Finances 21/22

[Guest]

Steve has got a lovely fireplace in his Guernsey house and each day he keeps the house warm by burning £78,000 in it, it gives him more pleasure than the £78K a day, every day, his football club costs him.

[Mr Popodopolous]

The slight other bit that concerns me, as I've said elsewhere about the transfer add-back particularly.

Costs and Revenue. Profit is arguably neither and especially a non-recurring one. Profit on player sales requires two parties- a willing buyer and a willing seller. Then it comes to fee minus remaining book value...reportedly turning down £8m for Massengo from Watford won't have helped our case? Edit, a quick search says Sky claimed £8.3m.

Transfer profit or loss isn't revenue as such. At a push maybe you can argue a Loan fee but the definition is quite clear of Covid losses? It's a circle I am struggling to square.

Costs are fairly self explanatory. Testing, travel arrangements, cleaning etc.

Revenue is fairly self explanatory. Tickets, Season tickets, Matchday income, Corporate cevenue, Commercial revenue etc.

The fact that we and maybe some others used transfer profit to try and bridge the gap is on us and others who did likewise. It's not a revenue and it's not a cost- it's a profit to help offset (in FFP terms) the gap between the first 2.

It's by no means a cut and dry argument either way.

Edited November 18, 2022 by Mr Popodopolous

[BTRFTG]

24 minutes ago, Mr Popodopolous said:

The slight other bit that concerns me, as I've said elsewhere about the transfer add-back particularly.

Costs and Revenue. Profit is arguably neither and especially a non-recurring one. Profit on player sales requires two parties- a willing buyer and a willing seller. Then it comes to fee minus remaining book value...reportedly turning down £8m for Massengo from Watford won't have helped our case? Edit, a quick search says Sky claimed £8.3m.

Transfer profit or loss isn't revenue as such. At a push maybe you can argue a Loan fee but the definition is quite clear of Covid losses? It's a circle I am struggling to square.

Costs are fairly self explanatory. Testing, travel arrangements, cleaning etc.

Revenue is fairly self explanatory. Tickets, Season tickets, Matchday Income, Corporate Revenue, Commercial Revenue etc.

The fact that we and maybe some others used transfer profit to try and bridge the gap is on us and others who did likewise. It's not a revenue and it's not a cost- it's a profit to help offset (in FFP terms) the gap between the first 2.

It's by no means a cut and dry argument either way.

I've no issue should one wish to classify profit on transfers as revenue. I've every issue should one claim provision or impairment for lack of profit on transfers for ANY reason. For sure as hell no allowance should be made for Covid resetting the market.

Its akin muppets who bemoan the value of their homes is falling. Matters only to those stupid enough to borrow against over-hyped valuations and, ultimately, the taxman. My house is worth sweet FA as it's where I live. If its value declines why should I care as it makes zero difference to me and It'll be cheaper for my kids to buy homes of their own?

Edited November 18, 2022 by BTRFTG

[Davefevs]

15 minutes ago, Mr Popodopolous said:

The slight other bit that concerns me, as I've said elsewhere about the transfer add-back particularly.

Costs and Revenue. Profit is arguably neither and especially a non-recurring one. Profit on player sales requires two parties- a willing buyer and a willing seller. Then it comes to fee minus remaining book value...reportedly turning down £8m for Massengo from Watford won't have helped our case? Edit, a quick search says Sky claimed £8.3m.

Transfer profit or loss isn't revenue as such. At a push maybe you can argue a Loan fee but the definition is quite clear of Covid losses? It's a circle I am struggling to square.

Costs are fairly self explanatory. Testing, travel arrangements, cleaning etc.

Revenue is fairly self explanatory. Tickets, Season tickets, Matchday Income, Corporate Revenue, Commercial Revenue etc.

The fact that we and maybe some others used transfer profit to try and bridge the gap is on us and others who did likewise. It's not a revenue and it's not a cost- it's a profit to help offset (in FFP terms) the gap between the first 2.

It's by no means a cut and dry argument either way.

I don’t think any of us disagree.

However…(an example, theoretical - remember that)

If you buy Tomas Kalas at market rate in 2019 at £8m, the theory is he’s worth £6m a year later, and if you wanted to sell him you could expect to get £6m back and everything squares off.

If however Covid has meant clubs can only afford £2m, that’s a £4m hole…and in some ways probably means you keep hold of him.  And by year 4 he’s worth £0.  Everything is back aligned.

