Leicester City. Points deduction?

[Hxj]

The scariest part of the LCFC accounts from my perspective is the complete lack of any write-down of the intangible assets on relegation.  That results in a probable £50 million amortisation charge in 2023/24.  

[oldstandrobin]

Once upon a time in my day it was all about going to a game and gazing in awe as your local chairman, ie for us the late and loved Harry Dolman, swept into the car park in his RR, cigar alight and breezed into the directors entrance, getting your Bovril in the East End and watching Big John's Brylcreem slip another past the opposing keeper. Now you have to have a degree in Accountancy to compete on a fans forum. Happy Days now long gone .

[HoldenBall]

24 minutes ago, Hxj said:

The scariest part of the LCFC accounts from my perspective is the complete lack of any write-down of the intangible assets on relegation.  That results in a probable £50 million amortisation charge in 2023/24.  

What does this mean for dummies 

[Mr Popodopolous]

I expect that a loss pre tax not exceeding £38m is the magic number for this season.

Perhaps a £20-25m overspend for the 3 years to last season.

When we account for Resets of past 2 years exceeding the maximum. I still stand by my £25m in Allowables Costs.. Academy, Depreciation etc.

Edited April 3 by Mr Popodopolous

[Mr Popodopolous]

Some real fun with FFP and EFL Regulations will occur if they stay down however.

EFL rules have this T+1 and T+2 as we know.

If they stay down, starting point.. 

*Upper Loss limit after Allowables to next year £61m. Already almost certainly used £35m of that in 2022-23, plus whatever this season

and

*Parachute Payments down by £10m or thereabouts. £5-10m anyway. That feeds further into a deficit.

*Remember this years loss included a £39m Profit on Barnes and a £6-7m Profit on Castagne. That is another £45-46m to find less amortisation and wage savings.

*EFL FFI combined with Business Plan can mean no Fees, no Loan fees, Wage restrictions, all to assist with FFP compliance.

*Failing said Business Plan can lead to a Points Deduction in March but doesn't serve to mitigate or exclude an FFP fail or punishment for it.

Edited April 3 by Mr Popodopolous

[Mr Popodopolous]

Some of the Reporting is so very poor.

Local Reporter for Leicester says a £53m boost to FFP in next Accounts. Superficially true but...

£38m Barnes- Pure Profit

£15m Castagne- He had a book Value remaining of maybe £8.8m. You lop that off.

Secondly that huge loss came despite and including the Transfer Profit on Fofana and Maddison so if anything it is a net negative swing in an FFP context.

£50m Pre Tax Loss this season? More?

Some back of envelope and possibly a bit generous Calcs.

Wages  £115m ie Wage, Bonus, NI. All staff not just players etc. Gross wage payment.

Amortisation  £25m

Vs

Income  £60-70m

Profit on Disposal of Players  £20-25m

I'm probably being a bit generous with a couple of these. Parachute Payments Year 1 e.g. are not £70m, they are 55% of the Basic Award. Either £48.73m or £43.56m.

That fall in wage bill being towards the top end as Percy said some players or players had between 35-50% reduction but...

There is the impact of the 13th month too of course.

I agree with @Hxj on the £50m in Amortisation perhaps even the £50-55m range when we factor in Loan Fees.

Edited April 3 by Mr Popodopolous

[downendcity]

4 hours ago, HoldenBall said:

What does this mean for dummies 

They're ****ed?

[Mr Popodopolous]

One more note, their Covid losses as stated in their Accounts.

2021-22 first then the 2 main years. For the latter you average it as the 2 years wwre added then averaged.

I'm reasonably comfortable based on this and other extrapolations with a prediction of a £25-30m overspend to 2022-23.

Edited April 3 by Mr Popodopolous

[Dan11]

1 hour ago, downendcity said:

They're ****ed?

What is the punishment though? Everton got 6 points in the end. Forest got 4 points which they are appealing. Both will probably stay up this season.  It's all toothless nonsense really, before you even get to Leicester seeming to fall between the cracks of the PL/EFL. If any breach regardless of size was a 30 point deduction then perhaps clubs might think about it. 

[Mr Popodopolous]

16 minutes ago, Dan11 said:

What is the punishment though? Everton got 6 points in the end. Forest got 4 points which they are appealing. Both will probably stay up this season.  It's all toothless nonsense really, before you even get to Leicester seeming to fall between the cracks of the PL/EFL. If any breach regardless of size was a 30 point deduction then perhaps clubs might think about it. 

EFL sanctions and PL sanctions are both points. I agree with the overarching point but EFL..starting point.

£39m Plus Adjustments the Upper Loss limit. (Plus add £22m per PL season).

£1-1.99m=3 points

£2m-3.99m=4 points

£4m-5.99m=5 points

£6m-7.99m=6 points

£8m-9.99m=7 points

£10m-12.499m=8 points

£12.5-15m=9 points

£15m+=12 points.

Derby and Sheffield Wednesday got off lightly to some extent. Reading in one way, less so in another way but all got relegated.

