DerbyFan

3 hours ago, Mr Popodopolous said:

Alas, seems it is within the updated regs.

People call it a loophole but actually seemingly it's one enabled by the club owners, the EFL- did 18/24 vote for this then? 

Will have to look through the new regs- first I've seen a lot of those actually. Part 2 onwards would appear to be the updated/most recent/relevant.

I still wonder if the ground sale and leaseback might be challenged and adjusted- not excluded but adjusted- for FFP purposes what with Gibson's. Would need a full and far reaching inquiry though. 

Example A- Reading. Their ground was worth around £20m, income from sale and leaseback to owners £26.5m- that's about 32.5% profit margin. Bear in mind Madejski built similar time to Pride Park and adjusted for inflation, £50m to build today.

Example B- saw a rumour that Hillsborough gross figure was £30m- profit margin about 1/3.

To me either of those might pass the "smell test"- I don't approve of any of it but it feels like 25-35% uptick what with post 1992 developments of grounds, new builds, further work, property rises and inflation adjustments- might be within the bounds of normal. Double though, or as good as double? Just struggle to see it, given valuation in 2007 was £55m- unclear what revaluation in 2013 might have been- but for subsequent revaluation I've been taking £55m as a starting point, adding on extra work i.e. additions under Tangible Fixed Assets and subtracting depreciation.

I mentioned this in post 678, I actually quoted that particular section of the rules! (1.1.2 and (a))

The old rules (from the first tweet) are the ones in Part 1 on the EFL website, they relate to 2015/16. The new rules (from the second tweet) are the ones in Part 2 they relate to 2016/17 onwards.

The old rules seem to only be there as a reference because the year 2015/16 was included in the 3 year rolling period leading to 2017/18.

5 minutes ago, Mr Popodopolous said:

Oh I don't like the ground sale at all- Aston Villa certainly the worst of the 4 likely big FFP botherers- by far, but this is a very good post.

Agreed.

The thing about Derby and where they differ to other clubs- by which I mean Aston Villa, Birmingham and seemingly Sheffield Wednesday- we don't know either way yet as still no accounts for 2017/18- was the first team and squad players they sold- seemed like a move to buy time for a restructuring rather than a big FFP dodge/cheat to me- but then it comes down to which accounts used for Derby's FFP submissions as well, is it the Derby County ones or the Sevco 5112 Limited?  

If the latter then yes FFP failed for sure without it, if it was the former then there's a small chance they pass. I've looked over their 3 year figures for Derby 2015/16-2017/18 and it really wouldn't have been a done deal that they fail to June 2018 with the DCFC accounts- grey area. Sevco 5112 though, absolutely it was FFP related! I hope they have to go through some austerity times though, if not fall foul of FFP.

It isn't right I agree- he's usually a good listen though.

@DerbyFan Thanks- will take a listen. The bit about events bringing in £12m per season sounds notable, like you are looking to stick strictly within the regulations in the future. Also do you know if it is "The Derby County Football Club Limited" or Sevco 5112 that is used for FFP submissions?

I've got no idea which accounts are used for the FFP submissions.

I've said before, the club have been saying for the last few years that we need to get our costs in line, we are reducing our costs for the future, the players bought in will be on less than the ones leaving, that will start to come to fruition now that a lot of contracts are ending in a few days time, then there will be a few more this time next year.

3 minutes ago, downendcity said:

Steve Lansdown also realised that there wasn't enough revenue to sustain a competitive club, so set about improving revenue and managing costs through the club's strategy around player purchases and use of the academy. 

These decisions were made with full realisation of the impact of ffp and that the club had to work within those parameters. It also meant that the plans would not have immediate impact and effect but would take time for the club to be properly competitive at the top end of the table, and in the meantime would test fans' patience .

For all that Mel Morris is a Derby fan and wants the best for his club ( as does SL) he is basically saying that he's not prepared to wait, wants success now and is prepared to pay for it and will break the rules in order to do so. He's also saying stuff all the other clubs that are affected by the same issues but are going about things the right way in order to stay within the same set of rules that he seems to regard as being unfair and restrictive to the club soon to be known as Formerly Frank Lampard's Derby County. 

Sorry but that makes him a cheat in my eyes, no matter how "interesting' he might be.. 

 

We didn't break the rules so I'm not sure why that keeps getting mentioned!

That's not what he was saying at all, he's talking about it from our point of view obviously as he's our owner and he only sees how it directly affects us, but if you think he's not aware that all other non parachute clubs have the same issues then I think you've listened to it wanting to hear that and not listened to what was actually said.

32 minutes ago, Mr Popodopolous said:

Mel Morris has defended the stadium sale and leaseback on TalkSport- saw it on another forum.

Also added:

Think he's pretty engaging, pretty interesting tbh- and a good owner who is clearly a Derby fan- just a shame about the ground sale and leaseback!!

Dunno if it's a direct quote or a summary but this bit was also of interest, on the financial side.

Like I say, the ground move is not one I much care for at all but an interesting owner definitely.

It was a really good listen, as a Derby fan I feel very lucky to have him as our owner!

He actually mentioned the stadium valuation, he said about having it valued and paying the valuation and 'if I'd have bought it for a penny less then I'd have had HMRC on my back asking me why I've undersold' or something along those lines, I can't remember the exact wording.

As I had mentioned before, he talked about using the stadium for events, he mentioned that currently it is only used for around 30 days of the year and how many clubs want to use their stadium for events during the close season and that there's too many basically so you don't get much for it and how we can use it during the season.

He talked about having a retractable roof put onto the stadium (as the local rumours had been saying, and also as confirmed in that Sky article) and also finding a way of covering the pitch that was not only quick, but allowed the pitch to grow and flourish rather than yellow and die, as we still want to play good football so don't want a dodgy pitch, he said if this worked the way we think it will then it will allow use of the stadium for 100 events a year and bring in around £12m revenue!

You can actually listen to it via the TalkSport website, if you go via the 'Schedule' link at the top, then click the 'Listen Again' link for the Jim White show, it's on there in 30 minute sections, he came into the studio around 10.45am.

37 minutes ago, phantom said:

By "Tone" I meant that you use terminology and information that I wouldn't imagine a "fan" to know, the impression I (and obviously at least one other person got) was that you were more than just a regular North Stand ticket holder

Ha, funnily enough that's exactly what I am, although add in the word season between Stand and ticket.

I'm certain (because I don't have any inside information) that if you go through my posts and search anything that I've put you will find it somewhere, if not then it's probably something that was in one of the televised fan forums that we've had, or possibly a radio interview, which it's possible may not be transcribed in an article anywhere.

20 minutes ago, phantom said:

@DerbyFan I am intrigued, and apologies for asking, but are you connected with the club in any way?

The tone of some of your posts (as informative as they are) reads more than just your casual fan with knowledge of their club

No, I'm just a fan, someone else asked the same question previously.

I'm not sure what you mean by the tone of my posts, if you mean because I stand up for my club, then doesn't everyone?

I'm not saying anything that's not public knowledge - because I don't have any inside information.

3 hours ago, chinapig said:

Does it strike you as odd to celebrate selling your stadium, getting compensation for a manager and not finishing below 9th?

Time was when Derby County counted for more. Still, big club, should be in the PL as of right etc, etc.

Was someone celebrating? I was just pointing out some facts as you were implying we were such a poorly run club.

I wasn't saying it was perfect, but you have to make the best of every situation and I believe that's what we've done by finishing in the top nine whilst having all those changes.

I know everyone craves stability, but you certainly can't blame the last two managerial changes (well one and that's one expected very shortly) on Mel Morris.

Rowett when appointed admitted he had wanted this job for years (source), he's lived in Derby for over 20 years, his son has grown up supporting us. Who would have expected him to walk out on us to go to Stoke in the manner he did after a season and a bit?

To be honest by the end of the season quite a few of our fans were getting frustrated with his pragmatism. Going into the second leg of the play offs against Fulham trying to hold onto a lead rather than attack didn't help. In hindsight, with that in mind and with the season that followed, getting almost £2m for him was actually great business.

Our fans annoyance with him leaving and the whole 'snake' thing was due to his comments after rebuffing their advances once and signing a new contract here in the January (source) and then choosing to walk out, to the same club, when they were no longer even in the league above us, about four and a half months later! A cynic would wonder if he just didn't want the likely relegation on his CV?

With Lampard - who on earth, regardless of his standing at Chelsea, would expect them, a club that finished third in the Premier League and won the Europa League, to come after a Championship clubs manager after just a year in management?! It feels so odd to even type those words it's that strange a situation.

Our fans obviously want him to stay but we know that's not going to happen, it's Frank Lampard and Chelsea, he's not going to turn them down when they come calling, as much as we'd like him to. But it would be the same situation no matter the club he was at, regardless of their standing and league, if Chelsea came calling he'd be going.

At least when they do the £4m they will have to pay helps the finances. We apparently added in a clause that means it costs more for them to take him because they're in the Champions League, so, if true, that can only be described as clever business sense.

6 minutes ago, chinapig said:

Since nobody backed Gibson I think we can conclude that they don't give a toss about FFP.

Still, are Derby about to move on to their, (ninth is it?), manager under Morris? What with that and selling off the family silver, a stable, well run club, and an example to us all!

If you actually look at the situations at the time there was one (McClaren) in place in May 2014 when he bought a minority (22%) stake in the club, then there was another (Clement) in place in September 2015 when he bought the rest of the club (source), since then we've had four permanent managers (Pearson, McClaren MKII, Rowett and Lampard), one interim (Wassall - after Clement) and one caretaker (Powell - after Pearson). Sam Rush, ex CEO, left in May 2017, when Rowett was in charge.

So while you may say the next one will be the ninth under Mel Morris, it's not as simple as that, it rarely is.

For all the manager changes we've actually not finished below ninth in that time, and we've finished in the play offs for four out of the last six seasons, there's worse clubs to be.

Anyway, at least when Frank goes we'll have made around £6m in compensation from the last two, better than having to pay them off!

It's just been announced that our Chief Executive Stephen Pearce has joined yours and Reading's on the EFL Board today.

Can we assume from that, given that they are selected by the other clubs in the division that there is no problem between us and the majority of clubs re. FFP as had been rumoured on here?

I can't imagine they would have voted our CEO onto the board if there were issues?!

29 minutes ago, Davefevs said:

Your comments re the projected accounts submission id the big flaw in that rule and one we’ve speculated a lot on here. 

If Villa projected a big loss, then their FFP submission might include a footnote that they’ll sell Grealish before the end of of their accounts period to comply. 

And to be fair, there’s nothing wrong with that, hence the flaw in the projected accounts rule!

I agree, of course clubs will do it if it helps them and they're allowed to.

I don't really know what the EFL can do to fix the flaw. Would forcing clubs to have reporting periods ending by April, so that they can't project a sale happening after the season work? But then I don't know if there's a way around that too, would having a sale set up ready to go when the window opened be a way around it? Or because that sale would only go through after the end of April (when the window opens) be enough? Could a club use their post balance sheet events as mitigation if they did fail?

