Derby County

[Mr Popodopolous]

Couple of general thoughts and observations.

Probably missing something here but surely now that Covid business conditions have passed, officially speaking anyway, given all of the cost cutting the club should have been self-sufficient for a period after Mel stopped funding this season if the appeal is to have legs? The cash balance should have been adequate for a while anyway.

HMRC wise. I dunno, but just have a feeling that they would rather accept a % of something rather than 100% of nothing in the event of liquidation?

Even though 100% of nothing would set an example in particular to football clubs who are considering it. The moral of the story being:

"Football or not, we've taken up to a £28m hit here and this shows that yes we are willing if required to wind up clubs over tax issues". 

[Hxj]

4 hours ago, Mr Popodopolous said:

HMRC wise. I dunno, but just have a feeling that they would rather accept a % of something rather than 100% of nothing in the event of liquidation?

Paragraph 42 of the Portsmouth judgment makes HMRC's position at the time pretty clear:

1. It was abundantly plain from the outset of this hearing that HMRC has throughout been motivated by two very significant factors. First, it has a policy (which sounds as though it is invariable) to oppose any CVA which does not treat unsecured creditors within the same class equally. That has guided it throughout this matter. Second, it has a deep-rooted antipathy to the football creditor rules. It considers them to be quite contrary to proper insolvency principles and (if it is different) to be contrary to public policy. I have already referred to the challenge to those rules that it has mounted elsewhere.

Derby's case could be the perfect one for HMRC to achieve their aim of neutering the Football Creditor's rule.

[Mr Popodopolous]

Thanks, will have a good read of that later. Maybe the full judgement but certainly yes HMRC severely object.

Big news- appears that the - 12 administration hearing has been adjourned.

Nixon says administration appeal on ice or somesuch.

EFL need to give no quarter now or moving forward of course.

[Mr Popodopolous]

Comment below the line on an earlier article. Note the allegiance and remember not only the clubs but the 2019 playoff final no less.

Quote

Villatillidie012 HRS AGO

Why cant the EFL just let it go now.. i think Derby fans who are the real owners have been through enough now.Mel has gone and its time to move on.

How quaint. Cheats of a feather stick together?

Edited November 8, 2021 by Mr Popodopolous

[Mr Popodopolous]

Will say- my comment above was a bit unworthy of the debate really, in hindsight- but I did find it amusing that a Villa fan was piping up with some support for Derby.

I am not sure that would be a majority view among Championship fans in the here and now that's for sure- nobody wishes them bust but at the same time, the process is the process is the process.

Edited November 9, 2021 by Mr Popodopolous

[Jerseybean]

https://www.bbc.co.uk/sport/football/59215252?at_custom4=5BC0FE82-40DE-11EC-B138-260316F31EAE&at_medium=custom7&at_campaign=64&at_custom2=facebook_page&at_custom3=BBC+Sport&at_custom1=[post+type]&fbclid=IwAR3BPdFzHgqd-EflJ03eCDdNQMLY25vQ-4NYGXSfy8c6R8V7LOBdr0l9KP4
 

[hertsexile]

COVID was a big financial drain on all clubs in the EFL not just Derby. The fact they went into administration has nothing to do with it. Derby have constantly flown close to the wind financially and have been prepared to break the rules to succeed but have failed. Punishment is needed not legal dodging come EFL just be strong for once impose your punishment 

[chinapig]

12 hours ago, Mr Popodopolous said:

Thanks, will have a good read of that later. Maybe the full judgement but certainly yes HMRC severely object.

Big news- appears that the - 12 administration hearing has been adjourned.

Nixon says administration appeal on ice or somesuch.

EFL need to give no quarter now or moving forward of course.

This implies that both parties were happy with an adjournment but the question is why? In a civil court scenario this would often result in the parties reaching a settlement.

If the administrators were minded to drop the appeal they could have withdrawn it at the hearing but they didn't. Should we perhaps expect a sweetheart deal to emerge, justified on the basis that it is the only way to save the club?

Though a less cynical possibility is that the panel told the administrators they had no prospect of success and suggested they go away and consider withdrawing to save some face.

