8m in 2017/18.

To nearly halve that by 2020/21 would be seriously impressive tbh!

[1960maaan]

Whatever the wage bill, still not paid al of December's. How long before the EFL step in or ask questions?

[Mr Popodopolous]

7 hours ago, 1960maaan said:

Whatever the wage bill, still not paid al of December's. How long before the EFL step in or ask questions?

Nixon said a couple of weeks back that the players have a strong say here.

As in, it would be up to them to get the ball rolling for any kind of action. They don't seem to have done so yet, as far as anything in the public domain suggests anyway.

That can't be right though, as even if they are happy enough to wait by playing without paying, Derby are gaining an advantage as they literally cannot afford them at this moment in time, albeit cash flow.

[1960maaan]

12 minutes ago, Mr Popodopolous said:

Nixon said a couple of weeks back that the players have a strong say here.

As in, it would be up to them to get the ball rolling for any kind of action. They don't seem to have done so yet, as far as anything in the public domain suggests anyway.

That can't be right though, as even if they are happy enough to wait by playing without paying, Derby are gaining an advantage as they literally cannot afford them at this moment in time, albeit cash flow.

That explains the partial payment, try to keep them sweet and onside. For now.

[Mr Popodopolous]

1 minute ago, 1960maaan said:

That explains the partial payment, try to keep them sweet and onside. For now.

Yep. Could even be as simple (or desperate) as "We've managed to flog a fringe player or 2, now we can pay some of the wages!"

[AnotherDerbyFan]

15 hours ago, Mr Popodopolous said:

On a more positive note (for Derby) I do read their forum from time to time and a number that arises is £2m per month.

That's the total suggested wage bill. Certain caveats to the numbers, is this eg consolidated or club, with empty grounds and no events or fans since March, those staff might be furloughed and unpaid respectively in the case of matchday staff, have they taken advantage as companies are legally entitled to do in these times, of the delays to taxation portion of the wage etc.

For all my criticism of them though and for all these caveats and unknowns, Consolidated Account  state wages including pension and tax as £46.8m in 2017/18.

To nearly halve that by 2020/21 would be seriously impressive tbh!

Look at the players to have left since 17/18 and compare with those to have joined.

In: Waghorn, Marriott, Jozefzoon, Holmes, Malone, Evans, Bielik, Shinnie, Jozwiak, Ibe, Marshall, Byrne, Kazim, Clarke (loan). Rooney manger. Factor in Marriott, Jozefzoon and Malone being out on loan too.
 

Out: Vydra, Weimann, Shackell, Jerome, Bent, Baird, Ledley, Nugent, Butterfield, Blackman, Pearce, Johnson, Bryson, Thorne, Keogh, Olsson, Martin, Anya, Huddlestone. Rowett manager

That's not including some of the players to have been on lesser wages (Jamie Hanson, Luke Thomas, Bennett, etc...). Vydra was on a reported £40k pw, and almost all the ones listed would have been on at least £20k

[Mr Popodopolous]

Latest on this is that outstanding wages to be paid on Monday and that they can now enter the transfer market.

Another loan or?

[Mr Popodopolous]

39 minutes ago, AnotherDerbyFan said:

Look at the players to have left since 17/18 and compare with those to have joined.

In: Waghorn, Marriott, Jozefzoon, Holmes, Malone, Evans, Bielik, Shinnie, Jozwiak, Ibe, Marshall, Byrne, Kazim, Clarke (loan). Rooney manger. Factor in Marriott, Jozefzoon and Malone being out on loan too.
 

Out: Vydra, Weimann, Shackell, Jerome, Bent, Baird, Ledley, Nugent, Butterfield, Blackman, Pearce, Johnson, Bryson, Thorne, Keogh, Olsson, Martin, Anya, Huddlestone. Rowett manager

That's not including some of the players to have been on lesser wages (Jamie Hanson, Luke Thomas, Bennett, etc...). Vydra was on a reported £40k pw, and almost all the ones listed would have been on at least £20k

We all know Rooney's playing wages aren't/weren't small, would Bielik and Waghorn eg come that cheap on the inbound. Byrne, Marshall, Kazim might. Shinnie too maybe.