We could have impaired him in the summer of 2021 when his asset value was £4 in line with:

If we revalued him at £1m, that would’ve been a £3m impairment in that year’s accounts (counting against our P&L and therefore FFP) plus the £2m due that year, but amortisation of the final £1m, would’ve been £0.5m p.a. for the final 2 years.  But he still costs us £8m over his 4 years, just instead of being 2+2+2+2, it’s 2+5+0.5+0.5.

But it’s the cost of not being able to sell him that I think it being disputed by RG, Stoke, etc, whether that’s for a profit or not, rather than transfer profit itself.  The plan was not to let him get to the end of year 4 and be zero value.  I even agree with Mel Morris on this.  The collapse of the transfer market has “forced us” to hang on to the likes of Kalas because there was no market to recoup his asset value.

Tough shit you might say.  I tend to agree, but it’s not black and white.

But RG will argue that revaluing the asset value of all of our signings because of Covid is a bit unfair (whether that’s done through the accounts or via add-backs.

I do have some sympathy…especially when City have a good record of moving on players to balance the books.  If we ignore players wanting to better themselves, imagine keeping hold of peak Flint, Pack, Webster and Brownhill.  (I’ve deliberately not named any Academy players, as although that is a similar argument, the treatment of those players in our books doesn’t incur any amortisation).  We’ve recognised that our model relied on selling, and stuck to it, when you can bet the manager would’ve loved to have kept them.

Finally, in our theoretical Kalas example, what if we sold him for £2m last summer, when under his new value he was just £0.5m in the books.  We’d raise a “transfer profit” of £1.5m that would help towards FFP.

I don’t think there was an easy way of being fair, winners and losers from both sides of the fence.

We are paying for the way we previously “gambled”.  I think the next post that came in whilst I was typing..

18 minutes ago, BTRFTG said:

I've no issue should one wish to classify profit on transfers as revenue. I've every issue should one claim provision or impairment for lack of profit on transfers for ANY reason. For sure as hell no allowance should be made for Covid resetting the market.

It’s akin muppets who bemoan the value of their homes is falling. Matters only to those stupid enough to borrow against over-hyped valuations and, ultimately, the taxman. My house is worth sweet FA as it's where I live. If its value declines why should I care as it makes zero difference to me and It'll be cheaper for my kids to buy homes of their own?

…sums it up nicely.

But I don’t blame RG for trying!!!

[Davefevs]

Just to add since the summer of 2021 we’ve effectively “had” (???) to let £20m+ of assets dwindle to nothing…because of covid.  Not saying we would’ve got it all back on each player, but we might’ve and more in some cases.

[Mr Popodopolous]

52 minutes ago, Davefevs said:

Just to add since the summer of 2021 we’ve effectively “had” (???) to let £20m+ of assets dwindle to nothing…because of covid.  Not saying we would’ve got it all back on each player, but we might’ve and more in some cases.

I do understand that there are arguments for- plus the Kalas example that you gave earlier- but it seems so difficult to quantify- how much is down to Covid and how much is down to the policy careering off the tracks, aka running out of good players who can turn a healthy profit.

Would imagine that a lot of clubs could argue in favour of this adversely affecting them- maybe they have. In a pre Covid market should Blackburn be losing Nyambe, Lenihan, Rothwell for precisely £0.

Big sales still happened in the aftermath of Covid too- posted about the years on the FFP thread. £10m + and those just close to, so from summer 2020 to January 2021- maybe you can include summer 2021 too as football and the rest of us were re-emerging, blinking into the light.

If you compare it to the prior 2-windows the number of moves in that bracket isn't all that different...

I think it's arguable- overall balance of probability am still coming down against.

Edited November 18, 2022 by Mr Popodopolous

[Negan]

 

Me going through the entirety of this thread just wondering if we can spend £4.99 in the summer... 

[ExiledAjax]

1 minute ago, Negan said:

 

Me going through the entirety of this thread just wondering if we can spend £4.99 in the summer... 

It will be similar to the last couple of summers.

Players leaving as contracts end.

Some may re-sign on new (reduced wages) terms.

We may sign some free agents.

There is a chance we would pay a small fee for a lower league player.

Unless we sell it is unlikely that we will spend any real money. 

[Mr Popodopolous]

1 minute ago, ExiledAjax said:

It will be similar to the last couple of summers.

Players leaving as contracts end.

Some may re-sign on new (reduced wages) terms.

We may sign some free agents.

There is a chance we would pay a small fee for a lower league player.

Unless we sell it is unlikely that we will spend any real money. 

STILL wouldn't say we are out of the woods on the FFP side yet. Subject to review etc, not just by the League but by the Financial body.

Could have all of that plus some kind of charges or case to defend. Soft embargo? Business Plan?

