Mr Popodopolous

Dunno if this is behind a paywall but we'll soon see I guess. These transactions certainly seem to have raised eyebrows over time in the various sectors.

That late equaliser really saved them- Bromley from a big Cup shock! Sure they'll do it at home though.

From what I've read of his posting on it, seems very on the ball with it. Different valuation methods could change things- I should have stated at the start that I was basing my workings on a Depreciated Replacement Cost basis as a starting point. Which I still think is a good method for transactions such as this. It's good to have these discussions- dunno where @DerbyFan went but they were good discussions too. Echo chambers are crap!

To a point I agree @OwlsonlineAdmin to a point. I think differences may depend on methodology being used? For example, the valuation I am basing the £30m or so on is that of Depreciated Replacement Cost. To me, that seems to be fairly appropriate for this kind of transaction- read MK owl on Owlstalk every so often and he's alluded to this being the case before! Value in use? That could change the equation, not an approach I'm altogether familiar with- but if it was under Depreciated Replacement Cost then £60m seems waaay out of kilter- for completeness, it was £22.25m in 2014 under Depreciated Replacement Cost- for that again according to MKOwl a while ago, you would pick a number and work back? Fair value and market value, both require an active market. Comparative value can be useful, I note that Brammall Lane and the training ground went for a combined or are due to be sold back to Sheffield United for a combined £50m- perhaps there is some sort of major discount or special deal? McCabe back to Abdullah/Sheff Utd feels more like an open market or fair value or whatever transaction than Chansiri to one of his own companies- benchmarking in short is something that can be used here, but it has limited use for this sort of specialised propety I'd have thought. Valuation method could be quite important here IMO. Now the rent, this is another debate. I note that when Home Park was sold to Plymouth Council in 2010/2011 and leased back it went for £1.6m! Hillsborough clearly worth quite a bit more, but what's the rent?? That was quitre onerous this transaction because Plymouth as part of the terms were due to play the Council £135,000 per season- or that's a yield of 8.4375%! Ouch, but that was clearly done on commercial terms and Plymouth were over a barrel a bit. Applied to Hillsborough, if £60m is right, you should be paying £5,062,500 per year if that is a benchmark- and it is a benchmark as there is/was a market report on it. Personally I'd say 4-5% makes good commercial sense, but would have to be worked out dependent on commercial yields in Sheffield probably. See, the reason I strongly suspect these transactions need real scrutiny is because if a bank or a Commercial Property company or another Commercial entity and not a related one but an actual arms length entity brought Hillsborough etc, and leased it back- don't worry security of tenancy would be guaranteed- then the terms would be nothing like as generous- nothing like, especially the rent! For completeness, Andrea Radrizzani purchased back Elland Road- Leeds sold it and leased it back and it changed hands a couple of times during their financial troubles for actual bona fide arms length transactions- he purchased it for £20m! £20M!! In a more expensive city for what that is worth- he rents it back to Leeds now, would have to research the rent. I wouldn't be posting a single word- not a word- of criticism of any of these deals if they were sold at genuine arms length, with proper commercial rent arrangements to boot- if you could still get £60m or Derby £81.1m or even Aston Villa £56.7m I'd be hailing from the rooftops the business acumen of the owners! Bit on Leeds- just look at a snapshot of some of their terms when it was sold to, subsequently leased back from, an actual commercially based 3rd party! The only caveat here is I'm unsure what Radrizzani is charging- saw some stories of a 33 month rent free grace period, after that? Unsure! Whether the stories are accurate, I'd have to delve deeper and see. Here's a good Twitter thread you might like too- about to read it myself, with an open mind! I've looked at the acreage though, granted in Derby vs Sheffield as it wouldn't go deep into the postcode- and the £250,000 v £110,000 for house prices- well I question whether price per acre or house price is a better comparative factor here. They said about £32m- a little above but nothing vastly so, above my guesses and estimation based on precedent- possibly using a slightly different methodology too!

