Finances 21/22

[Davefevs]

2 hours ago, BTRFTG said:

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.

Like I posted earlier…what we (City) lost was the opportunity to sell on players for anything like their pre-covid value (let’s not get into how much we paid in the first place!).  My view is much like yours - toughski shitski.  A strategy based on boom-time was gonna go pear-shaped at some point, covid just hurried it.  What is surprising is that the financial expert couldn’t see the flaw in that strategy.  Revenues plateauing at £30m with costs growing fast and reliance on transfer profit was as Nige says “bonkers”.

[Lanterne Rouge]

4 minutes ago, Davefevs said:

Like I posted earlier…what we (City) lost was the opportunity to sell on players for anything like their pre-covid value (let’s not get into how much we paid in the first place!).  My view is much like yours - toughski shitski.  A strategy based on boom-time was gonna go pear-shaped at some point, covid just hurried it.  What is surprising is that the financial expert couldn’t see the flaw in that strategy.  Revenues plateauing at £30m with costs growing fast and reliance on transfer profit was as Nige says “bonkers”.

A classic case of someone who knew they wouldn`t be here when the shit hit the fan. He was probably planning his exit strategy from the day he was appointed.

[BTRFTG]

17 hours ago, Davefevs said:

Like I posted earlier…what we (City) lost was the opportunity to sell on players for anything like their pre-covid value (let’s not get into how much we paid in the first place!).  My view is much like yours - toughski shitski.  A strategy based on boom-time was gonna go pear-shaped at some point, covid just hurried it.  What is surprising is that the financial expert couldn’t see the flaw in that strategy.  Revenues plateauing at £30m with costs growing fast and reliance on transfer profit was as Nige says “bonkers”.

'Value' is subjective. I therefore don't follow how City 'lost' anything. Pre Covid City were free to sell players but didn't. Covid hasn't prevented City selling players, its only impacted what City (and perhaps others,) thought they might have been worth. Point being one can't lose something one never had in the first place.

[Davefevs]

2 hours ago, BTRFTG said:

'Value' is subjective. I therefore don't follow how City 'lost' anything. Pre Covid City were free to sell players but didn't. Covid hasn't prevented City selling players, its only impacted what City (and perhaps others,) thought they might have been worth. Point being one can't lose something one never had in the first place.

I know, I’m agreeing with you.

The real flaw was overpaying in the first place on an expectation that boom time would continue to get boomier and boomier.

I still think we could’ve mitigated some of that too…e.g. Diedhiou.  Not only did he walk for zero in summer 21, he cost us £2m in 20/21.  Of course that was the club’s right to “get his value on the pitch”, but that didn’t happen either!

What a mess.

[Mr Popodopolous]

Otoh if we are punished or challenged then it is incumbent on the League to challenge or push back against Stoke.

Plus on their return potentially, Nottingham Forest and Fulham.

Aston Villa would have been compliant to 2021 irrespective of the transfer add-backs by my calculations and selling Grealish for £100m would solve it to 2022-23 and probably beyond. PL jurisdiction anyway.

Given that the rules are on paper harmonised but in reality enforced differently, could Everton being let off with £170m in 2 years when it comes to Covid add-backs and lost revenue set a precedent for everyone else including clubs caught by Championship Profit and Sustainability regs. Or could a host of clubs sue for the PL not enforcing their regs correctly.

Edited November 20, 2022 by Mr Popodopolous

[Davefevs]

49 minutes ago, Mr Popodopolous said:

Otoh if we are punished or challenged then it is incumbent on the League to challenge or push back against Stoke.

Plus on their return potentially, Nottingham Forest and Fulham.

Aston Villa would have been compliant to 2021 irrespective of the transfer add-backs by my calculations and selling Grealish for £100m would solve it to 2022-23 and probably beyond. PL jurisdiction anyway.

Given that the rules are on paper harmonised but in reality enforced differently, could Everton being let off with £170m in 2 years when it comes to Covid add-backs and lost revenue set a precedent for everyone else including clubs caught by Championship Profit and Sustainability regs. Or could a host of clubs sue for the PL not enforcing their regs correctly.

The other point is those clubs who managed themselves sensibly both pre and during covid don’t get to add as big “add-backs” either. All a bit unfair isn’t it…but they voted for it?

[Mr Popodopolous]

5 minutes ago, Davefevs said:

The other point is those clubs who managed themselves sensibly both pre and during covid don’t get to add as big “add-backs” either. All a bit unfair isn’t it…but they voted for it?

Totally agree, but I still as indeed none of us know if the concept of Player add-backs was voted for or just the more regular and agreeable stuff.

Football League could always publish guidance as to categories of add-back they deem permissible or not.