So many questions! 

3 hours ago, downendcity said:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

Playing devil's advocate a little, depending on which club's senior executive is quoted could have a huge bearing on the comment, as if it was, say, a Villa executive then he would say that, wouldn't he? 

As for "taking potshots .......... when on-field results go badly". I remember this sort of comment being trotted out by Leeds fans when our owner was pushing for Leeds to be punished over the spygate incident and I've seen comments from Villa fans along similar lines when their ffp position has been questioned i.e. it's sour grapes or jealousy. The issue is not that club's are aggrieved because their own results have gone against them, it is that if a club has breached ffp but escaped any punishment then  they have gained an advantage over all the other clubs clubs that have complied with the same set of financial rules. 

I am sure all clubs and fans would be more than happy to "let the authorities do their job". It is the fact that the authorities, i.e. the EFL, do not appear to be doing their job when it comes to ffp  that is causing other people to "interfere. The ulterior motive such people have is to ensure the EFL applies ffp rules properly and fairly across all clubs and ensures that any club that breaches is properly penalised - there appears to fairly widespread scepticism as to whether this is the case currently.

 

It could be but it obviously doesn't say who it was, so how can we know? I'm not going to assume I know who it's come from as I have no idea. I haven't seen any other direct quotes referencing the April meeting saying anything to the contrary. Have you seen any?

I can't know the reasoning behind their quotes, I did notice they used the phrases 'that everyone realised' and 'we all realised after discussion'. They seem to be talking like it was unanimous once they'd all discussed it? That would fit with the quotes I posted before from Mel Morris saying that no one voted for Gibson's proposal including his own clubs representative/s (whoever they were as he didn't even seem to attend according to the BBC):

Quote

The Boro chairman, who has reportedly demanded that the spending of Derby County, Sheffield Wednesday and Aston Villa be looked at, is understood not to have attended Wednesday's meeting in Nottingham - which lasted almost five hours - at which the clubs decided not to accept Gibson's proposal.

If the clubs themselves decided not to vote for Gibson's proposal, who are we to say anything different? They were the ones that saw the EFL's presentation, they were the ones that had the discussion, they were the ones that had the chance to vote for it. They didn't.

Unless anyone comes out and says they did vote for it and the quotes from both Mel Morris and the person (whoever they are) quoted above are wrong, or tells us a different reason than the above as to why they didn't vote for it, then that's all we've got to go on, for now.

Re. the 'taking potshots' and 'ulterior motives' comments, you realise those were the comments from the 'senior executive' quoted and not myself? If the other clubs felt so strongly about clubs 'gaining an advantage' or if there was such 'widespread scepticism' they could have voted for the proposal or couldn't they have tried with a different proposal themselves? There would have to have been 75% voting in favour for it to be passed wouldn't there? If there are only a few clubs causing an issue, surely that would have been an easy target to hit from all of the others?

3 hours ago, Mr Popodopolous said:

You beat me to the punch.

Perhaps it was Derby's! Or in seriousness, as you say anyone who is just happy with the status quo- that comment just sounds made up to me, I am not saying it is but it's so toadying, flies in the face of a lot of evidence that it is laughable unless in self-interest.

Where to start with the unnamed senior executive:

It seems that they (EFL finance team) can talk a very good game. Easy to do at times- or being fair maybe this is what happens post the changes, maybe the anger at the March meeting has actually brought about serious changes- Shaun Harvey going for a start is an instant improvement. I'm open-minded on this, though a lot of course depends on the Senior Executive in question.

What can risk bringing a competition into disrepute is owners selling grounds to themselves in a very creative manner- not just Derby, but anyone out of Aston Villa, Birmingham and Sheffield Wednesday too. Reading, though for different reasons- £26.5m in that part of the country seems oddly low to me. They made a modest but barely substantial profit but I query why the value pre sale was £20m or so, Madejski Stadium that is. Shouldn't have been done of course but compared to Derby...?

What can risk bringing a competition into disrepute even more is the prospect that Aston Villa run up an FFP excess of £25-30m over 3 seasons and only get a risk of a points deduction once they've reached PL!

What truly will- or should- bring a competition into disrepute is the EFL lacking the competence to close loopholes before exploitation- namely the ground one- and the dexterity to properly enforce in-season punishments as per their own regulations!!

Total toadying. Laughable, PR. Sounds like someone with an axe to grind than an objective reading of the situation- I mean they may have a valid point even if it isn't one I agree with, but it's so obsequious- with ironically a slight potshot, i.e. the bolded bit.

One more interesting note- the finances of Aston Villa and Derby it seems will be on the agenda at the EFL Summer Conference. Hopefully Birmingham and Sheffield Wednesday also.

I've covered most of this in my reply above, so won't go over it all again - see above for my thoughts on the quotes.

Although I will add, at the time Middlesbrough were still fighting for top 6 with the clubs that he was accusing, is it possible that the executives of the other clubs thought about exactly why Gibson might have been making his accusations ie. he might have believed they wouldn't finish in the top 6 (as did come to pass) and was trying to unsettle some of the clubs they were directly competing with and they did actually believe he had an ulterior motive?

A few things I've found, that may or may not be relevant to the stadium valuation discussion, but I thought they were interesting none the less:

Here (Click 'OUR SPECIALISMS' -> 'Sport stadia')

Quote

Sports stadia and football ground assets are valued in different ways, depending on the purpose of the valuation. As each approach may produce different figures, it’s essential to understand the purpose of the valuation.

Here (Page 3 - Although seems to be from 2006, so it's possible it may no longer be relevant - I've not read much past that bit yet either, it's quite a long read!)

Quote

It is, however, important to remember that DRC is not intended represent a potential sale price (i.e. a value in exchange) and, within the UK, it should still normally be used only within the context of financial reports.

Re. The Villa situation, weren't Birmingham punished for their 2015/16, 2016/17 and 2017/18 season losses? If so, didn't the EFL say at the time that Birmingham were the only club to have failed FFP for this period?

In that case the only period that Villa (or anyone else for that matter) could have failed for is their 2016/17, 2017/18 and 2018/19 losses, ie. ending this season, which although finished, most clubs actual accounting periods don't end until later, giving them time after the season in which they made the loss to rectify it, once their know their future seasons financial position.

With the situation, as it stands, under the current rules (regardless of whether you believe it is right or not to be able to do so) had they stayed down they presumably could've sold players before the end of their accounting period after the end of the season which would've meant they stayed within the rules. I'm not saying it is likely they would have been able to cover a big loss had they stayed down, but they could surely argue they could have, and as they didn't stay down, now no one will ever know if this would've happened or not.

As it stands, having been promoted, I'm not sure when they get their first Premier League payment/s? If this is outside of their accounting period, I assume what they could do is take a loan on their guaranteed income to cover themselves for whatever they are behind by? In the same way that I believe they (and others?) have done when they've taken loans out on their future years of parachute payments?

Even if their losses are above those allowed and they chose to deliberately disregard FFP for this season, ie. not cover the loss anyway to make sure. Unless the Premier League are willing to align themselves with the EFL on the situation then there is sadly nothing that anyone can do about them having a points deduction into next season, this it the problem having different organisations controlling leagues with in the same league structure.

If they do still fail FFP, I guess the only thing the EFL could do to hit them currently is fine them a hefty amount. They might be able to 'park' a points deduction so that the next time they fall under their jurisdiction that comes in play? But I imagine as no one knows whether that will be 1, 2, 10 or even more years from now that might be something they try to avoid, so as not to hit any possible future owners?

If it does turn out that they failed FFP, and we passed, then we would have lost out at Wembley for a second time to a team that failed FFP, but once again there would be nothing that we could do about it, so we'd once again have to deal with it.

I don't know how, apart from making clubs have their financial years ending prior to the end of April (ie. before the end of the season to stop post season fixes), the EFL can fix this situation in the future, so that any punishment for a breach is dealt with in the season in which it occurs.

But even then don't they have months to file them with Companies House? Will they have them ready before that or not - I assume not? So how do the EFL make sure that they have them by the end of April (and go through them all) so that they can hand out punishment before the end of the season? Or is this the point of the P&S submission, you're basically submitting your accounts details to them early? But then how can you do this when you have to file that before your accounting period ends and things could change?

It's not easy is it.

2 hours ago, Mr Popodopolous said:

Needs 21- hell perhaps even as their breaches were smaller and not cushioned by parachute payments without which their (Aston Villa's) breaches would have been astronomical, all 23 clubs to take a stand and tell them where to go basically.

Would have to be a totally united front however- you cannot force a division to play a bunch of cheats surely?

I also read that clubs have no faith in EFL- in a Telegraph article, which rather contradicts the DerbyFan who said that owners were very impressed indeed with EFL financial professionals! Unless this took place after the reforms of course- clubs wanting a far bigger say in the new P & S regs is particularly interesting- could be good, could be bad but definitely appears to be the case that there's no confidence- and rightly so! What took them so long??

Two Telegraph articles suggest a lot of disquiet indeed.

Some key snippets from the 2 articles- key bits within key bits in bold:-

 

https://www.telegraph.co.uk/football/2019/03/07/efl-facing-turmoil-interim-chair-debbie-jevans-expected-step/

 

Second article basically rehashes decent chunks and is past events.

 

https://www.telegraph.co.uk/football/2019/03/01/english-football-league-fire-rebel-championship-clubs-demand/

That article is from March and references a meeting at the end of February (at Pride Park incidentally), the article to which I was referring was after the meeting in April (at Forest), in which the EFL's own finance team did a presentation. It is also the Telegraph and also written by John Percy here:

Quote

A senior executive present at the meeting, said: “The EFL finance team did such a superb presentation on their processes and policies that everyone realised it was totally unnecessary to question their work and second-guess their FFP [Financial Fair Play] findings.

“Taking potshots at clubs’ accounts when on-field results go badly, if encouraged, will lead to a free-for-all which will bring the league into disrepute.

“We all realised after discussion that we need to leave non-sporting matters to the EFL. It is right to let the authorities do their job and not have interference from people with ulterior motives.”

An EFL spokesman said:

“Championship Clubs met on Wednesday where there was a positive exchange of ideas on a number of different issues, including the League’s Profitability and Sustainability rules.  

“The long term sustainability of all EFL Clubs remains of paramount importance to the EFL Board and they will continue to work with Clubs in respect of the rules.  

“Clubs were also reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any Club is found to be in breach of the rules, they will be referred to an Independent Disciplinary Commission.”

There's an interesting article here from 2 days ago about Blackburn's position, which references the stadium sale being within the rules:

Quote

Last month, it was reported Boro owner Gibson would take legal action against Derby for allegedly breaking EFL profitability and sustainability rules before Rams owner Mel Morris hit back, accusing Gibson of hypocrisy.

Waggott said some club have been ‘creative’ with how they have managed their figures, but notes everything is being done within current EFL rules.

