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Derby Deserve Relegation; Are the Football League going to bungle this one too?


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1 hour ago, WarksRobin said:

 

The bit I don't get about the MSD stuff, well there are a few bits but whether that £15m is the sum total of all the loans/charges between MSD and the club plus of course Gellaw Newco 202 or just one of them...because there was one in August 2020 and one in October 2020.

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1 minute ago, Mr Popodopolous said:

The bit I don't get about the MSD stuff, well there are a few bits but whether that £15m is the sum total of all the loans/charges or just one of them...because there was one in August 2020 and one in October 2020.

Could this be down to the use of the word “Derby County” as opposed to the myriad of companies in play?

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25 minutes ago, Davefevs said:

Could this be down to the use of the word “Derby County” as opposed to the myriad of companies in play?

Yeah true...the administrators will definitely earn their cash here, it seems a proper tangled mess.

One possibility perhaps is that Mel keeps paying it off if it's the one secured against Pride Park, and charges Derby a significant rent to match the repayment schedule.

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6 minutes ago, Mr Popodopolous said:

Isn't there interest that accrues on HMRC debt- or does that go out the window with time to pay?

Interest is still payable on time to pay.  But clearly any compromise will take into account the total liability including interest and late payment penalties.

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1 hour ago, Mr Popodopolous said:

The bit I don't get about the MSD stuff, well there are a few bits but whether that £15m is the sum total of all the loans/charges between MSD and the club plus of course Gellaw Newco 202 or just one of them

The MSD accounts state simply that "one of the underlying borrowers associated with a £15 million loan held as of year end, entered into administration."

I would say that the total MSD exposure to The Stadium Group and The Football Group was £15 million (plus interest and costs).  No one in the outside world has seen the loan documentation and so no one knows who the actual borrower was.

The decision of the directors of the football club to put that company into administration triggered the rights of MSD to appoint Administrators even if the football club had no debt due to MSD because of the  the legal charges put in place.

Edited by Hxj
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I mentioned the FFP/P&S position a little while ago and my calculations against what info is in the public domain and possible guesswork as well...following on from my last posts on it, I have to say it has suddenly gone a bit quiet since admin took over on the punishment front but the EFL must press on, for the good of the game/integrity of the competition etc. Nobody's fault but Derby's or Mel's more likely that they are facing a combination of FFP and administration simultaneously.

Anyway, going to try and recalibrate some of the numbers using a mix of the info posted by the Derby fan and info in the public domain, ie pulled from the Independent Panel last August.

P&S losses to 2018- from the Independent Panel 1st Hearing- using the Derby method

image.png.cb321e543f76d7bbab2f58a5a6974842.png

That of course was with the £74.4m valuation and the valuation shooting up to £81.1m would have cut things, as indeed Derby showed in their calculations.

image.png.ff8b7b18353c022510431e01da5a2f91.png

This amortisation- and this is where things can start to change but so far so good...but this uses the Derby method.

image.png

With credit to @AnotherDerbyFan for this info. 

Change to the 3 years using straight Line method. Although in fact the final result varied again slightly by the time of the final results in March.

image.png.71a17fa5b9d9c0e9600efc6250e5d5c8.png

The final 3 year outcome therefore would have been- using the Derby method, a P&S loss of £21,487,000.

Total 3 year amortisation to 2018 using the Derby method- as above clearly rounding will exist

£14.95m

Total 3 year amortisation 2019 using the straight line with extension method

£35.93m

Minus the additional £2m profit on Ince.

£21,487,000 + £20,980,000-£2,000,000=£40,670,000. That's only a 3 point overspend though, not 4. 

Total 3 year amortisation using the straight line method

£36.29m

Minus the additional £2m profit on Ince.

£21,487,000 + £21,340,000 - £2,000,000=£40,827,000. Again that's only a 3 point overspend, but not 4.

The Ince profit in either case would change 3 to 4...but otherwise it's 3.

To 2019!

