FFP amendments - covid allowances

[Davefevs]

4 hours ago, Mr Popodopolous said:

Am I misinterpreting something quite big here?

I take/took the £5m allowance over 2 years to be the max Covid allowance- so £48m-£5m-usual allowances (£5m x 2)=£33m.

£33m/2=£16,5m. That knocks the claims of £10-15m, perhaps £15-the lower end of £20m out of the park if so.

3 hours ago, Mr Popodopolous said:

If we've cut the wage bill by £6m as per a couple of reports and I've interpreted the Covid figures correctly I fear an 8-figure hole to 2022/23. Equivalent in terms of tariff to an 8-9 point deduction for the period ending 2022/23.

Certainly won't be alone though it's notable reading other Championship forums the lack of concern and debate about the issue so far.

Thanks, will have a look back. Most reported  figure I've seen is £6m per season however and does it account for the new additions?

Would you be able to give me your simple:

Income and Costs for each year for the period ending this year, and ditto for next year.  Obviously numbers up to 20/21 are factual.

Then how much your knocking off for covid and standard FFP exclusions (£5m p.a Academy, Depreciation etc).

[ExiledAjax]

3 hours ago, Mr Popodopolous said:

One interpretation from the Stoke forum too.

If you forecast a breach and are up front, work with EFL does this avoid a points deduction?

Again my guess would be no but it is an interpretation.

I'd guess that you'd get some leniency - fewer points deducted, more suspended, thanking of thing. Like Reading did this season iirc.

[Waconda]

3 hours ago, Mr Popodopolous said:

One interpretation from the Stoke forum too.

If you forecast a breach and are up front, work with EFL does this avoid a points deduction?

Again my guess would be no but it is an interpretation.

This is the sort of thing that is going to have to happen, there will be several clubs as bad if not worse than us you would think.

I'm guessing suspended points deductions due to COVID impairment or something like that.

Edited February 18, 2022 by VT05763

[Mr Popodopolous]

8 minutes ago, VT05763 said:

This is the sort of thing that is going to have to happen, there will be several clubs as bad if not worse than us you would think.

I'm guessing suspended points deductions due to COVID impairment or something like that.

Not so sure, because once a precedent is set...

Maybe it would be the case of the Business Plans with points deduction attached in the same season if failed- see Reading and the 6 + 6...as in you'd have Summer 2022 and January 2023 (plus any sales to foreign clubs when window shut and theirs open) to put it right. By Spring 2023 basically!

[Mr Popodopolous]

18 minutes ago, ExiledAjax said:

I'd guess that you'd get some leniency - fewer points deducted, more suspended, thanking of thing. Like Reading did this season iirc.

Reading got 6 but that 6 comes with serious strings attached. 6 + 6- can rise to 12 this or next year for a range of reasons, metrics that they're measured by, the suspended 6 being activated doesn't preclude separate charges for the specifics of the breach itself whatever it may be.

Granted their breach was £18.5m IIRC overspend but the principle is that even cooperation and perhaps a lower initial deduction can come with strings attached.

Edited February 18, 2022 by Mr Popodopolous

[Mr Popodopolous]

29 minutes ago, Davefevs said:

Would you be able to give me your simple:

Income and Costs for each year for the period ending this year, and ditto for next year.  Obviously numbers up to 20/21 are factual.

Then how much your knocking off for covid and standard FFP exclusions (£5m p.a Academy, Depreciation etc).

Yes, although I am actually working on multiple scenarios. Computer acting up but that aside perhaps we share notes Friday.

Covid I'm knocking off £5m over 2 seasons as per the EFL statement today, usual allowances £5m per season.

[Davefevs]

19 minutes ago, Mr Popodopolous said:

Yes, although I am actually working on multiple scenarios. Computer acting up but that aside perhaps we share notes Friday.

Covid I'm knocking off £5m over 2 seasons as per the EFL statement today, usual allowances £5m per season.

I’ll DM you a screenshot of my latest estimates.  

[Davefevs]

9 minutes ago, Tafkarmlf said:

With this being confirmed  im reading that in the 2021 accounts IE  this next season, we can deduct 12.5 million total. 

But, we can also write off players values due to amortisation and losses in the transfer market too

Ergo, We're well in the clear here  this is awesome news from where I'm looking 

No, not quite right.

We can only claim against lost revenues….and I doubt we lost as much as £5m in 19/20 (£2.4m by my estimates).  20/21 we will claim the full £5m.