[Hxj]

16 minutes ago, chinapig said:

Though a less cynical possibility is that the panel told the administrators they had no prospect of success

Or even on reading the independent accountants' report and all the evidence in the case it was decided by the Administrators and their advisors that the case was hopeless.  No doubt the report also details the approximate loss position for accounting purposes which demonstrates the implied position for FFP for years to 2021 in which case the only sensible decision was to say 'can we adjourn and see if we can agree an overall settlement'.

 

Edited November 9, 2021 by Hxj

[Mr Popodopolous]

1 hour ago, hertsexile said:

COVID was a big financial drain on all clubs in the EFL not just Derby. The fact they went into administration has nothing to do with it. Derby have constantly flown close to the wind financially and have been prepared to break the rules to succeed but have failed. Punishment is needed not legal dodging come EFL just be strong for once impose your punishment 

Yep spot on.

Yet the weird thing is, fans wise- allthough it could simply be a loud and outsized minority, but a fair number consider Derby not to be the ones in the wrong but quite the reverse. It's hard to fathom.

I was glad Sheffield Wednesday went down in May and that the halved deduction proved decisive. My God though, Derby as a club, fanbase seem more deserving.

Edited November 9, 2021 by Mr Popodopolous

[Davefevs]

11 hours ago, Mr Popodopolous said:

Comment below the line on an earlier article. Note the allegiance and remember not only the clubs but the 2019 playoff final no less.

How quaint. Cheats of a feather stick together?

8 hours ago, Mr Popodopolous said:

Will say- my comment above was a bit unworthy of the debate really, in hindsight- but I did find it amusing that a Villa fan was piping up with some support for Derby.

I am not sure that would be a majority view among Championship fans in the here and now that's for sure- nobody wishes them bust but at the same time, the process is the process is the process.

Villa fans worried they might get relegated and EFL (new board) have unfinished business?

[Mr Popodopolous]

16 minutes ago, Hxj said:

Or even on reading the independent accountants' report and all the evidence in the case it was decided by the Administrators and their advisors that the case was hopeless.  No doubt the report also details the approximate loss position for accounting purposes which demonstrates the implied position for FFP for years to 2021 in which case the only sensible decision was to say 'can we adjourn and see if we can agree an overall settlement'.

 

If that's the case and I'm the EFL, I'd depending on the strength of defence of the - 12, not be looking to settle with that as part of it which is a climbdown to an extent but looking to uphold the - 12 and then push on with the FFP at the appeal if required issues from a position of strength.

Then I would be looking off the back of the position of strength be looking to use this combined with embargoes in play and other potential rule breaches, this as leverage for the final settlement.

Edited November 9, 2021 by Mr Popodopolous

[Ska Junkie]

10 minutes ago, Davefevs said:

Villa fans worried they might get relegated and EFL (new board) have unfinished business?

I'm sure the £120M or whatever they get in PPs would soften the blow.

[Davefevs]

12 minutes ago, Ska Junkie said:

I'm sure the £120M or whatever they get in PPs would soften the blow.

Retrospective

[Mr Popodopolous]

On a side note, old Crew cut and some of his- some not all- of his cronies on dcfcfans.uk don't half post some crap. At times anyway, but by no means all.

Wonder if there is objectionable content about Wycombe and Couhig. Certainly if so he should see it! Harden his resolve for his claim or whatever.

Edited November 9, 2021 by Mr Popodopolous

[Mr Popodopolous]

Saw two legal arguments earlier but phone died before I could post them- I think the EFL can counteract them through other means within their rules but interested in the substantive merits or otherwise...

1. The restatement due to the amortisation does not set a legal precedent therefore Derby cannot fall foul to 2019 under this- the unspoken bit here is if there would need to be a new set of charges or a new investigation...I'd say keeping them under embargo while accounts not agreed should focus the mind.
2. One possible bargaining chip was Mel Morris writing off debt to give Derby headroom- I'd suggest continuing to use Regulation 16.20 in order to set budgetary requirements in order to ensure compliance with and monitor a range of regulations is a good counter measure.

