Derby County

[chinapig]

11 minutes ago, Mr Popodopolous said:

Agreed on all points, although a) The numbers I have seen mooted on various social media this last 6 months were 25% to a third as the exit deal number. Time will tell and b) The precedent argument has been challenged although this latter bit was on Dcfcfans.

The optics of any sweetheart deal would be terrible though for the reasons that you state.

HMRC claim they do not do sweetheart deals.

https://www.gov.uk/government/news/hmrc-responses-to-inaccurate-claims#hmrc-does-not-do-sweetheart-deals-with-anyone

Fact: HMRC does not do ‘sweetheart deals’. HMRC aims to make sure every taxpayer, no matter what their size, pays everything they owe.

Some (like Taxwatch) will dispute that and point to historical cases where they have done just that. Google and Goldman Sachs were two cases iirc.

 

 

[Sir Geoff]

4 minutes ago, chinapig said:

HMRC claim they do not do sweetheart deals.

https://www.gov.uk/government/news/hmrc-responses-to-inaccurate-claims#hmrc-does-not-do-sweetheart-deals-with-anyone

Fact: HMRC does not do ‘sweetheart deals’. HMRC aims to make sure every taxpayer, no matter what their size, pays everything they owe.

Some (like Taxwatch) will dispute that and point to historical cases where they have done just that. Google and Goldman Sachs were two cases iirc.

 

 

HMRC will never accept a lower payment than we could reasonably expect to achieve in court. We will only accept the full amount of tax, interest and penalties owed.

If multinational corporations do not agree to settle a dispute with HMRC, we will take this to a tribunal, and we win most cases.

[chinapig]

1 hour ago, Hxj said:

Roughly correct - Technically HMRC are behind, secured creditors (to the extent of their security), loans by Administrator, fees and costs of the Administration, preferential creditiors (redundancy pay, employees pension contributions etc), then second preferential creditors HMRC (as above), then unsecured creditors (including Football creditors), then shareholders.

EFL rules say that Football Creditors are 'super-preferential creditors'.

HMRC have a published practice which states that they will not agree to a CVA where, to paraphrase, non-football unsecured creditors are shafted by Football Creditors.  In the Derby case HMRC control any exit from Administration.

This may no longer be relevant but didn't HMRC challenge the football creditors rule in court and lose?

[ExiledAjax]

1 hour ago, PHILINFRANCE said:

The Law states that HMRC are first in line as preferential creditors, although, in effect, the EFL are saying their internal rules overide the Law and HMRC's published practice.

Crucial distinction of language Phil. The EFL rules do not "override" Insolvency Law. Rather they operate in addition to standard Insolvency Laws, and even then only in so far as Derby wish to remain in the EFL.

The football creditors rule does not prevent the company from exiting administration in the normal way, ie by agreeing a purchase that provides funds to agree a deal with its creditors.

However the EFL, as a private members club, then say that if you do that without paying your football creditors first, then you're no longer welcome in the EFL.

Derby could exit without paying football creditors. They could do that and still be a football club. They'd just have to go and play in non-league. If and when they achieved promotion to League 2 then there would be a discussion with the EFL.

Practically that means that a buyer would be paying millions for a non-league club, and so that's the "real-world" block to exiting in this way.

[chinapig]

33 minutes ago, Sir Geoff said:

HMRC will never accept a lower payment than we could reasonably expect to achieve in court. We will only accept the full amount of tax, interest and penalties owed.

If multinational corporations do not agree to settle a dispute with HMRC, we will take this to a tribunal, and we win most cases.

Thanks, that's helpful. I'm not qualified to judge and I'm going off topic but their claims are still disputed. Take this from TaxWatch and an All Party Parliamentary Group re a deal done with GE (though HMRC say they got as much as they could have got it they had gone to court):

TaxWatch has written to the Public Accounts Committee (PAC), the National Audit Office, and the Treasury Committee, requesting that inquiries be held into an out of court settlement between HMRC and General Electric (GE).