But don’t forget those two years losses are added together and halved….so feels more like £3.7m (£7.4m divided by 2).

Then we get £2.5m lost revenue this season.  Attendances 10% down, so we will claim the whole lot.

I reckon we are slightly worse off following this announcement.

Re player values - nope, that was posturing from RG/JL to try to get reform….what we got was today’s announcement, so no we can’t remove those costs either.

So next season, we are currently looking to be over the £39m allowed.

[Waconda]

6 hours ago, Mr Popodopolous said:

Not so sure, because once a precedent is set...

Maybe it would be the case of the Business Plans with points deduction attached in the same season if failed- see Reading and the 6 + 6...as in you'd have Summer 2022 and January 2023 (plus any sales to foreign clubs when window shut and theirs open) to put it right. By Spring 2023 basically!

COVID though, can surely be described as a once in a life time business disrupter.

[AnotherDerbyFan]

12 hours ago, Mr Popodopolous said:

On a side note, Page 804 and beyond of the Administration thread on Dcfcfans worth a look- fuming!!

They are speculating about legal action, points back- 2 or 3 points is the ballpark figure I am seeing. Suggesting that this £5m allowance is to let us, Middlesbrough, Stoke and likely more off the hook!

I think that's a misunderstanding of how the new rule is implemented. The instinctive reaction of a few is that it's an additional £5m allowance in 19/20 and 20/21 which didn't apply previously when the penalty was applied. 

The reality is the £5m cap is the reason we failed the 2021 period by £1.96m. I understand why they decided on a cap as it prevents clubs like Stoke included a massive chunk due to Covid impairment. However, I'm surprised they didn't come up with a basic rule to only allow match receipts and commercial losses. In our case, that's at least £13m and a net £4m impact on the 2021 period. The difference being a failed 2021 period or not (18% of our points deduction), and a Wycombe claim disappearing.

There is no logic to a max £5m allowance.

[AnotherDerbyFan]

29 minutes ago, Tafkarmlf said:

Ooh, cheers. 

Just re read the EFL statement 

As a result of a number of Clubs highlighting that the pandemic continues to have an adverse financial effect despite a return to full capacity stadiums, Clubs have opted to reintroduce COVID add backs into the P&S calculation for season 2021/22.  The impact is that Clubs will be able to claim lost revenues or exceptional costs directly relating to the pandemic up to a value of £2.5m for the reporting period 2021/22. Clubs can claim up to £5m for seasons 2019/20 and 2020/21.

The Covid add backs read from that they can be put in in this seasons accounts. 

To me it still seems we can claim 12.5 million from that wording in this seasons accounts. 

I'm also not seeing the added together and halved in calculations on P&S  1.10 onwards on the EFL site makes no reference to it https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/appendix-5-financial-fair-play-regulations/

But if you can show me where that is would be most appreciated. 

 

Players, ok that's on me. 

 

For P&S calculations,19/20 and 20/21 P&S losses are averaged. 

P&S for to 4 years to 2022 = 18/19 + (19/20 + 20/21)/2 + 21/22
The max allowance applied for the 2022 period is therefore... 0 + (5+5)/2 + 2.5 = 7.5

[Monkeh]

No doubt covid had a massive effect but if covid hadn't of happened we would of still lost 20 million plus imo

[Davefevs]

1 hour ago, Tafkarmlf said:

Ooh, cheers. 

Just re read the EFL statement 

As a result of a number of Clubs highlighting that the pandemic continues to have an adverse financial effect despite a return to full capacity stadiums, Clubs have opted to reintroduce COVID add backs into the P&S calculation for season 2021/22.  The impact is that Clubs will be able to claim lost revenues or exceptional costs directly relating to the pandemic up to a value of £2.5m for the reporting period 2021/22. Clubs can claim up to £5m for seasons 2019/20 and 2020/21.

The Covid add backs read from that they can be put in in this seasons accounts. 

To me it still seems we can claim 12.5 million from that wording in this seasons accounts. 

I'm also not seeing the added together and halved in calculations on P&S  1.10 onwards on the EFL site makes no reference to it https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/appendix-5-financial-fair-play-regulations/

But if you can show me where that is would be most appreciated. 

 

Players, ok that's on me. 

