Derby County

[chinapig]

10 hours ago, Hxj said:

They did - but that only has an impact whilst the company is in Administration - it's only a cash flow impact as well - they will still want their money!

It might, but they will still have to pay them off in full.

That's a dangerous step - always do your own research and make your own mind up - all this is in my humble opinion!

As far as research goes I'm with the great Tom Lehrer:

Plagiarize,
Let no one else's work evade your eyes,
Remember why the good lord made your eyes,
So don't shade your eyes,
But plagiarize, plagiarize, plagiarize -
Only be sure always to call it please 'research'.

[AnotherDerbyFan]

On 08/11/2021 at 14:10, Mr Popodopolous said:

Couple of general thoughts and observations.

Probably missing something here but surely now that Covid business conditions have passed, officially speaking anyway, given all of the cost cutting the club should have been self-sufficient for a period after Mel stopped funding this season if the appeal is to have legs? The cash balance should have been adequate for a while anyway.

HMRC wise. I dunno, but just have a feeling that they would rather accept a % of something rather than 100% of nothing in the event of liquidation?

Even though 100% of nothing would set an example in particular to football clubs who are considering it. The moral of the story being:

"Football or not, we've taken up to a £28m hit here and this shows that yes we are willing if required to wind up clubs over tax issues". 

I touched on this a month ago (see next quote). We essentially had a pot of money, which had to get us through from March 2020 to a point of self-sustainability. Covid smashed though that pot meaning admin before we could be self-sustainable.

Given all evidence points to wards the admin appeal being withdrawn I see 3 likely scenarios:

• we were never actually projected to be self-sustainable- being run at breakeven or a profit was reliant on regular player sales
• the claim was we would have been bought by someone in the 18 months between March 2020 and administration.
• the potential new owner thinks it's best to get it all out of the way asap, regardless of the the likely outcomes, just to have a clear picture of the future.

 

On 15/10/2021 at 11:58, AnotherDerbyFan said:

That's not quite right. It's not about 'financial difficulty', but whether in balance of probabilities, we entered administration solely because of Covid.

There are many ways that statement can be interpreted.

In the basic sense, if we had the £20m cash we missed out on as a result of Covid, would we avoid admin completely?

A little example here of how much money if left in Mel's piggy bank. Let's say he had £30m at the start of 2020 (before lockdown). The plan being to slowly reduce his input so that the club will run at an organic profit. By the end of the 21/22 season, that goal was set to be achieved, and no more money ever needs to be taken from his piggy bank.

However, Covid struck which ruined those plans. Sales made in the summer to get some cash in and others let go to cut the wage bill. Fans still not allowed in so further sales and cutbacks necessary in the Jan window. But still, not money left by Autumn 2021.

 

[Davefevs]

3 hours ago, AnotherDerbyFan said:

we were never actually projected to be self-sustainable- being run at breakeven or a profit was reliant on regular player sales

Suspect that is very likely.  It also probably shows that the strategy of amortisation policy to not use straight line  was based on an upward market.  Covid hastened that admittedly, but I think a football “reset” was coming due to so many clubs having wages greater than income, let alone other costs.

[exAtyeoMax]

 

 

[Davefevs]

Eye, eye

[chinapig]

1 hour ago, exAtyeoMax said:

 

 

The first sensible statement to come out of Derby during the entire saga.

[Mr Popodopolous]

I'll read the thread and post properly later but an interesting thread.

https://dcfcfans.uk/topic/38656-to-blame-derby-fans-for-dcfc-problems-is-nonsensical/

Not gloating by me but an interesting talking point.

Fans didn't technically take the decisions, nor could they control the executive. If SL decided to go mad, £25m in January on a promotion or bust gamble we could do zero about it.

All of our headroom that remains to 2022 basically with no regard for the next 2 seasons.

However I have to question where the critical analysis was when Derby were pushing the limits, spending, yes some sales but spending- the sheer size of the operating losses once not necessarily repeatable transactions were filtered out.

There wasn't a huge amount at the time was there? From an FFP perspective he was gambling big time for a number of seasons.

Same goes for Reading too, their 2018 to 2020 3 year accounts were bad indeed even with plenty of exceptional transactions.

