Mr Popodopolous

Thanks for the explanation @martnewts am slowly getting the hang of it a bit I think. Yep, that's what I thought- in my initial workings- revaluation upwards plus the write back (I called it deletion or removal or something) of the past Depreciation. Yep, they were similar to my sums too. Not an asset then? Well all I do know is that neither Mel Morris in 2015 nor Global Derby in 2007/08 decided to upgrade Pride Park based on fair value- so the Revaluation Reserve stayed put, save for depreciation over the years. So unrealised surplus in this instance would be the Revaluation Reserve? To be realised on sale of Pride Park? Thanks, was looking for one of those but couldn't find. Still struggling to see how £81.1m however! Not when valued at depreciated replacement cost, and given how buildings do depreciate. Yeah, that makes sense I guess. Also wouldn't have hurt with the purchase price either for Tony Xia of course... Villa Park sale according to Land Registry went through on May 23rd 2019- when they were still technically a Championship club. Impairment wasn't fully reversed though, seemed to be down £44,593,000 in 2015/16 but the add back in 2018/19 was about £28-28.5m. I'd have to pull up the exact figures later but it feels in that ballpark. Gross or net of depreciation and subsequent deprecation I'm unsure.

Thanks for the explanation, been trying to piece it together somewhat- like I say though seemed to be no evidence of tax paid by Derby in 2017/18. Which is neutral because under FFP, tax isn't factored into the P&L anyway. Does it add to the value though, or is this something different? I'm still trying to work out given the historic revaluation, how there was both a revaluation reserve and an upwards revaluation of around £39m back in 2007! This £55m valuation was at depreciated replacement cost. This was reflected, save for a few hundred pounds almost exactly in the books in terms of the change from cost to Depreciated Replacement Cost. On the face of it, there would appear to be both an upward revaluation and a Revaluation Reserve in addition, as of 2007/08!

To add @martnewts, they didn't pay any taxation on it, at least so far as I can see. Because their Accounts showed profit of £14,571,628 before tax and it was still the case after tax. However, strip out the Transaction, or should I say the Profit on the Transaction of £39,940,387 and that's a pre tax loss of £25,386,759! Further, their holding company/parent company Sevco 5112 Limited even with the transaction showed a small loss so that may also have accounted for a lack of tax paid that year? Like I say though, FFP is generally Profit Before Tax or Loss excluding any Tax credit. Another hole in the regs?

An interesting question. FIFA are a global body not based in either, so I question whether either set of laws applicable in this instance- certainly in terms of a FIFA type sanction. Swiss law? CAS? That said, this case is pretty unusual- but FIFA are based in Switzerland so any case should be heard there...

Thanks, that's interesting stuff- still learning on this one. Had a look or a quick look at Deferred Tax for 2016/17 so the most recent before the sale and leaseback and it gave a net total of £27,188,837. Would we be going back to their 2007/08 results for a better guide- if I'm reading this right (probably not), deferred Tax Value increases sale price? Tax doesn't count in FFP though, because tax on profit that's deducted from calcs, whereas if say an FFP loss ie after deductions, of £10m and a tax credit of £2m, then I believe that the loss would still be £10m after FFP deductions for FFP purposes.