Following a lengthy tax dispute regarding a tax avoidance scheme that saw billions of dollars transferred around the world, it was revealed in the trade press on 15 September that the two parties had reached an out of court settlement, with HMRC settling for a deal that involved no cash payment and just £82m added to GE’s deferred tax charge, and agreeing that there had been no wrongdoing by GE.

GE revealed in their 2020 accounts that if HMRC were successful in their claim, they could face a liability of $1.1bn, before accounting for interest and penalties.

[REDOXO]

6 minutes ago, ExiledAjax said:

Crucial distinction of language Phil. The EFL rules do not "override" Insolvency Law. Rather they operate in addition to standard Insolvency Laws, and even then only in so far as Derby wish to remain in the EFL.

The football creditors rule does not prevent the company from exiting administration in the normal way, ie by agreeing a purchase that provides funds to agree a deal with its creditors.

However the EFL, as a private members club, then say that if you do that without paying your football creditors first, then you're no longer welcome in the EFL.

Derby could exit without paying football creditors. They could do that and still be a football club. They'd just have to go and play in non-league. If and when they achieved promotion to League 2 then there would be a discussion with the EFL.

Practically that means that a buyer would be paying millions for a non-league club, and so that's the "real-world" block to exiting in this way.

Exactly the way I understand it! 
 

I’m amazed that there is still an idea that HMRC will somehow not demand full payment over time with a large payment up front. 
 

I just don’t see Derby being bought by anyone as the exit barriers are so high. Up to and including, No Ground, 28m of HMRC Debt, A minimum of 12m owed to other clubs including players who have been sold to make some cash and unknown other debt to multiple suppliers and national and local businesses. 
 

What I really don’t understand is what it is buyers are actually buying as the club has multiple players out of contract and nothing much that I see as tangible. 
 

Now if the purchase price was actually what the club is going to use to pay some of these debts then ok. But that still leaves the ground owned by an outside entity. 
 

Buying distressed business happens all the time but that is reflected in the price. However Derby County are beyond distressed they are a debt mountain that once was a football club. 

[REDOXO]

4 minutes ago, chinapig said:

Thanks, that's helpful. I'm not qualified to judge and I'm going off topic but their claims are still disputed. Take this from TaxWatch and an All Party Parliamentary Group re a deal done with GE (though HMRC say they got as much as they could have got it they had gone to court):

TaxWatch has written to the Public Accounts Committee (PAC), the National Audit Office, and the Treasury Committee, requesting that inquiries be held into an out of court settlement between HMRC and General Electric (GE).

Following a lengthy tax dispute regarding a tax avoidance scheme that saw billions of dollars transferred around the world, it was revealed in the trade press on 15 September that the two parties had reached an out of court settlement, with HMRC settling for a deal that involved no cash payment and just £82m added to GE’s deferred tax charge, and agreeing that there had been no wrongdoing by GE.

GE revealed in their 2020 accounts that if HMRC were successful in their claim, they could face a liability of $1.1bn, before accounting for interest and penalties.

Having quite a bit of experience in litigation. I would suggest that HMRC took a view that they could lose in court as GE practices may not have been seen as illegal. Thus they do a deal that suits both parties and close any loopholes that allowed GE to move their money around. 
 

Derby is nothing like that. This is a case of not playing taxes particularly, players income tax. Derby have no defense AND CRUCIALLY no money to defend against any  order anyway. 

[PHILINFRANCE]

10 minutes ago, ExiledAjax said:

Crucial distinction of language Phil. The EFL rules do not "override" Insolvency Law. Rather they operate in addition to standard Insolvency Laws, and even then only in so far as Derby wish to remain in the EFL.

The football creditors rule does not prevent the company from exiting administration in the normal way, ie by agreeing a purchase that provides funds to agree a deal with its creditors.

However the EFL, as a private members club, then say that if you do that without paying your football creditors first, then you're no longer welcome in the EFL.

Derby could exit without paying football creditors. They could do that and still be a football club. They'd just have to go and play in non-league. If and when they achieved promotion to League 2 then there would be a discussion with the EFL.

Practically that means that a buyer would be paying millions for a non-league club, and so that's the "real-world" block to exiting in this way.

