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Derby takeover ....


davidoldfart

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A Spanish consortium have agreed a takeover of Derby - another means to avoid FFP?  Wonder if they will try and buy the ground and training facilities or lease them from MM. Will be interesting if they go for the ground and the price they will have to pay after MM claims he paid £80m !!!!!!

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"Subject to EFL Approval". 

The Erik Alonso who fell out with Chansiri?

Think that the EFL have every right to take their good sweet time. :)

"Selling Stadium and Training Ground back". Charges over each, as well as the Club- been cleared with MSD has it? He'll want his dues and rightly so!

Selling it (Pride Park) back, when there's a 30 year lease- another issue for EFL?

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9 hours ago, Mr Popodopolous said:

"Subject to EFL Approval". 

The Erik Alonso who fell out with Chansiri?

Think that the EFL have every right to take their good sweet time. :)

"Selling Stadium and Training Ground back". Charges over each, as well as the Club- been cleared with MSD has it? He'll want his dues and rightly so!

Selling it (Pride Park) back, when there's a 30 year lease- another issue for EFL?

He’s a front for Matt Southall allegedly.

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Heard part of an interview with the new owner on the radio earlier. 

He used the phrase “ sleeping giant” ( although I don't know if he was referring to Rooney or DCFC) but that’s them b******d then! 

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Ha the kiss of death that, "Sleeping giant" indeed. Comatose more like it?

You know what would be great.

Monday: EFL approval of takeover materialises.

Tuesday: Indeed announced that Southall is a key component...

Wednesday: EFL Appeal verdict is in. 12 point deduction with immediate effect. Welcome to Derby and probably League One Erik!!

If Carlsberg did karma based takeover Scenarios...

Wonder how much of their financial chicanery, position, relationship with the EFL had been disclosed by old Sideshow Mel to Alonso etc...

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5 hours ago, Mr Popodopolous said:

Read that Pride Park is part of the deal. This raises more than a few questions.

As soon as I heard about the club being sold I wondered how Pride Park would feature.

As Derby County FC sold the ground to a third party company, then I cannot see how the ground can be included within the sale of DCFC to Alonso - it’s not DCFC’s to sell.  Especially given the contentious nature of the sale of the ground, i.e. to circumvent ffp rules, then I think one of 2 things should happen. 

Either Derby County purchase Pride Park back from whichever of Mel Morris’s companies that now owns it, with that expenditure contributing to Derby’s cumulative losses and counting towards ffp. Or, Alonso purchases DCFC from Mel Morris and separately, and subsequent to the purchase of the football club,  purchases Pride Park from it’s current owner, with the price paid for the stadium contributing to DCFC’s losses for ffp.

If the stadium is included within the sale of the football club then Morris/Derby will have truly had his/their cake and eaten it.

However, we can rest easy in the secure knowledge that the EFL’s vigilance and the robust application of their airtight rules will enable any sleight of hand to be thwarted and the appropriate punishment handed out! 

 

 

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Under current EFL rules the new owners can set up a new holding company that acquires the shares in the football club group and the stadium group.  They can they state that the new holding company is the head of the group that should be used for FFP - see EFL FFP Regulations paragraph 1.1.3 (b).  If the EFL requests they can ask for a different group (see the same reference). That would make for an interesting case, which decision takes precedence. 

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17 hours ago, downendcity said:

As soon as I heard about the club being sold I wondered how Pride Park would feature.

As Derby County FC sold the ground to a third party company, then I cannot see how the ground can be included within the sale of DCFC to Alonso - it’s not DCFC’s to sell.  Especially given the contentious nature of the sale of the ground, i.e. to circumvent ffp rules, then I think one of 2 things should happen. 

Either Derby County purchase Pride Park back from whichever of Mel Morris’s companies that now owns it, with that expenditure contributing to Derby’s cumulative losses and counting towards ffp. Or, Alonso purchases DCFC from Mel Morris and separately, and subsequent to the purchase of the football club,  purchases Pride Park from it’s current owner, with the price paid for the stadium contributing to DCFC’s losses for ffp.

