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Stoke City £87m loss


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1 minute ago, Lanterne Rouge said:

If that gets agreed then every club will be able to do it won`t they?

Yes, but not everyone has an over-inflated valuation of playing squad to lower!  Looks like they already did an impairment when first relegated too.

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1 hour ago, Davefevs said:

Yes, but not everyone has an over-inflated valuation of playing squad to lower!  Looks like they already did an impairment when first relegated too.

No worries Dave, im sure we can do a deal with some good humans who understand the club DNA.?

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Way I view it (and with no background in understanding the rules, regulations of background of FFP).

They'll be fine.

The owners have more than  enough cash, they might be fined or work under some sort of hole-ridden embargo, but they'll be fine.

Frightening sum of money, but I dare say their profit from the Grand National will cover it.

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3 hours ago, Alex_BCFC said:

Good job they are owned by B365 aren't they? Or something like that (I'm sure someone will put me right).

I thought the point of FFP was you couldn't rack up these sorts of debts and wipe the slate clean. 

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1 hour ago, Bristol Rob said:

Way I view it (and with no background in understanding the rules, regulations of background of FFP).

They'll be fine.

The owners have more than  enough cash, they might be fined or work under some sort of hole-ridden embargo, but they'll be fine.

Frightening sum of money, but I dare say their profit from the Grand National will cover it.

Your right i saying they will be fine, as their owners have more than enough cash - the Bet365 family I think. Accordingly, there is little/no danger of this level of loss causing administration.

Their problem ( unless they can play a Covid Get Out of Jail Free card) is the impact the loss will have on ffp. The cumulative effect of losses over a three year period cannot exceed a pre-set level ( Thirty something million IIRC although Mr P will surely be able to confirm exact amounts) and £87m of loss in just one season means they would appear to look well on the way to a serious breach and punishment according, although of course we all thought the same with Villa, Derby and Wednesday in previous seasons!

 

 

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Saw snippets of this the other day. Until their Accounts out in full it's impossible to say.

The early reports suggest an £87m loss but of that, they're trying to put through £43m in an Impairment Review and I suspect that they will try to claim that the Impairment of Intangible Assets- ie Player Registrations- was in this instance brought about through Covid and Transfer Values falling through the floor.

Without Covid then most forms of Impairment of Player Registration go against FFP in full. 

However were this to be accepted then it possibly cuts their amortisation bill by 75-90%. This feels excessive, which isn't to say that some of the Impairment may not be okay under Covid, but all of it??

Would have to look at their 2018/19 Accounts in depth again but it would if allowed to stand in full, slash future Amortisation obligations. 

The other factor to consider is that the 3 years to 2019/20 aren't standalone. Nor are they standalone to 2020/21. Currently that 2019/20 and 2020/21 are combined into one period, added together and then halved with Covid Costs as well as other usual allowances excluded.

The bit that might slip under the radar here is that even if it's allowed in full they still lost £44m last season (before we exclude Academy etc, legitimate Covid costs). Only bit that's unclear, are Parachute Payments structured differently due to Covid? ie Deferred to June or July when these Accounts ran until May? Impossible to say as so few clubs have released Acounts so far!

Also their Upper loss limit as 1 PL season and 3 at this level will be £55.5m. Next year that becomes £39m if they don't surge into final playoff place and go back up..

The formula between the two divisions is add together the upper limits dependent on division, divide by 4 and then x 3.

In Stoke's case (Swansea too) it'd be:

£35m + £13m + £13m + £13m=£74m.

As they were in PL in 2017/18 and Championship next 3 years.

£74m/4=£18.5m x 3=£55.5m.

Norwich as well for this one, but slightly different as 2017/18, 2018/19 and this year at our level, while 2019/20 in PL. Unsure on the equity though.

Huddersfield are two of each so Upper Loss limit is subject to equity, £72m this year.

Watford and Bournemouth, well they absolutely shouldn't fail. £88.5m!?

3 x PL, 1 at this level.

Anyway about Stoke, it seems awfully convenient. No other club has made anything like this claim, in terms of absolute numbers or more significantly as a % to date.

Possible that Berahino and Imbula early departures feature in this, and as these predated Covid then provided that these weren't within the £30m one on relegation as @Davefevs mentioned, then these should absolutely count towards FFP.

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Bet365 (but not Stoke) Accounts are now out!

Goes into a little more detail on this matter than the media in fact reported- and as I thought they aren't putting all of the Impairment down to the Pandemic.