He added: “There have been numerous discussions of how people are counting their figures back to profit and sustainability.

“Some are being creative with how they go about it, staying within the EFL rules of course. At the last Championship meeting we had a big presentation about it because it’s been well broadcast and heralded that some clubs are buying their stadiums and offsetting different losses against the permissible development.

“People are working within the rules as they presently are.

“We’re off to Portugal for an EFL meeting and it will be one of the hot topics.”

I do find the quote on this tweet quite interesting:

From here it looks like we weren't one of the clubs that lobbied against Gibson's proposal:

Quote

His proposed changes would have allowed all profitability and sustainability information to be shared with fellow Championship clubs, although a majority vote of 75 per cent (18 out of 24) of the second tier clubs at the meeting is the requirement to make changes.

The fiery meeting lasted over five hours, with Sky Sports News reporting that both Aston Villa and Sheffield Wednesday lobbied the decision in an effort to keep the current rules in place.

These are apparently Tony Pulis' comments from their Norwich programme notes (my bolding, quote from here) :

Quote

In his programme notes ahead of the Norwich City game, boss Tony Pulis echoed the chairman's position.

He wrote: "We saw Birmingham hit by a nine point deduction for breaching the EFL's profit and sustainability rules, Bolton hit with a winding up order and reports have suggested more clubs spending way beyond their means could be facing action from the EFL.

"Some of the figures published are quite staggering.

"Aston Villa's operating loss for last season was £50m while the player costs of both Reading and Birmingham was quoted as being almost 250% of their actual income.

"The total losses for the Championship clubs last season currently stand at £366m and with a number of other clubs still to announce their financial results it is not beyond the realms of possibility that the total figure could be in excess of half a billion pounds.

"Thankfully, here at Boro, we have an owner in Steve Gibson who will never risk the future of this football club.

"Steve is a committed man who lives and breathes this area. The care, attention and support he gives this club should never be under-estimated.

"Steve has worked hard to abide by the EFL financial rules but it is clear that a number of other clubs haven't and that simply can not be right.

"Birmingham's nine point deduction should set a precedent now for other clubs not complying with the rules.

"Over the past year here we have brought money in through the sales of players and reducing the wages and we have cut our cloth accordingly - yet at the same time there are others in apparent breach of the rules and that cannot be right."

He seems to go from being 'clear' that others haven't abided by the rules, to then saying 'apparent breach' of the rules, which sounds not so 'clear' after all?

The reason that I was sceptical in a previous post about the Daily Mail's very recent claim (30 May here) :

Quote

Villa, who were promoted to the top flight after beating Derby County in Monday's Championship play-off final at Wembley, are among a number of clubs — Derby included — currently operating under a soft transfer embargo while the English Football League continue to assess their P and S submission.

 that we were under a soft transfer embargo is because of this quote from John Percy (normally very reliable with our news) in the Telegraph (15 April here) :

Quote

But Derby are said to be operating under a “soft transfer embargo”, which is preventing them from registering Aberdeen captain Graeme Shinnie. 

The midfielder held talks with Derby last week but cannot sign a pre-contract at this stage, as the club’s accounts are being looked at by the EFL.

It is understood the embargo should be lifted later this week, however, enabling Derby manager Frank Lampard to make Shinnie his first signing ahead of next season.

As we have now announced Shinnie (7 May here - I think it's possible that it was only announced this much later because he had an injury in between and knowing how soon he would be back we didn't want to announce him whilst he was injured) then either it has already been lifted and the Daily Mail are wrong, or John Percy was wrong (which would be very unusual) that we couldn't announce Shinnie until it had been lifted.

From the quote in my previous post *678 (from the EFL regulations) that suggests you wouldn't be able to register new contracts if in breach of the rules and we have at least signed Roos on one, that's another reason to believe it has been lifted. All of this together would seem to suggest that the league have passed our accounts.

I have actually been pondering whether a soft transfer embargo is the default position of a (ie. every) club while the EFL finance team mentioned earlier do their own checks after P&S and/or account submissions. As I think we were one of the later ones to submit our accounts to Companies House, it may stand to reason that it then takes longer to clear.

As this post is already very long I'll post my thoughts on the Villa situation later.

2 hours ago, Mr Popodopolous said:

Bolded sections I reply to.

More than likely wrong about the Gellaw Newco number- there were quite a few. Thought of getting on the Land Registry myself but it costs and I have no professional interest so...

Yeah, only just but only just is enough!

Surely it can't be backdated to the 2015/16-2017/18 accounts which is what they would be judged on? Their accounts for that period were due on Feb 28th 2019, which they then shifted back to ending on May 31st 2019- don't know when that was planned but it came up on Companies House on 27th February 2019 and they have been due since April 30th 2019- seem to be down as overdue. If there's a side who deserve the book being thrown along with Aston Villa it'd be them!

Yep- see above for their shifting accounts.

Feels wrong though, if it is to a related party and especially interesting if towards the end of an accounting period where passing FFP up for debate.

Interesting you should mention Reading! I just now looked up their sale and leaseback of ground- I assumed it was sale of fixed assets other than Madejski Stadium but it appears it was for £26.5m- by way of comparison, that is a notable difference to Derby! Whereas Griffin Park for £30m- London premium? Madejski value at time of sale was around £20m, so the profit was £6.5m- £1.2m per season feels low for rent on an asset sold on a 20 year lease tbh- the Madjeski is a 25 year lease I believe. EFL should have insisted on commercial rent arrangements for such moves if to related parties from the get-go, would a bank or a property developer insist on such a low rate? 

Tottenham's worth £1bn is crazy even for football yet if that is what it cost. London, high end PL clubs, capacity, inflation and all of the mod cons added probably played a role, agree property prices a bit of a red herring- Ashton Gate however as per our accounts- 5-6,000 less capacity than Pride Park but many similar features. According to Ashton Gate Limited, as I think already pointed out by Coppello,  £42,548,669 at 31st May 2018, though it wasn't a fresh new build but a big redevelopment nonetheless.

My big problem with this but particularly the sharp rise for Derby is that- what would Barclays Bank realistically offer- assuming they are not linked in any way to Derby. What would a property company offer? If an unrelated company came to a valuation of £81.1m and a rent of £1.2m per season on a 20 year lease? I'd think they were mental but it's their prerogative!! I can only assume the Reading valuation was a lot closer to an open market one, given that there was a profit of only £6m or so.

Yes, I can't see how it can be at all possible that Sheffield Wednesday won't fail FFP at some point, haven't they only sold 1 player (to you) of any significance (or at all?) in something like 3 years? And I seem to remember that their owner actually told them that if they didn't get promoted they would be in big trouble?

Unless of course they can do or have done a stadium sale that covers for period they were going to fail for, that also covers the amount they were going to fail by. But I don't know 1. The valuation or 2. The book value of Hillsborough, to know whether this is achievable or not.

Re. Reading, just wondering, is it possible that the stadium was actually valued (not the book value) at more than the sale price but their owners didn't want to put in that much money so if they had a specific amount of loss to cover (ie. the amount of profit created from the sale once the book value is taken off) that this why they sold the stadium for the value they did? Can you sell an asset for a lot less than you know it is worth?

Griffin Park - very interesting, I find it strange in that case that theirs, even with a London premium, can be worth more than Reading, who are also southern and have a much nicer stadium. I notice from their accounts that Brentford used the same company we did for our 2013 valuation, Jones Lang LaSalle.

Re. Ashton Gate, I've seen an article (Bristol Post) that describes the work as costing £100m in total (including for not yet completed or future developments I assume?). I've also seen a BBC article from 2013 that says £40m developments (presumably this would have been a bit more by the time it actually happened like most things with a few years in between?). Is the £42m odd that you mention, the total valuation of your completed (£40m?) development works and what was already existing? Or is that the value of work that you have had done to it, minus the existing?

All I know, from the accounts, is that Pride Park was valued at £55m in December 2007 by King Sturge LLP (now incorporated into Jones Lang LaSalle), seemingly both highly respected companies for this kind of thing. It was revalued in 2013 by Jones Lang LaSalle (but no new value has been stated in the accounts as far as I can see) and both of these valuations were before the vast majority of the works I listed the other day, in fact I think it was only the internal big screen (and maybe the exterior ones) that were done just before 2013. Then it was valued in 2018 at £81m or whatever it was, for the sale, but it doesn't state by which company.

I don't know what anyone else would offer for it, but if an unrelated respected company has given it a valuation of £55m some 11 years before the sale (and some 10 years after it was built for a total cost of somewhere between £21-28m) then I can only assume they do and that would've been the amount at the time, in 2007.

1 hour ago, Mr Popodopolous said:

Owlstalk.

Owlstalk in that thread made reference to Gellaw Newco 201 having ownership at some stage- presumably because Sheffield Wednesday are or have been planning similar.

Okay, another post on that thread makes clear that it was within the accounting period.

20 year lease, £81.1m- I make that a yield of around £4.05m per season rent if commercial rates applied. Yet I believe it is around £1.2m per season- on a 20 year lease for £81.1m transaction??

I'll go have a nosy, that's another forum I like to lurk on! 

So were they wrong about Gellaw Newco 201? Did someone misread and then miscommunicate it somewhere along the line?

At least we now know that it was within the accounting period then.

Re. Hillsborough, I assumed they wouldn't have sold theirs until this years accounts anyway, 2019?

If they were intending to do the sale for the 2018 accounts then it would definitely have been done outside of the accounting period if the above quote about still being registered with the club at 17 May is true? Although I think they are still to file their 2018 ones?

I can't see in the rules where profit from the sale of fixed assets is excluded from P&S for Championship clubs, so I'm not sure why they have stated this, unless the rules, in full, are not the same as on the EFL website?

The quote I mentioned in a previous post from Mel Morris (article in the Derby Telegraph) specifically said that the sale of fixed assets was allowed in the rules, I can't think why else would you want to sell a fixed asset but to gain a profit?

For comparison, Reading, I believe lease their stadium? £1.1m a season, I seem to recall?* Less capacity but at £50m seemingly cost around double to build in 1998 (only 1 year after Pride Park opened in 1997), down South - so more expensive rental value to counteract the capacity?

*Actually, their accounts seem to say that their rent is only £750,000 to the parent company.

57 minutes ago, cidered abroad said:

Like many on here, I'm totally at a loss to understand the technicalities of the business accounting world. Except that i have always understood that when money is involved, it is incredible how many ways there are for circumventing the rules.

So just a comment on the valuation of a football stadium. When we were trying to get Ashton Vale new stadium approved, we had a purchaser, Sainsbury's, lined up to buy ours. I don't remember the value of the stadium mentioned at the time but it didn't appear to be extortionate.

Surely the value of a stadium is not really measured by what it cost, except for depreciation in annual accounts. It has, in my opinion, minimal value as a stadium because unlike a residence or an office block, there will not be many, if any, purchasers. What does one do with a football stadium, if there isn't another football or rugby club in the near vicinity?