This 12 points if no mitigation or declining losses can rise as high as 21 if there are aggravating factors. On the flipside, an improving trajectory can lead to a point or 2 back.

Leicester if they go up in breach should really be looking at 2 Points Deductions.

Birmingham worked example.

£9m or so overspend to 2018.

7 points for the overspend

3 more for the rising losses/recklessness Year on Year especially in 2017 and 2018.

One back for impressive cooperation.

Edited April 3 by Mr Popodopolous

[Mr Popodopolous]

8 hours ago, HoldenBall said:

What does this mean for dummies 

Essentially to impair means to write down to its assessed (fiddled/guessed?) recoverable value.

Oh bad season, yeah add a bit impairment to that. It increases losses in the Year but can help in two ways..

A) It reduces amortisation costs moving forward ie the remaining Book Value of the Player.

B) A strategic write down can make it easier to sell or even loan as you would need lower Transfer or loan fee to get close to breakeven point thereby also enabling the offload of higher earners because if you don't sell them at a loss or s notable loss you can perhaps balance it out with wage savings and get closer to FFP compliance or reduce the overspend at least.

It would however increase losses in 2022-23 and thereby increase the eize of the potential overspend then but may assist moving forward.

[22A]

From the Sunderland forum. The line in bold type sounds like City.

https://www.readytogo.net/smb/threads/safc-losing-100’s-of-1000’s-every-week.1630984/

Just curious as to how/why we’re losing (reports I’ve seen £300k a week) and how it would compare to others.

Practically every club is a basket case in the championship, the majority hope to sell at least one player for a large sum to cover most of the costs and keep within FFP or as close to as possible.
You will find that clubs who have gone for it this season (and don't go up) will cut costs like crazy next season and it can take a few seasons before they are ready to challenge again.

[Mr Popodopolous]

Subject to how much we spend, I don't think we actually need to sell anyone this coming summer.

[Mr Popodopolous]

What do we think of the Rule whereby the P&S Calculation exceeding leads to the Embargo? Not only Leicester fans but clearly a comment on Foxes Trust and some Leicester journos think it unfair and or premature.

I have no issue with it personally, because a club have gained a competitive advantage by being over limits in the period and during the season itself- that was the whole point of the In-season mechanism after all.

[ZiderEyed]

12 hours ago, Davefevs said:

Great forum name though

Convinced I ****** up on the name on OTIB now I've witnessed the delights of Ian Nacho 

[Hxj]

8 hours ago, downendcity said:

They're ****ed?

No need for the ? 

6 hours ago, Dan11 said:

What is the punishment though?

It appears that LCFC may escape any punishment for 2022/23, until 2024/25.  As I said previously pointed out the relevant regulations have a hole in them.

The EPL cannot transfer a case to the EFL unless the subject was subject to a disciplinary case before relegation - which LCFC were not.

The EFl can only sanction if their 2023/24 FFP calculations actually show a breach for 2023/24. 

 

 

Edited April 3 by Hxj

[downendcity]

23 minutes ago, Hxj said:

No need for the ? 

It appears that LCFC may escape any punishment for 2022/23, until 2024/25.  As I said previously pointed out the relevant regulations have a hole in them.

The EPL cannot transfer a case to the EFL unless the subject was subject to a disciplinary case before relegation - which LCFC were not.

The EFl can only sanction if their 2023/24 FFP calculations actually show a breach for 2023/24. 

 

 

The model for football's  financial regulations....

[Mr Popodopolous]

30 minutes ago, Hxj said:

The EFl can only sanction if their 2023/24 FFP calculations actually show a breach for 2023/24. 

 

 

On Point 2, in respect of this does that mean the CFRP cannot do anything on the strength of the P&S Calculation or am I misunderstanding? 2.10.1 did follow onto 2.10.3.

As we know:

A) The League/CFRU lost a case in mid January, weirdly announced a week into March.

B) The League/CFRU embargoed Leicester under Regulation 2.10.1 ie a P&S Calculation which I assume is the 3 Years to 2023-24 over limits.

C) 2.10.1 seems to logically follow on to 2.10.3 ie CFRU refer the breach to the CFRP.

Edited April 3 by Mr Popodopolous

[Hxj]

7 hours ago, Mr Popodopolous said:

On Point 2, in respect of this does that mean the CFRP cannot do anything on the strength of the P&S Calculation

The regulations do not give the EFL the right to change any part of the P&S Calculation for T (the current year) for matters such as estimated player sales during T.  Compare the wording of 2.9, dealing with T+1 and T+2, with 2.10 dealing with the P&S Calculation for T.  There is no 'reasonable opinion' in 2.10.

So provided the P&S Calculation for T submitted by LCFC shows compliance with the loss limit, and is calculated in line with the regulations then that has to be accepted.

