Hxj

44 minutes ago, Mr Popodopolous said:

The transfer window does not reopen until the summer. Some believe clubs are taking the penalty now hoping that they will be in a position to trade their way out of embargo when it reopens.

This completely misrepresents what has happened.  The EFL are just firing a warning shot across the bows of those who haven't submitted final accounts.  Currently there is no real penalty just the inability to sign out of contract players.  All those clubs who want to, will be able to submit final accounts and agree their FFP position by the beginning of June at which point their embargo will be lifted.

If any club can't or wont do that their embargo will stay.  At which point I hope that they will remain or become complete embargoes until the posiiton is resolved.

I doubt there will be much sympathy from Messrs Lansdown, Gibson and the other 12 who have complied so far.

PS I understand that the quote is not from @Mr Popodopolous it just appeared like that!

A clever move by the EFL in putting all those with no accounts submitted onto an Embargo.

It gives anyone who is a bit slow two months to file the accounts, agree their FFP position and move on.  It neatly avoids a club running into the 2021/22 season having bought a bunch of players without having sorted 2019/20.

Any club not submitting accounts will be deliberately doing so.

As to the claim of 'Financial Armageddon' well it is the Daily Mail.

20 hours ago, Davefevs said:

I find it hard to believe / understand how this didn’t warrant an investigation when they submitted predicted accounts last March.

It may well of done.  However as there is now no FFP test for 2019/20 then they can't fail ...

As @Mr Popodopolous says they have also thrown the kitchen sink at the accounts and altered the accounting date so difficult to really tell what is happening.  My particular favourite is including a provision for the refund of Premier League TV receipts of £7 million, where the original Premier League TV receipts don't obviously appear in the accounts ...

7 minutes ago, Mr Popodopolous said:

Might also add, they released Imbula with a year and a bit of his contract- Feb 22nd 2020 his final Release date, PRIOR to Covid, that could be part of the Impairment bill and this part should be added back for FFP.

Not sure why FFP comes into play, I think you might have this one the wrong way around.  I wouldn't want to reduce their losses.

29 minutes ago, Mr Popodopolous said:

Before I get onto the main points, will any club fail in a 3 year period to 2019/20 or 2020/21 in isolation? Doubtful given that it was rejigged last Summer- it's the average of 2019/20 and 2020/21 loss as the 3rd year in the cycle this time around?

They won't and I didn't mean to imply that they could. 

The more general point that I was trying to make was that this is not just an FFP issue as that is the second stage.  The first stage would be arriving at the accounts correctly.  Applying that to any one club is difficult as it is very much fact dependent.

I can easily make an argument that a substantial impairment is due in 2020 accounts as no significant income was received to March 2021 due to covid.  I can equally make a strong argument that that has to be covid related.  The first is simply the correct accounting and cannot be challenged.  How far the second one goes is interesting.

20 minutes ago, Davefevs said:

I read some stuff recently that COVID losses re impairment was more around you sold a player for £2m that would’ve been worth £6m pre-COVID, and that you had to prove you’d had a £6m offer pre-COVID.

The problem you have is that is more of an accounting issue than an FFP issue.  Under the accounting standards for intangible assets you need to review these at the end of each accounting period.  The value at that date needs to reflect any material changes to the period and the amounts included in the balance sheet must reflect the reality of the position when the accounts are signed off.  Signing off May 2020 accounts in March 2021 would require you to look at the period to March 2021 and decide what input your intangibles will have in generating income in the future looking forwards from May 2020.  Large impairments are inevitable.

The gaming will then come into how you maximise the amount that falls outside FFP as 'ignored due to Coivd' and how much intotal you can push through the period to the end of this season to fit within the FFP limits to 20/21.  

7 hours ago, Mr Popodopolous said:

I wonder if these two events might have been linked? 

Why would you buy Deby County for the rumoured £60 million with all the rubbish hanging over their heads still.

11 hours ago, Mr Popodopolous said:

BIG losses there, wow.

That said Middlesbrough and Gibson strike me as one of the more sensibly run clubs in general, in this- the FFP era...

It looks as if they have managed the transition well.

The wage bill is £30 million, definitely mid-Championship and £18 million of the loss was depreciation on transfer fees.  The balance of fees to be written off at the end of the 2020 accounting period is only £16 million.

They have headroom to lose £80 odd million to 2021 and still meet FFP.

It just demonstrates why Gibson gets annoyed with all the messing around elsewhere.

On 18/02/2021 at 18:39, Mr Popodopolous said:

You called this quite well @Hxj

Last Summer after or during the Derby stuff you mentioned these two clubs- I thought Reading would be but I'm a bit surprised by Stoke given a) The numbers of loans out and b) Parachute Payments!

Thank you @Mr Popodopolous or maybe they just read my post and stole it!