Edited November 11, 2021 by Mr Popodopolous

[Jerseybean]

The local rags take….https://www.derbytelegraph.co.uk/sport/football/football-news/derby-county-points-deduction-ffp-6189383?utm_source=whatsapp&utm_medium=social&utm_campaign=sharebar&fbclid=IwAR2dZo6PMYDKJcZFTt7r5nIWq_y2OwhzOKWN9RcQElSVZ-NTTskqE0k6ELo

 

[Mr Popodopolous]

12 hours ago, AnotherDerbyFan said:

I touched on this a month ago (see next quote). We essentially had a pot of money, which had to get us through from March 2020 to a point of self-sustainability. Covid smashed though that pot meaning admin before we could be self-sustainable.

Given all evidence points to wards the admin appeal being withdrawn I see 3 likely scenarios:

• we were never actually projected to be self-sustainable- being run at breakeven or a profit was reliant on regular player sales
• the claim was we would have been bought by someone in the 18 months between March 2020 and administration.
• the potential new owner thinks it's best to get it all out of the way asap, regardless of the the likely outcomes, just to have a clear picture of the future.

 

 

Ah yeah I remember. Read it a bit more closely in that timespan.

A pot of money- cash allocated by Mel to the club to get through and some of it had to be front-loaded, hence going into administration now.

I think all 3 of the scenarios probably have some truth to it- and point 3 is very important for the future as you rightly say. On that note, I am a bit surprised at the administrators changing tack and back agan- unless it was part of the plan.

Initially IIRC they spoke of wanting to take it all in one fell swoop, one hit- sensible approach to get on with the serious business of saving the club off the pitch and providing a level of clarity for prospective new buyers, as a good way to tidy up a range of issues too. Seemed surprising then that a) They decided to appeal the -12 which has taken a good- 3 weeks, month out of this time. Quite possibly for no purpose- and minus 9 and a further suspended 3, they were never going to move on that the EFL IMO- and had leverage such as keeping embargoes in play, putting stringent conditions on despite change of control etc so I'm unsure quite what the idea was there- any ideas? Although should be pointed out that none of this is ratified, finalised.

On a side note, what's your take on Reading's overspend? It's big but I keep reading £30-60m, and that just doesn't seem that high to me- I've thought 8 figures but unsure about such a large overspend to date. What do you make it if you've looked at it lately? For reference I use the club in 2017/18 and Renhe Sports Management in each of the last 2 seasons.

[AnotherDerbyFan]

9 hours ago, Mr Popodopolous said:

Ah yeah I remember. Read it a bit more closely in that timespan.

A pot of money- cash allocated by Mel to the club to get through and some of it had to be front-loaded, hence going into administration now.

I think all 3 of the scenarios probably have some truth to it- and point 3 is very important for the future as you rightly say. On that note, I am a bit surprised at the administrators changing tack and back agan- unless it was part of the plan.

Initially IIRC they spoke of wanting to take it all in one fell swoop, one hit- sensible approach to get on with the serious business of saving the club off the pitch and providing a level of clarity for prospective new buyers, as a good way to tidy up a range of issues too. Seemed surprising then that a) They decided to appeal the -12 which has taken a good- 3 weeks, month out of this time. Quite possibly for no purpose- and minus 9 and a further suspended 3, they were never going to move on that the EFL IMO- and had leverage such as keeping embargoes in play, putting stringent conditions on despite change of control etc so I'm unsure quite what the idea was there- any ideas? Although should be pointed out that none of this is ratified, finalised.

It's the back tracking on the appeal that frustrates me. Days to go until the hearing and not much longer until a verdict would have been announced... it just seems really odd. 
I can understand the P&S penalty being accepted just to speed things up. No takeover was going to happen until that was resolved so it was either accept it (whether we believed we were right or wrong) or let things drag on, This is where I would critisise the EFL for not cooperating enough to expedite a fair trial (given no side was willing to budge from their stance)

9 hours ago, Mr Popodopolous said:

On a side note, what's your take on Reading's overspend? It's big but I keep reading £30-60m, and that just doesn't seem that high to me- I've thought 8 figures but unsure about such a large overspend to date. What do you make it if you've looked at it lately? For reference I use the club in 2017/18 and Renhe Sports Management in each of the last 2 seasons.

I can't remember which accounts I based it off, but I had Reading down as a £32m overspend in the 3 years to 2020, then similar again for the 4 years to 2021.
I want to see consistency in penalty between Derby and Reading. Not something like the suspended 3 points for paying 1 months wages late, then SWFC get the same for several months wages.