Pride Park. Re-acquired or reintergrated onto the Books in 2007/08. Revalued and £55m. Fair enough perhaps. What I don't get though, is why when it was Revalued on 11 December 2007 on a depreciated replacement cost basis- and the workings are shown somewhat- Revaluation Adjustment takes it up by £34,147,000, but the Revaluation Adjustment eliminating £5,047,000 of Depreciation, is why is there still a Revaluation Reserve in those 2007 08 accounts of £39,554,000. Is there no risk of Double Counting having taken place here- or at least the case for a large portion of it here? Because on Disposal, when unrealised or accounted for in Accounts the Revaluation Reserve forms part of that value-how on earth though can it be upgraded in value- possibly rightly- and yet, still have a Revaluation Reserve at that time of £39,554,000? Because in 2006-07, it was unclear who owned it. Incidentally, it was- give or take a few hundred quid and rounding, and it probably wasn't factored in, the exact difference between Historical Cost and Revaluation adjustment. £55,000,000 -£34,147,000 =£20,853,000. Construction Cost? Stated at £20,852,867 Where the hell does a Revaluation Reserve of £39,554,000 come from then? Can it be counted twice- because the Adjusted Depreciation Plus the Upward Revaluation Adjustment comes to the Revaluation Reserve exactly at that time..that comes to £39,254,000- yet how come it's upgraded in the Tangible Fixed Assets if there's still a huge Revaluation Reserve in there? Also on acquisition by both Mel Morris, and indeed in 2008 by Global Sports Derby or whatever they were called, there was no fair value adjustment to the assets...none! Which makes me wonder if Net Book Value and Depreciated Replacement Cost/Sale Price did not overlap somewhat in terms of Pride Park- consistently. £50-55m my guess, £60m at a push- said it consistently. Appears after some admittedly early inspectiom that they got the Revaluation gain pretty much on the balance sheet ..yet had pretty much the same again (gross of subsequent depreciation) to bank in profit!

More corroborating evidence, were it needed- in so far as you can trust a forum anyway, which raises questions over the Hillsborough transaction and the Reporting Period. https://www.owlstalk.co.uk/forums/topic/279512-ground-being-sold-in-february/ Not read that Market Value Report yet, hopefully it'll give some pointers for grounds sold and their worth. Been looking at Sheffield Wednesday accounts going back to 1990, with relevant valuations, checking against revaluation reserves etc and I can't fathom how it was valued at £60m- £30m or low £30 million's tops! Notably, the valuations when carried out, seemed within a fairly consistent band, when done at Depreciated Replacement Cost. Once Revaluation Reserve factored in, over these periods and in any given year, it's been in the £25-35m bracket. Yet, suddenly...Bang- £60m!

http://democracy.plymouth.gov.uk/documents/s31655/Plymouth Argyle Market Value Report.pdf I found this. Now the only problem is that it was from 8 years ago and there are many variables of couirse. Not even read it myself yet but @Davefevs @Coppello @CyderInACan @downendcity to name a few might be interested! Seems to be about market valuation of Home Park- wonder what lessons there are for the EFL when assessing the deals over the last 2 seasons. Good template potentially! EDIT: Report was written/dated October 2011 but the actual transaction may have gone back further. Further digging suggests that £10.4m as of October 2008 was what it was valued at.

Which court would appeals etc be heard in if it reaches that point? I'm guessing CAS but beyond that?

Apparently Cardiff have 45 days to pay up- this of course is subject to appeals to the CAS, but if Chelsea sets a precedent the ban would be in place while said appeal is prepared/heard.

EFL won't apologise, blame Bury owners. https://www.metro.news/no-apology-as-efl-blames-owners-for-burys-demise/1786348/ https://www.telegraph.co.uk/football/2019/11/05/football-league-andfootball-association-must-share-blame-following/ Hopefully these new regs, whenever they are brought in and by whom, will not only protect clubs from themselves, from piss poor owners as Dale but protect the integrity of the competition by doing things like blocking promotion for FFP dodgers. Hopefully some good will come from bad basically! Also, hopefully Bury Phoenix club at Gigg Lane will rise the Leagues again.

That's courtesy of Kieran Maguire of course.

Properly surprised that Harvey and co understood all this legal and financial stuff- especially Harvey- but there we go! Will look in depth later or tomorrow but Norwich- the Cost of Promotion. £9.4m in promotion bonuses apparently. They don't count towards FFP but at the same time...shows just how expensive it is to go up and how important the headroom we now have could be. No suggestion that Norwich broke FFP incidentally, that's even before we consider allowable costs etc.