Also was amused to read that I apparently live in a world of my own or words to that effect- well no more than some Derby fans, less so in fact who were talking of signing Adam Armstrong back in May! a) Footballing reasons and b) Financial- if I am the EFL I have all the time in the world, whereas Derby are up against the clock to an extent as January looms- EFL should just continue to take their own sweet time. Make it clear through actions not necessarily words that you wouldn't be averse to making sure that things are done correctly even with a new owner unless and until resolved.

In fact one thing to help focus the mind might be to at least suggest that because an agreed deal with administrators might not necessarily bind a new owner, that if the new owner wants to negotiate that clock, with the accompanying embargo etc, might reset to zero,

Edited November 9, 2021 by Mr Popodopolous

[Mr Popodopolous]

Edit, perhaps that last post by me- ie this one- crossed the line.

Edited November 9, 2021 by Mr Popodopolous

[Hxj]

13 hours ago, Mr Popodopolous said:

The restatement due to the amortisation does not set a legal precedent therefore Derby cannot fall foul to 2019 under this

That is a correct statement but not really insightful, a bit like saying "the sun comes up every day".

Each time a set of accounts are audited the auditors need to reconsider what the appropriate accounting policies are.  Derby are perfectly entitled to submit their accounts to an auditor for any year based on any amortisation methodology they like provided that (with full disclosure - unlike 2018 and earlier (because I know that our friends from away like to pop in)) an auditor signs it off as compliant with FRS102.  The methodology can then be tested.

It is also not clear that Derby have yet been charged with any 'excess loss' FFP offences for any year.  As far as I am aware the investigation continues.

Once the accounts are agreed then the FFP position can be clarified.

13 hours ago, Mr Popodopolous said:

One possible bargaining chip was Mel Morris writing off debt to give Derby headroom

It is not immediately obvious that Morris is owed anything by the football club or Sevco 5112 (the parent of the football club) or by Gellaw Newco 203 Limited (the parent of Sevco 5112).

Firstly no indebtedness to Morris is shown in the accounts to 30 June 2018 for the first two, no accounts have been submitted for Newco 203.  The accounts for Sevco 5112 show £40 million owing to Newco 203.

Secondly there remains the mystery of the £75 million remaining for the stadium at 30 June 2018.  It is quite possible that Morris is owed nothing.

The stadiun was lent £75 million by Morris, which it used to pay for the Stadium.  Football lent the money to Sevco 5112.  Sevco repaid the £40 million to Newco 203, and let the balance to Newco 203.  Newco 203 repaid Morris the £40 million (assuming that Newco 203 simply acted as a conduit for the cash).

So Morris is £35 million worse off in cash, and Newco 203 is £35 million better off.  

So in 2019, 2020 and 2021 Morris pays in his £13 million a year (for FFP purposes) and the Football Group burns through that plus the £35 million in cash held by Newco 203. 

The £39 million from Morris, plus the £35 million cash in Newco 203 plus the £25 million (say) in unpaid HMRC debt would give cash losses of £100 million to Administration, which looking at other clubs is not far off.

[BTRFTG]

On 06/11/2021 at 09:57, Hxj said:

On related issues the Rams Investment Limited/Gabay Charge against the Stadium Group has been repaid in full.

Out of curiosity, what was the value of the variable charge repaid? Was it a true reflection of monies originally loaned, or did a degree of discounting/ write-off take place?

Am I also right in thinking there are no outstanding warrants against Gabay re the Cum-ex scam?

[Hxj]

16 minutes ago, BTRFTG said:

Out of curiosity, what was the value of the variable charge repaid?

It doesn't say the Charge was simply satisfied in full.  It could well have been repaid months ago, but the general public will never know.

17 minutes ago, BTRFTG said:

no outstanding warrants against Gabay

That's my understanding - arrested in France - extradited to Germany - posted bail - went home.  Investigations continuing.

He's also had a fairly nasty spat with an ex-business partner that has been through the UK courts, plus his business was successfully sued in respect of a Carribean development.