Cocu and his payoff, how would this be structured? Over time or a one off hit?

Suspect Bent would have been a higher earner, I did read a piece in which Morris suggested that wages would fall 40% over the following season or 2, but was before anyone new was signed. Fall 40% from which base- club, consolidated. 2016/17, 2017/18 or the (as yet unreleased) 2018/19 accounts?

Which would have included Tomori, Mount, Wilson- on the flipside they also dropped off in 2019/20 onwards.

He wouldn't have anticipated no Keogh, Malone, Bennett, Jozefzoon and Marriott being loaned out. Or Carson!

I also would add as I said 2 years ago, combined Vydra and Weimann wages would absolutely have been IMO in excess of Marriott and Waghorn.

[Lanterne Rouge]

They have to pay Richard Keogh £2m compo too don`t they?

[Mr Popodopolous]

I have some confusion on whether it's £2m or how that figure has been reached- though reports suggest it to be the case.

Just add it to the Creditors list...? 

[Davefevs]

1 hour ago, Mr Popodopolous said:

I have some confusion on whether it's £2m or how that figure has been reached- though reports suggest it to be the case.

Just add it to the Creditors list...? 

£20k per week / 2 years on contract (not sure how long he had left mind you)....that’d do it.
 

Edit: just checked it was June 2021 expiry.  Article says owed £1.3m wages....woukd the rest be “costs”.

[JamesBCFC]

Bielek was £8-10m signing wasnt he? 

He won't be on low wages.

[Mr Popodopolous]

1 hour ago, Davefevs said:

£20k per week / 2 years on contract (not sure how long he had left mind you)....that’d do it.
 

Edit: just checked it was June 2021 expiry.  Article says owed £1.3m wages....woukd the rest be “costs”.

Ha yes- basic maths!

I read 21 months, £1.3m per year- the reason for my confusion was that a quick Google Search did suggest that there is a cap on Employment Tribunals of about £80k- I'm far from an expert though. Costs could be it.

On a financial note, one formula for their loan and interest is suggested as follows.

Quote

$20,000 x .05 x 5 = $5,000 in interest

In short that might be- £30,000,000 x .09 x 5=£13.5m in interest. Just in interest! Assuming equal payments, £2.7m per year!

Could be completely different of course but found this method for a few loans- 9% interest, 5 years...MSD get the assets and the club if default occurs!

I'd hope Dell looks to a) Lease them back to the club at a high old rental rate in the unlikely event default occurs or b) Sells them to the highest bidder and the right to lease- a Bank, a Property Management Company- whoever. Subject to the community buy potential option of course- important he isn't out of pocket however.

As in sell them, and an explicit right- if possible obligation- to lease them back to Derby, at whatever a Bank, Property Management Company would see fit .

Sell the club for £1, keep the assets and again whack the rent on- possibilities are endless!

Keep all 3, lend the club a bit more cash, charge your 9-10% interest, high rent on the assets and thereafter run the club on an absolute shoestring, selling high earners and talented players to balance the books and the cashflow.

This breakeven would in my ideal scenario, be inclusive of 9-10% interest on loans- loans which would sooner or later, ie in the final analysis be repayable in full- and the true market rent for such excellent assets as Pride Park and Moor Farm appear to be. What a shoestring!

Assuming the figures are right of course- but £30m in loan repayments plus £13.5m in interest by 2025! The latter counts against their FFP allowance, Interest payments do after all.  As would rent.

Loans in or out, surely do not.

[Mr Popodopolous]

52 minutes ago, JamesBCFC said:

Bielek was £8-10m signing wasnt he? 

He won't be on low wages.

He was indeed, maybe at the lower end of that and unsure if add ons?

Derby fans do seem convinced their wage bill is right down, although it's impossible to judge with all the variables and a lack of data since 2017/18 season!

