Sheffield Wednesday charged for FFP

[mozo]

1 hour ago, Vincent Vega said:

The Podcast this week looks at the Wednesday situation,  plus a interesting tale of West Ham's purchase of their stadium. 

 

Which Pod is this?

[Vincent Vega]

2 hours ago, mozo said:

Which Pod is this?

https://podcasts.google.com/?feed=aHR0cHM6Ly9mZWVkcy50cmFuc2lzdG9yLmZtL3ByaWNlLW9mLWZvb3RiYWxs&episode=YjEyNmY4MDQtNTM1YS00Nzg0LWIwZDktZDMxODQxOTkzODk3

[Mr Popodopolous]

Could be wrong but given the EFL section on Arbitration being a key method of solving these things, unsure Sheffield Wednesday threatening to sue the competition organiser/governing body and one that implements rules based on majority rule or so they say, is all that wise...

https://www.efl.com/-more/governance/efl-rules--regulations/section-9--arbitration/

Quote

SECTION 9 - ARBITRATION

95. Agreement to Arbitrate

95.1 Membership of The League shall constitute an agreement in writing between The League and Clubs and between each Club for the purposes of section 5 of the Arbitration Act:

95.1.1 to submit those disputes described out in Regulation 95.2 to final and binding arbitration in accordance with the provisions of the Arbitration Act and this Section of these Regulations;

95.1.2 that the seat of each such arbitration shall be in England and Wales;

95.1.3 that the issues in each such arbitration shall be decided in accordance with English law;

Further key points that indicate that it may not be an ideal path to go down by Chansiri includes:

Quote

100 Remedies

100.1 The League Arbitration Panel shall have power to:

100.1.1 determine any question of law or fact arising in the course of the arbitration;

100.1.2 determine any question as to its own jurisdiction;

100.1.3 make a declaration as to any matter to be determined in the proceedings;

100.1.4 order the payment of a sum of money;

100.1.5 award simple or compound interest;

100.1.6 order a party to do or refrain from doing anything;

100.1.7 order specific performance of a contract (other than a contract relating to land);

100.1.8 order the rectification, setting aside or cancellation of a deed or other document.

Quote

103 Challenging the Award

103.1 Subject to the provisions of Sections 67 and 68 of the Arbitration Act, the award shall be final and binding and there shall be no right of appeal or further arbitration and the parties exclude irrevocably any right to any other form of appeal, review or recourse in or by a court, judicial authority or other arbitral body, in so far as such waiver may validly be made.

103.2 For the avoidance of doubt, the exclusion extends to any rights that would otherwise arise under:

103.2.1 Sections 44, 45 and 69 of the Arbitration Act; or

103.2.2 Rule K of the Football Association Rules (or any replacement provisions of substantially similar effect).

Looks pretty binding to me- subject to Sections 67 and 68 of the Arbitration Act! Fair few bases covered though?

Bolded bits save for the section headings in bold as they read as bolded, are ones I feel pretty relevant to these cases.

A key thing in the last case to go through arbitration based appeals- ie QPR- was that FFP was not deemed/ruled to be unlawful. There are new regulations so I suppose it could be tested via Arbitration again, but this FFP is harder to fail if anything so I'd be surprised if not!

[Mr Popodopolous]

Well, sometimes old stories are, can be rehashed. Unsure if this one is? About to read it!

https://www.swfc.co.uk/news/2019/december/club-statement2/

@Davefevs @downendcity @Coppello @CyderInACan

Sure there's a few more too. 

Openly challenging once again the Governing body of your League, at whose discretion you play in the League is ballsy I'll say that much!

EFL could be acting unreasonably for all we know, but I'm unconvinced. The devil will be in the detail of those docs.

[downendcity]

11 minutes ago, Mr Popodopolous said:

Well, sometimes old stories are, can be rehashed. Unsure if this one is? About to read it!

https://www.swfc.co.uk/news/2019/december/club-statement2/

@Davefevs @downendcity @Coppello @CyderInACan

Sure there's a few more too. 

Openly challenging once again the Governing body of your League, at whose discretion you play in the League is ballsy I'll say that much!

EFL could be acting unreasonably for all we know, but I'm unconvinced. The devil will be in the detail of those docs.

Getting their retaliation in first?