That is what I was trying to say, although it would seem I didn't make myself sufficiently clear.

I wrote that 'The Law states that HMRC are first in line as preferential creditors, although, in effect, the EFL are saying their internal rules override the Law and HMRC's published practice'.

What I was trying to indicate was that, in effect, the EFL are saying their creditors are more important than HMRC and, if Derby wish to remain in the EFL, they must be settled, regardless of what payments, if any, are made to HMRC. 

Be that as it may, my understanding is that HMRC consider (rightly, in my opinion) that their debt takes preference over EFL's football creditors, regardless of what the EFL might think.

Hence my belief that, once it is made clear HMRC's debt must be settled in full, over several years if necessary, as must the EFL's football creditors (if Derby wish to remain in the EFL), CK will pull out and liquidation will follow. 

[chinapig]

6 minutes ago, REDOXO said:

Having quite a bit of experience in litigation. I would suggest that HMRC took a view that they could lose in court as GE practices may not have been seen as illegal. Thus they do a deal that suits both parties and close any loopholes that allowed GE to move their money around. 
 

Derby is nothing like that. This is a case of not playing taxes particularly, players income tax. Derby have no defense AND CRUCIALLY no money to defend against any  order anyway. 

I'm sure you are right about GE given your expertise. I suppose the dispute was to do with the fact that the settlement was so much less than HMRC claimed was due.

You are certainly right about Derby. Their fans might be wise to keep the champagne on ice.

[ExiledAjax]

9 minutes ago, PHILINFRANCE said:

That is what I was trying to say, although it would seem I didn't make myself sufficiently clear.

I wrote that 'The Law states that HMRC are first in line as preferential creditors, although, in effect, the EFL are saying their internal rules override the Law and HMRC's published practice'.

What I was trying to indicate was that, in effect, the EFL are saying their creditors are more important than HMRC and, if Derby wish to remain in the EFL, they must be settled, regardless of what payments, if any, are made to HMRC. 

Be that as it may, my understanding is that HMRC consider (rightly, in my opinion) that their debt takes preference over EFL's football creditors, regardless of what the EFL might think.

Hence my belief that, once it is made clear HMRC's debt must be settled in full, over several years if necessary, as must the EFL's football creditors (if Derby wish to remain in the EFL), CK will pull out and liquidation will follow. 

Agreed. Thanks for further explaining. 

[Davefevs]

37 minutes ago, ExiledAjax said:

Crucial distinction of language Phil. The EFL rules do not "override" Insolvency Law. Rather they operate in addition to standard Insolvency Laws, and even then only in so far as Derby wish to remain in the EFL.

The football creditors rule does not prevent the company from exiting administration in the normal way, ie by agreeing a purchase that provides funds to agree a deal with its creditors.

However the EFL, as a private members club, then say that if you do that without paying your football creditors first, then you're no longer welcome in the EFL.

Derby could exit without paying football creditors. They could do that and still be a football club. They'd just have to go and play in non-league. If and when they achieved promotion to League 2 then there would be a discussion with the EFL.

Practically that means that a buyer would be paying millions for a non-league club, and so that's the "real-world" block to exiting in this way.

Better explanation than mine.

[chinapig]

45 minutes ago, REDOXO said:

Exactly the way I understand it! 
 

I’m amazed that there is still an idea that HMRC will somehow not demand full payment over time with a large payment up front. 
 

I just don’t see Derby being bought by anyone as the exit barriers are so high. Up to and including, No Ground, 28m of HMRC Debt, A minimum of 12m owed to other clubs including players who have been sold to make some cash and unknown other debt to multiple suppliers and national and local businesses. 
 

What I really don’t understand is what it is buyers are actually buying as the club has multiple players out of contract and nothing much that I see as tangible. 
 

Now if the purchase price was actually what the club is going to use to pay some of these debts then ok. But that still leaves the ground owned by an outside entity. 
 

Buying distressed business happens all the time but that is reflected in the price. However Derby County are beyond distressed they are a debt mountain that once was a football club. 

