Finances 21/22

[Mr Popodopolous]

4 minutes ago, Davefevs said:

For the UEFA scheme (CLFSR) it’s worth googling as the items for inclusion on the income and cost is not straightforward.  Income can include transfer profit type stuff, whilst costs include amortisation too.

Thanks, will have a look at this tomorrow probably. There was some speculation on what may or may not be included- amortisation of Player Registrations makes sense to me certainly.

[Davefevs]

Just now, Mr Popodopolous said:

Thanks, will have a look at this tomorrow probably. There was some speculation on what may or may not be included- amortisation of Player Registrations makes sense to me certainly.

I’d say we will end up with a scheme that falls somewhere between UEFA, La Liga and SCMP.

[Hxj]

@Davefevs Thanks, saved me some thinking time!

The only bit I disagree with is this:

18 hours ago, Davefevs said:

Future Stuff (stuff that happened after 31st May)

- Looks like it could be £180k in compo for Wilson, assumes Bajic was free

- Looks like we made £472k on McAllister (£250k) and Szmodics (assume £222k) in transfers and sell-on percentage

I read the first one as the net transfer costs - Amount to be paid out less amount to be received =£180k.  On your names that would be McAllister - Wilson - Bajic = - £180k, which looks like good business.

The second is sell on fees only.  If that's entirely Szmodics then we did well out of him too.

[Davefevs]

Often compared to the likes of Preston and Millwall…albeit from 20/21 season.

Preston:

City:

We are moving in the right direction, and our staff costs contain some high earners who either won’t be here next summer, or if they are will be on much reduced wages.

5 minutes ago, Hxj said:

@Davefevs Thanks, saved me some thinking time!

The only bit I disagree with is this:

I read the first one as the net transfer costs - Amount to be paid out less amount to be received =£180k.  On your names that would be McAllister - Wilson - Bajic = - £180k, which looks like good business.

The second is sell on fees only.  If that's entirely Szmodics then we did well out of him too.

Ah great spot Sir.  I will amend my “stuff”. Ta

[Davefevs]

Millwall:

Theirs will have increased a bit this season following the signings made, plus amortisation increase too.

We just need to rebuild the squad, and that opportunity comes in the summer.  It won’t be easy.  At that point we are still 2/3 seasons behind the likes of Preston, Millwall, Luton, Coventry.  Frustrating…absolutely.  But that’s how long it takes to turn a ship around in a depressed financial climate (not just football either).

Patience is key.

[Mr Popodopolous]

20 hours ago, Davefevs said:

Millwall:

Theirs will have increased a bit this season following the signings made, plus amortisation increase too.

We just need to rebuild the squad, and that opportunity comes in the summer.  It won’t be easy.  At that point we are still 2/3 seasons behind the likes of Preston, Millwall, Luton, Coventry.  Frustrating…absolutely.  But that’s how long it takes to turn a ship around in a depressed financial climate (not just football either).

Patience is key.

Glad you mentioned these sides Dave, as I found an article online from around the time out accounts dropped.

https://www.theleaguepaper.com/features/columnists/chris-dunlavy/379645/city-crash-could-be-tip-of-the-iceberg/

As it happened we were the worst to report that season- Swiss Ramble's figures do show this to be the case. (The impossible to know Derby aside).

Dunlavy raises a strong point here and puts it better than i have.

It's an interesting debate but if I'm Millwall- probably Barnsley, Luton, Coventry and those who have already been punished I wouldn't be advocating excessive leniency for clubs with large losses.

Blackburn and Preston probably also within. QPR too maybe.

Specific clubs aside, he lays it out quite well I think. Millwall is the example he gives...but also is cautious of sanctions post Covid-19.

My view remains as it always has- beyond the agreed amendments there should be no notably greater clemency or waiving of requirements for clubs until or unless the rules are changed entirely. In other words the EFL challenge everything and scrutinise everything as er pre 2019, save for the amendments applied universally..

Plus forgot Hull (probably compliant irrespective), Rotherham. Sunderland coming back up- although Parachute Payments played a part with some of these.