[Davefevs]

13 minutes ago, AnotherDerbyFan said:

It's the back tracking on the appeal that frustrates me. Days to go until the hearing and not much longer until a verdict would have been announced... it just seems really odd. 
I can understand the P&S penalty being accepted just to speed things up. No takeover was going to happen until that was resolved so it was either accept it (whether we believed we were right or wrong) or let things drag on, This is where I would critisise the EFL for not cooperating enough to expedite a fair trial (given no side was willing to budge from their stance)

I can't remember which accounts I based it off, but I had Reading down as a £32m overspend in the 3 years to 2020, then similar again for the 4 years to 2021.
I want to see consistency in penalty between Derby and Reading. Not something like the suspended 3 points for paying 1 months wages late, then SWFC get the same for several months wages.

Random thought from me.

Could one of the prospective buyers be influencing the decision to not appeal, e.g. I don’t think you’re gonna overturn it, I am offering to buy Derby, but my offer is based on them being in Lg1.  Take it or leave it….therefore don’t waste time on an appeal, and therefore new buyer starts planning and funding Derby as if they were Lg1.

[Hxj]

55 minutes ago, AnotherDerbyFan said:

It's the back tracking on the appeal that frustrates me.

I still suspect that the commercial reality has driven this.  As Administrators with a legal obligation to all creditors (and potentially at personal financial risk for getting it wrong) can you really justify all the costs where the chances of success appear bleak.  I've always suggested that the Administrators are engaged in a PR battle to sell the club, not just a time and financial one.

55 minutes ago, AnotherDerbyFan said:

This is where I would critisise the EFL for not cooperating enough to expedite a fair trial

mmmm - so when were the revised accounts to 2018 and the final accounts for 2019 onwards submitted to the EFL along with the FFP paperwork?  Without that you can't have a charge on failng FFP and therefore no hearing.

In adition we are now at a stage where any decision from a Disciplinary Commission on the FFP failure is unlikey to be resolved by the end of January, so no lifting of any embargo in time for the January transfer window, with all those consequences, and any appeal may not be finalised until after the March deadline which potentially puts the 2022/23 season in jeopardy as well.

All in all I can see huge advantages to get the EFL issues dealt with and clear the decks to deal with the real issue which is the threat of liquidation.

Edited November 12, 2021 by Hxj

[Davefevs]

3 minutes ago, Hxj said:

In adition we are now at a stage where any decision from a Disciplinary Commission on the FFP failure is unlikey to be resolved by the end of January, so no lifting of any embargo in time for the January transfer window, with all those consequences, and any appeal may not be finalised until after the March deadline which potentially puts the 2022/23 season in jeopardy as well.

That was gonna be my next point(s).  Time is money, and those two events (Jan window / next season) are probably driving decisions.

[AnotherDerbyFan]

25 minutes ago, Hxj said:

mmmm - so when were the revised accounts to 2018 and the final accounts for 2019 onwards submitted to the EFL along with the FFP paperwork?  Without that you can't have a charge on failng FFP and therefore no hearing.

In adition we are now at a stage where any decision from a Disciplinary Commission on the FFP failure is unlikey to be resolved by the end of January, so no lifting of any embargo in time for the January transfer window, with all those consequences, and any appeal may not be finalised until after the March deadline which potentially puts the 2022/23 season in jeopardy as well.

All in all I can see huge advantages to get the EFL issues dealt with and clear the decks to deal with the real issue which is the threat of liquidation.

That's the problem though. Both sides can't (or at least couldn't) agree on what is(was) acceptable, so accounts wouldn't be officially submitted as a result. It just seems like there needs to be an independent panel to make that call.

Thoughts on this little snippet from the LAP judgment? It seems to have been skipped over by everyone up until now.

[GrahamC]

Looks like Derby are accepting the 21 point deduction & Reading’s 9 point one is also imminent now as well.

If both things come to pass you would have to be a super pessimist to think we couldn’t finish above both of them & one of Hull, Barnsley or Peterborough, or in the possibility that despite having to effectively make up 12 points on us (because we have already beaten them) & Reading still overhauled us, 2 of those 3.

[TDarwall]

Pretty likely that Points Deduction will win our POTY for this season.