Projected...

image.png.c9fbe86f339938c82750e3f6ca23d7f2.png

...Then updated.

image.png.2a4ecf44ac0469051e4d2f734de1867c.png

The sensitivity about rent...does this mean it should bump up the P&S losses or bump them down? Basic maths says that it is a fall of £617k post the 30th June as set against the projections in March.

3 year amortisation to 2019 using the Derby way

£16.18m

Total 3 year amortisation 2019 using the straight line with extension method

£38.39m

Total 3 year amortisation 2019 using the straight line method

£41.06m

Recalculated P&S to 2019 using straight line with extension method

That would be an addition of £22.21m to the £37.1m figure- minus £2m improvement for Ince and say £11m for Vydra etc.

£37.1m + £9.21m Net=£46.31m. Isn't that a 6 point deduction an overspend of £7.31m. Written Reasons for Sheffield Wednesday's sanctioning hearing suggest so.

Recalculated P&S to 2019 using straight line method

£37.1m + £11.88m Net-£48.98m. That's a 7 point deduction using that tariff.

Clearly the need to drag it back out and analyse and reset certain years where appropriate, this could take some calculating and this throws it up in the air somewhat...but there is a starting point. It doesn't evenly fall so the reset to £13m for periods and assessment against that would be interesting and this is a starting point.

Restatement of that mere 3 year period however can cause a significant ripple effect for better and worse.

Edited by Mr Popodopolous
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7 hours ago, Mr Popodopolous said:

This amortisation- and this is where things can start to change but so far so good...but this uses the Derby method.

image.png

With credit to @AnotherDerbyFan for this info. 

I'm not convinced by those figures, as except for 2015/16 I can't tie them into the accounts.  The relevant additional intangibles in 16/17 were £21.1 million and in 17/18 were £15.0 million and the 2018 accounts refer to acquisitions of £18.5 million.

@AnotherDerbyFan's figures might be right, just presented differently.

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7 hours ago, Hxj said:

I'm not convinced by those figures, as except for 2015/16 I can't tie them into the accounts.  The relevant additional intangibles in 16/17 were £21.1 million and in 17/18 were £15.0 million and the 2018 accounts refer to acquisitions of £18.5 million.

@AnotherDerbyFan's figures might be right, just presented differently.

Those figures look pretty detailed to me, giving the amortisation in the accounts to 2019 and with different methods- and we know of it up to and including 2019/20 for the projected based on the 2019/20 spike in amortisation under the Derby way- I think Upfront would represent the total additions in a season and beyond in fact.

I looked at the additions at times in the past but not of late- and could represent a huge job trying to ascertain the average length of a contract, let alone extensions.

Either way it seems plausible to say that once restated using the EFL's preferred methodology, P&S is failed- simply a question of by how much and how many times. Oh and the thorny issue of how you recalculate T-1 and T-2 to assess T in 2019 certainly.

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Interesting to note that a Derby MP has taken to Twitter moaning and indeed wants to meet the EFL etc.

Special pleading is one way to describe it. I'm sure that fans of clubs adversely affected by Derby's financial activities in recent times would also take a strong view.

What a state of a letter, as in so one eyed...not a word of criticism of Mel, the CEO or his pet auditor, not a word about the £28m in HMRC debt, not a word about football insolvency regs to offer balance and context, not a word about multiple alleged breaches or attempted alleged breaches of P&S in recent times...

...If Derby are a pillar of the community, then she is a word that is very like pillar but has a very different meaning. ;)

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17 minutes ago, Mr Popodopolous said:

Those figures look pretty detailed to me, giving the amortisation in the accounts to 2019 and with different methods

I agree

17 minutes ago, Mr Popodopolous said:

I think Upfront would represent the total additions in a season.

So did I, it agrees the figure in the 2015/16 accounts, but not those for the two later years.  The accounts figures are about £10 million more, which has a significant impact on the losses.