I think our probable true Covid losses and add-backs over 2019-20 and 2020-21 were likely £15-17m when we factor in net falls and some net additional Covid costs. By all means bump the £5m x 2 up to £16-17m in that period.

Edited November 28, 2022 by Mr Popodopolous

[Davefevs]

I don’t disagree that there should be fair play.

But why are you not presenting the facts, that the rule changes were agreed (required a 2/3rds majority by the members, league representatives from the 72 clubs and independent).  If some clubs thought a handful of clubs (City, Stoke, etc) were going to gain unfair advantage, why were the covid add-backs agreed?  They’d have voted against it, surely?

You are making assumptions on other clubs’ behalf.  Who knows whether Coventry, Luton etc benefitted from these rule changes too, just in different ways or to a different degree.

Luton spent more than they’ve ever spent this summer.

Blackburn sold their training ground for £13m, or else they would’ve been touch and go re £39m for 20/21…not 21/22…not predicted 22/23.

I repeat, the rules say clubs can claim more than the 5/5/2.5 with necessary evidence.  I’ve shown you the EFL regs on this.  Why are you are asserting that certain clubs are getting special treatment over and above the agreed rules.  What is your evidence for this?  If you have some, then great, bring it to the discussion.

Also, don’t forget, we haven’t broken any Covid limits up to 21/22. Whether we do for 22/23 we don’t know.  We might be planning to sell Semenyo in January too.  We have until March to submit our projections for 22/23.

As for the article, I don’t think he does lay it out well…no reference to normal allowances (depreciation, Academy, etc), nor the halving of two years.  For me he’s copied and pasted Swiss Ramble numbers without getting fully behind understanding it!

[Davefevs]

Just to add, the 3 Championship reps are:

On your reckoning Kavanagh and Ridsdale were proverbial turkeys voting for Christmas!!!

(not forgetting the 3 independent members that make up the 9 man board headed by Parry)

[Mr Popodopolous]

Was a quick post made having read Twitter.

Covid add-backs have been agreed yes. The devil though is in the Detail with these beyond what we know in the public domain.

We could sell Semenyo in January yep agreed. He's laid out a certain bit of it well IMO ie the consistency and the reference to Millwall. To be clear tbis was an article about 2020-21 and prior to the initial add-backs that were mid Feb 2022. Clearly clubs cn put in for more.

Blackburn I still have one or two q's on. In the sense of timing...technical and arid but I estimate training ground sale took £6.5m off their combined average.

If it's Venkys London Limited who are the reporting entity for FFP then the period of the sale falls within April 1st 2021 to March 31st 2022..which accounting reference period? If it's 2021-22 there is a question. The club and VLL are not aligned correctly dates wise.

I am looking at the headroom of some of these clubs and making a bit of a guess yes. I think QPR once that 2019-20 and 2020-21 figure drops off if we have the same limits could have an issue to 2023-24 as it stands. Likewise Cardiff and Birmingham. West Brom too? We otoh if we get through this period have clearer waters ahead.

Yes he should post about allowables too the author.

Edited November 28, 2022 by Mr Popodopolous

[Hxj]

3 hours ago, Mr Popodopolous said:

Blackburn I still have one or two q's on. In the sense of timing...technical and arid but I estimate training ground sale took £6.5m off their combined average.

If it's Venkys London Limited who are the reporting entity for FFP then the period of the sale falls within April 1st 2021 to March 31st 2022..which accounting reference period? If it's 2021-22 there is a question. The club and VLL are not aligned correctly dates wise.

The Regulations are clear.  If the accounting date for the reporting entity does not fall in the period from 31 May to 31 July figures need to be prepared for 12 months to a date in that period, and subjected to all the normal requirements.

[Davefevs]

13 minutes ago, Hxj said:

The Regulations are clear.  If the accounting date for the reporting entity does not fall in the period from 31 May to 31 July figures need to be prepared for 12 months to a date in that period, and subjected to all the normal requirements.

Indeed

[Mr Popodopolous]

4 hours ago, Hxj said:

The Regulations are clear.  If the accounting date for the reporting entity does not fall in the period from 31 May to 31 July figures need to be prepared for 12 months to a date in that period, and subjected to all the normal requirements.