[ScottishRed]

And Rooney is quoted on the BBC Football site stating that he wants to bring some players in this week.....

Good luck with that Wazza.

[AnotherDerbyFan]

18 hours ago, Mr Popodopolous said:

We all know Rooney's playing wages aren't/weren't small, would Bielik and Waghorn eg come that cheap on the inbound. Byrne, Marshall, Kazim might. Shinnie too maybe.

Byrne, Marshall and Shinnie brought in when we had a soft embargo? max wages of£12k pw. Given Kazim's history and the role he was brought in to play (cheap backup), I'll be surprised if he's on more than £6k.

18 hours ago, Mr Popodopolous said:

Cocu and his payoff, how would this be structured? Over time or a one off hit?

Not part of the wage bill?

18 hours ago, Mr Popodopolous said:

Suspect Bent would have been a higher earner, I did read a piece in which Morris suggested that wages would fall 40% over the following season or 2, but was before anyone new was signed. Fall 40% from which base- club, consolidated. 2016/17, 2017/18 or the (as yet unreleased) 2018/19 accounts?

Which would have included Tomori, Mount, Wilson- on the flipside they also dropped off in 2019/20 onwards.

He wouldn't have anticipated no Keogh, Malone, Bennett, Jozefzoon and Marriott being loaned out. Or Carson!

I also would add as I said 2 years ago, combined Vydra and Weimann wages would absolutely have been IMO in excess of Marriott and Waghorn.

I think you're referring to a comment he made at a fans forum in 2019, where he claimed 40% of the wage bill had not kicked a ball for the club (or barely featured) in that season up to that point. That 40% costing about £1.25m per month.

Based on those figures, the wage bill for the season was £37.5m in 18/19. He claimed those players making up that 40% would leave at the end of their contracts within 2 seasons.
£37.5m minus 40% = £22.5m. Those players likely include: Butterfield, Blackman, Pearce, Thorne, Olsson, Martin, Anya, Ledley, Davies
Davies signed an extension, so we'll add his £20k back on = £23.5m
19/20 out (other): Bryson, Johnson, Nugent, Carson, Keogh. Assuming average wages of £20k pw, that's an extra £5.2m off = £18.3m
19/20 summer in = Shinnie and Bielik (ignoring loans as they left at the end of the season). Assuming Bielik is on £20k and Shinnie £10k = £20m
19/20 winter in: Rooney = +£80k pw = £24.2m
20/21 summer out = Lowe, Bogle, Martin, Anya, Huddlestone = -£80k pw = £20m
20/21 summer in = Marshall, Byrne, te Wierik, Ibe, Jozwiak, Kazim = £10k each = +£60k pw = £21.1m
20/21 winter out = te Wierik, Holmes (any minute now) = -£15k pw (-£390k for rest of season) = £20.7m
20/21 loans in = Clarke = £21.8m

I assume loans out still form part of the wage bill (we just get a loan fee which covers wages). If we want to exclude those as well (Marriott, Jozefzoon, Malone, Carson) and we'll be looking at close to £18.2m.
Youth players would have signed new deals, but I also haven't included players such as Bennett and Thomas being sold either so I fell it'll even out somewhat.

£24m certainly doesn't seem unreasonable as a rough estimate.

[AnotherDerbyFan]

12 hours ago, Mr Popodopolous said:

He was indeed, maybe at the lower end of that and unsure if add ons?

Derby fans do seem convinced their wage bill is right down, although it's impossible to judge with all the variables and a lack of data since 2017/18 season!

It's just a matter of common sense.

'Senior players': Roos, Marshall, Byrne, Wisdom, Evans, Davies, Clarke, Forsyth, Bielik, Shinnie, Lawrence, Jozwiak, Ibe, Waghorn, Kazim
Recent academy graduates: Buchanan, Bird, Knight, Sibley, Whittaker

That's our first team squad. Just 20 players. Even our youth sides are low on numbers. U18s are regulars in the U23 squad, U16s are regulars in the U18 squad

1 hour ago, ScottishRed said:

And Rooney is quoted on the BBC Football site stating that he wants to bring some players in this week.....