 

[Davefevs]

28 minutes ago, Tafkarmlf said:

Brill, thanks muchly 

So, fag packet style maths here

Roughly

10 (18/19) - 24 (19/20+20/21/2) - 7 (my guesstimate for 21/22)

= - 21

So with 7.5 ish as a Maximum off that 

That's - 14 and well inside FFP

If losses this season are much larger say 15

As would be - 28 then maximum of 7.5 which would be 21.5 over that time. 

Its still okay based on that

Rolling three / four year period once 18/19 drops off 

-24 - 7 + next years accounts before Covid deductions of 7.5  would mean that unless we posted another massive loss then we'd be fine on that too. 

If this years accounts show losses of 20 plus losses, then we're knackered, but given crowds are back, weve lost several high earners and will have stadium income from the NHS too as one of the vaccine supersites, I can't see how that would be the case, hence the 7 guesstimate. 

Works for me, others may disagree, or come up with better maths. 

For info, assuming no transfer profit this season (currently £0!!!) I estimate we will lose £22m this season (21/22).

But on top of Covid allowance of £2.5m we also have FFP excludables - Academy, Women’s, Depreciation, etc.

That is about £5m p.a.  So 21/22’s FFP losses will be roughly £22m minus £2.5m, minus £5m totalling £14.5m.

[BTRFTG]

1 hour ago, AnotherDerbyFan said:

I think that's a misunderstanding of how the new rule is implemented. The instinctive reaction of a few is that it's an additional £5m allowance in 19/20 and 20/21 which didn't apply previously when the penalty was applied. 

The reality is the £5m cap is the reason we failed the 2021 period by £1.96m. I understand why they decided on a cap as it prevents clubs like Stoke included a massive chunk due to Covid impairment. However, I'm surprised they didn't come up with a basic rule to only allow match receipts and commercial losses. In our case, that's at least £13m and a net £4m impact on the 2021 period. The difference being a failed 2021 period or not (18% of our points deduction), and a Wycombe claim disappearing.

There is no logic to a max £5m allowance.

How do you know this when the last accounts openly published were for the year ending 2018 and elements of those were called into question?

Are you privy to the revised accounts supposedly filed with the EFL at the end of January or like the Gibson accord is that not subject to public scrutiny?

[BCFCGav]

14 hours ago, Mr Popodopolous said:

On a side note, Page 804 and beyond of the Administration thread on Dcfcfans worth a look- fuming!!

They are speculating about legal action, points back- 2 or 3 points is the ballpark figure I am seeing. Suggesting that this £5m allowance is to let us, Middlesbrough, Stoke and likely more off the hook!

I know seeing football clubs struggle financially isn't good, but it is very funny reading that Derby forum. Seeing them all send error strewn e-mails to people who will never read it to try and get some points back. Bless them.

[Davefevs]

43 minutes ago, Tafkarmlf said:

Cheers Dave,  interesting stats you have there,  I dont think the losses will be that crazy, but appreciate your stats have been near as damnit thus far. 

Still wondering how UEFA changes run into this as the UEFA site is a nightmare to navigate and as we've discussed that owners can cover larger portions etc. 

I'm still relatively sure that we're okay and that we've reported what we have as we have as part of transparency and some due diligence. 

I may be the only one though, as per 

We are 100% fine this year end 2022 (seasons up to and inc 21/22 in effect), but with a bunch of assumptions / caveats we bust the £39m for the cycle ending 2023 (seasons up to and inc 22/23).

I basically expect some cost savings (players leaving) and a bit of revenue uplift….and £0 transfer profit (that is the game changer if we sell certain players, or we get something from Kelly, Brownhill, Webster).  Based on that I make us about £2.0m-2.5m over the £39m.

I shared my estimate (at summary level) with Mr Pops last night.  Waiting to see his equivalents!

Edited February 18, 2022 by Davefevs

[AnotherDerbyFan]

2 hours ago, BTRFTG said:

How do you know this when the last accounts openly published were for the year ending 2018 and elements of those were called into question?

Are you privy to the revised accounts supposedly filed with the EFL at the end of January or like the Gibson accord is that not subject to public scrutiny?

The EFL kindly shared the figures...

Nixon has kindly shed a bit of light on the 2021 overspend too...

 

Translated into English: "the breakdown of the 9 points was never worked out, so no-one will ever know if the deduction for the 2021 period was 1, 2,3 or more points out of the total 9."
Proportionally, it would be 2 points.

 

[BTRFTG]

7 minutes ago, AnotherDerbyFan said:

The EFL kindly shared the figures...

Nixon has kindly shed a bit of light on the 2021 overspend too...