[BTRFTG]

1 hour ago, Hxj said:

It doesn't say the Charge was simply satisfied in full.  It could well have been repaid months ago, but the general public will never know.

Thanks, my interest being what the total value of both Charges were in relation to the asset's realistic value. Any idea if the Charge was repaid or whether it was simply removed by the lender? Whilst the latter would be unusual this is the Derby Wonderland we're talking about?

[Hxj]

I suspect that the amount was less than £10 million and was actually repaid from the MSD loans.

It may well be that Gabay had other matters on his mind and the paperwork was never dealt with at the time.

[BTRFTG]

18 minutes ago, Hxj said:

I suspect that the amount was less than £10 million and was actually repaid from the MSD loans.

It may well be that Gabay had other matters on his mind and the paperwork was never dealt with at the time.

Indeed, that old, ' I had other matters on my mind so got behind with the paperwork' ruse. Gabay and Morris well versed in that respect.

[Mr Popodopolous]

Talking of MSD- and that's a good way of putting it @BTRFTG about the Derby Wonderland.

https://dcfcfans.uk/topic/38632-a-question-of-debt/#comment-2229866

Sounds as if the stadium might well be going back at less than £81m- I do hope the EFL use this as a pressure tactic in the upcoming negotiations, all leverage is fair game in my view. I saw it suggested in May that it would create a huge FFP issue so a good tactic might be to refuse to amend the current terms of the embargo for prospective new owners until this part also resolved to their satisfaction- or offer the administrators and prospective new owner the chance of fresh investigations and if necessary IDCs for affected period- with embargo type conditions remaining in play for the duration.

Possibly slightly more surprising is why MSD are seemingly being so cooperative, playing ball so much- any ideas? The administrators certainly say that MSD are 'onside'.

Edited November 10, 2021 by Mr Popodopolous

[Mr Popodopolous]

If anyone is interested too, found this from the archives.

https://dcfcfans.uk/topic/27482-qpr-ffp-fine/

Note the vastly differing tone- what goes around comes around to an extent?

Some of them who currently loudly complain about unfair treatment etc...well?

Quote

I don't mind admitting to being bitter about this so I am pleased that justice appears to have caught up with them, albeit belatedly.

Justice has caught up with Derby, albeit belatedly. This poster certainly complains in the present!

Quote

Good, they deserve it. This is nothing to do with them beating us in the play-offs. It's good because finally FFP is looking like it has some backbone and consequences for those who ignore it. We've spent a lot but always within our means, hence why we've always passed the FFP regulations.

They're already comfortably a bottom-half Championship side. This will inevitably relegate them sooner rather than later, perhaps even more than once.

If the FFP rules exist then they have to be enforced. I've seen comments on here and elsewhere from other fans that us or their clubs should just spend what they like as if you go up there is no detrimental impact on your club. Now there is.

This poster is currently advocating deals with the administration issue. I totally agree with them on the bolded bits.

This bit is quite funny- it's theoretically possible that Derby could go down ultimately due to the FFP issue, the overspending did not take them up however.

Quote

The funny thing is, they didn’t actually prosper by breaking the rules anyway, one season in the prem, then back in the daldrums, and they’re being f****** with a big fine on top if all their other woes. Cheaters really don’t prosper. 

Doldrums of League One?

This bit didn't age well...

Quote

On the other hand the rules are in place and QPR knowingly broke them so they should be punished for that. You can't break the rules just because you think you can get away with it or you think they're rubbish rules. Mel understands this, hence our cutting back on wages and transfers. 

...agreed, and that is what Derby have or are in the process of getting!

Quote

From a purely practical standpoint it makes no sense to fine QPR so much money. Given that FFP is meant to keep clubs in business why give them a fine so large that they will inevitably have to go into administration or liquidation. And you can't let the owners pay it off because that's what the rules were trying to avoid in the first place. A points deduction/transfer ban makes much more sense. Plus Forest and Blackburn have been punished for it in the past so they'd be complaining if QPR got away scott free.

I totally agree with the below- and yes this poster is to an extent, a moaner about EFL and the unfair treatment now!