Equally interestingly, an old ground like Hillsborough and more importantly in a city such as Sheffield- well that's about 50% higher than London. An old ground which has flooded in the recent past- that may have an impact on commercial valuation? An old ground- and trust me I've looked through accounts going back to 1990?- that has been within a fairly consistent range of valuation when this was done at DRC, in a city that is cheaper than Derby- but not all that far away geographically. I also note they didn't seem to depreciate it through a lot of the 1990s but am guessing that was alright for football because of the obligatory upgrades to stadia post 1989. Maybe it was just the accounting policy for Freehold land and buildings for a while. Valuations in the range of £20-25m and maybe a bit more, plus periodic adjustments to the Revaluation Reserve which you will gain on disposal...suddenly sells for £60m! How does that work then? Cheaper per acre in Sheffield than Derby, albeit perhaps not a huge amount in it...the gap to London that is! Actually, scratch that- slightly cheaper in Derby than Sheffield. June 2007 the flooding I think.

Thanks @Port Said Red I do try- they are very complex indeed, agreed! Agree with much of this, though the Fair Value rule is fairly clear, the EFL appointed valuers will as a starting point if they haven't already, decide whether these stadia were sold and leased back on proper commercial terms- an FFP regulation allows for adjustment to such transactions if required. You're right though, the wording must be spot on. I'm not so bothered personally at this stage about court cases or legal action or anything like that, the main thing is to get those values, adjust if necessary and Test afresh for FFP over given periods- I think the EFL should have done this at the time and had they done so, then this could have helped to prevent a lot of problems. The other thing the EFL need to do is to make sure that the clubs are paying rent at a commercial rate- that Plymouth Market Value Report is quite interesting and Derby's rent payment and that of others is certainly well out of line with this! I'd suggest 5% seems fair, this report though had Plymouth paying £135,000 per year on a transaction of £1.6m!! Or 8.4375%. Apply that to some of these and said clubs will have quite a bill...like I say I see 4-5% as about in line but that report was instructive. Court cases or legal action bu the EFL are probably something that should come into action later down the track if applicable IMO- the urgent priorities are Fair value, adjustment to said fair value then reassessment of FFP but certainly for the most recent periods. Quite possibly, though if these ones are pulled up, then the regulation needs to be changed quick sharp and a stipulation inserted that: Clubs can do this but it won't count towards FFP calculations in any respect, regardless of purchaser. Any actual disposal- by which I mean a bona fide sale to a third party and the ground no longer used by the club in any form- that is an actual disposal so I'm not sure if I have a problem with it counting towards FFP there. Allow this in terms of FFP, but only when a bona fide third party is involved, such as a Bank, a Finance company, a Professional landlord etc- presumptuously the third party won't significantly overpay or undercharge on rent. Any Related Party deals in this respect simply don't count as FFP- they still appear at CH and in the accounts but nothing relevant for FFP. Mind you, in general terms- football finance was not Shaun Harvey's strong point seemingly! Only clubs who publicly took the piss, acted like idiots or fought it- see QPR and the protracted legal issues- or see Birmingham signing Pedersen under a soft embargo, were the ones to really get it- well in his world anyway. In partial defence of Harvey, his pushing on safe standing and alcohol for fans in view of the pitch is something to praise him for - shame he was so useless in many other aspects!! I also have the belief that the EFL and other football Governing bodies think the fans are idiots- "Sale and leaseback with a profit- paper profit or real profit from a related party to bring into compliance and provide some headroom? Ah, they'll never know!" Part of the equation? The comments by Tad Detko cited earlier in this thread were pretty damning in terms of the EFL's approach at that time to this sort of thing.

Interesting to see that Stoke actually show their ground at market value and book value. Interesting because the current market value based on the most recent valuation is about £41.6m or £42.1m if we include Plant and Machinery. £27,290,896 at Cost. This valuation carried out in March 2018. It's particularly interesting as both Pride Park and the Bet365 are in and around the Midlands, and the best bit is that, both grounds were opened in 1997! Similar capacity too. One small note but not really looked in much depth is that their Revaluation Reserve seems not to depreciate unlike many. Only appears to change on revaluation or re-assessment. Now it could be about something other than the ground as their accounts once you find the right part seem fairly transparent, Book Value of buildings seems to be individually listed but that small bit is a little confusing. Also interesting to see that save for player registrations, there was no writedown of asset value on relegation- actually that Aston Villa one on early inspection seems fairly unusual! This could be instructive...another thing for me to add to the Plymouth one to have a look at! http://info.valuation-tribunals.gov.uk/Decision_Documents/documents/NDR/425026586935134N10.pdf In short, if it's classed as a material change of circumstances then it feels more understandable. If not however... All I do know though, is that the timing was very helpful, as it meant that Lerner could get rid of the club quicker and more easily- with £30m to be paid as a bonus or part of the deal on promotion. Also worth noting that Xia first season did not seem to have Book Vale vs Fair Value required as other clubs such as Derby did on takeover and indeed Lerner himself in 2007- possible that it isn't mandatory in accounts or that regs changed with shift to FRS 102 of course.