 

Translated into English: "the breakdown of the 9 points was never worked out, so no-one will ever know if the deduction for the 2021 period was 1, 2,3 or more points out of the total 9."
Proportionally, it would be 2 points.

 

Thanks, were the full accounts disclosed?

[AnotherDerbyFan]

6 minutes ago, BTRFTG said:

Thanks, were the full accounts disclosed?

Not yet

[Mr Popodopolous]

38 minutes ago, AnotherDerbyFan said:

The EFL kindly shared the figures...

Nixon has kindly shed a bit of light on the 2021 overspend too...

 

Translated into English: "the breakdown of the 9 points was never worked out, so no-one will ever know if the deduction for the 2021 period was 1, 2,3 or more points out of the total 9."
Proportionally, it would be 2 points.

 

I'm unsure about the argument that Derby were stitched up.

Because we don't know what the Sevco 5112 aggregated losses for those two years were ie before Covid allowances. For all we know, there might have been some Covid allowance in there up to £5m in 2 years. As I have posted elsewhere, Derby claimed £20m losses in the Covid period attributed to Covid.

For all we know, maybe they are setting the limits for everyone else at the limits that Derby and Reading were allowed.

Because as we know before any amortisation adjustment, Sevco 5112 made an operating loss of £46m (£38-39m with usual P&S allowances) was it in 2017/18. Granted amortisation increasing earlier means it decreases later but the stitch up idea is suspect at this stage certainly IMO.

Can work backwards using your amortisation schedules under different methods that you have posted in the past but I'm unconvinced by the stitch up claim.

We've debated before on which accounts to be used too but IDC 1 showed the Sevco 5112 as the standard so that is it I believe. The consolidated seem like the sensible choice, possibly even Gellaw Newco 203?

Edited February 18, 2022 by Mr Popodopolous

[Davefevs]

37 minutes ago, Mr Popodopolous said:

I'm unsure about the argument that Derby were stitched up.

Because we don't know what the Sevco 5112 aggregated losses for those two years were ie before Covid allowances. For all we know, there might have been some Covid allowance in there up to £5m in 2 years. As I have posted elsewhere, Derby claimed £20m losses in the Covid period attributed to Covid.

Yep, my thoughts too….they might’ve already accounted for them!

[BTRFTG]

2 hours ago, AnotherDerbyFan said:

Not yet

Intrigued by the phrase:'....which will show.....' 

[old_eastender]

4 hours ago, Mr Popodopolous said:

 

Please could you summarise our position, i.e. is it likely we may fail FFP  and face a pts deduction next season, or the season after, or not?

[AnotherDerbyFan]

4 hours ago, Mr Popodopolous said:

I'm unsure about the argument that Derby were stitched up.

Because we don't know what the Sevco 5112 aggregated losses for those two years were ie before Covid allowances. For all we know, there might have been some Covid allowance in there up to £5m in 2 years. As I have posted elsewhere, Derby claimed £20m losses in the Covid period attributed to Covid.

For all we know, maybe they are setting the limits for everyone else at the limits that Derby and Reading were allowed.

That's kind if the issue here. If £5m was the figure set, there's still a significant amount of income lost due to Covid that isn't accounted for. £9m match receipts in a normal season, resulting in a minimum of £2m deficit in the P&S calculations. Coincidentally, that would have been enough to avoid a penalty in the 2021 period.

4 hours ago, Mr Popodopolous said:

Because as we know before any amortisation adjustment, Sevco 5112 made an operating loss of £46m (£38-39m with usual P&S allowances) was it in 2017/18. Granted amortisation increasing earlier means it decreases later but the stitch up idea is suspect at this stage certainly IMO.

Can work backwards using your amortisation schedules under different methods that you have posted in the past but I'm unconvinced by the stitch up claim.

We've debated before on which accounts to be used too but IDC 1 showed the Sevco 5112 as the standard so that is it I believe. The consolidated seem like the sensible choice, possibly even Gellaw Newco 203?

It doesn't matter which accounts us common folk use to play around with the numbers as long as the correct additions/deductions are made to get a reliable estimate. P&S calculations will have been using the ultimate parent company though.

[Mr Popodopolous]

36 minutes ago, old_eastender said:

Please could you summarise our position, i.e. is it likely we may fail FFP  and face a pts deduction next season, or the season after, or not?

Me and Dave will try between us!