Pull it down and use the land for another building? Thus, the true value is what it would sell for as building land. Correct? If so the value should be in line with other land in the immediate neighbourhood, if there is any.

It surely can't be as simple as only the land having the value, because regardless of the limited usage of a stadium (unless you get creative with it being a performance venue) it has cost something to build and/or make improvements to, can you imagine being the person that has to tell Spurs that their new £1bn stadium is now only worth the land value. 

As the Ricoh Arena debacle shows there doesn't have to be a team in the near vicinity to attract a buyer - they were London Wasps weren't they?

Sainsbury's presumably would only have been interested in the land though (unless they wanted to branch out into the sport world? ) which maybe would have limited the value if they were the only interested party at that time?

47 minutes ago, Mr Popodopolous said:

Haha, well my idea is that bit more creative though- if you're going to pull a stunt, it should be a big one. Two third parties- sounds a good one!

Will respond to all the bigger posts later- saw this on another site though presumably the date indicates the date it was searched- if the transaction occurred later than 30th June 2018 though, it's amazing the flexibility permitted in UK business laws and regs!.

Seemingly owned by Gellaw NewCo 201 Limited- which appointed a Voluntary Liquidator within a month or so. Amazing what Company, Solvency, Financial law and EFL regs permit! This was on the same site- Mel Morris likes a Gellaw Newco it appears.

I'm not sure what all of that means, but does it not say the registered owner is Gellaw Newco 202, and not Gellaw Newco 201?  I'm not sure why the liquidation of Gellaw Newco 201 is relevant - have I missed something?

If the date shown is the date of the search, then surely that doesn't have any bearing on when the transaction took place? Do you mind me asking which site you found it on? If that is the date of a search then I can't help but wonder why someone went looking for this information in January?  The sale was only made public knowledge (as far as I'm aware anyway, ie. I'd not seen anyone mention it previously, and I feel sure someone on our forum or Twitter would have picked up on it) when we released the accounts.

3 hours ago, Mr Popodopolous said:

On a light side note, given it appears to be in the rules.

Why don't Gibson and Lansdown do a ground swap- Lansdown purchases Riverside, Gibson does the same with AG and relevant guarantees about the future of the 2 stadia- with equivalent rent charged, given they get on so well!

No rule against...no loophole forbidding- if you can't beat them etc! 

Ahh, but what are your book values? And why so convoluted, just each buy your own! 

35 minutes ago, Mr Popodopolous said:

I'm not openly stating that I believe they are bent or similar- simply that if the EFL reported them to their bodies, they should welcome an investigation as they clearly have done nothing wrong. Just a bit of a believer in the saying "Nothing to hide, nothing to fear"- in the same way Man City claimed they welcome the investigation by UEFA then perhaps those should welcome a report to their professional bodies? I think it would be good for transparency anyway- who doesn't like transparency after all. That paragraph perhaps reads a bit flippant though- but there are sufficient questions I think for some sort of report but particularly if there are substantive valuation differences for example.

If the EFL's valuation matches the club? Then we have to go with it. It sticks in the craw but we would have to accept it for what it is. A thorough investigation by top of the range accountants, auditors, corporate lawyers and land valuers should take place though and I dare say most Championship owners would agree. I dare say most owners are very rich at this level so would gladly fund it too if they pooled resources- they certainly easily could. The same would go for Birmingham and Sheffield Wednesday too incidentally if they have attempted this.

Don't know- wouldn't be prudent for them to put that sort of thing on a public forum, PL in London IIRC? Though again can't remember entirely, definitely a London club- wouldn't presume to speak for them beyond that. On valuation- and I know this aspect isn't so relevant in building valuations, land let alone stadia- you mentioned house price inflation in Derby. House prices rising- well as it goes, Leicester- which is a good comparison- has higher house prices but a lower stadium valuation. Interesting, but perhaps not so relevant. FWIW, Zoopla- Average Property Price Derby- £210,436...Leicester £232,777. Now I know property valuation has little relation to that of stadia, but Walkers Stadium valued in the accounts at around £38m yet Pride Park goes for more than double!? Bit funny no- it isn't London, Monaco or New York- with respect. Hell it isn't even Bristol (£331,554)- yet AG a fair bit less as pointed out by @Coppello . 

Well that is interesting in itself- see when Villa Park was revalued in 2016, the amount lopped off it was put into the accounts and was down as the cost of impairment. Maybe it isn't obligatory with compulsory revaluations that take place over a given time period, but it is with ones by choice.

Only Steve Gibson knows Steve Gibson's motivations. Playing the long game maybe, who knows. Or maybe Morris offered it in a mocking way- only Gibson will know his reasons but I dare say he believes in them.

A fair bit doesn't stack up with it- not pointing the finger at Derby here (for once!), but I was under the impression that as well as Gibson, my club were pretty angry over the FFP issues, so too were Nottingham Forest and it goes without saying Leeds. Are they too playing a long game- maybe canvassing support and planning an ambush in the form of a vote at this summer's EFL conference?  That would be great!  

I'll read these articles again now- thanks. Well so they did- EFL should have got in independent auditors and lawyers appointed by them before approving- look at Man City now facing a possible CL ban, to think old cases cannot be reopened is patently a view that is held on shaky ground.

Haha suspicious minded? On some things perhaps...on this- yeah. I believe that there are clubs who have been very close to the rules- and actually FWIW I have always had Derby down as being just about in compliance before any such transaction- I have claimed it on this thread pretty often in recent months. Yeah though, I believe clubs may well have flouted the regs or seriously tested the spirit of them, while we and lots more have sold players and abided and it ain't right. It is still possible with a big youth expenditure in 2015-16, that the 3 years to 2017/18 might have had you in compliance, albeit narrowly incidentally! I think it is tight either way, but my main bugbear is that I think given you sold 7 players in that period- 4 or 5 first team and the remainder squad, that if you had breached then the EFL should have applied more mitigation i.e. removed a few from any potential points penalty if guilty due to said sales. Whereas Aston Villa I'd say should have the book thrown, Sheffield Wednesday no real mitigations either but a smaller breach so less punishment. Birmingham got punished and should be watching this with interest.

Agreed- I from time to time will look up other forums, interesting to see perspective- Aston Villa the most odious of them all IMO at this level.

Yeah fair enough- looks inflated though, £81.1m which while not doubled and doubled again. 50%,, double maybe- something like that.

Yeah, input is good- that is the point of forums after all.

They certainly can vary club by club and it is definitely an interesting subject- why else would I make this thread after all!  Think it's interesting in itself and also interesting from a competitive advantage/disadvantage tbh.

Wouldn't say I'm so worked up as such. Passionate about it yes, and if honest quite angry at the EFL- they're a disgrace. Echo chambers are no good though, the input has helped stimulate the thread- different perspective always positive I find.

I can't speak for them, it just surprised me due to situations I've seen or heard about in the past.

I believe that at that meeting it was said the owners heard the briefing by the EFL's own finance people and were so impressed by it, that they trusted them to get things right. I'll try and find a link, it may have been live on Sky Sports News that this was said, not sure, hopefully there will be an article to back this up somewhere too.

That's fine I didn't expect them to say where it was that they worked, but sometimes when people have been together on a forum for a while, things become common knowledge between longstanding members that others don't know so I wasn't sure if others were maybe aware.

It may not have been relevant, I wasn't sure, I saw on Zoopla (maybe Rightmove? one of them...) that Derby has had a 12% increase in property values since 2016, that seemed quite high I thought.

I don't know about Leicester's valuation, that actually seems low to me, when you think about how expensive stadia are to build these days - look at Spurs , but I'm only a layperson.

I don't know if they're a good comparison, but on the other Derby venues I mentioned before, the Arena (velodrome) next to the stadium apparently cost the Council £27-28m to build - opened 2015 (I feel pretty sure the land was already council owned, it was built on an existing car park, so I guess the cost may not include the acquisition of the land?) granted theres a huge amount of wood for the track and all the work that making the actual track involved, but the building itself is pretty simple, nice but basic, only 1500 fixed seats. The Assembly Rooms that had the fire in the plant room (which was on top of the car park, not the main building, so very little damage to the main part) will apparently cost the Council £24m to fully refurbish, the cost to replace it would apparently have been £44m for a 3000 seater music and performance venue with car park. It's even costing the Council another £42m to replace an old swimming pool complex. Like I say, I don't know whether those values are at all relevant, but given the relative sizes and complexity of the buildings involved they could be? As an aside, I have no idea - do construction costs vary much depending on location? Or are most of the differences in costs due to location down to the land value, or the actual location itself being desirable?

Maybe, but Mel Morris doesn't seem to do that, he's very straight talking from what little I've seen and heard (televised fan forums, radio interviews) (the quotes mentioned before I think show this) he's very compelling to listen to, if you watch the clips of him you mentioned previously, I think you'll see. From those quotes he does seem unhappy that even after offering it and seemingly being ignored, it appears Gibson is still going for us, especially with the things that he points out Middlesbrough having done themselves previously, with their representative saying the same thing he is now ie. it was within the rules.

Presumably Forest would be angry because 1. It's us  and 2. I don't think they can do the same as I think their ground is Council owned. Leeds, who knows, although I did notice they were mentioned by the Times as being close to FFP or something in the article you quoted in your other thread, I believe they bought their ground back quite recently too? Maybe they don't have any book value to market value headroom because of this?

Man City are under both PL and UEFA FFP rules - it is the UEFA ones they are supposed to have broken isn't it? We (clubs in the EFL) are under EFL FFP rules, they are not one and the same thing, so surely the situations cannot be compared?

That's the thing, as this point none of us know what the EFL did (or didn't) do with regard to it, which is why I asked what if their valuation was the same earlier, we simply don't know, we (as in the fans of the clubs rather than the clubs themselves) may never know, actually even the clubs themselves may never know, apart from a reassurance from the EFL - I'm not sure exactly what is covered under the confidentiality agreement. They haven't gone against the clubs claim that they okayed it though, so I assume that is accepted by the EFL, and presumably the club have the proof of this. That's why I don't understand how the club can be investigated even at the request of other clubs, that would effectively be the EFL investigating themselves, wave something through as ok and then say oh no sorry it actually wasn't.

This is not the same situation as Birmingham, they must have known they had flouted the rules, they spent a huge amount on very little income (isn't their wage bill alone something over 200% of their income? Ours isn't great but I don't think I've ever known it to be that bad!) but they made absolutely no attempt to do anything about it, and then bought another player when they were under an embargo. I seem to remember the EFL wanted a 12 point deduction, wasn't it 9 for the amount over and above what they were allowed to lose and then the extra 3 for the aggravated breach? I saw their fans arguing that because they ended up registering the player rather than forcing them to get rid, either temporarily, or permanently, that they shouldn't get punished for that bit. Is this the argument the club used? Is this why the deduction was the 9 points and not 12 in the end?