[ExiledAjax]

1 minute ago, Mr Popodopolous said:

STILL wouldn't say we are out of the woods on the FFP side yet. Subject to review etc, not just by the League but by the Financial body.

Could have all of that plus some kind of charges or case to defend. Soft embargo? Business Plan?

I don't think anything I've just said runs contrary to that though? Certainly not for this summer window anyway.

[Mr Popodopolous]

18 minutes ago, ExiledAjax said:

I don't think anything I've just said runs contrary to that though? Certainly not for this summer window anyway.

Fair but just saying in addition to those constraints, we could yet have an FFP issue to this season.

A scenario in which we are told to get our books in order by end of May once the March projections go in or face further measures.

In March 2019, it was reported that Aston Villa, Derby and Sheffield Wednesday were told just that.

Edited November 18, 2022 by Mr Popodopolous

[Mr Popodopolous]

Of course there is one other solution.

Promotion! Or at least winning the playoffs, because even though the League or an IDC have the right to deduct points in season for the existing cycle, it's never happened yet. Never.

Edited November 18, 2022 by Mr Popodopolous

[Peter1450]

So without understanding all the financial going’s on in these thread’s,does this mean we’ll get a points deduction and end up playing Rovers next season?

[Mr Popodopolous]

@Peter1450

Not this season, almost certainly not unless we somehow fell foul of the in-season rule ie projected fail to 2022-23, points deduction next Spring kinda thing.

The risk is in that we get one in 2023-24 pertaining to the period ending in this season.

Edited November 18, 2022 by Mr Popodopolous

[Mr Popodopolous]

Putting FFP to one side I'm actually a little concerned about the loan arrangements.

They sound a bit onerous while we remain a Championship side. Of course IF SL keeps converting debt to equity or is happy and willing to keep us going then the Lion sleeps tonight to some extent.

@BigAl&Toby @NickJ @The Constant Rabbit

All posters who are sceptical to varying degrees in respect of Lansdown, interested in your take as 3 sceptics. Should we be concerned?

Print screens are a bit of a mess, will try and align a bit better.

Edited November 18, 2022 by Mr Popodopolous

[Davefevs]

no

[DaveInSA]

I’d love to go for nine pints and a curry with @Davefevs and @Mr Popodopolous.

I’m almost certain that I’d be able to understand everything then.

[Galley is our king]

4 minutes ago, DaveInSA said:

I’d love to go for nine pints and a curry with @Davefevs and @Mr Popodopolous.

I’m almost certain that I’d be able to understand everything then.

I think I'd just get pissed and throw up. Just sat there wondering what all those long words were......

[Jerseybean]

https://twitter.com/kieranmaguire/status/1593311014782640129?s=58&t=CXvKkJLruKDZp4Bz-UZUbQ

[The Constant Rabbit]

3 hours ago, Mr Popodopolous said:

Putting FFP to one side I'm actually a little concerned about the loan arrangements.

They sound a bit onerous while we remain a Championship side. Of course IF SL keeps converting debt to equity or is happy and willing to keep us going then the Lion sleeps tonight to some extent.

@BigAl&Toby @NickJ @The Constant Rabbit

All posters who are sceptical to varying degrees in respect of Lansdown, interested in your take as 3 sceptics. Should we be concerned?

Print screens are a bit of a mess, will try and align a bit better.

No

Lansdown will keep the mill turning until the indoor concert / convention / basketball area is done, and then the feelers will go out again.

If we manage to become a top six side again, and show consistency then that's when SL is likely to pull the trigger IMHO

@Mr Popodopolous

If you want some fun - go check out SL and Botswana - ask why we went on tour - ask why the land that the Game reserve(s) sit on was specifically chosen. Start here: Mashatu Investment

Then ask - who in Botswana gained from it - and what role did they play in Botswanan Govt. Then, if you are really bored, cross over the heads of depts, to people on boards of various Pula / SL shelf companies involved with 'clean water' - you may find some names match.....

 

Lastly - mining in Botswana is easy - getting an exploration permit is not. Imagine if you were doing a humanitarian gesture by looking for drinking water and you just happened to find a vein of gemstones. Imagine.

Why all you'd need then is a sympathetic minister willing to change your exploration license. Who is football mad. Who also has some land going attached to a failing business. Imagine the odds on that ever happening. It's like saying the same fellow would get the contract to provide all the tourism / mining infrastructure too.

 

Nah, too crazy right? BCFC went to Botswana because..., umm, well....

 

Knock yourself out Pops, it will take a deepish dive, but you will find the answers.