 

4 hours ago, Davefevs said:

Indeed

Thanks both. Is a bit confusing (for me) however as to whether the training ground sale and leaseback falls into 2020-21 or 2021-22.

The problem or confusion for me is:

Blackburn Rovers Football and Athletic- July 31st-June 30th

Venkys London Limited-  April 1st-March 31st.

They appeared in (iirc) the Blackburn Rovers accounts made up to to June 30th 2021...

Whereas they will appear in the Venkys London Limited accounts to March 31st 2022.

VLL though seems to sit above Blackburn Rovers??

Edited November 28, 2022 by Mr Popodopolous

[Davefevs]

2 minutes ago, Mr Popodopolous said:

They appeared in (iirc) the Blackburn Rovers accounts made up to to June 30th 2021...

Then that will be the year in which they’re included for EFL purposes.

[Mr Popodopolous]

Swiss Ramble analysis of our accounts out now.

Although his work seems to be on Substack these days.

Fwiw he reckons our gross Covid losses (talking revenue) over the two seasons are £18m and cost savings being this down to a net figure of £14m. I'm thinking more £15m net.

He also has our typical allowable costs down at £6m per season. I thought so for 2021-22 but wasn't sure about the previous couple.

I had our gross figure for Covid revenue hits down at £15-17m so that feels in a sensible ball park.

He doesn't mention the £2.5m EFL Covid bit for last season, every little helps.

He does reference Gould's quote about high confidence when it comes to avoiding FFP penalties due to add-backs.

Edited November 29, 2022 by Mr Popodopolous

[Spoons]

Anyone else heard the rumour SL looking or has sold 51% to American investors? 

[Davefevs]

19 minutes ago, Spoons said:

Anyone else heard the rumour SL looking or has sold 51% to American investors? 

No, but it would not surprise me.  All very quiet…accounts out in public domain, planning recently approved.  Now would at least make sense in my head…even though I’ve no idea how these things might be timed.  We do know he’s been looking.

Edited November 29, 2022 by Davefevs

[lenred]

24 minutes ago, Spoons said:

Anyone else heard the rumour SL looking or has sold 51% to American investors? 

Very interesting! Been rumoured a long time now. 

[Mr Popodopolous]

15 hours ago, Spoons said:

Anyone else heard the rumour SL looking or has sold 51% to American investors? 

 

14 hours ago, Davefevs said:

No, but it would not surprise me.  All very quiet…accounts out in public domain, planning recently approved.  Now would at least make sense in my head…even though I’ve no idea how these things might be timed.  We do know he’s been looking.

 

14 hours ago, lenred said:

Very interesting! Been rumoured a long time now. 

These things usually find their way into the public domain somehow so I'd be surprised if it's happened yet.

The other bits to consider are:

1) It would of course require EFL approval. Would that (a hypothetical sale) and even the final approval all still be secret after it has happened?

2) Even fresh investment or ownership wouldn't alter the FFP position so why would someone invest while we are still hamstrung as a club? After the improvement, by all means.

Edited November 30, 2022 by Mr Popodopolous

[Davefevs]

3 minutes ago, Mr Popodopolous said:

2) Even fresh investment or ownership wouldn't alter the FFP position so why would someone invest while we are still hamstrung as a club? After the improvement, by all means.

Because it might be cheaper!

[Mr Popodopolous]

1 minute ago, Davefevs said:

Because it might be cheaper!

Well yes there's that but usually- good point!

Often an Investor may want to come in and start throwing cash around instantly on new players etc. Maybe each case is different, perhaps one for us would be happier to play a longer game. A range of clubs does show the excited new owner or investor looking to buy, buy, buy.

[Pezo]

51 minutes ago, Mr Popodopolous said:

Well yes there's that but usually- good point!

Often an Investor may want to come in and start throwing cash around instantly on new players etc. Maybe each case is different, perhaps one for us would be happier to play a longer game. A range of clubs does show the excited new owner or investor looking to buy, buy, buy.

Interestingly it would likely highlight that the investor is looking for value though.