In the past I suspect fronting up the EFL would probably have been sufficient to cause the EFL to back down, for the fear of getting embroiled in legal action and potentially being embarrassed. Against the background of other club's using the stadium sale loophole  to avoid ffp sanctions and Gibson's subsequent threatened actions, it will be interesting to see if, under Rick Parry's leadership, the EFL will now take a tougher line if they are to demonstrate that they mean business as far as financial controls are concerned. 

 

 

[CyderInACan]

9 hours ago, downendcity said:

it will be interesting to see if, under Rick Parry's leadership, the EFL will now take a tougher line if they are to demonstrate that they mean business as far as financial controls are concerned. 

The point surely is that they can't continue to ignore it? 

[Never to the dark side]

His first priority should be not sending Bristol City on journeys of more than 130 miles to midweek away games

[downendcity]

55 minutes ago, CyderInACan said:

The point surely is that they can't continue to ignore it? 

I'm not sure if they've been ignoring it.

For the Bournemouth and QPR  situations, those weren't ignored but as they were under the previous ffp rules a fine was the only option available, although in both cases the fine didn't reflect the financial rewards each club received as a result of being promoted asa  result of financial  cheating.

As for the current situation, the EFL has found itself between a rock and a hard place as regards the clubs that have sold their stadia, due to the EFL's own cock up when drafting the new ffp rules. It seems that the only route open to them as a far as Villa and Derby are concerned is whether the valuations the clubs placed on the stadia were overstated, but that will not be an easy task, as each club will doubtless argue that their valuations were obtained through independent and professionally qualified valuers, so why shouldn't they be fair values.

Wednesday's situation seems a bit more clear cut, as it seems that not only did Wednesday go down the stadium sale route, but they then backdated that sale transaction so that the profit appeared in a set of accounts that enabled them to avoid breaching ffp limits in the last assessment. It seems that Wednesday are arguing that they have evidence that not only were the EFL notified of their intention to sell the stadium but that the EFL OK'd it, and that makes it it acceptable. Of course, Wednesday seem to be ignoring the fact they they've still fiddled the accounts.

I agree that I don't think the EFL can ignore these issues. If they are not seen to take appropriate action then the ffp rules will be shown to be not fit for purpose and have no credibility. Other owners will probably the  think why should their club make itself less competitive by trying to comply when other clubs are driving a coach and horses through the rules. Hopefully, under new leadership the EFL might now show that it has the bottle to take on big clubs, as if it doesn't there is a possibility of financial anarchy breaking out in the championship.

[Davefevs]

Merry Xmas!!!

 

[CyderInACan]

45 minutes ago, downendcity said:

I'm not sure if they've been ignoring it.

OK - badly worded maybe - but I think we all agree that inaction is not an option 

[Major Isewater]

41 minutes ago, Davefevs said:

Merry Xmas!!!

 

It would be tragic if they get relegated back to the Championship this  season.

[elhombrecito]

https://www.theguardian.com/football/2019/dec/19/sheffield-wednesday-sponsors-owner-not-commercially-active-dejphon-chansiri

Sheffield Wednesday’s owner, Dejphon Chansiri, is putting more than £1m a year into the club through sponsorships by entities connected to him which are not currently commercially active companies, the Guardian understands.

The Wednesday shirt has Chansiri as the main sponsor across its chest, and Chansiri is branded as Wednesday’s “official club partner”, including on the club’s website. Although the owner does have a registered company, Chansiri Ltd, which is registered at Hillsborough, its most recent accounts state that it was dormant, not trading.

Another company owned by Chansiri, Sheffield Wednesday Holdings, registered in Hong Kong, has since June 2019 been his vehicle for owning the club. The Chansiri sponsorship on the Wednesday shirt and partnership with the club is simply the owner’s surname, rather than a commercial company bearing his name, according to sources with knowledge of it.

The brand name sponsor on the upper right of the club shirt, Elev8, is a clothing company owned by Chansiri, and it does manufacture the kit, the club has said. Elev8 is also planned to be an energy drink, and Chansiri has a company, Elev8 Energy Drink Ltd, registered in London’s Mayfair in August 2017, but it is understood to be not yet manufacturing an energy drink for public marketing.