Good luck with that Wazza.

It's just a matter of time before the club gets a bit off cash to pay outstanding wages - either Mel's own funds or another loan. Pay the wages = out of embargo = a couple of players in.

[Hxj]

29 minutes ago, AnotherDerbyFan said:

It's just a matter of time before the club gets a bit off cash to pay outstanding wages - either Mel's own funds or another loan. Pay the wages = out of embargo = a couple of players in.

My only question would be, given the lack of resolution of the takeover, the EFL disciplinary process and the cash flow issues, oh and the league position, why anyone of quality would chose to sign for you?  Of course it will come done to money, but that hardly helps you long term. 

[BLRed]

Why the hell are they being given so long to resolve things? They are clearly in a mess. Just the fact they can’t pay wages means they should immediately inherit a points deduction and be subject to administration. Not, don’t worry, we’ll give you all the time you need to fix it...

[Mr Popodopolous]

4 hours ago, Hxj said:

My only question would be, given the lack of resolution of the takeover, the EFL disciplinary process and the cash flow issues, oh and the league position, why anyone of quality would chose to sign for you?  Of course it will come done to money, but that hardly helps you long term. 

On a general note, scanned Dcfcfans.uk, they don't seem especially worried about the loans, indeed they barely mention it as a complicating factor when it comes to sale of club, assets, price etc. Abu Derby County thread on there worth a look.

4 hours ago, BOSRed said:

Why the hell are they being given so long to resolve things? They are clearly in a mess. Just the fact they can’t pay wages means they should immediately inherit a points deduction and be subject to administration. Not, don’t worry, we’ll give you all the time you need to fix it...

Agreed. However Nixon suggested a week or two ago that it's up to the players to instigate the process.

Wonder if they have external creditors who are overdue and might be getting twitchy? Keogh might be due anything up to £2m, but Derby appealing it (if they can pay added legal bills, they can pay wages more readily) so doubt he has grounds yet. 

Certainly nothing reported yet but it can go on for months tbh, see Steve Dale and Bury the players played on despite persistent wage issues and won promotion! 

Didn't end well of course... Hope Bury come back in some form in years to come.

[Mr Popodopolous]

4 hours ago, AnotherDerbyFan said:

It's just a matter of common sense.

'Senior players': Roos, Marshall, Byrne, Wisdom, Evans, Davies, Clarke, Forsyth, Bielik, Shinnie, Lawrence, Jozwiak, Ibe, Waghorn, Kazim
Recent academy graduates: Buchanan, Bird, Knight, Sibley, Whittaker

That's our first team squad. Just 20 players. Even our youth sides are low on numbers. U18s are regulars in the U23 squad, U16s are regulars in the U18 squad

It's just a matter of time before the club gets a bit off cash to pay outstanding wages - either Mel's own funds or another loan. Pay the wages = out of embargo = a couple of players in.

Which accounts are you reference in your two posts? I use the consolidated as my starting point, so do EFL it seems.

Mel Morris however has a different interpretation as shown in the difference between P&S results stated on your club website for 2016/17 and the EFL Hearing. I suspect wages are higher in the consolidated accounts though haven't checked for a while now, albeit a lot of them might be furloughed.

What about the next month, month after that, month after that, etc...hoping that the takeover will come through. What's in it for eg Dell to loan more cash?

What about the EFL's own secure funding rules- can we say with certainty that Derby in line with this??

If a club needs extra revenue, then the secure funding projections weren't correct were they!

External loans need repaying at agreed rates as we all know. Dell is hardly likely to be giving it away or hugely subsidising it.

[Hxj]

8 minutes ago, Mr Popodopolous said:

On a general note, scanned Dcfcfans.uk, they don't seem especially worried about the loans, indeed they barely mention it as a complicating factor when it comes to sale of club, assets, price etc. Abu Derby County thread on there worth a look.