To simplify my argument. IF a revaluation plus write back of depreciation occurs in 2008, there shouldn't be a new Revaluation Reserve or certainly not much of one. Either there should be the Upward Revaluation Plus write back in the Accounts in 2008 and next to nothing, in the Revaluation Reserve. Or the Book Value should have remained similar but with a whacking great Revaluation Reserve added in 2007/08. To have both seems incongruous to me! For arguments sake had it been Option A, assume Depreciation at about 2% year but yes some additions...Pride Park sells at maybe £45-50m. Had it been Option B, what with Depreciation and yes some additions, Pride Park sells at £45-50m. I'd have to do the full workings later but it seems to me that both were benefited from. There was no Revaluation Reserve in 2006/07 Accounts for example- this is purely IMO about Pride Park.

Yeah I know that...just puzzled as to how it reached that point in first place- given Depreciated Replacement Cost was nowhere near that and subsequent Depreciation and additions...that valuation is "interesting". Also know that NBV doesn't represent Fair Value, or Depreciated Replacement Cost necessarily. That's why the EFL have hired independent valuers etc I guess for the Pride Park, Hillsborough and the Madejski Stadium transactions. I'm arguing that it is quite a bit less than £81.1m. Maybe I'm wrong but something doesn't stack up- however its weighted and balanced, it doesn't all neatly fit together. Of course, this is all the EFL's fault largely. Because, had they kept in place the regulation that says profit on disposal of fixed tangible asset isn't considered as part of FFP calcs then this would all be a moot discussion- for some weird reason that clause was deleted, or they should have kept it but with an amended, or deleted it but with caveats. Or even allowed it but passed FFP submissions provisionally while they investigated, or perhaps more realistically insisted that they as an honest broker commissioned the valuation not the club and the EFL commissioned valuation would be the one used for FFP purposes. Now they are re-assessing the valuations but the problem is that Aston Villa are now in the PL- but still being checked themselves apparently. A million ways in which they- the EFL- could have worked this better! Still- from an organisation that appointed then kept on for 6 seasons Shaun Harvey as the CEO- can we expect anything more??

Except they received £81.1m for it. The cost or revaluation eliminated on disposal was indeed £56,502,901, the depreciation eliminated on disposal for it was £14,523,854. The remaining balance there is £41,618,237. That's why the valuation, the 2007/08 Revaluation Reserve and upward Revaluation appearing for accounts is a puzzle, for me anyway. Additions will of course enhance value, but there will be depreciation too- in that 10 years from the 2007 one. Fortunately, the EFL FFP regs stipulate that such transactions must be at fair market value- and if incorrect, they will be adjusted accordingly- hence the current investigation into Derby, Reading and Sheffield Wednesday. Hillsborough at £60m? That's a good laugh! Was last valued at DRC at £22.25m in 2014 accounts and there was a Revaluation Reserve of abo0ut £6.7-6.8m at that time post readjustment. 4 years on and both the value there and the RR will have depreciated. Some alright but not earth shattering additions yes, but we're expected to believe that it rose £30m+ in 4 seasons! Not much more than £30m IMO- that's in total not in addition! Looked at their accounts going back to 1990 too and nothing but nothing indicates a sale price of £60m in 2018!

Thought it was the case, read a lot on it and it seemed to be the only explanation that made most sense. Training ground etc maybe. Still really struggling with a rise to £81.1m though! That was the price paid for sale. Showed in hose accounts as £ My personal guess given relative consistency of valuations, depreciation was £50-55m, maybe £60m at a push. I've looked through about 11 years worth and there certainly doesn't appear to be a further £39m or whatever it is of other Tangible Fixed Assets in there...surely with the Revaluation in 2007/08, this Revaluation Reserve assuming it's all for Pride Park or mostly for Pride Park should have become much smaller or cancelled out entirely? I may post my workings later, print screens etc- it's a very interesting situation though IMO.

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.