If the stadium is included within the sale of the football club then Morris/Derby will have truly had his/their cake and eaten it.

However, we can rest easy in the secure knowledge that the EFL’s vigilance and the robust application of their airtight rules will enable any sleight of hand to be thwarted and the appropriate punishment handed out! 

 

 

I'd have to see further reports as to the veracity, think was a Tweet by Ryan Conway.

I don't disagree with your post but given that Infrastructure expenditure-and this was for the right reasons- is excluded from FFP, it is so a club can grow etc, thing is that when UEFA made these rules they also excluded Profit on Disposal of Fixed Assets from FFP calcs. Problem is EFL changed the latter in 2016.

I fear a scenario whereby the Stsdium is brought back, added to Balance Sheet. It is Infrastructure, only Profit and Loss Hit is Depreciation and Costs of running Pride Park- the former is adjusted out for FFP, latter within Operating Costs.

I recall when it was sold, one qualifying condition was that it 'could no longer be a material part of football operations'.

Can you overturn a 25 year lease just like that.

What I am trying to ascertain is why no media have even mentioned MSD charge over Pride Park and the rest. That was quite onerous from memory, surely not all paid down as part of takeover.

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The charges in respect of both Rams Investment (Gabay) and MSD contain no provisions restricting change in ultimate ownership of the companies.

Therefore Morris can sell the companies to who ever he wants to and amounts due under those charges will simply remain due.

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17 minutes ago, Mr Popodopolous said:

Can you overturn a 25 year lease just like that.

No - you just put both parties to the lease in the same group and the net transactions at the group level will be nil.

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1 hour ago, Hxj said:

The charges in respect of both Rams Investment (Gabay) and MSD contain no provisions restricting change in ultimate ownership of the companies.

Therefore Morris can sell the companies to who ever he wants to and amounts due under those charges will simply remain due.

Thanks. Had a quick look the other day but not looked in depth for a while.

Suppose it is possible that either Alonso or Morris is paying off the charge as part of the deal?

1 hour ago, Hxj said:

No - you just put both parties to the lease in the same group and the net transactions at the group level will be nil.

Yep, would cancel out at a Group Level. Given that one of the stipulations in the Written Reasons (from memory) was that the Stadium would no longer be a material part of operations, could this trigger a fresh Investigation into the legitimacy of the 2018 Transaction?

Consolidation or reconsolidation would put it back as one again, a material part of operations.

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2 minutes ago, Mr Popodopolous said:

Yep, would cancel out at a Group Level. Given that one of the stipulations in the Written Reasons (from memory) was that the Stadium would no longer be a material part of operations, could this trigger a fresh Investigation into the legitimacy of the 2018 Transaction?

Consolidation or reconsolidation would put it back as one again, a material part of operations.

The cynic in me wonders whether Pride Park being included within the transaction to purchase the football club will avoid the need for the value of the stadium being detailed, thereby avoiding any embarrassment if the value is substantially different from that used to avoid ffp sanctions.

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4 hours ago, downendcity said:

The cynic in me wonders whether Pride Park being included within the transaction to purchase the football club will avoid the need for the value of the stadium being detailed, thereby avoiding any embarrassment if the value is substantially different from that used to avoid ffp sanctions.

Maybe. Certainly shouldn't be substantially different though given a note in the 2019 Gellaw Newco 202 (Purchasing Company) underneath the Investment Property bit:

Note 3, Investment Property and is stated as being at Fair Value with the following note, a note that also appears on the 2020 Accounts- so in Covid times and released in 2021:

Quote

"Investment property comprises Pride Park Stadium. The fair value of the investment property has been entered at cost in this the year of acquisition."

Although, "entered at cost" for "Fair Value"....hmmm.

UNLESS and only unless it's paid at Fair Value then feels like yet another case for the EFL. Wonder how aware they even are of these Accounts and the note- surely they're well aware.