Yet Kirchner is said to want the Council to buy the stadium and Rooney is talking about signing 30 players to cover the first team and U21s.

[ExiledAjax]

5 minutes ago, chinapig said:

Yet Kirchner is said to want the Council to buy the stadium and Rooney is talking about signing 30 players to cover the first team and U21s.

Have the council actually come and said they are willing to buy the stadium? I've seen a lot of chat from Derby parties that seem to suggest it's a done deal...but the latest reliable news (from 4 April) suggests that this isn't quite the case.

https://www.google.com/amp/s/www.bbc.co.uk/news/uk-england-derbyshire-60989047.amp

"Derby City Council's chief executive has played down suggestions it could buy Derby County's stadium...In a statement released to the Local Democracy Reporting Service, Mr Simpson said the council has been working with "Team Derby" - made up of business, civic and political leaders in the city - to try and help the Rams survive despite its "extremely challenging financial position"...

"Our preference is for a buyer to purchase the club and stadium outright."

 

 

[exAtyeoMax]

12 minutes ago, chinapig said:

Yet Kirchner is said to want the Council to buy the stadium and Rooney is talking about signing 30 players to cover the first team and U21s.

He doesn't say which 30 players…

[chinapig]

7 minutes ago, ExiledAjax said:

Have the council actually come and said they are willing to buy the stadium? I've seen a lot of chat from Derby parties that seem to suggest it's a done deal...but the latest reliable news (from 4 April) suggests that this isn't quite the case.

https://www.google.com/amp/s/www.bbc.co.uk/news/uk-england-derbyshire-60989047.amp

"Derby City Council's chief executive has played down suggestions it could buy Derby County's stadium...In a statement released to the Local Democracy Reporting Service, Mr Simpson said the council has been working with "Team Derby" - made up of business, civic and political leaders in the city - to try and help the Rams survive despite its "extremely challenging financial position"...

"Our preference is for a buyer to purchase the club and stadium outright."

 

 

No, you're right. Some people just seem to be taking it as a given.

Local Authorities have had massive cuts to central government funding since 2010 so quite how it could be justified is beyond me.

[REDOXO]

4 minutes ago, chinapig said:

No, you're right. Some people just seem to be taking it as a given.

Local Authorities have had massive cuts to central government funding since 2010 so quite how it could be justified is beyond me.

I just don’t see it either.
 

I have been involved where a local authority gave money to the seller of a historic house so the seller would not sell it to a developer but sell it to a party that would preserve it. BUT not anywhere the kind of money being spoken of here.

Also MM is an ambassador for Derby and Derbyshire CC all party’s could be in court for years if MM gets his money from local government! The Conflicts of interest here are very clear. 

[REDOXO]

4 minutes ago, billywedlock said:

How a council funded by taxes, can buy the stadium is beyond me. More so when it is to the benefit of an individual who chose not to pay his own liabilities to HMRC, whilst sitting on a fortune of hundreds of millions. 

I do understand the desire to keep the club alive, but we are talking here about the taxpayer taking a hit so one multi millionaire avoids his (created)  liabilities , whilst limiting his losses, and then another multi millionaire taking over, but only if the taxman is willing to write off the previous regimes mess. 

How HMRC got themselves in so deep is also beyond me. Whenever I have owed them a £ they come after you like a hurricane. £30M ??? How can that be ? 

Simple reality is, the club is worthless without any assets and no stadium or players, and Morris is trying to keep the ground. He does not want to sell to Ashley, as he knows he is going to get hammered. Kirchner will not, absolutely not, complete a deal before the end of this season. 

 

Yep!

The tax was the perfect storm taken advantage of by MM. 

As I understand it was government policy for HMRC to not go after corporations for debts during Covid. Thus allowing Morris to keep cranking it up. Bloke should be in jail not sitting on a stadium having bankrupted a football club!

[ExiledAjax]

50 minutes ago, chinapig said:

No, you're right. Some people just seem to be taking it as a given.

I. Am. Shocked.

[Davefevs]

Great posts above.  The sooner people realise Morris took advantage of everything and everyone the better.  In many respects I want Derby to get liquidated so Morris is shown up for what he is.