Part 2. 2016/17, no Additions but a further Depreciation of £1,454,000. Interestingly in 2017/18, there were: "Additions"- £2,553,000. Disposals"- £1,505,000 A Depreciation Charge of £1,446,000- BUT also elimination of £174,000 in Depreciation on Disposals- this couild have been the Carpark sale I read about somewhere- they clearly sold a fixed asset in 2017/18 but it's not altogether clear what... Interestingly, the Freehold Land which does not Depreciate was added to to the tune of £1,028,0000. Now £8,959,526. Well aware that Net Book Value and Market Value not the same, but feeling that Impairment of Villa Park in 2016 leaves some quite notable unanswered questions. Interesting thing potentially applicable to FFP too, in the wake of the Rugby story! https://www.efl.com/-more/governance/efl-rules--regulations/section-9--arbitration/ Some interesting points in there. May well be that League membership is contingent on not going outside the system- possibly save for CAS? Looks like it could well be the case. Key bits to FFP in bold.

Another Aston Villa point. Article from last year... Back to the time of the Aston Villa takeover last summer. That is £54.54m or thereabouts. Villa Park alone? £56.7m. Granted, Xia was looking to get any investment as he couldn't get cash out of China, distressed asset etc etc but when you factor in the 2015-16 Impairment too, you really do wonder...Aston Villa really were close to administration at best! Xia purchased them for £60m, though that did not include £30m payable to Lerner on promotion...still I find it tenuous with these factors or at least open to question how Villa Park in isolation was worth £56.7m. Recon Sports Limited (back then under Lerner, known as Reform Acquisitions Limited)- Accounts to May 2016. Go to the following: Now we all know what player Valuations are like and anyway the write down of player value doesn't count so much anyway so don't worry on that score! The second one though, is what I was driving at before. Recoverable amount? Well, it's the greater of an assets fair value less costs of disposal or value in use. To me, "disposal" is actually doing just that- selling for real. Perhaps Accounting rules say different though! In fact, the exact Impairment for the Freehold Land and Buildings- which is surely Villa Park- is £44,593,000. I suppose the Freehold land which has not been depreciated maybe included which could bump it up a bit? No real indication as to what that is. Then though, that would surely have a drag on the Profit on Disposal if so.

What truly baffles me on a general note though, is how Hillsborough- valued on a DRC basis in 2014 at £22.25m and a Revaluation Reserve of £6.778m, becomes £60m in 2018 (if it was even sold that year). Magic!! Chansiri is a magician- was there oil, gold or similar found under the site or something? Seemingly built in and around a flood plain/flood zone too, if that makes any difference. Also read that its designated use is leisure only- again, don't know if that's so relevant. I note that in 2013, there was a Revaluation Reserve of £3,615,000- that is the accounts for 2012/13 season. This became £6,778,000 in 2017/18. A gross uptick of £3,163,000. The total unrealised gain in the P&L was £3,276,000- Revaluation upwards in Tangible Fixed Assets for that year was £1,518,000... £60m though?? Oh yeah, the reason I state 2014 is because the last time that a valuation was disclosed on the balance sheet. The Revaluation Reserve naturally decreased in the subsequent 3 seasons- there was some work done perhaps but both this and the existing Net Book Value would still have been subject to depreciation too. Hence how I come to my valuation of around £30m or so. Edit, just looked- in the 3 years post 2014 Revaluation in accounts, they added £1,211,000 in terms of "Additions" under Tangible Fixed Assets- but this is gross of Depreciation, which came to £1,547,000 in those 3 seasons. If it's much above £30m I'd be interested indeed!