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Reading that 49 page Charge they took out last August with MSD for the first time in a while, there must be something I'm missing or misunderstanding:

Quote

5.   NEGATIVE PLEDGE

No Chargor may:

(a) create or agree to create or permit to subsist any Security Interest or Quasi-Interest over all of part of the Charged Property; or

(b) sell, transfer, lease out, lend or otherwise dispose of all or any part of the Charged Property (other than in respect of assets charged under Clause 3.3 (Floating Charge) on arm's length terms in the ordinary course of trading) or the right to receive or be paid the proceeds arising on the disposal of the same, or agree to attempt to do so,

except as permitted by the Term Loan Agreement or with the prior consent of the Lender.

Chargor being Derby, all the companies plus Gellaw Newco 202 and 204. MSD the lender.

Do some terms contradict this- as I say is there something I'm missing? It says Floating, Fixed Charge as well as Negative Pledge at the top of the Document.

Course if it's been paid down by Alonso etc then...

I'm fantasising a bit with this last bit but could Sideshow Mel have done the sale without bothering to notify MSD- or maybe sold it to the new buyers without bothering to inform them of this small matter. :whistle2:

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3 hours ago, Mr Popodopolous said:

I'm fantasising a bit

Really ???

The chargors are the companies, the charged property being the land owned by the companies.

So the owner of any company can sell the company without the charge stopping that sale.

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1 hour ago, Hxj said:

Really ???

The chargors are the companies, the charged property being the land owned by the companies.

So the owner of any company can sell the company without the charge stopping that sale.

Yes, just a little haha- I'm sure he's complied with all applicable regs etc.

So the Negative Pledge is an irrelevant consideration here then? The Term Loan Agreement or agreement of the Lender seems to be a factor?

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Interesting snippet in Matt Hughes and his Ahead of the Game column- he must have a source at or with knowledge of Derby?

Quote

EFL PROBING ALONSO'S MONEY

Prospective new Derby owner Erik Alonso is facing questions from the EFL over the source of his funds before a proposed takeover can be signed off. 

Alonso lodged proof of funds with the EFL this week after reaching an agreement to purchase the club from Mel Morris, but questions remain about his trading history and the money's origin. 

Alonso's case may not be helped by the fact that the EFL pushed through a previous takeover attempt at Derby by Sheik Khaled last year after receiving reassurances from Morris

There is suspicion Morris took the step of publicising the sale agreement to pressure the EFL to provide endorsement.

Now clearly they do the due diligence on all owners so bits of this maybe a little hammed up, but this last bolded bit could be interesting- and remember Derby last August unilaterally published the EFL Case Written Reasons so they have form for it...Sideshow Mel has form for this kinda thing, the rage when they were charged with FFP denying it could happen or was legitimate, DESPITE the Written Reasons stating all was open to Ongoing and Multi-Layered Review- he's a tad Trumpian except perhaps without some of the Buffoonery?

So this is not surprising- the bolded bit above makes him appear a bit of a chump given the History of that Consortium and takeovers, or desperate to get out.

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Suggests in the Mirror that Pride Park will be part of the deal, but that Moor Farm will not. 

They'll be renting the latter, mentioned some company I've never heard of, as for the former, the price will be most interesting.

One of their more sensible posters suggests that their Amortisation policy means they could spend £20m on one player at this level, Alonso said he could?

Given the Stadium Sale drops off after this season, might past losses not hem them in as far as £20m on a single player goes? 

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Does make me laugh, Derby fans ranting about Matt Hughes on Social media and their forum.

"He hates Derby" "He knows nothing" probably among the politer- it's obvious he has a source- albeit one who provides him with negative info about the club. He said the EFL would be looking further into the Takeover and while that's normal they were dismissing it- not been ratified yet has it!! Supposed to be done by now, wasn't it- but they're anti expert, same reason a lot of them dismiss Kieran Maguire or say he has an agenda- talking about their forum primarily in this latter case. Some of them do make me laugh.

EFL should absolutely be taking their own good time on this, and his pronouncements only add to this- because an EFL Regulation, well dunno if it's new or supplemental to the Owners and Directors Test but...