I do see that last part at least as somewhat similar to our situation, if the EFL okayed the sale of the stadium ie. a tangible fixed asset - as we're told they did - and they haven't denied it (not sure whether they knew the valuation or not at this point, however, logically, surely they would have known it was going to be more than the book value, as otherwise why would we have wanted to do it? - the club will know exactly how much the EFL knew at the time though) then we can't be punished for the sale under the good faith rule:

Quote

4.4          Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement).  Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

I notice that the rule specifically states that only The League shall have the right to bring any action. I assume then that should any legal action that Gibson may bring about mention 'good faith' (I don't know if you can actually sue someone for this?!) then the EFL may not be too happy about it, as it would undermine their own 'good faith' rule?

I did notice that you had said that you thought we might be ok for FFP anyway, I also note that the club specifically said (in the accounts - under the 'Financial and business review') that the reasoning for the stadium sale was:

Quote

to fully realise the market value of the stadium from its balance sheet after consideration of the Club's P&S position for forthcoming years.

...

Given the number of clubs in receipt of parachute payments and the level of wages and transfer fees paid in the division, the Club has wished to remain competitive to achieve its desires of Premier League football and undertaking a transaction of this type allows it to do so whilst also remaining within the financial rules of the league.

As it specifically mentions forthcoming years, I wonder if that is the case.

I'm glad that you don't mind my input, I wasn't sure whether I should be here or not, but I thought you might appreciate the different perspective, I'm pleased to see that is the case. I hope I'm not going around in circles (too much...) it's difficult to remember what you've covered before, especially when typing long posts! And it took me a while to notice the multi quote button. 

11 minutes ago, Coppello said:

Yeah but I'm sure that we can agree that the land value difference between Middlesbrough and Derby is not significant enough to create a £40-50m difference. As mentioned, i've spoken to various professional in and around the sports industry and they think it's a bit of a sham. This includes the surveyor who works for a large firm who have become a leader for valuing sports facilities. Whilst I'm sure that the property prices are rising in Derby, it's not exactly London or Monaco in terms of land value. 

I saw your explanation of the development works that have gone on at Pride Park over the last few years but I seriously doubt the capital expenditure will be anywhere near enough to have significant boost (>40%) to the stadium value. As a side note, we levelled a three stands at Ashton Gate a few years ago, added in boxes, top media facilities, a desso pitch, increased our capacity by £8,000, added in a coffee shop/sports bar/new club shop and landscaped the whole area and it still only cost £45m. This value would then have been depreciated if we to do a depreciated replacement cost valuation today. This is where myself, finance professionals in the sports industry and experienced surveyors are slightly confused and why the 'independent' valuation might not be all that it seems. I am sure you can appreciate this?

Regarding your point about reversing impairments, you can only reverse an impairment up the amount of the initial impairment. So my calculations were correct when I said that you can reduce a players value from £20m, down to £2m and back up to £20m. There is a reason why no other football club (that I can think of anyway) accounts for player valuations in the same way.

Your point about the accuracy of the accounting valuations on disposals compared to their market value is actually quite a simple one. If you sell a player on the 10th August 2019 for £20 million for example, you would have performed an revaluation exercise as at '30th June 2019'. Whilst this is the book date, this will actually be performed a lot later, ie around September/October time when the company is audited. This will allow you to accurately account for the players sold and you will adjust said players value to the £20m he was sold for. There is no better indication of a player's value than its actual selling price. This will limit the loss/gains on player trading because it will always been fairly accurate, you would've already recognise an impairment or valuation gain pre-disposal. The vast majority of losses would actually be made in the January transfer window as they would've been revalued several months earlier. 

The big issue will be for players who are not sold in the summer and therefore the accounting valuation is based on an internal assessment. These will fluctuate significantly season-on-season and will result in impairments and reversals all over the shop. As I mentioned, player registrations are not an asset which should be fair valued, it doesn't really follow accounting guidance, creates a lot of risk and makes an auditor shit their pants. Any reputable audit firm would have a real issue with it. 

Regarding your query about the stadium valuation, the depreciated replacement cost method is basically what it would be to build the stadium now and then depreciate to the current level of wear and tear. So it would be the value with the depreciation removed.

Yes I agree it shouldn't make that much of a difference on it's own, I was just thinking of reasons by there might be a difference, even if not that large a one. I don't know why it was valued so high, all I know is that it was according to everything that we've been told. Only the valuers can know the reasons why they gave it the value they did.

I think the reason I find it hard to believe that £80m is excessive is simply because you hear for example that it's costing over £1bn for Spurs' stadium and you think, well ok, I can easily see how it would cost less than a tenth of that to replace ours. Even if that's not actually the case, it's how my mind seems to compute it! Those figures seem crazy for Spurs, I get that it's good but blimey, it's very, very expensive isn't it!

I do think you're vastly over complicating the way we deal with player amortisation I can't remember where it originally came from, but if you read on our forum, everyone is of the same belief (so it must have been said somewhere in the past, I just don't know when or who said it, maybe at a fans forum(?) I'm not sure on that one) that once we amortise a player down, we cannot (or maybe it was do not rather than cannot?) then revalue them upwards in future accounts.

It's been said that we cannot (do not?) put a value higher on a player than they were in the last accounts, and we cannot (do not?) put a value on players that had no value in the first place, ie. Free transfers or youth players, hence when we sell one of them it is pure profit for the books (unless they are a youth player that was actually purchased at some point, rather than fully homegrown, then there might be sell on fees).

It could be wrong, but that is how we all understand it to be, no one talks about putting a value back up again from year to year, only carrying a higher value towards the end of the contracts than straight line amortisation would. ie. a player bought for £4m on a 4 year contract would normally be £1m each year, we might make it £0.5m, £0.5m, £1m and then £2m over the 4 years, so we take a larger hit in the last year, unless we extend their contract, in which case say we gave them a 1 year contract extension at the end of year 3 then we amortise the remaining £2m over years 4 and 5 instead of taking the full £2m in year 4.

It may not be quite as simple as that, but I'm not sure if it's quite as complicated as you make it. Unless we are all under the wrong impression of how we deal with it, which could be a possibility, I just wish I could remember why it is that we are of this belief. 

39 minutes ago, Coppello said:

Also, what do the two owners in dispute have to called Mel Morris and Steve Gibson. I keep thinking your owner is called Mel Gibson!

1 hour ago, Mr Popodopolous said:

Done nothing wrong, nothing to worry about I'd say- so let's get them reported to clear it all up. I think there is a lot that is very creative here so yeah I'd say so. Do I think they would truly let Derby support influence their judgement...doubt it but I believe the EFL should report them yes, especially if their valuation differs significantly to "Derby's". Coppello's valuation of a London stadium being significantly less than this sounded most interesting.

The valuation is not so clear- the revaluation as of 2013 is not so clear- it states that it was revalued in 2013 but to what? The valuation is either what was sold in the 2017/18 accounts excluding depreciation or that what was sold in 2017/18 inclusive of depreciation.

Steve Gibson wanting to make sure his ducks were lined up in a row- we don't know the context of the offer, only what Mel Morris said. Was it a case of "an offer to view accounts (as presented) in return for an undertaking you drop it". Can well see Gibson's reservations here.

Lack of votes also makes me wonder what other clubs are hiding...again we only have the word of Mel Morris, hardly a neutral party.

Why don't you produce some sources some actual proof of some of your more recent claims- you seem to be rather close to this story and rather keen to pump out PR on it- are you "DerbyFan" or "Derby Something Else"?

Also where is your proof that the EFL approved it pre-purchase? You have none...unless of course you are "Derby Something Else"- be it employee, auditor etc. In which case you shouldn't be posting it on a forum- should you.

I mean, you seem awfully worked up for a random fan because of one or 2 slight technical errors and you seem awfully keen to obfuscate, from the original point which is that your club overspent and used very creative accounting to (so far) get round the regs.

Yeah, quick searches will do that- that clearly was not quite the right one...then again I'm not a Chartered surveyor.

I was just very surprised that you'd openly stated that, I've been lurking on forums for long enough to have seen people getting themselves in hot water for casting aspersions on people before.

What if the EFL's valuation matches that of the club?

I don't know which club the other poster works for - you may know as a fellow fan of theirs(?) so I can't know which stadium it is they have worked on a valuation for, there may be reasons why it differs from ours? I wouldn't like to make assumptions on that as I don't know anything about how to value a stadium, the only thing I do assume is that the only people who know how they come to a valuation are the people that have all the facts of why they have done so.

I don't know what the 2013 valuation was, it doesn't appear to say, and the book value didn't appear to change either. From the notes I took it to be an exercise that had to be undertaken, as it said something about FRS 11, but maybe they didn't have to actually change the book value? Again, I don't know, I'm guessing, like everyone else is.

Maybe you're right and that was Gibson's aim, I guess only he knows, all I know is what the club (or Mel Morris) have communicated to us fans. I have no reason not to believe what they're saying, especially on things that can be proved or disproved quite easily. Until anyone comes out with anything different to what's already been said then that's all I've got I'm afraid.

You're right, we do only have Mel Morris' word for it, but given that there were supposed to be representatives from every club in the league there, and none of them have come out and said anything different, then I believe it to be true, I don't get why anyone would think any different when it's something that every club could disprove if they so wished?

What claims would you like me to provide sources on? I'll try my best to find them if you let me know. Re. The EFL approving pre-purchase, I have already provided the link to the Sky article referencing this in a previous post, yes it has obviously come from the club, so you will probably choose not believe it, but where else is that information going to come from? If it is not true then I would imagine the EFL would have come out by now and said this. It doesn't say on the article, but the information seemed to come from Rob Dorsett, he is the local Sky reporter, if the club want to put information out there, this is one of the ways they do it, one of the others being via the Derby Telegraph.

Sky Article

Quote

Sky Sports News has been told that Derby are bemused by Boro's complaint, saying they cleared the stadium sale with the EFL before the deal was done, and they remain convinced it is within the rules.

They also had the stadium independently valued before the sale, and are currently investigating whether they can put a roof on Pride Park, to make it more commercially viable outside of match days.

Quote

Sky Sports News has seen two emails, sent to Middlesbrough by Derby's bosses, inviting officials from the North East to come and view Derby's financial accounts. Boro did not reply to either offer.

You can tell from the second quote that it is obviously the club who have told Sky this, otherwise why would they have seen the emails, they've not just been told about them by a third party, they've seen them, the wording is obviously deliberate.

Derby Telegraph Article

Quote

Derby County chairman Mel Morris has hit back at Championship rivals Middlesbrough and their owner Steve Gibson.

Quote

Derby are adamant they have been fully compliant.

They invited Middlesbrough to take a look at their accounts. The invitation was declined.

"Middlesbrough were offered by us in writing to come with their advisors to go through our submissions for profitability and sustainability, [but] they declined," Morris told DerbyshireLive last month.

Quote

Asked for his thoughts on the latest reported stance by Middlesbrough, Morris said: "I’ll call it out there because I think it needs calling out.

"Sale of fixed assets is allowed in the rules.