An embargo of some sort seems to be, if we follow the Birmingham pattern a holding pattern- notice that there is a problem, a first stage? Perhaps was even a full embargo! He did not! Along with a number, I believe he was sidelined to try to help ease him out to show willing in terms of compliance. Birmingham did similar last season with a number of players. Rhodes returned as well, presumably on full wages- was only a loan (with wages covered) and a loan fee- helps yes but nothing permanent or taking into 2019/20 to improve things. Makes me continue to, and indeed increasingly strongly suspect that Hillsborough transaction appearing in 2017/18 accounts is very interesting!! Line 1 here- and arguably lines 2 and 3, make me seriously question whether the Transaction of Hillsborough, combined with the reporting date, corresponded! https://derbyunifootyjournos.wordpress.com/2018/08/07/owls-chairman-dejphon-chansiri-confirms-clubs-transfer-embargo/ The article has done nothing to assuage my suspicions and doubts- that I first voiced in July and elaborated on in September. A full week before the Times reported on the EFL raising questions. Saw this article earlier. @Coppello Thank you for the response- will do so in depth later, but that is interesting stuff- the major shift in thinking. You clearly are a lot better qualified than me, but I wonder...if Villa Park proven overvalued then it could become a live issue again. The impairment issue looks pretty interesting- my view is that these assets were impaired in order to reduce price of purchase for Xia maybe? Or in advance of a prospective sale- and Intangible ones obviously due to relegation, to maybe try to make a better profit on players sold? I still seriously wonder about this though- clearly the EFL couldn't catch Aston Villa but it is worth noting that Purslow back in the summer was purportedly pushing for a public statement from the EFL which would confirm the passing of FFP...in the absence of one, we certainly don't know. Definitely it's deliberately vague though, to leave many options open- or the threat of many options open I reckon. From what I've seen when looking at Aston Villa's accounts in recent times, I can't see reference so far- but will look again in more depth- to impairment testing, or anything like this. My point I'm trying to make I guess, is questioning whether the Impairment fits the relevant Accounting rules and criteria- and therefore should be looked at afresh in terms of FFP calcs. Clearly a Revaluation Reserve is if value goes upwards but can a Revaluation Reserve be applied in the same financial year as a Revaluation and subsequent sale? It basically doubled Villa Park, on promotion- the Impairment % from the original Impairment about 62.5%, without factoring in Deprecation in the following 3-4 years, was added back on to value. £28m or thereabouts of £44.8m, possibly actually with Depreciation factored in.

Interesting line on it this morning. https://www.telegraph.co.uk/football/2019/11/03/exclusive-cardiff-city-face-three-window-transfer-ban-fail-comply/ Update. Appeal to the CAS is possible- probable?

Hi @Coppello Apologies if I've already asked, or referred to this one- I've asked about similar before but this is quite specific. Thinking specifically about Aston Villa if they have significantly overstated the value of Villa Park for example. In short, to your knowledge is this just an EFL declared thing or a fairly watertight agreement? Certainly, I'd interpret that as leaving the door open to future action on return, or the possibility of parking a punishment if PL wouldn't enforce, or holding a possible EFL Hearing in reserve etc. While I'm at it too, is it at the discretion of a club as to when to review/amend impairment of assets? Can't see how Villa Park down by £44.8m in 2015/16 then up again by £28m or so 3 years later. Is regular testing, and equally regular disclosure of such not required then? Plus reasons being stated- I haven't found these anywhere to date. Seems quite a shift up and down in value for an asset- Villa Park- that has remained largely the same between 2015/16 and 2019.

Had a look back at Derby and their takeovers, both by Mel Morris and in the late 2000's. Mel Morris 2015/16 season- Sevco 5112 Limited- NO Fair Value Adjustments made, ergo the Net Book Value may not have differed all that much from the Fair Market Value. in 2008 or 2009, Global Derby UK Ltd- the club possibly at or preceding their takeover got it revalued in December 2007 yes, at £55m- guess how many Fair Value Adjustments made? Zero! Other notably- or possibly not- aspects include a Revaluation Reserve on the Derby accounts but not the parent company at time of takeover- in both cases. I wonder then, given that it was Revalued to £55m in 2007, why then was there still a Revaluation Reserve thereafter- Pride Park truly worth nearly £95m in 2007?? How was that Revaluation Reserve accounted for in 2008 and subsequent years? Is there some formula of Net Book (Carrying) Value + Revaluation Reserve? In 2007/08, the Unrealised surplus on revaluation of Stadium was equal to, the Revaluation Reserve- certainly the numbers were the same. Yet I struggle to believe that as of December 2007, Pride Park was worth £55m + £39,554,000=so about £94,554,000. Unrealised in terms of profit maybe? Will post a few screenshots later- still inclined to think Pride Park in the range of £50-55m, £60m at a push at time of sale. Yes there was work done, yes that enhances value- but remember the Depreciation. The expert who suggested it was worth <£41m though is most intriguing! Sheffield Wednesday? Well there's been nothing of note Infrastructure wise at Hillsborough for a while. Valued at DRC in 2014 at £22.25m- there was a Revaluation Reserve- unrealised- of £6-7m- can only assume ground worth not much more and quite possibly less than £30m surely? That Revaluation Reserve did of course decline between 2014 and whenever the ground was sold! Aston Villa intrigues me owing to their Impairment of Villa Park in 2015/16- yes it's an accounting trick but interested in how it works, add back on Impairment or a chunk of it. Surely there would be strict Tests, criteria, formula- etc. The Cost of Impairment was £44.8m in 2015/16, yet they sold it for £56.7m in 2019- or roughly double Net Book Value- which makes me think that £28m or thereabouts was added back on at time of sale. Very interesting to read what this is- how they shall justify it in their accounts! The PL, EFL and yes other clubs should be looking very closely at this. Mind you, what exemptions applied to lack of disclosure of 2018 independent valuation for Derby, 2018- we assume- one for Sheffield Wednesday, likewise for Reading. Wonder if Aston Villa will disclose theirs too. Oh yeah, Hillsborough- probably £30m or so at Depreciated Replacement Cost.