Quote

FOOTBALL CLUB AND FACILITIES

In the 2019/20 season Stoke City Football Club ("the Club") once again competed in the English Football League Championship. As with most Leagues around the world, the end of the Championship season was adversely affected by the restrictions imposed due to the Covid-19 pandemic. As a result, the Club's final match was eventually played 'Behind Closed Doors' on 22 July 2020.

The Club and its related facilities and operations Company incurred a loss before taxation in the period of £87.2m. (2019: £8.7m loss) on a turnover of £54.2m (2019: £82.0m). The reduction in turnover was principally due to a fall in central distributions/TV income following the club's relegation from the Premier League and the subsequent reduction in the "parachute payments".

Well that 2019 comparison looks incorrect for a start! Accounts for both the Football Club and Holdings Company show a turnover of around £70.6m and depending on which one, losses of £15.4-15.67m for the 2019 season. Odd...? Perhaps it's the P&S loss as excludable costs are mooted to be £6-7m a season but doesn't make much sense so far.

Quote

FOOTBALL CLUB AND FACILITIES - CONTINUED

During the period, the club charged amortisation on player registrations of £31.9m. The resulting book value of individual player registrations of £69.0m was assessed by directors as being greater than their market value. An impairment review resulted in an additional charge of £43.0m, of which £30.1m was directly attributed to the Covid-19 Pandemic in accordance with the guidance issued by the Football League.

In short, £69.0m their remaining Book Value to be amortised, Stoke reckon they could only attract £26m for the lot and they claim £30.1m is due to the Pandemic which means on an early calculation:

£87.2m-£43.0m + £12.9m=£57.1m Financial loss for the year if we exclude their Covid related Impairment claim but also before the usual £7m or thereabouts in allowable costs.

Plus, it feels like the Parachute Payments are distributed in a certain way which means less than usual would have appeared in 2019/20 and a bit more in 2020/21- still the same overall amount but distribution may differ due to suspension of Season. They appear to be incorrect with respect to their 2019 figures though.

Aaaah I see what I've done there- these Accounts are 1st April-31st March- they cut across seasons. It sounds like the bulk of the Impairment was nonetheless in 2019/20 but the Accounts were still on first glance unclear for 2019 because that 2019 period would have included 2 months of PL income etc, ie 1st April 2018-31st March 2019. Probably at most £1m and likely less in Impairment that can be reclassified to 2018/19.

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On 04/04/2021 at 22:52, Mr Popodopolous said:

Saw snippets of this the other day. Until their Accounts out in full it's impossible to say.

The early reports suggest an £87m loss but of that, they're trying to put through £43m in an Impairment Review and I suspect that they will try to claim that the Impairment of Intangible Assets- ie Player Registrations- was in this instance brought about through Covid and Transfer Values falling through the floor.

Without Covid then most forms of Impairment of Player Registration go against FFP in full. 

However were this to be accepted then it possibly cuts their amortisation bill by 75-90%. This feels excessive, which isn't to say that some of the Impairment may not be okay under Covid, but all of it??

Would have to look at their 2018/19 Accounts in depth again but it would if allowed to stand in full, slash future Amortisation obligations. 

The other factor to consider is that the 3 years to 2019/20 aren't standalone. Nor are they standalone to 2020/21. Currently that 2019/20 and 2020/21 are combined into one period, added together and then halved with Covid Costs as well as other usual allowances excluded.

The bit that might slip under the radar here is that even if it's allowed in full they still lost £44m last season (before we exclude Academy etc, legitimate Covid costs). Only bit that's unclear, are Parachute Payments structured differently due to Covid? ie Deferred to June or July when these Accounts ran until May? Impossible to say as so few clubs have released Acounts so far!

Also their Upper loss limit as 1 PL season and 3 at this level will be £55.5m. Next year that becomes £39m if they don't surge into final playoff place and go back up..

The formula between the two divisions is add together the upper limits dependent on division, divide by 4 and then x 3.

In Stoke's case (Swansea too) it'd be:

£35m + £13m + £13m + £13m=£74m.

As they were in PL in 2017/18 and Championship next 3 years.

£74m/4=£18.5m x 3=£55.5m.

Norwich as well for this one, but slightly different as 2017/18, 2018/19 and this year at our level, while 2019/20 in PL. Unsure on the equity though.

Huddersfield are two of each so Upper Loss limit is subject to equity, £72m this year.

Watford and Bournemouth, well they absolutely shouldn't fail. £88.5m!?

3 x PL, 1 at this level.

Anyway about Stoke, it seems awfully convenient. No other club has made anything like this claim, in terms of absolute numbers or more significantly as a % to date.