A third sponsor, D Taxis, whose name is on the scoreboard and other areas of Hillsborough, is not yet set up as a functioning taxi company to drive passengers around; Chansiri is understood to be intending to set it up as a taxi business. A different firm, City Taxis, which does operate in Sheffield and across South Yorkshire and Derbyshire, is currently a main sponsor of the club.

The English Football League is clearly aware of these sponsorships, but is understood not to be concerned about them in relation to its “profitability and sustainability” financial fair play rules, because their value is not excessive.

The rules, aimed at steadying finances in a ferociously unequal, generally overspending division, limit Championship clubs’ permitted losses to £13m per season. To protect against owners artificially covering losses by over-valued sponsorships, the rules require any connected commercial relationships to be for “fair value” – comparable to the amounts a club could earn from a commercial brand not connected to an owner.

Wednesday’s most recently published accounts, for the 14 months to 31 July 2018, suggest the revenues from the three sponsorships connected to Chansiri were £1.27m, not excessive for a main partner, kit manufacturer, and scoreboard sponsor of a major club in the Championship. The club maintains the sponsorships are all for “fair value”.

Chansiri, 51, whose family owns the Thai Union Frozen Group, a giant tuna and seafood processing company in Thailand, bought Wednesday in 2015 for a reported £37.5m from Milan Mandaric, and has since spent huge amounts of money trying to win promotion to the Premier League.

Last month the EFL charged Wednesday with misconduct over Chansiri buying the Hillsborough ground in June this year, from the club, for £60m. That sale, and a stated £38m profit to the club from it, was included in Wednesday’s accounts, and its submission under the financial fair play rules, for the previous year, 2017-18. The profit helped turn what would otherwise have been a £35.4m loss – very substantially in excess of the permitted loss so potentially incurring a serious penalty – into a £2.6m profit.

Wednesday responded to the charges this month with an emphatic statement, arguing that EFL executives authorized the sale, and that the charges are therefore invalid.

“The club maintains that it consulted with the relevant executive officers of the EFL in connection with the stadium transaction and that it acted in good faith … The club is accordingly bringing its own claim against the EFL to establish that it is acting unlawfully, as well as standing ready, if necessary, to vigorously defend the charges.”

A Wednesday spokesman said the club was making no further comment, and declined to comment on the connected sponsorships to Chansiri.

Wednesday finished 15th in the Championship in 2017-18, despite increasing their wage bill to £42m, which along with other costs meant that they spent almost double their entire revenues of £25m. The accounts for that period state that Chansiri’s loan to the club more than doubled, from £38m in 2016-17, to £78m. In September last year Chansiri also appears to have paid £21m for new shares in the club.

The accounts note that Chansiri is a director of Elev8 Clothing and Elev8 Energy Drink, and state that the total paid to the club from “related parties” was £61.27m. As he bought Hillsborough for £60m, that suggests the total from sponsors connected to him, including the name Chansiri itself, was £1.27m.

Sales of a stadium to a club’s owner are allowed under EFL financial rules, despite reservations, known to be felt most strongly by the Middlesbrough owner Steve Gibson, about clubs and grounds being in separate ownership, and concerns that such sales are an artificial, one-off way of balancing the books.

The EFL is understood to be conducting a review of the £60m valuation for Hillsborough, but that is separate to the misconduct charge, which relates to the timing of the sale and allocation of the £60m to the 2017-18 financial year.

Wednesday’s accounts for that year were initially required to be published at Companies House by the end of February this year, but then the annual year end for the figures, 31 May 2018, was extended to 31 July 2018, meaning the accounts were for a 14 month period, and needed to be published by 30 April this year. They were not published on time, then nearly two months later on 21 June Chansiri formed a new company, Sheffield 3 Ltd, which a week later, on 28 June this year, was used to buy Hillsborough from the club. The £60m receipts were included in the 2017-18 accounts whose period had ended on 31 July 2018, 11 months earlier.

“The EFL has … concluded there is sufficient evidence to justify issuing charges of misconduct … in respect of a number of allegations regarding the process of how and when the stadium was sold and the inclusion of the profits in the 2017/18 accounts,” the league said

[Mr Popodopolous]

Sounds about right when it comes to Taxis and Elev8..Chansiri, I wasn't aware of- just assumed he was the owner and it was linked to that.