[Mr Popodopolous]

1 hour ago, chinapig said:

Yet Kirchner is said to want the Council to buy the stadium and Rooney is talking about signing 30 players to cover the first team and U21s.

40 was a number I saw a while back, unless it's fallen since.

[ScottishRed]

1 hour ago, ExiledAjax said:

Have the council actually come and said they are willing to buy the stadium? I've seen a lot of chat from Derby parties that seem to suggest it's a done deal...but the latest reliable news (from 4 April) suggests that this isn't quite the case.

https://www.google.com/amp/s/www.bbc.co.uk/news/uk-england-derbyshire-60989047.amp

"Derby City Council's chief executive has played down suggestions it could buy Derby County's stadium...In a statement released to the Local Democracy Reporting Service, Mr Simpson said the council has been working with "Team Derby" - made up of business, civic and political leaders in the city - to try and help the Rams survive despite its "extremely challenging financial position"...

"Our preference is for a buyer to purchase the club and stadium outright."

 

 

I suppose it depends to an extent on the amount asked for the ground but I pretty sure there would be uproar in Derby if this were to happen, particularly in the current state public sector finances are in.

Yes ok, one club city, but far from all council tax payers are WRDC fans or even football fans full stop.

Way to many hurdles to overcome and money is running out, I see CK pulling out pretty sharpish.

Administrators have gone for the only game in town with their fingers firmly crossed behind their backs.

[Mr Popodopolous]

4 hours ago, ScottishRed said:

I suppose it depends to an extent on the amount asked for the ground but I pretty sure there would be uproar in Derby if this were to happen, particularly in the current state public sector finances are in.

£20m, £22m I have seen mooted. Template could be the Plymouth deal in 2010- seen a suggestion of 5% yield ie £1-1.1m and that is commercial but the Plymouth deal was 8-8.5% and when resold it was some multiple of the rent which was slightly above the amount the council purchased for- could work commercially if on true commercial terms, enhanced to reflect the risk with public money.

4 hours ago, ScottishRed said:

Yes ok, one club city, but far from all council tax payers are WRDC fans or even football fans full stop.

Agreed although "majority rules" etc might be another take. Wonder if they might do some kind of local referendum on the matter?

[Derby_Ram]

Head of DCC was up in Preston and met the EFL for around 3 hours today. CK dialled in on Zoom. Although nothing official is announced it strongly feels like there is am agreement between DCC/CK in place. CK is also in Derby tomorrow for a day of meetings with various parties including MPs.

I'm still highly dubious that CK will follow through on completing a deal but I'm cautiously optimistic that the stadium stumbling block is being removed by DCC; albeit in a less than satisfactory way. I'm concerned about what the HMRC will say when it comes down to it - all the noises from local media is thay they're onboard with the 'plan' - but given that's from Quantuma briefings it makes me suspect the opposite!

Though beggars can't be choosers I was always in the MA camp. However CKs twitter Q+As have been remarkably refreshing and if he does complete I think it'll be an interesting journey. Odds are he won't complete....but it really takes a strange individual to do all the things he has done/is doing.

[downendcity]

8 hours ago, ScottishRed said:

I suppose it depends to an extent on the amount asked for the ground but I pretty sure there would be uproar in Derby if this were to happen, particularly in the current state public sector finances are in.

Yes ok, one club city, but far from all council tax payers are WRDC fans or even football fans full stop.

If I were a Derby resident I would be none too happy if my hard earned council tax ( paid out of my net personal income -  net after income tax has been deducted and paid)  were to be used to pay £20m to the man who oversaw the evasion/non-payment of £25m of  tax payments. 

It’s a sort of ironic hypocrisy.

[chinapig]

11 hours ago, Derby_Ram said:

Head of DCC was up in Preston and met the EFL for around 3 hours today. CK dialled in on Zoom. Although nothing official is announced it strongly feels like there is am agreement between DCC/CK in place. CK is also in Derby tomorrow for a day of meetings with various parties including MPs.