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52 minutes ago, Hxj said:

I agree

I'm inclined to go with it at this time...even using that and possibly a little bit of optimism bias on the 2018/19 upswing for profit on player sales and amortisation there is still quite possibly a fail or 2.

52 minutes ago, Hxj said:

So did I, it agrees the figure in the 2015/16 accounts, but not those for the two later years.  The accounts figures are about £10 million more, which has a significant impact on the losses.

It could be because they separate out Player registrations and Transfer fee levies and other associated costs into two categories, that's in the Sevco 5112 Limited 2018 accounts. An example would be that £30m in 2015/16 seems to correlate but once you add in that 2nd category it goes up by £4-4.9m.

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While I'm at it I forgot to ask you @Hxj

Unsecured Football Creditors- is this a new thing? Cocu was described as such in the Telegraph this week, and John Percy is a journo I rate highly but I don't see how it works without Cocu's consent and is in accordance with EFL/FA regs.

There were reports last year that he chose to forego some of his payoff which is fine- as long as he chose to.

Alternatively there could have been some contractual clause that said he would only get x if sacked by y or if sacked at all- again he would have signed that and can have few complaints.

Those scenarios aside though, there is nothing that I can see which enables the administrators to choose to get him to take a haircut and remain compliant with relevant regulations.

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2 minutes ago, Mr Popodopolous said:

Unsecured Football Creditors- is this a new thing?

I don't believe so - I think that it is just a statement of the obvious of what Cocu's debt is.  It is not secured (unlike MSD) and it is a Football Creditor.

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16 minutes ago, Hxj said:

I don't believe so - I think that it is just a statement of the obvious of what Cocu's debt is.  It is not secured (unlike MSD) and it is a Football Creditor.

Thanks. Ah yeah but the implication was that he wouldn't need to be paid in full as a result of this status. Think it even stated as much in the article...unsure the EFL would concur. If it's his choice or a contractual thing then the admin thing doesn't come into it so much. Could be sloppy reporting too.

Quote

Derby’s financial problems also include the £26 million owed to HM Revenue and Customs but Cocu, who was dismissed by Derby in November, will not receive his full compensation of around £5 million as he is now an unsecured football creditor.

Again it goes against everything I have read on it. I assume that sources close to the club or close to the administrators might be the origin here. I wonder if the administrators are trying to class him as such- there's literally nothing anywhere that differentiates between classes of football creditor however, this aside.

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18 minutes ago, Mr Popodopolous said:

the implication was that he wouldn't need to be paid in full as a result of this status

There is some wriggle room in the EFL guidance and regulations - I think that the guidance uses the word 'may' when referring to agreements with ex-managers in the sense of 'those contracts may be football creditors'.

Either way the English needs to be tightened up - the word 'fooball' or the word 'unsecured' should be omitted.

Edited by Hxj
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23 minutes ago, Hxj said:

There is some wriggle room in the EFL guidance and regulations - I think that the guidance uses the word 'may' when referring to agreements with ex-managers in the sense of 'those contracts may be football creditors'.

Either way the English needs to be tightened up - the word 'fooball' or the word 'unsecured' should be omitted.

Thanks, will look to read up further on that- sounds a real new one. Golden share in exchange for settling of football creditor debt seems a fair bargaining chip also, indeed I've read that is a condition of financial restructuring.

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On 07/10/2021 at 08:11, Hxj said:

I'm not convinced by those figures, as except for 2015/16 I can't tie them into the accounts.  The relevant additional intangibles in 16/17 were £21.1 million and in 17/18 were £15.0 million and the 2018 accounts refer to acquisitions of £18.5 million.

@AnotherDerbyFan's figures might be right, just presented differently.