Yep though, that absolutely sounds right- £1m or so, not commercially significant as such, not excessive of fair value rules- EFL waved it through I expect.

[Mr Popodopolous]

4 hours ago, downendcity said:

I'm not sure if they've been ignoring it.

For the Bournemouth and QPR  situations, those weren't ignored but as they were under the previous ffp rules a fine was the only option available, although in both cases the fine didn't reflect the financial rewards each club received as a result of being promoted asa  result of financial  cheating.

As for the current situation, the EFL has found itself between a rock and a hard place as regards the clubs that have sold their stadia, due to the EFL's own cock up when drafting the new ffp rules. It seems that the only route open to them as a far as Villa and Derby are concerned is whether the valuations the clubs placed on the stadia were overstated, but that will not be an easy task, as each club will doubtless argue that their valuations were obtained through independent and professionally qualified valuers, so why shouldn't they be fair values.

Wednesday's situation seems a bit more clear cut, as it seems that not only did Wednesday go down the stadium sale route, but they then backdated that sale transaction so that the profit appeared in a set of accounts that enabled them to avoid breaching ffp limits in the last assessment. It seems that Wednesday are arguing that they have evidence that not only were the EFL notified of their intention to sell the stadium but that the EFL OK'd it, and that makes it it acceptable. Of course, Wednesday seem to be ignoring the fact they they've still fiddled the accounts.

I agree that I don't think the EFL can ignore these issues. If they are not seen to take appropriate action then the ffp rules will be shown to be not fit for purpose and have no credibility. Other owners will probably the  think why should their club make itself less competitive by trying to comply when other clubs are driving a coach and horses through the rules. Hopefully, under new leadership the EFL might now show that it has the bottle to take on big clubs, as if it doesn't there is a possibility of financial anarchy breaking out in the championship.

I'm not fully sure we can say that about the last CEO. I mean, not saying he ignored it, more that he was perhaps prone to allowing creative solutions to keep the show on the road might be fair?

To play Devil's Advocate for a minute, perhaps he was worried that rigorous enforcement might drive investors away- so stadium sale, combined with large cost cutting a fair compromise in his eyes? He was often cited as saying that they had never lost a club to administration on his watch...no wonder now we see the type of owners he just waved through!! Dale without any checks the best, but by no means only example.

Agree with the rest of your post. Aston Villa, Derby and if anyone really cares enough about them Reading- though if anything I'd have thought £26.5m is a bit on the low side! No easy task as you say- could they have chosen the incorrect valuatoon method in any instance though, any of these clubs? I think it possible at least- different valuation methods can change valuation. Depreciated Replacement Cost seems the most appropriate for me- and the clubs whose look too high here are IMO Derby and Sheffield Wednesday. Possibly Aston Villa too, but it is harder to say- Reading? Too low if anything, but again I'm not a valuer- but looking at the location, built in 1998- they've not had a revaluation since 1998 though so it's really hard to say, but their one feels the most realistic I suspect.

Agreed- also add in for them the £60m for Hillsborough is open to debate IMO. I've looked at their additions, valuations, revaluations, etc since 1990 and I'm really struggling to see £60m! £30m or so, sure, but double?? May make that Google sheet and take it all the way up to 2017 and stick it on here, see what people think. They delayed and delayed their accounts though which is a red flag- accounting period extended 2 months, so due April 30th 2019, up from February 28th 2019- which meant Reporting Period close date ended on May 31st 2018, but this moved to July 31st 2018.

Yet, the Accounts didn't get signed until June 20th 2019, think Auditors signed on June 21st 2019. Finally appeared on their site on July 11th 2019 and at CH on July 16th 2019.

Plus, if they genuinely had the document, why wouldn't they have produced it in the 7-8 weeks between EFL raising the issue, subsequently receiving in their words 'a large number of documents'. Only after the large number of docs were reviewed, were the charges laid. Might such an important one not have been among them?

Agreed.

Would also add on Aston Villa, that the EFL/PL whoever is working on this, need to analyse the 2015/16 accounts- the Impairment of Villa Park which I believe was £45.8m on relegation! Need to analyse it significantly...not least because Stoke's revaluation which took place on relegation- not necessarily an Impairment of Fixed Asset granted- took their ground down by maybe £700,000. Quite the difference- both numerically but more significantly, proportionally!!