Surely the only thing voted for in concrete terms was £5m x 2 and £2.5m and the averaging of 2019-20 and 2020-21. Everything else could be open to argument and I'd even query whether lost transfer add-backs are FRS 102 compliant.

[Davefevs]

8 minutes ago, Mr Popodopolous said:

Totally agree, but I still as indeed none of us know if the concept of Player add-backs was voted for or just the more regular and agreeable stuff.

Football League could always publish guidance as to categories of add-back they deem permissible or not.

Surely the only thing voted for in concrete terms was £5m x 2 and £2.5m and the averaging of 2019-20 and 2020-21. Everything else could be open to argument and I'd even query whether lost transfer add-backs are FRS 102 compliant.

As I pointed out a week or so back, the FFP template is PLBT, and there are all kinds of income (and cost) lines that go into that, both amortisation and transfer profit.

We honestly don’t know what lines we’ve claimed against, nor how much.

£15m of lost revenue?????

£12m of amortisation?????

Doesn’t have to be lost transfer profit claimed, does it?

 

[chinapig]

14 minutes ago, Mr Popodopolous said:

Totally agree, but I still as indeed none of us know if the concept of Player add-backs was voted for or just the more regular and agreeable stuff.

Football League could always publish guidance as to categories of add-back they deem permissible or not.

Surely the only thing voted for in concrete terms was £5m x 2 and £2.5m and the averaging of 2019-20 and 2020-21. Everything else could be open to argument and I'd even query whether lost transfer add-backs are FRS 102 compliant.

I've never been in favour of transfer add backs but isn't there a distinction though between the accounts supplied to Companies House and FFP calculations, with the add backs only relevant to the latter?

[Davefevs]

1 minute ago, chinapig said:

I've never been in favour of transfer add backs but isn't there a distinction though between the accounts supplied to Companies House and FFP calculations, with the add backs only relevant to the latter?

The FFP return is “based” on the P&L but has several exclusions in non-Covid times, e.g. depreciation, academy, womens, community.

[chinapig]

1 minute ago, Davefevs said:

The FFP return is “based” on the P&L but has several exclusions in non-Covid times, e.g. depreciation, academy, womens, community.

And presumably you can't claim notional lost transfer income in the P&L itself, which is the distinction I was thinking of.

A distinction between compliance with accounting rules and subsequent compliance with FFP in other words.

[Mr Popodopolous]

13 minutes ago, Davefevs said:

As I pointed out a week or so back, the FFP template is PLBT, and there are all kinds of income (and cost) lines that go into that, both amortisation and transfer profit.

We honestly don’t know what lines we’ve claimed against, nor how much.

£15m of lost revenue?????

£12m of amortisation?????

Doesn’t have to be lost transfer profit claimed, does it?

 

£15-16m lost revenue is totally in alignment across the 2 years with my views and expectations.

Agreed on that but a counterpoint is no specific space for it but it's arguable and I would suggest a suitably constituted IDC or a formal vote of clubs could decide the transfer add-back debate.

[Mr Popodopolous]

2 minutes ago, chinapig said:

And presumably you can't claim notional lost transfer income in the P&L itself, which is the distinction I was thinking of.

A distinction between compliance with accounting rules and subsequent compliance with FFP in other words.

Although as we saw with Derby and arguably even Sheffield Wednesday over the timing issue, if accounts are not in accordance with FRS 102 they are de facto non-compliant 

[Davefevs]

3 minutes ago, chinapig said:

And presumably you can't claim notional lost transfer income in the P&L itself, which is the distinction I was thinking of.

A distinction between compliance with accounting rules and subsequent compliance with FFP in other words.

No, but you can reduce a  players asset value:

which would be in the annual accounts.

 

[Davefevs]

9 minutes ago, Mr Popodopolous said:

£15-16m lost revenue is totally in alignment across the 2 years with my views and expectations.

Agreed on that but a counterpoint is no specific space for it but it's arguable and I would suggest a suitably constituted IDC or a formal vote of clubs could decide the transfer add-back debate.

it goes in the top row - “actual / forecast P/L…”, and Covid costs go into it…which is covered here in EFL Section 5.

 

[Davefevs]

Nor have we mentioned “transfer add-backs” anywhere.  We are all jumping to conclusions there, because of what Forest and Stoke did, and RG’s previous mentions of transfer market collapse.

We just use the term Covid-19 add backs.

[Mr Popodopolous]

49 minutes ago, Davefevs said:

it goes in the top row - “actual / forecast P/L…”, and Covid costs go into it…which is covered here in EFL Section 5.

 

Hmmm thanks for that bit. Definitely secured funding for Cash Losses and Covid add-backs is a must.