Those figures were from Transfermarkt. I may have used them at the time due to laziness.
We can get more accurate figures off the post balance sheet purchases which covers summer transfers. Estimates still required for 19/20 onwards winter windows.

image.png.a2d5b263a3b6bf547944e9cd4f16273c.png
PBSP = post balance sheet purchases

So I take it these calcs to figure out the total for each season:
15/16 = 22.056 + Blackman + Camara + Olsson + 0.323 (winter agent fees)
16/17 = 14.184 + Nugent + McAllister + winter agent fees (total agent fees = 1.962)
17/18 = 12.763 + Jerome + winter agent fees (total agent fees = 2.180)
18/19 = 18.541 + winter agent fees (total agent fees = 4.293)
19/20 = Bielik + agent fees (total agent fees = 2.142)
20/21 = Jozwiak + Byrne  + agent fees

Estimated Totals:
15/16 = 27.559
16/17 = 17.034
17/18 = 14.293
18/19 = 19
19/20 = 9
20/21 = 4.2

@Mr Popodopolous average original contract length is 3.3 years, but the players signed for big fees were all 4 or 5 years

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17 minutes ago, Leveller said:

I find it fascinating that there is in depth analysis of the accounts on OTIB, while there seems to be very little actual analysis in the Derby forum.

Yes. It’s fascinating the depths people will go to ignore the obvious and blame someone else! Cognitive Dissonance at its finest. 
 

We wuz framed by The EFL and a cabal of deep state football chairman lead by someone named Gibson guv!

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Going to have a very quick stab at the restated to 2019 when using the figures we have to hand as my guide once we factor in restatement of T-1 and T-2 to set the target in T.

When I talk of Profit and Loss I am talking about the adjusted earnings as opposed to the actual pre tax profit or loss.

Quote

The final 3 year outcome therefore would have been- using the Derby method, a P&S loss of £21,487,000.

Total 3 year amortisation to 2018 using the Derby method- as above clearly rounding will exist

£14.95m

Total 3 year amortisation 2019 using the straight line with extension method

£35.93m

Minus the additional £2m profit on Ince.

£21,487,000 + £20,980,000-£2,000,000=£40,670,000. That's only a 3 point overspend though, not 4. 

Total 3 year amortisation using the straight line method

£36.29m

Minus the additional £2m profit on Ince.

£21,487,000 + £21,340,000 - £2,000,000=£40,827,000. Again that's only a 3 point overspend, but not 4.

The Ince profit in either case would change 3 to 4...but otherwise it's 3.

That was it to 2018.

To 2019!

The loss using the Derby method in 2016/17 was £13,407,000.

With amortisation of £5.04m as part of that.

Pretty sure the player sales were academy products in that season with Ince the following? No adjustment on profit perhaps.

With the 3 year amortisation using the straight line with extension method

£12.58m- an increase of £7.54m

With the 3 year amortisation using the straight line method

£12.64m- an increase of £7.6m.

Depending on which you choose, it's £13,407,000 rising to £20,947,000 or rising to £21,007,000.

The profit using the Derby method in 2017/18 was £7,207,000. Using the Derby method the amortisation totalled £6.54m.

Add in the Ince profit on disposal improvement of £2m as well and that's £9,207,000.

With the 3 year amortisation using the straight line with extension method

£14.10m- an increase of £7.56m.

With the 3 year amortisation using the straight line method

£14.29m- an increase of £7.75m.

Either a profit therefore of £1,647,000 or £1,457,000.

Resetting is an issue therefore, how do you reset to £13m losses? You can't! Resetting could give a huge advantage going into 2018/19 but not resetting could hinder. This is the issue, how do you assess 2018/19?

The crudest and simplest way would be to assess the remaining £39m loss after these two methods. At this stage, straight line with extension methods gives a T-1 and T-2 aggregate of £19,300,000 with a target therefore of not exceeding £19,700,000 or failing that it gives a T-1 and T-2 aggregate of £19,550,000 therefore you cannot exceed a P&S loss of £19.450,000 in 2018/19 or you fail.

Resetting 2016/17 to £13m though would give a huge advantage due to the profit in 2017/18 however.

Anyway, the figure using the Derby way in 2018/19 as per the EFL written reasons- and this was updated post June 30th 2019- was £30.9m. Amortisation=£4.6m, £11.71m and £14.13m respectively but I also reckon an £11m improvement based on Vydra etc.