"In 2016 a club [Middlesbrough) got promoted who chose to sell the tax loss from the football club to the parent company, because that then makes it revenue which is a positive towards profit to help remain within Financial Fair Play.

"When I raised that at a meeting (in March) where all the Championship clubs met to debate this, the representative from the club said it was allowed in the rules at that time.

"So is this! What is different? You set the mould and we copied your lead, now you’re bitching. He [Gibson] had the hypocrisy to do that.

"Even his own fans called it out on their forums and said ‘how dare we do this with our own history’.

"We discussed this issue again and there wasn’t a single vote for the motions being put forward on this thing, not one, including the club that raised the issue. They didn’t even vote for their own motion.

"It needs calling out because unfortunately I didn't write the rules. It is absolutely hypocritical.

"I consider the timing of their action to be cynical, an open attempt to try and steal our focus ahead of a crucial game. Fortunately, we are motivated by such actions.

"I find this to be entirely out of character for Boro, and their chairman."

Derby Telegraph Article

Quote

Derby County invited Middlesbrough to look at their accounts in private, but the offer was declined.

This was in March when Middlesbrough owner Steve Gibson voiced concern over the finances of Derby, Aston Villa and Sheffield Wednesday.

Quote

The Rams insist they have complied fully with the regulations.

Morris told DerbyhireLive: "Middlesbrough were offered by us in writing to come with their advisors to go through our submissions for profitability and sustainability, they declined."

Championship clubs met at Nottingham Forest's City Ground yesterday and voted against proposals for an independent review and for changing the EFL's financial rules.

The meeting was said to have lasted for five hours and both Morris and Derby's chief executive, Stephen Pearce, attended.

Are those quotes satisfactory? Yes, you have to trust the words of Mel Morris, there are plenty of people who can come out and claim something different if they would like to, but as they don't appear to have...

You're clearly very suspicious minded, I'm just a fan of my club, any 'PR' you think I'm 'pumping out' is just me being a fan, you can believe or disbelieve that if you like, it makes no difference to me as I know who I am. 

I've been visiting your forum for some time as a lurker to see what your fanbase has to say, as I do with every club, yours is more active than most, so I lurked more often, it's an interesting way to pass the time.

I'd noticed your repeated mention of the 'double and double again' of the value in this thread, it seemed this was really irking you as you kept mentioning it and having looked through the clubs accounts recently out of interest, even though I don't understand most of it, I saw this bit was wrong from the notes underneath and when I'd seen that you had mentioned it again I wanted to point it out, if only to put your mind at rest that that wasn't actually the case.

You and others then replied to me, so I carried on replying, if I was wrong to do that then I apologise, I thought your forum might appreciate an alternative view, especially from a fan of one of the clubs that it seems are frustrating you the most re. FFP. Obviously I can only go on the information put out into the public domain, as that's all I'm aware of, like yourselves, but I thought I may be aware of things you are not as I obviously follow things at my club more closely than you would, and I watch the fans forums the club do and then subsequently put out on Rams TV, where things have been mentioned, directly, by Mel Morris and various people from the club.

It's a subject I find interesting, as most people (like myself) have a pretty strong opinion on it, even if they don't (also like myself) seemingly actually understand the full ins and outs of it - no one but the clubs involved can actually understand the clubs positions with regard to FFP, as there are so many variables, so many things can be excluded, the values of which I would assume vary wildly club by club.

I'm not worked up at all, I'd actually thought you were, hence pointing that out in the first place, and then I was just engaged in the conversation, I can leave if you'd rather this thread be an echo chamber? I don't mind either way.

16 minutes ago, Mr Popodopolous said:

A very interesting post that @Coppello

I'll get into it all the most recent posts from you and DerbyFan properly later the most recent posts etc, but I wonder a few things on this.

1) The integrity of the surveyor- yes I have wondered this for a while, without necessarily stating it.

2) The auditors- believe you said the Lead Auditor a Derby County fan? Independence and objectivity surely must be considered in a different light with that info?

3) Not too late for the EFL or its members I should say to conduct its own review. How about interested parties- so therefore Messrs Lansdown, Gibson, Marinakis et al pool resources hire a set of bona fide top independent auditors, bona fide top independent accountants, top independent land valuers and top independent corporate lawyers to launch a genuine review into Derby's finances. Take it to the CAS in Lausanne if necessary to seek access to the fine detail of the accounts. Yes, there is precedent on this, see AC Milan at the CAS in August 2018- related to here, I suspect Gibson turning down the offer of viewing accounts was him making sure he had all his ducks lined up in a row.

I would be surprised if owners were not bang up for this, the only question is the EFL as a Governing body themselves- as you say they're very much inept as an organisation...However were it to be left with the owners, the chairmen this could be a goer! Keep Shaun Harvey away from it though- he didn't even know who owned Leeds when he was there!! I think there would be a lot and I mean a lot of owners up for this. Though not like the Birmingham situation in many ways, one way is similar- them signing Pedersen under embargo got a lot of clubs very antsy- and this move though not necessarily outside the letter of the law, has had exactly the same effect I feel. God knows how Shaun Harvey got the gig though- Clubs appointing a patsy they can run rings round??

Also think the first 2 should be officially reported to their Professional Bodies over this, to check thoroughly their integrity and judgement in this matter. EFL or the above owners should do it.

I'm not so concerned about the sign off of players in the wake that the players were worth x but sold at a loss- that assuages some of those concerns at least IMO.

You want to report people to their Professional Bodies and you are questioning their integrity and objectivity? Why on earth would anyone jeopardise their career for that, even if they do support the club in question? Unbelievable.

The accounts and the stadium valuation are clear for everyone to see, presumably anyone with an accounting background can go through them and find out what they need to, no one has tried to hide anything, they've told people how they amortise the players, and they've told everyone how much the stadium was valued at, if people don't believe that value then there is not much they can do about that one, but presumably they will have all the evidence they need to back it up.

Steve Gibson was actually invited by Mel Morris to view the clubs accounts, with his finance people I believe, twice, and he apparently didn't even bother to reply, according to a Sky article (I think it was the one I referenced yesterday), if he was so concerned then why would he not take up that offer? And if there was anything to hide why would the club make that offer to him - anything amiss would be spotted instantly by his people?

Also according to recent articles with quotes from Mel Morris, that were released just before the final, absolutely no one voted for Gibson's proposal at the EFL meeting, not one person, including, apparently, his own representative!

2 minutes ago, Mr Popodopolous said:

On the valuation front- I'm no surveyor, but a very interesting article.

If anyone has access to this, this will be very interesting- fits almost perfectly Pride Park description!!

https://www.isurv.com/info/1076/valuation_calculations/3866/depreciated_replacement_cost_worked_examples/8

Where to start...

Quote

The football club has been relegated and they never managed to more than half-fill the stadium.

That fits almost perfectly Pride Park description?

Ok.

1 hour ago, Coppello said:

I thought I'd dip my toe back into this thread. Thanks for contributing @DerbyFan, it's always good to have opposing fans views on here and it allows for better debate. 

I don't want to turn this into a dick waving contest (as I know you already mentioned that you're female ) but I feel I'm reasonably qualified to comment. I was an audit manager at a big four accounting firm having worked there for 6 years, currently work in the football finance world, have worked on a stadium valuation over the last couple of months and have also discussed the Pride Park debacle with a surveyor who has conducted four different stadium valuations in a variety of locations in the UK. 

I've commented on here in the past that the organisation that I have a problem with is the EFL for leaving these pretty obvious loopholes open but I think Derby's actions are pretty unethical. I also have a problem with some of the professionals engaged by Derby to conduct the valuation and sign off the accounts. The fair valuing of the players registrations is also questionable practice. 

I'll start with the stadium valuation, I apologise if you have already responded to some of these points to Mr P. but I've quickly scanned over this thread as there is a lot of posts! I appreciate that you have conducted an 'independent valuation' but it is clearly out of line with the market valuations. The club I work for has had its stadium valued over the past few weeks and the final value was considerably less than Pride Park. The club that I work at is London based and therefore I would've expected the land value to give the London club a significant head start before even considering the stadium itself. This raises a few concerns for me personally.

Another club who revalued their stadium per their most recent set of accounts is Middlesbrough. The combined value of their stadium, training ground and headquarters has been revalued at £49.7m also using the depreciated cost method. The notes from their accounts is as follows:

This is an excellent benchmark given they were built three years apart and have almost identical capacities. Whilst this does not consider all of the work performed on the stadium during their 20-25 year lives, the values are remarkably different. Middlesbrough is a notoriously cheaper area, I will admit, but this does include the stadium, training ground and other buildings. 

This does call into question the integrity of the surveyor who performed the valuation. The auditor has a duty to review the report and, whilst they're not experts at valuing stadiums themselves, should consider the credentials of those performing the survey and also perform a benchmarking exercise comparing against other stadiums in the area. As @Mr Popodopolous states, the right thing to do would be for the EFL to conduct its own review but they are completely inept as an organisation and that ship has sailed. Personally I wouldn't sue Derby in the way that Gibson has; as you state you've just exploited a loophole and, whilst unethical, is not against the rules. 

I was not aware of the way in which you account for the player registrations until I read the thread this morning. I can't fathom how this could be allowed by the auditor having looked at the financial statements. As stated previously, accounting guidance allows the fair valuing of assets in many circumstances and this is not a situation where it is applicable. In the most simplistic terms, there is a 'fair value hierarchy' which considers the reasonableness and the level of judgement exercised. The hierarchy is as follows: 

- Level 1 inputs: This is where there is an identical asset in an active market. Players are not like barrels of oil where they are homogeneous and there is not an active market of Jack Marriott's being traded daily. Players are all different and would not meet the level 1 input criteria. 

- Level 2 inputs: These are quoted prices for similar assets in active markets or quoted prices for identical assets which are from inactive markets. In reality, footballers are not really similar assets as the sales prices are so volatile and cannot be reliably measured. Form, contract length, medical history, nationality and age all haze the situation further. The willingness of other clubs to buy a player has a massive impact on the valuation rather than the individual player himself. 

- Level 3 inputs: These are values which determined from observable sources. For example, Mel Morris' excel model or an in-house assessment of other forwards etc. These are the least reliable and is what the player values are based on. 

As you go down the hierarchy the relevance of the valuation decreases. The value of players are volatile and are hugely determined by form, injury etc. For example, say Bristol City sign Assombalonga for £20m and in 19/20 he scores 1 goal. This would result in a massive impairment charge of probably about 80% of his value (I say probably because it is impossible to value!). If he then scored 29 goals in 20/21 he would be revalued up to £20 million again, causing massive volatility in the financial statements. If I told my auditor that I was going to use this method, he would laugh his way out of the door before resigning. 

It is clearly a piece of creative accounting by the Derby County finance team. If I were the audit partner of Smith Cooper Audit Ltd, who sign off the accounts of DC, I'd be sweating that the accounts were going to be reviewed by the governing body as there's some very concerning issues in the accounts. What is even more interesting is that the lead audit partner is a Derby County fan which probably impairs his independence somewhat. 