[BTRFTG]

12 hours ago, The Constant Rabbit said:

No

Lansdown will keep the mill turning until the indoor concert / convention / basketball area is done, and then the feelers will go out again.

If we manage to become a top six side again, and show consistency then that's when SL is likely to pull the trigger IMHO

@Mr Popodopolous

If you want some fun - go check out SL and Botswana - ask why we went on tour - ask why the land that the Game reserve(s) sit on was specifically chosen. Start here: Mashatu Investment

Then ask - who in Botswana gained from it - and what role did they play in Botswanan Govt. Then, if you are really bored, cross over the heads of depts, to people on boards of various Pula / SL shelf companies involved with 'clean water' - you may find some names match.....

 

Lastly - mining in Botswana is easy - getting an exploration permit is not. Imagine if you were doing a humanitarian gesture by looking for drinking water and you just happened to find a vein of gemstones. Imagine.

Why all you'd need then is a sympathetic minister willing to change your exploration license. Who is football mad. Who also has some land going attached to a failing business. Imagine the odds on that ever happening. It's like saying the same fellow would get the contract to provide all the tourism / mining infrastructure too.

 

Nah, too crazy right? BCFC went to Botswana because..., umm, well....

 

Knock yourself out Pops, it will take a deepish dive, but you will find the answers.

As publicised at the time City went pre-season to Botswana because, er, SL had business links there. No secret.

What's the next revelation? City went to Portugal because SL has a villa there; Latvia because it has a strong financial services industry?

If you seriously think City playing a couple of meaningless knock-abouts opens doors in high places in corrupt regimes you're miles off the mark. I can, from bitter experience, inform the majority of those in power in African regimes don't want CoD et al. They want piles of greenback dollar bills, something SL does have in surplus.

[Peter1450]

13 hours ago, DaveInSA said:

I’d love to go for nine pints and a curry with @Davefevs and @Mr Popodopolous.

I’m almost certain that I’d be able to understand everything then.

After nine pints and a curry the club’s finances would be even worse with me doing a Swansea on the toilet block!

[The Constant Rabbit]

1 hour ago, BTRFTG said:

As publicised at the time City went pre-season to Botswana because, er, SL had business links there. No secret.

What's the next revelation? City went to Portugal because SL has a villa there; Latvia because it has a strong financial services industry?

If you seriously think City playing a couple of meaningless knock-abouts opens doors in high places in corrupt regimes you're miles off the mark. I can, from bitter experience, inform the majority of those in power in African regimes don't want CoD et al. They want piles of greenback dollar bills, something SL does have in surplus.

 

 

Seretse Khama Ian Khama - look him up - was kinda a big guy in Botswana (may well be again)...

 

 

If he gets off the charges that see him hiding in South Africa, I'm sure he will be a fine business partner again.  And loves Football.

 

Hey, if you are going to cosy up with dodgy dictators, may as well make it tax deductible with a football tour.

 

Nothing to see here. Move along....

 

 

[Negan]

20 hours ago, ExiledAjax said:

It will be similar to the last couple of summers.

Players leaving as contracts end.

Some may re-sign on new (reduced wages) terms.

We may sign some free agents.

There is a chance we would pay a small fee for a lower league player.

Unless we sell it is unlikely that we will spend any real money. 

Well that’s not very Christmassy… 

[BTRFTG]

2 hours ago, The Constant Rabbit said:

 

 

Seretse Khama Ian Khama - look him up - was kinda a big guy in Botswana (may well be again)...

 

 

If he gets off the charges that see him hiding in South Africa, I'm sure he will be a fine business partner again.  And loves Football.

 

Hey, if you are going to cosy up with dodgy dictators, may as well make it tax deductible with a football tour.

 

Nothing to see here. Move along....

 

 

What, you've uncovered mass corruption in The Dark Continent?

Hold the front page....!

[Mr Popodopolous]

Had a quick read of the Derby forum. This thread gets an airing on their admin thread. For clarity for a couple on there.

It isn't to 2021-22 where the issues would arise- the profit and rolling up of the two would see to that. No, the concern is to this season ie when that profit drops off. 'Add-backs' are available to all clubs and for e.g. Gate receipts, Matchday Revenue, Season ticket revenue or refunds and yes commercial and corporate that's okay.

The crux of an issue is, are add-backs relating to the transfer market permissible? My view fwiw is no, absolutely not. As far as I can tell, all of the costs, revenue and transfer profits that you see in the accounts are legitimate- the add-backs disappointingly are not disclosed.

I believe that revenue loss wise forgetting any optimistic claims about the transfer market that across 2019-20 and 2020-21, we could legitimately argue it cost us £15-16m. That would be an average of £7.5-8m across the combined two Covid seasons.