One of them could be way out and one could be in-line...fact Stoke are mooted to be having a fire sale in January suggests that theirs might be closer to accurate?

[downendcity]

4 hours ago, CyderInACan said:

OK - badly worded maybe - but I think we all agree that inaction is not an option 

Wasn't criticising your comment CEAC, but I think that all too often the EFL gives the impression that they wished contentious issues like this would quietly go away, in order that they can avoid confrontation with clubs.

 

[downendcity]

41 minutes ago, Mr Popodopolous said:

I'm not fully sure we can say that about the last CEO. I mean, not saying he ignored it, more that he was perhaps prone to allowing creative solutions to keep the show on the road might be fair?

To play Devil's Advocate for a minute, perhaps he was worried that rigorous enforcement might drive investors away- so stadium sale, combined with large cost cutting a fair compromise in his eyes? He was often cited as saying that they had never lost a club to administration on his watch...no wonder now we see the type of owners he just waved through!! Dale without any checks the best, but by no means only example.

Agree with the rest of your post. Aston Villa, Derby and if anyone really cares enough about them Reading- though if anything I'd have thought £26.5m is a bit on the low side! No easy task as you say- could they have chosen the incorrect valuatoon method in any instance though, any of these clubs? I think it possible at least- different valuation methods can change valuation. Depreciated Replacement Cost seems the most appropriate for me- and the clubs whose look too high here are IMO Derby and Sheffield Wednesday. Possibly Aston Villa too, but it is harder to say- Reading? Too low if anything, but again I'm not a valuer- but looking at the location, built in 1998- they've not had a revaluation since 1998 though so it's really hard to say, but their one feels the most realistic I suspect.

Agreed- also add in for them the £60m for Hillsborough is open to debate IMO. I've looked at their additions, valuations, revaluations, etc since 1990 and I'm really struggling to see £60m! £30m or so, sure, but double?? May make that Google sheet and take it all the way up to 2017 and stick it on here, see what people think. They delayed and delayed their accounts though which is a red flag- accounting period extended 2 months, so due April 30th 2019, up from February 28th 2019- which meant Reporting Period close date ended on May 31st 2018, but this moved to July 31st 2018.

Yet, the Accounts didn't get signed until June 20th 2019, think Auditors signed on June 21st 2019. Finally appeared on their site on July 11th 2019 and at CH on July 16th 2019.

Plus, if they genuinely had the document, why wouldn't they have produced it in the 7-8 weeks between EFL raising the issue, subsequently receiving in their words 'a large number of documents'. Only after the large number of docs were reviewed, were the charges laid. Might such an important one not have been among them?

Im not so clued up on clubs accounts as you, but it seems to me that all the evidence points to Wednesday having had the same sort of ffp issues as other clubs that have resorted to stadium sales. While they may have also grossly overstated Hillsborough's value, as have other clubs, it appears that their greater misdemenour  is the backdating of the profit from the stadium sale allied to the  extended delays in producing accounts and producing signed off accounts ( falsifying accounts)  - all of which points heavily to something being amiss.

Wednesday's argument that they have written proof that the EFL agreed with/to the stadium sale seems to me to be a tactic designed to deflect attention from the real issue, which is the juggling that has taken place with their accounts. I'm sure they would want to EFL to be embarrassed and on the back foot on this issue,  thereby trying to get them to back down on taking action, despite the fact that even of the EFL did agree to the sale, what they did not agree to was a gross overvaluation to enable a ffp breach to be avoided.

 

 

[downendcity]

4 hours ago, Major Isewater said:

It would be tragic if they get relegated back to the Championship this  season.

A double whammy would be interesting.

Breach premier league ffp and given a poins deduction that relegates them, then the following season they get a points deduction from the EFL for breaching ffp last season in the championship!

[Major Isewater]

12 minutes ago, downendcity said:

A double whammy would be interesting.

Breach premier league ffp and given a poins deduction that relegates them, then the following season they get a points deduction from the EFL for breaching ffp last season in the championship!

[downendcity]

I know this is not directly championship related, but I saw this on the BBC website, taken from one of this mornings papers.