Naive in the extreme, at some point that amount will need to be repaid.

[Mr Popodopolous]

6 minutes ago, Hxj said:

Naive in the extreme, at some point that amount will need to be repaid.

Indeed it will.

Based on an article by Matt Hughes, mentioned before but it's suggested £30m loan, 5 years, 9% interest.

One quick loan calculator I used suggested it might be £13.5m...simply in interest.

No idea what the detail is buy presumably 5 years means by summer 2025.

[Hxj]

13 minutes ago, Mr Popodopolous said:

Based on an article by Matt Hughes, mentioned before but it's suggested £30m loan, 5 years, 9% interest.

One quick loan calculator I used suggested it might be £13.5m...simply in interest.

Or to put it another way a fraction over 1/5 of the annual FFP limit in interest alone ...

[Mr Popodopolous]

41 minutes ago, Hxj said:

Or to put it another way a fraction over 1/5 of the annual FFP limit in interest alone ...

Yup, add in the rent for Pride Park- £1.1m unbelievably but the Independent Reasons did suggest there was some debate over this and the £4.16m referenced by the valuer in each valuation.

That's approaching 10% of the 3 year limit on rent and interest per year, if we take the lower estimate/figure as the final and decisive one.

I also wonder- possible future legal battle waiting to happen, but if Mel Morris sells Pride Park back real cheap but stays on as an adviser, would that role be considered a related party? Thereby once more invoking fair value regulations with respect to RPTs. EFL should be monitoring Derby like a hawk- I'd suggest other clubs do likewise (if they aren't already). I also wonder when club board members come up for re-election to the EFL Board- I'd definitely vote for removal of Pearce, I hope Ashton will do just that, and be lobbying other clubs likewise.

[Mr Popodopolous]

Might also add, Secure Funding.

Quote

1.1.13 Secure Funding means funds which have been or will be made available to the Club in an amount equal to or in excess of any Cash Losses which the Club has made in respect of the period from T-2 or is forecast to make up to the end of T+2. Secure Funding may not be a loan and shall consist of:

(a)  contributions that an equity participant has made by way of payments for shares through the Club’s share capital account or share premium reserve account; or

(b)  an irrevocable commitment by an equity participant to make future payments for shares through the Club’s share capital account or share premium reserve account. This irrevocable commitment shall be evidenced by a legally binding agreement between the Club and the equity participant and may if the Executive so requires be secured by one of the following:

(i)  a personal guarantee from the ultimate beneficial owner of the Club, provided that the Executive is satisfied that

1)  he is of sufficient standing; and

2)  the terms of the guarantee are satisfactory;

(ii)  a guarantee from the Club’s Parent Undertaking or another company in the Club’s Group, provided that the Executive is satisfied that

1)  the guaranteeing company is of sufficient standing; and

2)  the terms of the guarantee are satisfactory;

(iii)  a letter of credit from a Financial Institution of sufficient standing and an undertaking from the Club’s directors to The League to call on the letter of credit in default of the payments from the equity participant being made;

(iv)  payments into an escrow account, to be paid to the Club on terms satisfactory to the Executive; or

(v)  such other form of security as the Executive considers satisfactory; or

(c)  such other form of secure funding as the Executive considers satisfactory.

https://www.efl.com/-more/governance/efl-rules--regulations/appendix-5---financial-fair-play-regulations/

Surely if a club is obliged to stick this in, up to T+2- but in this case it's not even enough to see out the season even if you relax future requirements due to uncertainty over Covid and the like- surely this calls into question compliance with Secure Funding if they are hitting Cash Flow Problems mid season.

People will cite the Covid issue, but very few other clubs are floundering like this- surely the Secure Funding that the Dell loan made up should be enough to cover 2020/21- if they have to take out further loans, it appears to be potentially in breach of these obligations. At least worth asking the question IMO.

[Lanterne Rouge]

They`ve just shifted Dwane Holmes out to Huddersfield.