Dunno the context but when searching for something else an amusing Tweet- wonder who it could be about. They who laugh last though...because we're in safe hands and nowt to fear from any FFP regs- they OTOH, have a very interesting £60m transaction that it basically hinged upon, plus questions over whether Reporting Period matches Transaction date. If one or both of those 2 factors are wrong, wow. Another amusing thing was I- though far from alone- posted in some depth about Sheffield Wednesday date of transaction vs reporting period back in the summer and then again one week in September except more succinctly...then about a week later, a story arose that the EFL were investigating this very matter! Now I take no credit in all seriousness, but the EFL were dragging it out somewhat... Serious note, for those who are interested- will be interesting to see how these Investigations into stadia valuations are doing.

Possibly too much to hope, but I see Keith Wyness Employment Tribunal over his Aston Villa departure is up soon. I wonder if any FFP regulation 'flexibility'/dealings will come out from the summer of 2018- I wonder...the answer would be probably not but! https://www.dailymail.co.uk/sport/football/article-7614755/AHEAD-GAME-Aston-Villa-braced-explosive-revelations-ex-chief-Keith-Wyness.html Regards some of the other valuations, these should be examined in some detail- all of them actually- as to whether the correct method was used, and whether there was yet another layer of misleading to add...ie valuation as if sold for commercial, residential and other property- by sold I mean sold outright- as opposed to sold for a lease to a third party, sold for existing use to a third party- or what we saw, a third party doing sale and leaseback. I remember one article did state, or at least intimated the idea that this had been done for one of the transactions- well if this is true, then as we can see they are still playing in the ground...FALSE INFO! Best case scenario is you deduct the difference between Existing use and sale for commercial, but it feels a lot bigger than that to me.

https://www.manchestereveningnews.co.uk/news/greater-manchester-news/bury-football-club-what-happens-17154213.amp Hope they can get the Phoenix club up and running- and hold Gigg Lane- and the sooner the better.

On and on he (assuming it's Dale) goes... https://www.buryfc.co.uk/news/2019/october2/statement-from-bury-fc/ Fair play to Kenwright too. Snippet from the Athletic- would have bought time if nothing else IMO.

No update on the story as a whole but news at the other Sheffield club that makes me wonder still further on the £60m valuation. Read an interview with Kevin McCabe yesterday. Was interesting stuff- relevant to this was the fact that he owned Brammall Lane and the training ground, Hallam FM Academy. Prince Abdullah acquiring these for the club as parr of the takeover is far closer to, perhaps even a complete, arms length commercial transaction, though there was a court case too. The combined total- £50m!! Training ground cost £20m to construct based on some fuerher research of mine, so a breakdown of this would be interesting to see...unsure when was constructed so I'd have to look more. @Davefevs @BobBobSuperBob @Coppello @downendcity @chinapig Any Sheffield Wednesday fans too, I'd be interested to see your take. EDIT: That combined total may also include the hotel but article made no reference. Some of these transactions go beyond FFP for me, these sale and leaseback arrangements with related parties!