Quote

3 Acquiring of Control

3.1  If any Person proposes to acquire Control of a Club:

(a)  the Club and/or the Person shall, as far in advance of the acquisition of Control as reasonably possible and in any event no later than 10 Normal Working Days prior to the date on which it is anticipated that such acquisition of Control will take place:

(i)  submit to the League a duly completed Declaration in respect of each Person who will become a Relevant person upon the proposed acquisition of Control; and

(ii)  submit to the League up to date Future Financial Information (as defined in Regulation 16) prepared to take into account the consequences of the change of Control on the Club’s future financial position; and

(b)  the League shall have the power to require the Club and/or the Person who proposes to acquire Control to appear before it and to provide evidence of the ultimate source and sufficiency of any funds which that Person proposes to utilise to acquire Control and/or invest in or otherwise make available to the Club.

3.2  In relation to any proposed acquisition of Control of a Club by a Person, The League shall have:

(a)  the powers set out in Regulation 16.20; and/or

(b)  the ability to impose such other conditions,

as in each case it may determine, in order to monitor and/or ensure compliance with Regulations 16 to 19, 21, 22 (including Appendix 3) and 103 to 113 inclusive (and their successor or replacement provisions).

3.3  No Person may acquire Control of a Club and no Club may permit a Person to acquire Control of it until such time as:

(a)  The League provides confirmation that all Persons that are required to do so have complied with the process set out in Rule 3.1(a)(i) and no such Persons are liable to be disqualified as a Relevant Person;

(b)  The League provides confirmation of its satisfaction with the information provided pursuant to Rule 3.1(a)(ii); and

(c)  The Club and any Person proposing to acquire Control have acceded to any powers and/or accepted any conditions imposed pursuant to Rule 3.2.

https://www.efl.com/-more/governance/efl-rules--regulations/appendix-3---owners-and-directors-test/

I dunno if this has been beefed up in recent years...

Very much the case though that as well as the better known bits, it seems FFP is a factor in this kinda thing- his recent declarations about "spending £20m on a single player", £150m if I have to in order for promotion" and reference to Fernando Llorente as a dream signing won't do him any favours with this- wonder if Derby fans over on DCFCFans get this bit, but I'm happy to see some sort of provisions in place.

In layman's terms, if he acts like he doesn't give a crap or understand P&S or care to understand, this could be grounds to block a takeover- parts of this only came in October 2020 so some clubs may have been scuppered (but ironically compliant) had this been in place in the mid 2010's onwards.

Good powers- the question as ever is, can they enforce them correctly now and moving forward?

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Interesting Tweet on the Derby issue.

https://twitter.com/softie75/status/1383157230573326336

Forgot to add these bits on the Future Financial Information last time too.

Quote

16.21  If any Person proposes to acquire Control of a Club:

16.21.1  the Club shall submit to The League up to date Future Financial Information prepared to take into account the consequences of the change of Control on the Club’s future financial position as far in advance of the change of Control as reasonably possible or, if such submission is not reasonably practicable prior to the change of Control, no later than 10 Normal Working Days thereafter; and

16.21.2  The League shall have the power to require the Person who proposes to acquire or has acquired Control to appear before it and to provide evidence of the source and sufficiency of any funds which that Person proposes to invest in or otherwise make available to the Club.

16.22  In relation to any proposed acquisition of Control of a Club by a Person, The League shall have the powers set out in Regulation 16.20 and/or the ability to impose such other conditions as in each case it may determine, in order to monitor and/or ensure compliance with Regulations 16 to 19, 21, 22 (including Appendix 3) and 103 to 113 inclusive (and their successor or replacement provisions).

I wonder if this could be part of the issue. His talk of £20m on one player, £150m for promotion or signing Llorente surely won't have gone unnoticed? ? I don't see how Derby- even taking the lesser one as Llorente's age may mean his wage isn't all that (though he'd surely be an upgrade on Colin Kazim Richards who is in a similar age range)?, but with P&S, how could they spend £20m on a single player with past results being in the 3 year Cycle? Until such time as they've dropped out of the cycle and losses or even a prior profit from sales etc but I don't see where the headroom comes from in Summer 2021.

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Interesting article by John Percy- good journo, seems to know Midlands related football news especially- seems to give EFL reasonable coverage, especially North of Birmingham.