Edited November 12, 2021 by TDarwall

[Hxj]

45 minutes ago, AnotherDerbyFan said:

Thoughts on this little snippet from the LAP judgment? It seems to have been skipped over by everyone up until now.

Several!

Firstly it depends upon what sort of review was done.  If all the boxes are completed correctly sometimes that suffices, other times the information provided by the director's is reviewed, or other backing paperwork.  With that in mind I wouldn't assume that that means anything more than the paperwork backs the audit.  This was a comment by the DC, paragraph 257.

However para 25, in particularly the last sentence, of the LAP decision says some interesting things when talking about the description in the accounts:

Paragraph 26 goes on to describe how the club and the auditor misled the EFL at a meeting in May 2019 and that it was not until June 2020, just before the hearing that the real methodolgy used was disclosed.

So the audit file backed the disclosures in the accounts and therefore both referred to a process that did not actually take place.  But as the paperwork is internally consistent it is highly likely to have passed an ICAEW review.

 

Edited November 12, 2021 by Hxj

[REDOXO]

1 hour ago, Hxj said:

Several!

Firstly it depends upon what sort of review was done.  If all the boxes are completed correctly sometimes that suffices, other times the information provided by the director's is reviewed, or other backing paperwork.  With that in mind I wouldn't assume that that means anything more than the paperwork backs the audit.  This was a comment by the DC, paragraph 257.

However para 25, in particularly the last sentence, of the LAP decision says some interesting things when talking about the description in the accounts:

Paragraph 26 goes on to describe how the club and the auditor misled the EFL at a meeting in May 2019 and that it was not until June 2020, just before the hearing that the real methodolgy used was disclosed.

So the audit file backed the disclosures in the accounts and therefore both referred to a process that did not actually take place.  But as the paperwork is internally consistent it is highly likely to have passed an ICAEW review.

 

What firm or what individuals were doing the accounting for Derby?? 
 

Reputations in tatters and Mel could not care less!! 

[Davefevs]

27 minutes ago, REDOXO said:

What firm or what individuals were doing the accounting for Derby?? 
 

Reputations in tatters and Mel could not care less!! 

Audit was done by a company owned by a lifelong Derby fan!  Of course that doesn’t mean anything.

[Port Said Red]

On 10/11/2021 at 19:06, billywedlock said:

Derby have Mel Morris to blame for their plight. End of. He tried to con the system with empty financial back up .

HMRC need to be resolute too . Morris still has millions to live off and he has conned the tax payers yet still basking in millions . 
 

How there is no criminal case to answer is astonishing but shows there are too many loopholes . Morris was fraudulent in action but not law . Intent was clear. 

 

 

On 10/11/2021 at 19:49, REDOXO said:

Mel Morris is a dreadful little man. However many Derby supporters appear to still believe he is some kind demigod and that the whole thing is an EFL vendetta against poor old us!
 

My personal hope is they end up way lower than league one, just for the delusional nutBagery that emanates from and throughout that bloody club 

 

17 hours ago, Mr Popodopolous said:

I'll read the thread and post properly later but an interesting thread.

https://dcfcfans.uk/topic/38656-to-blame-derby-fans-for-dcfc-problems-is-nonsensical/

Not gloating by me but an interesting talking point.

Fans didn't technically take the decisions, nor could they control the executive. If SL decided to go mad, £25m in January on a promotion or bust gamble we could do zero about it.

All of our headroom that remains to 2022 basically with no regard for the next 2 seasons.

However I have to question where the critical analysis was when Derby were pushing the limits, spending, yes some sales but spending- the sheer size of the operating losses once not necessarily repeatable transactions were filtered out.

There wasn't a huge amount at the time was there? From an FFP perspective he was gambling big time for a number of seasons.

Same goes for Reading too, their 2018 to 2020 3 year accounts were bad indeed even with plenty of exceptional transactions.

Anyone who thinks that WRDC will not pay for Mel Morris's misdeeds hasn't been watching how business works in other walks of life. These people are adept at setting up Companies to shelter them from the consequences of their actions, look at Philip Green as one high profile case. While the Government refuse to tighten and change the rules it will always be thus.

[REDOXO]

44 minutes ago, Davefevs said:

Audit was done by a company owned by a lifelong Derby fan!  Of course that doesn’t mean anything.