Possible that Berahino and Imbula early departures feature in this, and as these predated Covid then provided that these weren't within the £30m one on relegation as @Davefevs mentioned, then these should absolutely count towards FFP.

 

4 hours ago, Mr Popodopolous said:

Bet365 (but not Stoke) Accounts are now out!

Goes into a little more detail on this matter than the media in fact reported- and as I thought they aren't putting all of the Impairment down to the Pandemic.

Well that 2019 comparison looks incorrect for a start! Accounts for both the Football Club and Holdings Company show a turnover of around £70.6m and depending on which one, losses of £15.4-15.67m for the 2019 season. Odd...? Perhaps it's the P&S loss as excludable costs are mooted to be £6-7m a season but doesn't make much sense so far.

In short, £69.0m their remaining Book Value to be amortised, Stoke reckon they could only attract £26m for the lot and they claim £30.1m is due to the Pandemic which means on an early calculation:

£87.2m-£43.0m + £12.9m=£57.1m Financial loss for the year if we exclude their Covid related Impairment claim but also before the usual £7m or thereabouts in allowable costs.

Plus, it feels like the Parachute Payments are distributed in a certain way which means less than usual would have appeared in 2019/20 and a bit more in 2020/21- still the same overall amount but distribution may differ due to suspension of Season. They appear to be incorrect with respect to their 2019 figures though.

Aaaah I see what I've done there- these Accounts are 1st April-31st March- they cut across seasons. It sounds like the bulk of the Impairment was nonetheless in 2019/20 but the Accounts were still on first glance unclear for 2019 because that 2019 period would have included 2 months of PL income etc, ie 1st April 2018-31st March 2019. Probably at most £1m and likely less in Impairment that can be reclassified to 2018/19.

? No doubt 2 well thought out posts and nothing against you but way over the top of my head, could we have the very much shortened version for us non accountant types. ?

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2 hours ago, glos old boy said:

very much shortened version

The new FFP scam will be how much of your past mistakes loss you can hide your behind the 'Exempt from FFP due to COVID'.

Stoke have opened the bidding at an impressive £30 million.

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36 minutes ago, Hxj said:

The new FFP scam will be how much of your past mistakes loss you can hide your behind the 'Exempt from FFP due to COVID'.

Stoke have opened the bidding at an impressive £30 million.

So in effect, let’s just hide the fact that we paid stupid fees for players who weren’t even good enough for the level below by using COVID as the excuse.

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45 minutes ago, Hxj said:

The new FFP scam will be how much of your past mistakes loss you can hide your behind the 'Exempt from FFP due to COVID'.

Stoke have opened the bidding at an impressive £30 million.

A good time to bury bad (financial) news?

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I still don't know if that would be enough to save them from FFP breaches tbh- or severe cutbacks- perhaps both. Having trouble renewing Powell owing to FFP as per a week or two ago and tbh the Coates family from what I can gather in general are quite compliant- the younger Coates has complained about the rules but they seem to be showing restraint as set against say Mel Morris and his frankly Trumpian ways.

However as @Hxj said, could it open the door for others who are perhaps closer to the line but not over- but give them an advantage moving forward?

That 1st April-31st March across seasons muddies the waters though- when their actual Accounts out, both FC and Holdings we'll be able to see a much clearer picture. That is Bet 365 Accounting Period and they ultimately seem to control the club or the club are within the Group- perhaps I'll try and recalibrate their segmented Headline figures across the two seasons.

I should also add that my suspicion is that if clubs try to use Impairment to pull a fast one to then sell at a Profit, that Impairment gap can be added back to the P&S losses- sure the EFL have such a mechanism in place. Certainly should!

E.g. £7m remaining Book Value for a player written down to zero as a 'Covid cost'- ordinarily this would go against FFP in full but claim Covid- but then sell for £3-4m the following year.

In layman's terms, £7m Impairment written off to Covid which means zero FFP hit, £7m Profit next year sale- but £3-4m added back as non excludable FFP expenses...? (Layman's term- £10m loss inclusive of £7m written off due to Impairment, but sell for £4m following season- you add back in that £3-4m and make the Prior FFP £13-14m).

That would make clubs think twice.

As an aside, much like the Stadium and Fixed Asset Profit sale debacle, even with Covid AFAIK UEFA regulations don't make allowances for Impairment of Player Registrations- in the case of Ground Sales and especially Ground and other key Fixed Asset sale and leasebacks, the Profit (or Loss) on Disposal is simply adjusted out for FFP. Makes much more sense, simplifies it for everyone!

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