If we forecasted say a £25m pre tax loss verbatim but after £15m of profit on disposal it's down to £10m...problem is with no 'paper trail' ie of transfer arranged but that fell through it feels speculative to me.

42 minutes ago, Davefevs said:

Nor have we mentioned “transfer add-backs” anywhere.  We are all jumping to conclusions there, because of what Forest and Stoke did, and RG’s previous mentions of transfer market collapse.

We just use the term Covid-19 add backs.

This is a very good spot. As you say what others did and what Gould said before...I suppose my concern is that the likely easily quantifiable Covid losses are likely £15-16m across 2019-20 and 2020-21 and £2.5m last season which would still put us well or somewhat in the red FFP wise.

Amortisation excluded or Covid write-down perhaps?

Edited November 20, 2022 by Mr Popodopolous

[Mr Popodopolous]

Remodelled:

T-2 2019-20 and 2020-21. Averaged pre-tax loss £24m. - £5m x 2 in FFP allowance (averaged £5m). - £15-16m in legitimate declines in revenue and added costs.

T-2= £12-12.5m FFP loss

T-1 2021-22. £28.5m pre-tax loss. -£6m FFP allowance and £2.5m in Covid add-back.

T-1=£20m FFP Loss

T...No more Covid add-backs, estimate £6m FFP allowance.

Need to lose no more than £6.5-7m in FFP terms. £12.5-13m accounting wise. Remember that the £2.5m drops off meaning we need a £15.5-16m improvement in accounts this year.

[Davefevs]

33 minutes ago, Mr Popodopolous said:

Hmmm thanks for that bit. Definitely secured funding for Cash Losses and Covid add-backs is a must.

Why would you have any doubts SL hasn’t.  The report says (paraphrased) “continued support by the Lansdown / Pula”

If we forecasted say a £25m pre tax loss verbatim but after £15m of profit on disposal it's down to £10m...problem is with no 'paper trail' ie of transfer arranged but that fell through it feels speculative to me.

but we aren’t saying that, nowhere have we mentioned “lost transfer profit”.  Unless we hear / read differently, then you have to assume we’ve followed the rules and submitted the right evidence.  I put in a previous post that our auditors have made specific reference to auditing our P&S figures.  That seems very relevant to this part of the rules, see yellow highlighted section and in particular the red underlined bits:

your mistrust of Morris / Derby seems to be guiding what appears to be your mistrust of our accounts.  I might be critical of Lansdown about football decisions, but the one thing I wouldn’t go down the line of is “cooking the books”.  

This is a very good spot. As you say what others did and what Gould said before...I suppose my concern is that the likely easily quantifiable Covid losses are likely £15-16m across 2019-20 and 2020-21 and £2.5m last season which would still put us well or somewhat in the red FFP wise.

I think it is clear from the accounts that we’d rather use supplementary evidence with the accounts rather than overtly put it in our accounts.  Our accounts will be factual, we may never know the granular detail of add-backs.

Amortisation excluded or Covid write-down perhaps?

Who knows.  I wonder if we will get more info from RG / GM when the individual company accounts are made available?

 

Edited November 20, 2022 by Davefevs

[Mr Popodopolous]

Is a fairly big post to respond to but I'll try @Davefevs

1) No concern about SL and cash losses.

2) It strikes me as being the case that regular Covid add-backs would not in themselves fill the gap. Reduce but not fill. Could we (others too) and the League have a difference in interpretation as to what the guidance entails and allows for?

3) Defo SL wouldn't cook the books. My concern again is a genuine difference in interpretation of the regs if we are arguing for certain items. All hypothetical at this stage.

4) Agreed. Although revenue wise I think above £15-16m in those 2 years is questionable, notably above feels fanciful.

5) Agreed. Hope so.

[Davefevs]

14 minutes ago, Mr Popodopolous said:

2) It strikes me as being the case that regular Covid add-backs would not in themselves fill the gap. Reduce but not fill. Could we (others too) and the League have a difference in interpretation as to what the guidance entails and allows for?

the green bit DOESN'T just say “lost revenues” it DOES include “and / or exceptional costs” too, whatever they might be.  I’d imagine League guidance was pretty clear, but if it wasn’t clear it would have been clarified since.  Don’t forget RG said (back in the summer) they’d been speaking to the EFL regularly to gain clarification on certain things.

How can you have a different interpretation of something you’ve not seen?

[Davefevs]

Stoke appear to have taken the route of mentioning in their accounts:

2020 Holdings:

2021 Holdings, obviously more lost attendance income etc:

But also they used the term “lost opportunity”…which is uncanny, as I used the same earlier in this thread!!

So over two years accounts not only have they sought to use impairment as a cost to exclude, but lost transfer sales (opportunity to sell at least).