The problem with Stoke is the £50 odd million they spent in 2017/18 on players in their first season back in the Championship.  The 'Something or Bust' sensation is a lesson to all the 'Spend - Spend - Spend' posters on here.  At the end of 2018/19 they had intangible player assets of £80 million with amortisation running at £25 million a year.  How successful have Afobe, Ince, Vokes etc been for Stoke?  The amount that they needed to write off their players for 2019/20 and onwards is more than the remaining value of their parachute payments.

As an aside the charge documents for Birmingham City provided some interesting details on how transfers are funded.

1 hour ago, CodeRed said:

I realise this is all legal but I know which I would prefer.  

I've no doubt what I would prefer as well, my complaint was about the quality of the journalism, not the morals or ethics of football finance.

Publishing badly researched and written pieces does no one any favours, least of all the fans.

44 minutes ago, CodeRed said:

You'll have to explain that please I don't get your point.

 

because as far as I can see.

• Burnley had £42M in the bank, and no debt

 

• The 2 main owners - majority shareholders- sold the club for £100M to ALK Capital

 

• In order to pay that £100M , ALK took £40M from Burnley's bank account and borrowed the other £60M from Michael Dell's MSD company and secured the loan against Turf Moor . The loan interest rate is unknown but MSD have loaned similar amounts to Southampton FC at 9.14% - 9 x the bank base rate.

So 2 months ago Burnley had £40M.....now they owe £60M

 

How can that be right, how can that be of benefit to the club, the fans, the community?

Starting with the Burnley cash.  That may well have been used as suggested, the point is that if Burnley FC Holdings Limited (or a subsidiary of that company), the old parent co, lent the money to Calder Vale Holdings Limited (the company which acquired Burnley FC Holdings Limited) then it would have a debtor equal to that sum on it's balance sheet, so it is no worse off at all.  The £40 milllion still exists, it just sits somewhere else.

Then the alleged MSD loan.  There is no loan to Burnley FC Holdings Limited.  There was a loan to Calder Vale Holdings to presumably fund the purchase of Burnley FC Holdings Limited, £100 million doesn't magic itself out of nowhere.  If you read the legal charge documents it refers to MSD as 'the Security Agent', compare this with the legal charge documents from MSD in relation to Derby County, which refer to MSD as 'the Lender'.  Despite what the sloppy journalist writes there is a important difference between being 'the Security Agent' for a loan and 'the Lender'.  Security Agents are generally used for perfectly legitimate reasons, one of which is to obsure the name of the lender, another is where you have several lenders on a syndicated loan.  I suspect, for a fee, MSD are acting to obscure the fact that the new owners also lent the funds.

So back to the loan.  There is no loan to Burnley FC Holdings Limited or any subsidary, so the football club is not £60 million worse off from the loan.

I accept that the loan to Calder Vale Holdings Limited carrys interest, and that needs to be funded from somewhere.  On the assumption that it carries interest at 5%, that would need a management fee of say £3 million a year between the Burnley FC Holdings Limited and Calder Vale Holdings Limited to cover the cost.  Given that in the last three years the Burnley FC Holdings Limited group has had pretax profits of around £72 million and saved £40 million in cash, we are hardly into rape and pillage territory.

Oh and if the community are really that concerned they could have bought the club. 

As I said on the FFP thread:

"So I'm a Guardian journalist and I am bored so I will write a non-story and dress it up as something else.  I can't read and understand what is detailed on Companies House, but I use that as a source to justify my meaningless conclusions.

"That makes it difficult not to conclude that just to pay for ALK to take over, the club is now approximately £90m worse off, with interest to pay"

Or as an alternative the club is utilising it's cash resources by getting a far better rate of return than it was under the old management, so in fact the company is better off.  But that doesn't suit me as a Guardian journalist so I won't explain how that may have happened."

1 hour ago, Davefevs said:

 

So I'm a Guardian journalist and I am bored so I will write a non-story and dress it up as something else.  I can't read and understand what is detailed on Companies House, but I use that as a source to justify my meaningless conclusions.

"That makes it difficult not to conclude that just to pay for ALK to take over, the club is now approximately £90m worse off, with interest to pay"

Or as an alternative the club is utilising it's cash resources by getting a far better rate of return than it was under the old management, so in fact the company is better off.  But that doesn't suit me as a Guardian journalist so I won't explain how that may have happened.

48 minutes ago, AnotherDerbyFan said:

I should point out, that I think the figures stated in the accounts include add-ons (I certainly hope so!). Total potential add-ons in 17/18 about £13m. I would therefore assume that our amortisation in following years should be lower than estiamte due to not paying out on promotion bonuses and appearance fees? That may explain why the Hearing Decison Document stated amortisation is £25.1m for 19/20 as we had to calculate a 'worst case scenario' - meaning paying out for promotion? It'll still be above £15m either way

The original intangible cost figures in the accounts for new signings in the year won't include any add-ons potentially payable, only the original fee.  The figures in Note 20 of the accounts you refer to are not in the intangible cost figures in the accounts presented, they are known costs, but they may not occur in part or in full so are included as 'Contingent Liabilities'.