As I mentioned previously, it's not the club itself that are completely at blame, there's many other 'professionals' that are failing to perform their duties properly. 

 

Apologies all for the length - I'm not sure how many will make it to the end!

 

It's interesting to get the input of someone with some knowledge of the subject that can back it up with examples, however I would imagine there will be vast differences in the various stadia and it's not a one size fits all valuation.

As you mention, they were built 3 years apart and actually ours is based on Middlesbrough's, but I have no knowledge of the work that has been undertaken on theirs since it opened, but I do know, to some extent at least, the work that has happened on ours, so I wouldn't like to say that they should be anything like the same value now, and as you point out, property values in Middlesbrough are much less than in Derby, in fact I believe Derby is one of the places that prices have gone up rather a lot over the years, it helps that we are very central and it's pretty easy to get to anywhere from here I guess.

I notice that our remaining tangible assets amount to around £14.5m, I can only guess that this is the book value of the training ground, I don't think the valuation of this on the books has changed recently either as the book value of them all including the ground from the previous year was £59.3m (and this had been going down at a similar rate for years from what I can see) so minus the £41m we're told was the book value of the stadium at the time of the sale and you're not too far off what's left, presuming the current figure is minus the years depreciation.

I imagine the training ground will now in actuality be valued a lot higher as since Mel Morris bought the club a lot of work has happened on it, including the acquisition of and work to further land (which was maybe a 60-70% increase on the original size - guesstimate from looking at a map) to create more pitches to keep us up to Cat 1 standard, and there is planning permission in place for even more work to take place, which I believe also adds value.

I know that Middlesbrough's training ground is also Cat 1, so I imagine a similar size and probably standard, this maybe gives an idea of the difference in value of the clubs assets. (As an aside, I assume the Hall and golf course aren't included in Middlesbrough's asset valuation - 'other properties' from that quote? I believe Gibson also owns these - surely the value would be even higher if they were.)

As far as I can see the accounts don't mention who did the most recent stadium valuation for the sale, but the previous accounts do mention who did the last two, and having just Googled the most recent one, it seems that the two companies merged in 2011, so they were effectively done by one and the same.

I don't know how it works in relation to the clubs accounts, I've no inside knowledge of them, but others have said that it's a perfectly acceptable method of accounting, just different to use it for a football club. As far as I'm aware having seen discussions on the subject on our own forum, once a player is valued down they cannot then be up valued again, so your Assombalonga example is not how it would actually be done on the books.

There is a section in the accounts that says:

Quote

In the period since the end of the financial year the Company has entered into agreements to dispose of first team players with a net book value of £12,819,777 for £11,704,300

Yes it is a loss on residual values, however it does seem from that they were at least fairly accurate.

*I forgot to ask, from someone in the business would the market rate of a stadium, be the valuation with the depreciation removed, or the value before that is taken into account?

17 minutes ago, Olé said:

Putting aside the stadium thing, I still think this basic accounting twist on amortisation is already highly dubious. @DerbyFan I do appreciate you sharing the club's definition of how you handle player costs as I'd not seen it officially laid out, which is helpful. I have no specific axe to grind with Derby, I have friends who are Derby fans, always find Derby fans decent when we cross paths on trains on match days, and very much enjoy my trips to the area (well, okay, specifically the Brunswick!)

However I just can't get my head round this practice being fair (it seems like an obvious attempt to "game" compliance) and as in bold above, kicking the can down the road to "take the hit" later seems to be incredibly reckless and exactly what FFP is meant to be putting a stop to. That the definition from Derby even explicitly includes provision to negotiate new contracts and re-amortise an existing prior player cost further into the future is barmy to me, as is self evaluating impairment charges.

It seems to me to be continually deferring a lot of real terms costs from the balance sheet until you can get into the Premiership and then release all these accounting anomalies when you can "take the hit" far more comfortably. It's pure accounting sleight of hand. That alone should bring everything else Morris does into question. If the EFL had half a brain they'd define accounting rules so that the whole process of FFP is comparing like for like and not allowing clubs to write their own rules.

Don't get me wrong, the logic of Derby's model is valid - I've often pointed out on this board myself that paying silly money for a young player is something I think SL would do IF wages were achievable, as it's wages that are our real terms drag on the balance sheet and where we get beaten to players by most of our peers. £10m transfer fee amortised (straight line) followed by a likely profit on sale of exciting young player, is simply asset management to a lifelong share trader like Lansdown. 

Therefore one could argue that we should use Derby's residual value accounting. SL doesn't, I assume because it would be very misleading and very dangerous. Players get injured, players don't work out, and most of all players nowadays will run a contract down if they can get a big signing on fee at a future club. Derby's accounting implies certainty that none of this will happen and there is a guaranteed market and return for their players, allowing them to keep their costs off the balance sheet.

It's a neat trick to comply with FFP limits, but it's just a time bomb done in the hope of securing Premier League football before it goes off. And seeing the definition of how Derby handle re-negotiated contracts with re-amortisation of existing costs that still haven't hit the balance sheet, I can see even more there is a process here to keep deferring costs. You could actually give a **** player a new contract on meager terms to artificially defer their cost. And on current form I suspect Morris would.

 

All of the finance people I've seen say that whilst unusual for a football club, it is a perfectly valid method of accounting. I'm not sure whether we're the only club that utilises it or not.

Yes, it means that we have to take the hits at the end of contracts, but we're obviously going to be aware of that, and yes promotion would allow us to do that, however, that doesn't seem to be the only thing we are banking on as we have been taking steps to lower the future wage bill (I'm aware it went up in the last accounts, and may well have gone up again this year - but the players we are bringing in will be on lower wages than the ones that will be going out), but obviously this is a gradual process, helped by players going out of contract, although we then have to take the hit on their residual values, although the wages cut somewhat offset this.

I believe that as a club we feel we can do this because we're pretty stable in terms of income, our crowds, while very slightly down, are still pretty stable for a club that has been in this league as long as we have, we're a loyal bunch.

I also expect our turnover for this season to have increased probably fairly substantially again, partly due to having Frank as manager, and the associated coverage and increased sponsorship revenues that could bring, but also due to 1. Having cup runs in both competitions including ties at Man Utd, Chelsea, Southampton and Brighton, 2. Getting into the Play Offs again but then also getting to the final - it is said there's normally a gentleman's agreement that the losing finalist takes all of the share of receipts for the match, which is not an insignificant amount. Also, due to season ticket holders for next season being included in the first period of sale for final tickets, I believe this will have the knock on effect of helping the income for next season, I'm aware of people that bought one on the basis of being able to secure a ticket for the final. This can only help the financial situation.

13 minutes ago, downendcity said:

Unfortunately, in the real world things change.

The Villa owner, Xia, was financially able to support them and had been doing so, until last summer when he was unable to get money out of his country to here. As a result Villa had major cash flow problems, had not paid their tax bill for a few months and were on the verge of a winding up order from HMRC. 

It was as a result of the situation that befell Pompey, following their relegation from the premier league, that FFP was introduced to protect clubs from owners overcommitting the club financially and beyond it's means. I am sure many clubs can make an argument as to why they should be "exempt" from such limitations, because their owner is a fan and is committed to supporting the club, but as in Villa's situation last year, it only needs the unexpected to occur and all those securities go out of the window.

As I think has already been mentioned on here, the championship is the division with the biggest financial issues, as almost every club needs the support of it's owner to stay afloat. The attraction of the riches in the premier league is such a lure that some owners seem prepared to risk anything to gain promotion - there is a strong suspicion that had they not gained promotion this time around, financial chickens would have come home to roost at Villa. That both Villa and West Brom Brom borrowed against their third year parachute payment during year two following relegation, shows how badly clubs want/need promotion back to the premier league and the financial risks they are prepared to take.

Against this background, ffp protects clubs from themselves and their owners, notwithstanding the owners financial wherewithal and allegiance to the club. Before we start looking at huge changes, dismantling the ffp rules and introducing new ones ( or removing controls completely, as you seem to indicate) I would have though the first step is to get the EFL to make the current rules work properly. 

The situation with Derby's ground sale shows the problems that currently exist and that club's are prepared to "bend" the rules or break the spirit of the rules. You mentioned that is not until the benefit of hindsight that loopholes can be identified i.e. once a club exploits a loophole, and because that will always be the case perhaps the EFL need to reinforce that clubs must operate within the spirit of the rules, and that breaches in this respect will also be subject to penalty. The problem, as has been discussed so often on here, is the doubts that many doubt the  EFL has the balls to take on big clubs, for fear that they will be dragged into legal disputes.

Apart from the fact that Morris carried out the ground sale to avoid a major ffp breach, the real issue with your ground sale is not that Morris did it, but that, given the chance, the EFL did not recognise the loophole and close it before he could use it. I suspect they bottled it because they were worried that if they bought Derby to book for a ffp breach, Derby would argue that the EFL prevented them from remedying the situation by selling the ground.

 At the moment the EFL have dismally failed the many clubs that have worked hard to address ffp, even if it has made them less competitive.

 

 

 

I'm aware that things change, which is why my suggestion is to have the money in a holding account, there HAS to be enough in there to cover both fee and wages for the player (for the duration of their contract) otherwise you cannot buy them, lets face it - the players are inevitably the highest costs a club has to cover, this could be offset against income in the same way as normal, so when it comes to the end of the season and the accounts or upon the sale of said player, you can free up an amount in the holding account for future purchases (providing all other club costs have been met for the season) but no club can ever end up in a situation where they cannot afford a player they have on their books.

This would mean that a situation such as happened at Villa and Portsmouth could not occur again, as the money will already be in an account ready for use, and if that means an owner taking a hit on a purchase, then it's better than the club taking one. It may encourage crazy spending or it may do the opposite and owners may look carefully at what would be the maximum they would personally like to lose, but a reckless owner can't leave a club high and dry.

As I said I'm not trying to make an argument that this should be the case now, and clubs somehow deserve leniency if they have rich or benevolent owners, only that I think it would work as a change to the FFP rules in the future.

I'm also not suggesting removing controls completely, I'm not sure how you got that from my suggestion, there is still control over how much a club can spend, but it is decided by the owner of the club and how much they are prepared to spend and potentially lose, not by the league and other clubs.

You could make the argument that this disadvantages the poorer owners, and yes it does, but the rules as they are now have the same effect, if an owner is not prepared to put money into the club then they can only spend a small amount anyway, but they are still allowed to lose money, and this can only lead to problems somewhere further down the line, it can and does lead to normal businesses losing a lot of money when they inevitably end up in administration, all because a club was allowed to go beyond it's (or it's owners) means and try to achieve the big time. I personally don't think a club should be allowed to lose money, the owner has to make sure they can cover it fully by putting money into the holding account, either from their own pocket, and this cannot be in the form of loans that need repaying, or from player sales.

It may not work, it may be flawed, but what we have now is also flawed and I don't see any way to change it (other than making sure there can be no financial loss for a club) that wouldn't cause untold harm to the EFL's brand, which to be fair is happening anyway because of all the bad press about the state clubs find themselves in, which only seems to be getting worse with each passing season.