[Mr Popodopolous]

1 hour ago, Pezo said:

Interestingly it would likely highlight that the investor is looking for value though.

Value for long term or maybe to 'flip'?

A new investor wouldn't need to stick much in on infrastructure although can't test on laurels either if course.

I'd argue that the finding value thing at this level is a serious problem. You only have to look at the financial landscape of the Championship, however perhaps the post Covid-19 will be quite different.

If you can get a side up into the PL relatively cheaply and quickly then the opportunity to 'flip' certainly opens up. Likewise loans can be repaid over time if established.

Could look to run us on a cash breakeven basis or with relatively low cash investment I guess but how feasible that is at our level I am unsure but I don't suppose the owners of Coventry or Luton put in a huge amount.

Edited November 30, 2022 by Mr Popodopolous

[Mr Popodopolous]

Of course if the redistribution ideas for football to through, ie 17-25 pct of PL cash to the Football League, Parachute Payments either scrapped or massively reformed then that could change everything.

What is "value" though and how is it achieved? Can be quite subjective, different things for different people.

Edited November 30, 2022 by Mr Popodopolous

[frenchred]

Can't see the master controller selling 51%, maybe 49%

[Pezo]

3 hours ago, Mr Popodopolous said:

Of course if the redistribution ideas for football to through, ie 17-25 pct of PL cash to the Football League, Parachute Payments either scrapped or massively reformed then that could change everything.

What is "value" though and how is it achieved? Can be quite subjective, different things for different people.

Value isn't subjective from an investment perspective. It's about finding company's that are for sale for less than there objective value.

https://www.investopedia.com/terms/v/valueinvesting.asp

Most value investments are long term because they are trying to avoid buying and selling fees, they usually want an asset to be able to raise capital against. No idea what's going on here but I couldn't see us being a good club to "flip" at this point.

[Mr Popodopolous]

43 minutes ago, Pezo said:

Value isn't subjective from an investment perspective. It's about finding company's that are for sale for less than there objective value.

https://www.investopedia.com/terms/v/valueinvesting.asp

Most value investments are long term because they are trying to avoid buying and selling fees, they usually want an asset to be able to raise capital against. No idea what's going on here but I couldn't see us being a good club to "flip" at this point.

I suppose different ways of looking at value but I take the point here.

For example, for UAE, Qatar and potentially Saudi Arabia..the whole buying and creating a prominent club thing brings value in quite different ways- although if Qatar sell PSG for the recent mooted asking price they may make a profit too.

Depends who buys it.

Financial value...raising capital against doesn't sound good yet we certainly have Tangible assets against which a prospective investor could raise it against. Stadium, HPC etc. Assets that are surely at a higher value than their cost in the books. Fair/Market value significantly exceeds the current amounts stated at 'Cost' I think.

Were an investor to buy us, stick £20m in and we get to the PL within a few years, yes definitely can see good scope for ROI.

The longer you run a club at this level, the more you have to put in and the harder it can be to recover your investment and turn a profit.

Edited November 30, 2022 by Mr Popodopolous

[Mr Popodopolous]

On 17/11/2022 at 16:22, ExiledAjax said:

I understand that a finance specific interview with Richard Gould will be published this week in order to further explain to those fans who are not currently wallpapering their house with copies of our accounts.

Any update on this one, unless I missed it what with the current enjoyment of the WC?

[Davefevs]

Pretty much a stock reply from the regs re my recent email re add-backs.

We won’t ever know the granular side unless we / other clubs break the £39m.

[Mr Popodopolous]

41 minutes ago, Davefevs said:

Pretty much a stock reply from the regs re my recent email re add-backs.

We won’t ever know the granular side unless we / other clubs break the £39m.

Well done for trying Dave.

Seems transparency from the EFL- or more accurately the clubs who comprise it- has its limits!

Does seem strange that the League or perhaps more likely the clubs who vote on these issues want to keep that aspect so locked down- does it raise suspicions that perhaps the League/Clubs are trying to fudge it so that everyone is within £39m to last and this season one way or another, a combination of Covid-19 and the regulatory changes that are upcoming.

Edited December 7, 2022 by Mr Popodopolous