They state “in accordance with the guidelines”, “independently checked” type wording.  Did they indeed set the precedent?  

[Mr Popodopolous]

2 hours ago, Davefevs said:

the green bit DOESN'T just say “lost revenues” it DOES include “and / or exceptional costs” too, whatever they might be.  I’d imagine League guidance was pretty clear, but if it wasn’t clear it would have been clarified since.  Don’t forget RG said (back in the summer) they’d been speaking to the EFL regularly to gain clarification on certain things.

How can you have a different interpretation of something you’ve not seen?

It strikes me as potentially being at odds with FRS 102 and definitions there.

Presumably only the clubs will have seen the guidance but to me "Costs" strikes me as something that cost a a club/business which wouldn't have if not for the circs.

E.g. Cost of testing, cost of cleaning, cost of modified travel arrangements to stop the spread. That kinda thing. "It cost £500k in extra cleaning requirements therefore add it back/add it to the allowance".

Not costs caused by the transfer market stalling due to Covid-19. It's a hard one to argue either way but objectively speaking surely only an Independent Panel could decide on the concept as a whole.

1 hour ago, Davefevs said:

Stoke appear to have taken the route of mentioning in their accounts:

2020 Holdings:

2021 Holdings, obviously more lost attendance income etc:

But also they used the term “lost opportunity”…which is uncanny, as I used the same earlier in this thread!!

So over two years accounts not only have they sought to use impairment as a cost to exclude, but lost transfer sales (opportunity to sell at least).

They state “in accordance with the guidelines”, “independently checked” type wording.  Did they indeed set the precedent?  

Maybe they did and definitely if they and others get away with it then we should not be singled out.

In fact I believe they are more guilty than us! In which case if they get off the hook not properly challenged then there is no reason we should be singled out.

"Opportunity" to sell I'd argue that's speculative to an extent.

Edited November 20, 2022 by Mr Popodopolous

[Davefevs]

I don’t disagree, all I’m pointing to is what another club have done / stated in their accounts.  I’ve no idea how City are squaring their circle beyond the element of “lost revenue” and undoubtedly things like cost of testing, etc as you state.  I wonder if there was a £-sign attached to using Ashton Gate?

[Mr Popodopolous]

20 hours ago, Davefevs said:

I don’t disagree, all I’m pointing to is what another club have done / stated in their accounts.  I’ve no idea how City are squaring their circle beyond the element of “lost revenue” and undoubtedly things like cost of testing, etc as you state.  I wonder if there was a £-sign attached to using Ashton Gate?

This is fair. Is good to see it highlighted quite precisely.

Well you and me both how the circle is seemingly being squared is a mystery.

Cost of testing etc seems a useful and valid add-back as for all clubs.

Do you mean for the Vaccine Centre? Either will have appeared in 2020-21 or 2021-22 I'd have thought.

[Davefevs]

18 minutes ago, Mr Popodopolous said:

Do you mean for the Vaccine Centre? Either will have appeared in 2020-21 or 2021-22 I'd have thought.

Yes, referenced in the AG Ltd accounts 2021-22…not in £-signs though.

[Mr Popodopolous]

7 minutes ago, Davefevs said:

Yes, referenced in the AG Ltd accounts 2021-22…not in £-signs though.

Ah are these out now?? Will have to take a quick look at these- thanks.

Assume it'd perhaps be bundled up into Commercial Revenue? Closest category I can think of.

It's not really Commercial or Event at all though. Rendering of Services? Doesnt neatly fit any category.

Edited November 21, 2022 by Mr Popodopolous

[Davefevs]

16 minutes ago, Mr Popodopolous said:

Ah are these out now?? Will have to take a quick look at these- thanks.

Assume it'd perhaps be bundled up into Commercial Revenue? Closest category I can think of.

It's not really Commercial or Event at all though. Rendering of Services? Doesnt neatly fit any category.

Sorry 2020-21

Could be a combo lost Commercial Revenues and Costs to claim back.

Edited November 21, 2022 by Davefevs

[1960maaan]

It would be interesting to know if the of field Stadium income, has gone back to anywhere near the pre-COVID levels yet. 
The Corporate areas & Conferencing were big parts of the plan I believe.

[Mr Popodopolous]

10 minutes ago, 1960maaan said:

It would be interesting to know if the of field Stadium income, has gone back to anywhere near the pre-COVID levels yet. 
The Corporate areas & Conferencing were big parts of the plan I believe.

Surprisingly and happily the accounts state it is not far off at all for 2021-22 when set against 2018-19! A little remarkable actually.

2019 and 2022

 

Edited November 21, 2022 by Mr Popodopolous