So @Mr Popodopolous @Hxj and Dave. Now it seems the EFL have ruled on the points deduction and I’m sure put in place guidelines for future conduct, how much do they actually owe?

HMRC 26m

Arsenal 8

Suppliers?

creditors?

outstanding loans? ETC ETC ETC. 

From what I can tell from here is HMRC policy is not to accept partial payment and will be treated as the front of the queue, so any sale negotiations are basically around a valueless entity and the ability of the new owner to pay debt in full to some and pennies on the pound to others? 
 

any projections? And in view of the accounts where does the stadium fit in now. In theory the club and stadium are not connected so no fixed asset exists as collateral to a prospective buyer! 

Edited November 12, 2021 by REDOXO

[Davefevs]

7 minutes ago, REDOXO said:

So @Mr Popodopolous @Hxj and Dave. Now it seems the EFL have ruled on the points deduction and I’m sure put in place guidelines for future conduct, how much do they actually owe?

HMRC 26m

Arsenal 8

Suppliers?

creditors?

outstanding loans? ETC ETC ETC. 

From what I can tell from here is HMRC policy is not to accept partial payment and will be treated as the front of the queue, so any sale negotiations are basically around a valueless entity and the ability of the new owner to pay debt in full to some and pennies on the pound to others? 
 

any projections? And in view of the accounts where does the stadium fit in now. In theory the club and stadium are not connected so no fixed asset exists as collateral to a prospective buyer! 

The story was that a new owner would need to spend £50-60m just to cover the debts, but I’ve no idea how that works, or what happens to ground etc.  I honestly don’t think liquidation is out of the question.

[Hxj]

11 minutes ago, REDOXO said:

any projections?

We will get the real figures shortly.

My back of envelope numbers are:

MSD £20 million

Bank £3 million

HMRC £25 million

Football Creditors £20 million

Mel Morris Nil

Others £5 million

So £70-£75 million.

If HMRC follow their published practice all will need to be paid in full to avoid a liquidation.

So an investment of around £100 million is required to pay the debts and run the club through to the end of the 2022/23 season.

Edited November 12, 2021 by Hxj

[REDOXO]

1 minute ago, Davefevs said:

The story was that a new owner would need to spend £50-60m just to cover the debts, but I’ve no idea how that works, or what happens to ground etc.  I honestly don’t think liquidation is out of the question.

I agree. Ipswich including taking over the debt was according to the Athletic around about what HMRC debts is at Derby County. The two do make a good comparison. One league championship a little European history etc.
 

https://theathletic.com/news/ipswich-town-takeover-latest-completed/dRQ5BYPaRkWB/

[REDOXO]

6 minutes ago, Hxj said:

We will get the real figures shortly.

My back of envelope numbers are:

MSD £20 million

Bank £3 million

HMRC £25 million

Football Creditors £20 million

Mel Morris Nil

Others £5 million

So £70-£75 million.

If HMRC follow their published practice all will need to be paid in full to avoid a liquidation.

So an investment of around £100 million is required to pay the debts and run the club through to the end of the 2022/23 season.

without ownership of the stadium?

[Hxj]

You would engineer the financing to include the stadium.

[Davefevs]

That’s a lot of money for a League One club.

[REDOXO]

13 minutes ago, Hxj said:

You would engineer the financing to include the stadium.

Ok. Not completely sure what that means. Over and above the 100m or some how purchase the stadium separately? If there is a willing seller?

I guess there is an existing lease agreement. Something like the gas had at the dog track? That ended well :laugh:!

I just took a quick gander at League One. Similar clubs with history to Derby include Bolton, Sunderland, Portsmouth obviously Ipswich, Sheffield Wednesday etc. I’m not sure most Derby fans know what a mess they are in. 
 

I just took a look at the delusional web page that’s DCFC fans forum blaming Gibson the EFL and pretty much anyone! FGS! 

Edited November 12, 2021 by REDOXO

[Hxj]

4 minutes ago, REDOXO said:

Not completely sure what that means.

Apologies - you would arrange the deal so that the stadium was included.

[BTRFTG]

5 minutes ago, Hxj said:

You would engineer the financing to include the stadium.

Does that mean the new entity in 'purchasing / leasing' the stadium will incur stamp duty/land tax in the region of £4m, after all, it is worth £81m

If so, HMRC will be pleased....