£19.9m + £7.11m=£27.01m or + £9.53m=£29.43m.

The reset causes an undoubted issue though. Like I said at the start, restating one set of 3 year accounts creates huge issues that span from then ie 2015/16 to the present day.

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10 hours ago, AnotherDerbyFan said:

We can get more accurate figures off the post balance sheet purchases which covers summer transfers. Estimates still required for 19/20 onwards winter windows.

Thanks - appreciated.

I have reworked the figures based upon the disclosed accounts figures and assuming that they are all 4 year contracts and on a straightline basis.

                     
      2015/16   2016/17   2017/18   2018/19  
                     
  Upfront   30.65   21.10   15.00   18.50  
  Adjustment   0.00   5.56   3.96   2.22  
                     
  Derby   3.37   5.04   6.54   4.60  
                     
                     
  Original   9.36   14.03   16.67   17.07  
                     
  Adjustment   -5.99   -8.99   -10.13   -12.47  
                     
  Cumulative   -5.99   -14.98   -25.11   -31.59  
                     

 

My estimates show the extent of the benefit gained by Derby.  The Cumulative figures are the amounts by which the losses were possibly reduced in the three year FFP window by the non FRS 102 compliant amortisation adopted by Derby.  Those figures may well be a couple of million out either way, but give a good impression.  There may well also be adjustments necessary in respect of 'Profits' on sale.

However it is clear that the level of advantage is significant.

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On 08/10/2021 at 12:50, AnotherDerbyFan said:

Those figures were from Transfermarkt. I may have used them at the time due to laziness.
We can get more accurate figures off the post balance sheet purchases which covers summer transfers. Estimates still required for 19/20 onwards winter windows.

image.png.a2d5b263a3b6bf547944e9cd4f16273c.png
PBSP = post balance sheet purchases

So I take it these calcs to figure out the total for each season:
15/16 = 22.056 + Blackman + Camara + Olsson + 0.323 (winter agent fees)
16/17 = 14.184 + Nugent + McAllister + winter agent fees (total agent fees = 1.962)
17/18 = 12.763 + Jerome + winter agent fees (total agent fees = 2.180)
18/19 = 18.541 + winter agent fees (total agent fees = 4.293)
19/20 = Bielik + agent fees (total agent fees = 2.142)
20/21 = Jozwiak + Byrne  + agent fees

Estimated Totals:
15/16 = 27.559
16/17 = 17.034
17/18 = 14.293
18/19 = 19
19/20 = 9
20/21 = 4.2

@Mr Popodopolous average original contract length is 3.3 years, but the players signed for big fees were all 4 or 5 years

Thanks, will have a proper look at this over the weekend probably. Appreciated.

What seems clear to me is that with restated accounts Derby have failed FFP to 2018 and given the Lampard year quite likely 2019.

Although even under the Derby way assuming all amortised or impaired in the usual way for P&S if still in the Championship it seems like it would have been more a matter of when not if the fail comes

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One more bit of news, BBC article suggests that Pride Park as part of any takeover would be sold for significantly less than it's 2018 sale price.

Tax and P&S implications? I cannot see other clubs taking that well at all. As for tax, is this just for RPTs or is it applicable even if arms length?

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One more thing I forgot to ask @AnotherDerbyFan

Apologies if already covered and I missed it, but the apparent separation out of Player Registrations which I assume to be the basic fee-and the other category- which is Transfer fee levies and associated costs- how are we treating this financially/accounting wise?

Is this included in your overall figures as they too would need amortising surely.

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How Derby fans cannot get their heads around the disgraceful behaviour of Morris is astonishing . It is very different that someone with money wants to spend real money compared to someone who tried to bypass FFP but without actually spending  hard cash . Overspending is an argument , but overspending without actually spending real money is the real issue here . Morris is a disgrace snd has taken Derby fans for a ride 

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