I'm still highly dubious that CK will follow through on completing a deal but I'm cautiously optimistic that the stadium stumbling block is being removed by DCC; albeit in a less than satisfactory way. I'm concerned about what the HMRC will say when it comes down to it - all the noises from local media is thay they're onboard with the 'plan' - but given that's from Quantuma briefings it makes me suspect the opposite!

Though beggars can't be choosers I was always in the MA camp. However CKs twitter Q+As have been remarkably refreshing and if he does complete I think it'll be an interesting journey. Odds are he won't complete....but it really takes a strange individual to do all the things he has done/is doing.

How do Derby fans feel about Morris, the man who put them in this position, benefiting from any sale of the ground to DCC? Or is he going to use the proceeds to pay the taxes he thought were optional?

I have been shocked by the relative lack of vitriol he gets from the fans. He doesn't even seem to be top of the hate list, that position being reserved for the EFL for daring to apply its rules. Apparently rules are for little clubs.

[Sir Geoff]

If a Tory Council buy Pride Park for £20m and give the money to MM and not HMRC then there should, imo, be a public outcry.  I would hope that some of the respected (non Tory) Newspapers in this country run with the story.

[Eddie Hitler]

19 minutes ago, Sir Geoff said:

If a Tory Council buy Pride Park for £20m and give the money to MM and not HMRC then there should, imo, be a public outcry.  I would hope that some of the respected (non Tory) Newspapers in this country run with the story.

 

Yes. Though without the political slant.

As I've said I think it perfectly reasonable that councils buy sports grounds in order to save them for those parts of the city that follows that team, as long as it is at a fair value and a fair rent is charged, or everything just disappears under new build houses and there is nothing left to do.

But giving it to Morris would be wrong.

[PHILINFRANCE]

19 hours ago, billywedlock said:

Morris is why a solution has not been found . 

Club out of money in a few weeks with zero assets . Liquidation is very real . 

Derby fans can blame everyone they want but there is only one multi millionaire that has got them in this mess and has not paid for his own errors and unscrupulous actions . 

Better Ashley buys the ashes , builds a new ground and they start again . DCFC  mk 2 founded 2022

 

With all due respect to and empathy with Derby's fans, I think this would be my preferred outcome.

Derby would still exist, but in another form - think Rangers or Wimbledon - but, more importantly, the main cause of the problem, Mel Morris, would be left with the white elephant that is Pride Park Stadium, and still in hock to MSD.

[Derby_Ram]

1 hour ago, chinapig said:

How do Derby fans feel about Morris, the man who put them in this position, benefiting from any sale of the ground to DCC? Or is he going to use the proceeds to pay the taxes he thought were optional?

I have been shocked by the relative lack of vitriol he gets from the fans. He doesn't even seem to be top of the hate list, that position being reserved for the EFL for daring to apply its rules. Apparently rules are for little clubs.

I guess this is where we differ in opinions and the view in the stadium on match days is different from a lot of what you'll see on social media and in fans forums.

Don't get me wrong there's still plenty of chants 'F the EFL' chants - but you'll find them after an iffy decision and ironically as opposed to being a real point of ire.

I've said it before and to me it still holds true - MM has no presence online. Every other party does. When you have a focal point who you know will see what blame/abuse/constructive discussion is written that's what unsurprisingly comes to the fore. MM has vanished. If he appeared online or heaven forbid at the ground you would see something very different.

 

edit: and to how do we feel about him benefitting from any sale? Everyone I've spoken to detests it. I think you'll know from my posts on here that I feel the same. But it probably also won't shock you that every Derby fan I've spoken to would rather that outcome if it helped facilitate a new owner and us starting next year in League One - even more so if it's on zero point  

Edited April 13, 2022 by Derby_Ram

[downendcity]

24 minutes ago, Eddie Hitler said:

 

Yes. Though without the political slant.

As I've said I think it perfectly reasonable that councils buy sports grounds in order to save them for those parts of the city that follows that team, as long as it is at a fair value and a fair rent is charged, or everything just disappears under new build houses and there is nothing left to do.

But giving it to Morris would be wrong.

So that’s £80m then?!