As to the numbers above the following intangible additions are shown in the accounts (in £ millions), these include the fees and levies, and any add-ons paid out in respect of previous year transactions.

2015/16 - 29.96

2016/17 - 21.15

2017/18 - 15.0

These are the figures which will need to be written off through amortisation, subject to any disposals of those players.  The difference to your figures appears to be significant, and at fisrt glance probably accounts for the difference that you have with Kieran Magurie.

The provision should be in the FFP figures as it is in the accounts as a deduction and doesn’t fall within the list of necessary adjustments.

25 minutes ago, JoeAman08 said:

Thanks. How does that work then? It doesn’t seem likely Brighton gave us 20m cash for Webster up front did they? 

The accounts reflect the full value of transfer fees agreed in the year.

Any unpaid fees receivable are shown in Debtors, see Note 16 to the accounts.  Any unpaid fees payable are shown in Creditors see Note 18 to the accounts.   These show that the club is owed £24 million in unpaid fees and owes £17 million in unpaid fees, so a net £7 million in cash is due.

Where the transfer agreement contains terms such as additions on appearances or promotions then the estimated value of these is included in contingent assets or liabilities, so do not effect the current financial performance, see notes 27 and 28.  Amount sdue from sell on clauses won't feature in the accounts until the player is sold on.

In any season if a club returns a profit for FFP purposes there are no further tests.

So any club which makes an FFP profit of £1 in 2022 will automatically meet FFP regardless of performance in previous years.

On 08/01/2021 at 19:19, Mr Popodopolous said:

Agree @Hxj like that argument a lot with respect to Sheffield Wednesday and their accounts.

Maybe that is the precise or at least the broad nature of the delay to their accounts- could the EFL be pushing back with that very line of argument about inclusion of it in 2018/19 accounts? Be it at Companies House or for FFP purposes.

I'd expect the EFL under Rick Parry to take that stance for sure or explore it- unsure about under Harvey?

 

I would take the line that these are the submitted accounts for 2018 AP and so they fall within regulation 1.1.3 of the FFP regulations.

Accounts can be restated where there is a material omission or mis-statement in those accounts, materiality is relevant but the stadium transfer is clearly material.

FRS 102 states that an error that needs accounts to be restaed arise as follows: 

‘Omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

(a) Was available when financial statements for those periods were authorised for issue and

(b) Could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.’

In the SWFC case the auditor clearly decided that the adjustment in respect of the stadium sale should be made and therefore the informatiom was both available and taken into account, it was hardly hidden or not discussed.

All in all that makes it tricky to argue that a prior year adjustment is appropriate, in which case SWFC may well have stuffed themselves.

There is an argument for Sheffield Wednesday, which I particularly like, which goes along the lines of -

You have claimed the ‘profit’ in a set of accounts - what provision in the regulations allow you to claim it in another period?

My initial view on Millwall is actually how little impact Covid-19 has had on their results.

Probably because they have relatively low commercial income and 10 months of the period including Christmas had already passed.

The case against Derby will be - is a Private Equity Hedge Fund lending money acting in the ordinary course of banking.

I am sure that loads of legal fees will be spent on that one!

12 hours ago, Mr Popodopolous said:

• Author

•   On 24/11/2020 at 12:07, Davefevs said:

I haven’t read past the first few pages....how is that not an aggravated breach?

Your guess is as good as mine. If we look at Birmingham...

Because the EFL did not contend for an aggravated breach at the Sanctions Hearing see paragraph 20 efl-v-sheffield-wednesday---decision-on-sanction.pdf  

4 hours ago, Mr Popodopolous said:

Sheffield Wednesday written reasons released- well last week, just discovered them myself.

https://www.efl.com/siteassets/efl-documents/youth-alliance/201104---sheffield-wednesday-fc-v-efl-appeal---decision-final-201116.pdf

Few might be interested- @Davefevs @downendcity @BTRFTG @Coppello @Hxj

About to have a quick look myself.

Thanks - interesting read.

Provides some useful insight into the process.

Evening @Mr Popodopolous

There is a new charge in there over the training ground - Mel must be getting very short of money!  Having seen them play yesterday I think finances are the least of the club’s problems.

On 30/09/2020 at 16:24, Mr Popodopolous said:

Thanks. Maybe I've misread it a bit then.

I'm assuming that the rollup means that the 3 years to 2020 wouldn't be assessed in isolation and those look like the headline figures- maybe the segmented results are the ones to look for, well I've done that anyway.

If anyone is interested the accounts are available at https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0930/2020093001616.pdf

The loss for the company and subsidiaries is £26.5 million or thereabouts.  The reported loss for the football club is as per @Mr Popodopolous at £18.5 million.  If I was the EFL  would also be looking at the £8 million of unallocated central costs to see which ones related to football.

As to all reporting to the EFL my understanding is that all the current reporting rules apply as do all the sanctions, so if your are in, or potentially in breach, you can still for example be handed transfer embargos.  The final reckoning and any actual breach of FFP can't happen until the final 2020/21 position is agreed.