To give Aston Villa then Everton and Nottingham Forest to an extent and Stoke a little bit of credit they at least disclosed their claims and laid out their arguments. I think the last 3 have quite serious questions to answer about said claims relating to FFP- Aston Villa the period to 2019...under EFL analysis and governance had they not gone up, things may have gone quite differently.

As do we, if we have sought to add-back lost transfer revenue.

Edited November 19, 2022 by Mr Popodopolous

[BTRFTG]

59 minutes ago, Mr Popodopolous said:

I believe that revenue loss wise forgetting any optimistic claims about the transfer market that across 2019-20 and 2020-21, we could legitimately argue it cost us £15-16m.

I've read through the posts and have no idea under IFRS how one might legitimately argue that Covid cost clubs anything in lost transfer income? Transfer costs are what they are, fixed and capitalised in the accounts, as they should be. There's no ability to account for player 'value' or 'worth' in the accounts, if one could the numbers would be in intangible assets and subject to debate. Given clubs may defer amortization by extending current contracts why should they be given allowance for supposedly not being able to offload players? Seems to me that's  'cake and eat it'.

Accounts don't show fixed provision for future player/asset acquisition, if they did then the wholesale drop in player values might be impaired and revised to offset the position.

As with anything in life once you buy something its worthless until you can find somebody who'll pay to take it off your hands. Amortization says exactly that.

[BTRFTG]

Given the quality of Horse Racing this afternoon is so dire this thread's allowing me too much thinking time.

I'm confident accounts include insurance premiums (if paid,) though usually not any protected benefit. Which had me thinking. What is it clubs actually insure in respect of players? Are individual players insured and, if so, is that to the extent of their contract liability or does it also include a nominal value City think the player's worth to them or others?  Else, is there generic cover that pays out assuming 'x' number of players might have to be 'accounted out' during the period covered?

One assumes any insurance payout is accounted for as 'miscellaneous income'?

Is that how it works?

 

[Tin Soldier]

18 hours ago, The Constant Rabbit said:

No

Lansdown will keep the mill turning until the indoor concert / convention / basketball area is done, and then the feelers will go out again.

If we manage to become a top six side again, and show consistency then that's when SL is likely to pull the trigger IMHO

@Mr Popodopolous

If you want some fun - go check out SL and Botswana - ask why we went on tour - ask why the land that the Game reserve(s) sit on was specifically chosen. Start here: Mashatu Investment

Then ask - who in Botswana gained from it - and what role did they play in Botswanan Govt. Then, if you are really bored, cross over the heads of depts, to people on boards of various Pula / SL shelf companies involved with 'clean water' - you may find some names match.....

 

Lastly - mining in Botswana is easy - getting an exploration permit is not. Imagine if you were doing a humanitarian gesture by looking for drinking water and you just happened to find a vein of gemstones. Imagine.

Why all you'd need then is a sympathetic minister willing to change your exploration license. Who is football mad. Who also has some land going attached to a failing business. Imagine the odds on that ever happening. It's like saying the same fellow would get the contract to provide all the tourism / mining infrastructure too.

 

Nah, too crazy right? BCFC went to Botswana because..., umm, well....

 

Knock yourself out Pops, it will take a deepish dive, but you will find the answers.

Think it’s called corruption?

[Mr Popodopolous]

There is also a philosophical difference between us and the DCFCfans site well maybe philosophical is overstating it but.

When they were going through their travails FFP wise, there were lots of claims that:

*The authorities were biased against them.

*The restrictions were unfair, perhaps onerous too.

*The accounting methods were in fact valid.

* 'Isn't Mel clever' kinda thing.

*EFL on strings- okay that may have been young fans on social media.

*A total failure to recognise or acknowledge in all but a few cases that even were the charges to 2017-18 cleared, that compliance to 2018-19 let alone beyond would be a serious problem. I understand celebration of being exonerated but it's not a case of cleared and away you go.

I see very little of that on this forum . That's credit to us, granted forums are snapshots of fanbases but I think we are fully cognisant of the fact that Covid or not, financials have been screwed up badly and we could yet face FFP issues moving forward albeit not this specific season.

Perhaps 2019 would be a good snapshot. Stadium 'sold', Morris in his pomp on Talksport regularly. Boasted on there about how he'd sooner take on EFL than HMRC, Rooney in, 32 Red paying some of his wages? Bielik in. Lampard out? No issue- Cocu in! All the while a big ticking timebomb of Player Registrations still to be amortised as of early season 2019-20.

Edited November 19, 2022 by Mr Popodopolous