Edited April 4 by Hxj

[Mr Popodopolous]

3 hours ago, Hxj said:

The regulations do not give the EFL the right to change any part of the P&S Calculation for T (the current year) for matters such as estimated player sales during T.  Compare the wording of 2.9, dealing with T+1 and T+2, with 2.10 dealing with the P&S Calculation for T.  There is no 'reasonable opinion' in 2.10.

So provided the P&S Calculation for T submitted by LCFC shows compliance with the loss limit, and is calculated in line with the regulations then that has to be accepted.

Thanks, so it can only be challenged post the final Accounts, update come the summer etc.

An issue here is that Leicester potentially have submitted a non-compliant one in the period ending 2023-24 hence the Embargo for 2.10.1.

Feels uncharted territory.

[Hxj]

1 hour ago, Mr Popodopolous said:

An issue here is that Leicester potentially have submitted a non-compliant one in the period ending 2023-24 hence the Embargo for 2.10.1.

I suspect that it is more likely that the regulations do not say what the EFL/CFRU want then to say.  Identical to the other failed case against LCFC.

[Mr Popodopolous]

2 minutes ago, Hxj said:

I suspect that it is more likely that the regulations do not say what the EFL/CFRU want then to say.  Identical to the other failed case against LCFC.

Interesting. Albeit how would we know if a club were referred to the CFRP or is that done in secret? My thinking is that the EFL/CFRU are after Leicester this specific season.

Yes all they need to put in their forecast to avoid immediate censure is a compliant by e.g. selling as many players as possible.

[phantom]

EFL Statement: Leicester City

On 22 March 2024 Leicester City Football Club announced they had commenced urgent legal proceedings against the EFL and the Premier League.

This followed the Club’s referral to an independent Premier League Disciplinary Commission for an alleged breach of the Profitability and Sustainability Rules (P&S), ending in financial year 2022/23. The Club had also been placed under an EFL registration embargo, in accordance with Profitability & Sustainability Rule 2.10.1, after filing its 2023/24 P&S calculation.

One element of the Club’s legal proceedings involved an application to a League arbitration panel under the EFL Regulations in which it accused the EFL, amongst other things, of acting ‘unlawfully by conspiring with the Premier League to use unlawful means and to procure or induce a breach of contract by the Premier League’ in relation to its proceedings against the Club.

The Club made an application for an interim injunction to prevent the EFL from imposing a sporting sanction in the current 2023/24 season. 

Leicester City sent no letter before action and issued the proceedings without notice. 

The core issue in question was whether the EFL has the ability under its Regulations to apply a points deduction in its competition if ordered by a Premier League Disciplinary Commission.  

Having taken legal advice, the EFL has confirmed to all parties that whilst it would want to respect any decision of a Premier League Disciplinary commission (and vice versa) to deduct points in the EFL, it does not have the power under the Regulations as currently drafted. 

On the basis of that confirmation, the League Arbitration Panel held that the Club’s application for an interim injunction was neither necessary nor appropriate. The League Arbitration Panel dismissed the Club’s application accordingly. 

It remains a matter for Leicester City to comply with the P&S rules in all circumstances. In accordance with the League’s established processes, the EFL will continue to apply the P&S rules to ensure all Clubs meet their financial obligations so the competition can continue to operate in a fair and consistent manner.

[Markthehorn]

Seems like the EFL wanted to dock Leicester points but couldn’t as it’s a Premier league matter ?

 

[Mr Popodopolous]

Written Reasons and weirdly I would suggest that may open the door to refer for the Forecast fail this year.

As I have stated before, Rule 2.10.1...logically 2.10.3 can follow on.

https://www.efl.com/news/2024/april/12/efl-statement--leicester-city/

It says at the end that the Arbitration will continue albeit whether that means pertaining to P&S to the present season or that particular case.

Interim Relief was dismissed as unnecessary.

Edited April 12 by Mr Popodopolous

[Mr Popodopolous]

Funny feeling the EFL may try again this season. This time with the Forecast fail.

[Mr Popodopolous]

Leicester should now be referred to the CFRP despite what some of their stupid crowing fans think.

IMO anyway. Depends how you interpret the Rules but EFL need to go again.

Edited April 12 by Mr Popodopolous

[REDOXO]

There seems to be some tragic accounting in Nottinghamshire, Leicestershire and Derbyshire! 

 

[Natchfever]

1 minute ago, REDOXO said:

There seems to be some tragic accounting in Nottinghamshire, Leicestershire and Derbyshire! 

 

East Muddlelands mate.

[Mr Popodopolous]

13 minutes ago, REDOXO said:

There seems to be some tragic accounting in Nottinghamshire, Leicestershire and Derbyshire! 

 

Good spot..Leicester Tigers paid a fine for the Rugby Salary cap too this season iirc!

See also Leicester 2002-03 admin, 2013-14 FFP overspend, Nottingham Forest Embargo mid 2010s or so relating to FFP and Derby FFP and Admin, Derby also Admin early 2000s and some kind of financial difficulty in the early 1980s.

Edited April 12 by Mr Popodopolous