Some snippets...

Quote

Morris, the Derby owner and chairman, has been determined to sell the club for more than three years and to see his tenure end in relegation would be a nightmare. 

He is still trying to complete a sale of the club to Spanish businessman Erik Alonso, with the EFL stating the process remains "ongoing"

Alonso has delivered proof of funds of more than £70 million to the EFL yet must still pass the owners and directors’ test. Previously linked with a bid to buy Sheffield Wednesday, Alonso recently admitted his ultimate goal is to see Derby competing in the Champions League.

Looks like Matt Hughes and his Ahead of the Game column- the bit that Derby fans slated- was pretty accurate again. Dragging on...they think he doesn't like them very much!

Also see...

Quote

Derby still owe millions in compensation to former manager Phillip Cocu, who was sacked in November, and that money will be liable to whoever takes over the club.

Errr...would Cocu not be classed as a Football Creditor- how were they able to make loan signings in Jan?? Unless Cocu agreed to this of course.

Could be payments in stages or phases too- maybe he's still being paid over the course of his contract, ie not a lump sum but just on the payroll but not the management.

Also see...

Quote

Richard Keogh’s bitter legal row over his sacking in October 2019 has still not been resolved, and the former captain could be entitled to £2m in damages if he wins at an employment tribunal.

Not a football creditor but a creditor all the same- appeal can kick down the road? Unsure how EFL regs treat this kinda thing...There was a report in Jan that Keogh had won but Derby had appealed.

Quote

Perhaps the most worrying issue hanging over the club is the EFL’s appeal over a misconduct charge.

The charge relates to Derby’s policy over the amortisation of intangible assets - how the purchase price of a player is spread over a contract - and sanctions were initially dropped earlier this year.

But the EFL appealed, with the hearing held over the weekend of March 20-21, and the verdict is still to be delivered a month later.

Derby have denied the charge yet could face serious punishment if found guilty, which could include the docking of points.

Championship sources insist Derby chief executive Stephen Pearce’s position on the EFL board would be "untenable" if the appeal is lost.

I don't know if the timeline is entirely correct but seems accurate- Pearce who I think is lucky still to be on the board, would be drummed out if Derby lose! A points deduction at this late stage would be splendid though the odd sage on DCFCFans thinks a fine at worst- not sure where a fine at worst could come from if the readjusted Amortisation pushed them into breach- and why would EFL be pushing for a fine at worst over an entire season? Their tame local journo thinks they can't be docked points but local journos need access for sure...

https://www.telegraph.co.uk/football/2021/04/23/derby-county-crisis-doubts-wayne-rooney-steve-mcclaren-sidelined/

The bit that gets me there though is Cocu- I don't see how you can just say when sacked in November "Oh, the new owner- they'll sort the Payoff!" Any ideas?? @Hxj @Davefevs

Mel Morris could also not be bothering with Accounts for the same reason "They'll do it, as soon as takeover goes through!" :dunno:

On the last bit, surely a points deduction would be a must if guilty- if guilty they would be non-compliant Accounts and what is a serious punishment if not a deduction? Surely the Independent Panel wouldn't go above and beyond...

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18 hours ago, Mr Popodopolous said:

Derby still owe millions in compensation to former manager Phillip Cocu, who was sacked in November, and that money will be liable to whoever takes over the club.

This is just sloppy writing.  The common approach on sacking managers now is that you keep them on the payroll as it usually cheaper.  If was paid off it is unlikely that was agreed before the end of January, and whilst the liability remains with the company that employed him, clearly the new owners will need to fund the cost.

 

18 hours ago, Mr Popodopolous said:

Mel Morris is not bothering with Accounts

If MM signs off the accounts confirming that there is no going concern issue he is committing to fund the company in full for the next 12 months.  Not sure he can afford that.  If he signs off the accounts as not a going concern he automatically puts the club in breach of EFL regulations.  Plus all the assets will need to be valued on a disposal basis, including the player contracts, probably putting the club significantly in breach of the FFP regulations.

 My belief is that Alonso is waiting to ensure that Derby are not relegated before completing.

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