I would say yes there will be a deficit next year, the size of which is quite important. If we breach it's a deduction, bigger the deficit the harder to fill, played sales and cutbacks with small bits like Revenue and cost improvements seem the most likely way to fill it.

I've said it before but what with the possibility of a Business Plan for Projected Breaches maybe a scenario whereby we (and others) have the appropriate points deduction attached to it if we fail with the clubs job to become compliant by March 2023 is agreed or imposed this summer.

[Mr Popodopolous]

1 hour ago, AnotherDerbyFan said:

That's kind if the issue here. If £5m was the figure set, there's still a significant amount of income lost due to Covid that isn't accounted for. £9m match receipts in a normal season, resulting in a minimum of £2m deficit in the P&S calculations. Coincidentally, that would have been enough to avoid a penalty in the 2021 period.

If Derby propose a reduction in the Agreed Decision, I suggest the other clubs will politely tell them to get stuffed, no offence. It ain't happening. QPR a year ago made a proposal to reduce the FFP fine, guess what it wasn't.

That aside, would be surprised were Quantuma to have made zero provision for Covid losses when negotiations with the EFL were ongoing. You are assuming that the losses that Quantuma put to the EFL were as if Covid never happened.

It's neither here nor there, it matters not in this context whether Derby (or us or a lot of clubs) lost £9m in gate receipts let alone commercial revenue, the cap is £5m for all? Although I do wonder if the number is actually the right one for Covid. I'm quite sure Bristol City Holdings lost more than £5m in those 2 years due to the impact of Covid, but we have to suck it up along with everyone else.

If Quantuma put eg £10m in Covid losses as estimate to EFL and there was a cap of £5m as we now know can we revisit and revise upwards? Could add another 2-3 pts!

The best estimates I've seen for Derby, both Quantuma's report and club statement last September were £20m.

1 hour ago, AnotherDerbyFan said:

It doesn't matter which accounts us common folk use to play around with the numbers as long as the correct additions/deductions are made to get a reliable estimate. P&S calculations will have been using the ultimate parent company though.

Agreed to a point, although the IDC1 was quite clear, showed both pre tax losses and P&S adjusted losses for 2016, 2017, 2018 and 2019. Pretty sure always in the ballpark of £7-8m a season for P&S exclusions.

It's something useful to work with although only the club and EFL will know for sure, same with all clubs.

Edited February 18, 2022 by Mr Popodopolous

[Davefevs]

18 minutes ago, Mr Popodopolous said:

Me and Dave will try between us!

I would say yes there will be a deficit next year, the size of which is quite important. If we breach it's a deduction, bigger the deficit the harder to fill, played sales and cutbacks with small bits like Revenue and cost improvements seem the most likely way to fill it.

I've said it before but what with the possibility of a Business Plan for Projected Breaches maybe a scenario whereby we (and others) have the appropriate points deduction attached to it if we fail with the clubs job to become compliant by March 2023 is agreed or imposed this summer.

If we basically did nothing about our costs then we’d fail ffp next season (not this). But we have 15 months and 2 transfer windows to address the gap which I don’t believe is that big!

@oldeastender

[054123]

59 minutes ago, Davefevs said:

If we basically did nothing about our costs then we’d fail ffp next season (not this). But we have 15 months and 2 transfer windows to address the gap which I don’t believe is that big!

@oldeastender

This.

I get the impression that third party observers are rather misinterpreting are openness and willingness for a candid conversation (Derby take note).

There is a chance that by the summer of 2023 we could be in breach of FFP rules. However if we reduce our wage bill, sell some players etc. there is no problem.

Richard Gould and Steve Lansdown are doing a fantastic preemptive job on the wider issue whilst also presenting the club in a positive light.  

Its absolutely right that we are planning for the future and all eventualities, but lots of observers creaming their pants over nothing.

Edited February 18, 2022 by 054123

[Mr Popodopolous]

Although Gould and Lansdown could be a bit more candid still ie point out the potential aspects of a Business Plan, possible squad size limits or perhaps even a preemptive Business Plan, a change that I highlighted Thursday.

All that said, there is no doubt (to date) that we are being a lot more transparent than a lot of other clubs who might have problems now or in the near future.

If they want to level with us over the possible downsides, then they need to do so in full...or as far as possible anyway.

I think next March is a likely deadline to fix things, two windows. If you can forecast a breach ahead of time, then it stands to reason that you can dock points during the season of the breach if not in line by then.

Edited February 18, 2022 by Mr Popodopolous