Manchester United could have to pay a £12m agent fee to Mino Raiola on top of the transfer fee to complete the signing of Red Bull Salzburg and Norway forward Erling Braut Haaland, 19.

What ever has the agent done to justify a £12m fee from the buying club? That makes the agent worth more than Kalas, and on a par with Kelly. His value is only to his player client, so why is the buying club having to pay this extortionate fee?

It strikes me that with agents fees hitting these levels, there is a real danger that transfers will be determined not by which club is wiling to pay the player's transfer fee wand wages, but by which club is willing and able to pay the agents fees. The we are getting into the realms of players futures being decided not by what is in the player's best interest, but by what serves the agent best.

 

 

 

[Lanterne Rouge]

8 hours ago, downendcity said:

I know this is not directly championship related, but I saw this on the BBC website, taken from one of this mornings papers.

Manchester United could have to pay a £12m agent fee to Mino Raiola on top of the transfer fee to complete the signing of Red Bull Salzburg and Norway forward Erling Braut Haaland, 19.

What ever has the agent done to justify a £12m fee from the buying club? That makes the agent worth more than Kalas, and on a par with Kelly. His value is only to his player client, so why is the buying club having to pay this extortionate fee?

It strikes me that with agents fees hitting these levels, there is a real danger that transfers will be determined not by which club is wiling to pay the player's transfer fee wand wages, but by which club is willing and able to pay the agents fees. The we are getting into the realms of players futures being decided not by what is in the player's best interest, but by what serves the agent best.

 

 

 

I think we`re already there mate.

[downendcity]

4 hours ago, Lanterne Rouge said:

I think we`re already there mate.

You might not be for wrong LR.

It's almost ironic that the ending of the maximum wage in the 60s and then the Bosman ruling in the 90s were steps to change the situation where the clubs had all the power. What it has lead to/is leading to is a situation where the people with the least positive contribution to the game itself i.e. agents ( when compared to the contribution of clubs and players) have increasingly disproportionate influence on, and power over, clubs' and players' futures.

[chinapig]

9 hours ago, Lanterne Rouge said:

I think we`re already there mate.

We are. Jorge Mendes is or was to all intents and purposes Wolves' Director of Football. The so called Super Agents decide which club their players sign for, to their own advantage.

[Mr Popodopolous]

Interesting line today in the Mail, Matt Hughes and his Ahead of the Game section. The piece in full will also be in the subsequent below link.

So hang on a minute- the EFL adopted and took on the new PL FFP regs...yet if this is to be believed, they don't have points penalties as such??

Wonder if there is any sort of legal case for the EFL here...surely a contract was signed in order for changes and enforcement.

Plus. Stoke are selling or looking to offload in January...yet Aston Villa have until the summer??

I hope that there is something watertight and contractual for the EFL here...to pursue, to explore. 

Hi @Coppello I (and I'm sure everyone) would be very interested in your thoughts here. Is it the case that the PL have such a broad palette that they haven't laid down sanctioning guidelines, or is it basically that they have no sanctions available as such?

Quote

TWIST TO VILLA FAIR PLAY SAGA

The Premier League are considering following the EFL by introducing fixed points deductions for clubs that breach financial fair play regulations. 

Aston Villa are in danger of becoming the first club to be charged for exceeding the spending cap, as revealed by Sportsmail this week, but with no sanctions available at present, they could keep spending in a bid to avoid relegation and hope that even if found guilty they would be punished by a fine next season.

Top-flight clubs are pushing for more clarity on how the Premier League intend to enforce their regulations in the belief it would provide a greater deterrent to overspending.

The EFL have brought in fixed tariffs of between three and 12 points, depending on the level of overspending, as well as the right to impose a further nine-point penalty for an aggravated breach. 

https://www.dailymail.co.uk/sport/football/article-7815295/Premier-League-consider-introducing-fixed-points-deductions.html

[Mr Popodopolous]

Thought about it some more and am also working a bit on the basis/assumption that the PL didn't think they would have these issues.

I suppose though if there are no rules as such, then that could also work favorably in using Aston Villa as a bit of a test case/to make a precedent. Or perhaps a test case to enforce a penalty for the EFL.

If they come back down this season as yet unpunished though, I really cannot see the other 23- and yes I mean 23- clubs leaving it there tbh.