Quote

They knew the rules especially when they were relegated to the championship and they said we don’t care we will sign another 10 players for ££££ on huge wages - they broke the rules and deliberately so and their punishment should be severe 

bournmouth and Leicester should be done as well.

failure to do so leads all other clubs to take legal action against the EFL or even the rule breakers 

lets bare in mind that QPR are still receiving parachute payments and are still profiting from breaking the rules that others play by.

It's funny how views change. Would be a good little exercise to compare views then vs now from a variety of posters.

Edited November 10, 2021 by Mr Popodopolous

[Hxj]

2 hours ago, BTRFTG said:

' I had other matters on my mind so got behind with the paperwork'

I'll let Gabay off - with a European arrest warrant and an extradition case - even I have some sympathy!

[Mr Popodopolous]

On 09/11/2021 at 08:11, Jerseybean said:

https://www.bbc.co.uk/sport/football/59215252?at_custom4=5BC0FE82-40DE-11EC-B138-260316F31EAE&at_medium=custom7&at_campaign=64&at_custom2=facebook_page&at_custom3=BBC+Sport&at_custom1=[post+type]&fbclid=IwAR3BPdFzHgqd-EflJ03eCDdNQMLY25vQ-4NYGXSfy8c6R8V7LOBdr0l9KP4
 

Thanks. Missed this post and skimread the article. Interesting line below?

Quote

In addition to that deduction, the Rams' administrators are talking to the Football League about potential punishments for other financial breaches in future years.

I struggle to see why the EFL would accept a 3 point deduction if there has been more than one breach- we know to 2018 it might be 3 pts but beyond? Like I say all about the leverage- Derby probably need a buyer before January financially, the EFL though just need to sit tight and not lose their nerve if it looks like the club may fall further into the financial mire.

I believe the club need a relatively quick and clean conclusion more than the EFL do.

Edited November 10, 2021 by Mr Popodopolous

[Davefevs]

Booooooom

 

[Davefevs]

Derby County ready to accept another points deduction - all but confirming relegation

The club would be left on minus three points and destined for League One after talks between administrators and the Football League

By John Percy 10 November 2021 • 5:29pm

Derby County's administrators are set to reluctantly accept a heavy points deduction which will all but relegate the club to League One.

After weeks of talks with the Football League, Derby are close to agreeing another deduction of 9 points, plus a further suspended three points, for historical financial breaches under former owner Mel Morris.

This latest punishment will take their total penalty points to -21, which will put Derby on minus three points and leave them marooned at the bottom of the table with relegation from the Championship appearing inevitable.

Final negotiations are being held over the proposed business plan, which includes restrictions on spending, transfer and losses, and once that is agreed an official announcement will follow.

Derby's administrators, Quantuma, and the EFL declined to comment, though the EFL said matters were ongoing.

Wayne Rooney, the Derby manager, will now be facing a huge task to lift his squad with the second points deduction likely to prove a significant blow to his hopes of avoiding relegation.

Derby have already been hit with a 12-point deduction after entering administration in September, and the proposed appeal by Quantuma was adjourned earlier this week. That appeal is now set to be dropped altogether.

Quantuma were also intending to contest the threat of further points for breaching the EFL's profitability & sustainability rules but they are now close to reaching an 'agreed decision', with confirmation expected in the next few days.

It is understood that Quantuma have made their decision after receiving legal advice: they now believe the best solution for a potential sale is to accept the punishment, in order for closure and to provide certainty for any interested parties.

Derby are talking to at least three separate consortiums over a possible takeover, and the long-running saga with the EFL - which initially started in January 2020 - has proved a disruptive backdrop.

Rooney had inspired a spirited response from his players at the start of the season when the club's administration was confirmed, but Derby have won only once in their last nine matches.

The second points deduction will leave them 14 points behind second-bottom Barnsley and 18 behind Peterborough, who are just outside the relegation zone.

Derby return to Championship action on Sunday week with a home game against league leaders Bournemouth.

[CyderInACan]

Nothing less than they deserve if true. 

Hope that Reading and Villa (if relegated and still in scope for EFL justice) get what they deserve too. 

Cheats should never prosper.