19 minutes ago, Mr Popodopolous said:

The two rules which seem to contradict each other, which means there is an element of doubt and interpretation- pulled off Kieran Maguire's Twitter.

This one suggests it IS legit.

This one suggests it is in doubt- and I would also add in 11.3.4 to that for consideration!

111.1 would help cover it

That single rule opens it up again.

Let alone the highlighted bits.

Agree with @Olé that the accounting method for players etc could be worth a look too, it definitely has the effect of kicking the can down the road.

Agree with @downendcity about the detrimental impact to clubs who have complied or worked hard to do so- at the expense of their own competitiveness.

@DerbyFan You're right about loopholes but good governance can close them before they are breached. Like I said before, I doubt UEFA would have waved this through, personally- and they are not great but they're a lot more clued up on this than the EFL appear to be.

Possible Loopholes in EFL FFP, just a few examples.

 Example- Solution

• Stadium sold to Owner or any form of related party- Make it the case that profit excluded from FFP calculations- still comes up on their accounts but not their FFP figure.
• Player sold to Chinese League club owner may have a stake in- Reading mooted to have done this with Aluko. Exclude the profit and only have their remaining amortisation and obviously wages being removed from the books.
• Loan fee with big fee to sister club- Wages maybe off book, but loan fee not counted.
• Over inflated sponsorship by related party- say £10m per season for shirts when the going rate for that club size at this level is say £2m. Simple- it may come up as £10m on published account but refuse to class it as income in FFP submissions. I think they do this already though.

Loopholes can be closed and quickly, and well too- just depends if your organisation- in this case the EFL- is run in any way adequately.

As far as I'm aware the rules you have quoted above are the old rules prior to 2016/17, I do not know if those rules form the basis of the new rules, but they reference previous seasons. As below, all of those rules quotes are from part 1 of the rules, not part 2, part 2 is much further down the page.

Quote

Appendix 5 - Financial Fair Play Regulations

APPENDIX 5 FINANCIAL FAIR PLAY RULES

 

PART 1 – CHAMPIONSHIP FAIR PLAY RULES

 

Notes:

Capitalised Terms have the meanings ascribed to them in Regulation 1 or 16 of the Regulations of The League unless otherwise indicated.  The following Rules are supplemental to the Regulations.

This Part consists of the Championship Fair Play Rules which continue to apply for the purposes of reporting in respect of Season 2015/16, and the consequences arising from those reports.  Part 2 contains the Profitability and Sustainability Rules which are applicable for Season 2016/17 onwards.

Looking at the appropriate sections of the rules:

Quote

1.1.2       Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude costs (or estimated costs as the case may be) in respect of the following:

(a)           depreciation and/or impairment of tangible fixed assets, amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

It mentions depreciation and/or impairment, but not profit.

Quote

1.1.8       Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

Fair Market Value - I believe the independent valuation the club obtained to satisfy this. And the club sold an asset, so that seems to fit.

Quote

1.1.10    Related Party Transaction means a transaction:

(a)           disclosed in a Club’s Annual Accounts as a related party transaction;

The club have made no secret about this being a Related Party Transaction.

Quote

2.3          The Executive shall determine whether consideration included in the Club’s Earnings Before Tax arising from a Related Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, the Executive shall restate it to Fair Market Value.

2.4          The Executive shall not exercise its power set out in Rule 2.3 without first having given the Club  reasonable opportunity to make submissions as to:

2.4.1       whether the said consideration should be restated; and/or

2.4.2       what constitutes its Fair Market Value.

Fair enough, there is the scope for them to do this, if they believe they are required to. I guess we will find out in the next years accounts whether the value has been restated or not, if not, then I assume the valuation was accepted as being correct, and as the club have stated they had an independent valuation, then I presume they have all the evidence they need for this.

I make a point of bolding the word independent as I'm not sure what else the club can be expected to do in this situation, they have stated it was an independent valuation, if people don't believe this then I'm not sure what else they can do, making them pay for multiple independent valuations to make sure they are within the same range seems counterintuitive to keeping costs down to me.

In fact I still wonder if this is why they okayed it with the EFL beforehand, to make sure the valuation was acceptable to them. Obviously if the EFL get their own valuation done, this adds to their costs (or would they bill the club for this?) when they may already trust the one obtained by the club.

Quote

4.3          Without prejudice to the right of The League to refer any breach of rules to the Disciplinary Commission in accordance with section 8 of the Regulations, where any Club is in breach of any requirement of these Rules relating to the provision of information, the Executive may refuse any application by that Club to register any Player or any new contract of an existing Player of that Club.

4.4          Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement).  Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

I presume as we have been able to both sign Shinnie on a pre-contract and hand out new contracts to those already within the club (I know Roos' was done recently, the other 3 seem to have been done earlier) then we are ok as far as this goes?

Of course loopholes can be closed quickly after the fact, but if they are not then clubs WILL take advantage of them, clubs have been doing this for ages, and I cannot see it stopping now.

What you cannot do is close it afterwards and then retrospectively punish clubs who used it, as they:

1. May not have used it if they knew they would be punished - regardless of whether you think it should be or not if something was NOT against the rules as they were stated at the time then it was simply not against the rules.
2. May have done business differently - you cannot turn back time, if they knew something was against the rules and would not be allowed then they would not do it and would find another way around it that was, you may be punishing them for something that would not have happened if they knew they could not do it, and they no longer have the ability to change the outcome. ie. they may have failed FFP without it, but they may also have found a way NOT to fail FFP without it, you're no longer giving them that option and they have therefore failed FFP even though what they did was not actually against the rules when they did it. Do you see where I'm going with this? It's a minefield, and one that I doubt the EFL will want to enter, unless something is explicitly against the rules.

Everyone needs to know precisely what rules they are working to, that includes loopholes they may decide take advantage of, you cannot change the goalposts after the fact.

59 minutes ago, Mr Popodopolous said:

Agree on EFL oversight of owners. Coventry situation seems a shocker. Many bad EFL owners.

Don't agree on FFP- if the system changes in a few years, that is different. However as it stands now, can't see why there should be exceptions or mitigating factors for clubs- supposing the other 21 compliant clubs did not wish to play the ground sale clubs- just supposing an organised joint action- then the EFL would have to act on yourselves and if proven to have done the same, Birmingham and Sheffield Wednesday.

Hard to say- has it got worse because of FFP or despite it? If the rules were enforced correctly, with things like as promised in-season points deductions then we may see a different story. Another argument is that without some form of restraint the problem will be worse still- seems like limitation of losses than break even- if we want to go down that road, a breakeven requirement from footballing operations is the way to go- problem is what would it do to the Championship? Most clubs would have to have a firesale in the short to medium term but in the long term wage rationalisation would work. Simple solution- show proof of break even with zero owner investment or no license to play that season! Same goes for each and every season. There are arguments for and against FFP though granted and profit on transfers is an increasing factor which pushes wages up.

Again part 2 of that solution, clubs that look like breaking their own financial plans put in at start of season by sudden expansive player expenditure, soft embargo- no ifs, no buts, rule clear.

On the other hand, your solution also has its merits- that's for a future plan though, as of now I look at the Championship owners and they don't see the sort in many cases to take this lightly.

My idea of strict breakeven and automatic transfer embargoes- well it would financially stabilise but it would also likely wreck the 'product' though so it isn't feasible- though it is the most financially sane solution.

Of course I was talking about in the future, I know that is not currently how it works, just how I think it should work.

It's the only way I can see clubs not getting into situations such as Bolton, and the knockdown effect that produces to other clubs and to businesses in general who also lose money from the situation.

If the club (or rather the owner) cannot or will not put the money in then you cannot buy, as simple as that. However if they can, and they put that money aside, which cannot be used for anything other than it's intended purpose, ie. for player costs - that would be either until the player leaves 1. At the end of their contract (so all the money set aside is gone) or 2. Is sold (the remaining money set aside for them can then be repurposed) then you can go ahead and buy them without issue.

It's ok talking about a breakeven requirement, and that it would require firesales from most clubs to get into line, however, that doesn't leave many clubs to then actually buy the players that most clubs have to sell!

Again, a club can only sell a player if there is a club to sell to, if most of them have to sell, theres not many able to buy and the transfer window would grind to a halt.

There would have to be somewhat of an amnesty on current players and their current contracts (not re-contracts that happen further down the line after the change) to stop this from happening.

And yes, I can't see it happening as you're correct, it would wreck the product and I cannot see how anyone connected with the EFL (or any other league that considers taking it up) would want that to happen, and that includes the clubs, as it would leave them in an extremely weak bargaining position for absolutely everything, including TV rights and sponsorship, which then in turn further harms the amounts clubs can spend and creates a vicious circle.

And anyway there would still be clubs who find the loopholes, ie. selling a player to a 'friendly club' (one they have other links to who do not operate to the same rules as ours) they would just be different loopholes.

There are loopholes in everything, you just have to find them, I guess it's actually seen as a skill in itself to be able to do that.

6 hours ago, Mr Popodopolous said:

Interesting- Derby related- tweet.

Any ideas on this one @DerbyFan ?

I mentioned earlier that I thought this could be to do with their residual values and FFP and that I expected the release of them to be into July, whilst it could still be that, at least partly, I've just seen a tweet from a local journalist saying that the protecting their value part was down to sending them out on loan or in Johnson's case him becoming quite important for us at the end of the season. If they impressed, they would at least have value for us to utilise, rather than being out of contract, and therefore having no value to us. I can see the logic given they were 'vastly reduced terms', it will be interesting to see when they get released. In Johnson's case I still expect him to stick around, unless someone makes us an offer we can't refuse.

1 minute ago, Mr Popodopolous said:

Yeah, ultimately you're right. It is the case that he owns it, he is a fan- fans who own grounds even if they sell up club, don't tend to leave their club in the lurch with nowhere to play!

Banter aside it's actually not an issue I make light of.

I know what you mean, some clubs have been left in a right mess with theirs, Coventry as you mentioned, I wouldn't like to be in their situation, it can't be fun not knowing where you're playing next season, every season as it now seems.

I do think the EFL can do more to help clubs who are genuinely in a mess, owner wise, that is definitely where the focus needs to be in my opinion.

As long as an owner can prove they will continue to fund every piece of business they do, fee and wages, I can't see the problem personally, although that should maybe be within reason, as fees and wages are already sky high (is it just me or has this gotten WORSE since FFP came into play? I presume as everyone wants to maximise fees due to FFP, and as wages are generally connected to the size of the fee, they naturally go up too) even if that means putting the funds for this in a holding account prior to the season. Surely it is more damaging for football as a whole when clubs go out of business (or close to) because they are spending money their owners aren't prepared to fund. Then there was the situation with Bolton and FGR to do with Doidge, that should never have been allowed to happen, I presume that really messed up FGR's budget, it was a huge amount of money for a club at their level.