Derby County Accounts 13/14

[Diag Ram]

It's a big if, and will of course depend on what happens re: player sales. If we push through a Hughes and Hendrick sale for ~£15-20m before 30/6 then there would be no problem. If that doesn't happen, then I'd expect the board to go for broke next year, take the embargo in January.

Typing this on my phone, can't get through on the computer atm, but will put down some "finger in the air estimates" on what we might expect results to be this year later. 

[ramblur]

It's a big if, and will of course depend on what happens re: player sales. If we push through a Hughes and Hendrick sale for ~£15-20m before 30/6 then there would be no problem. If that doesn't happen, then I'd expect the board to go for broke next year, take the embargo in January.

Typing this on my phone, can't get through on the computer atm, but will put down some "finger in the air estimates" on what we might expect results to be this year later. 

​Ok I'm with you now.It was your reference to a fine that threw me,which to me would indicate breaching the £13m for 15/16 and subsequently being promoted.We could have a big spree this summer (even if we'd breached FFP in 14/15) and still stay within the 15/16 limits.

Just to give others a taste of what this extra £7m boost to the FFP limit might allow,you could,for example,increase wages by £3m and buy £12m worth of players (incl League levy+agents' fees) on 3 year contracts,giving £4m amortisation/year. I'm in no way suggesting this is what we would do,and I think it would be grossly unfair to expect it.My own guess is that sales might have to (at least part) balance incomings.

Going back to the fine situation,I've seen some suggest that multiple FFP breaches without promotion would lead to a fine.I've seen no mention of this in the regs and have just assumed that all that would happen would be a continuation of transfer embargo.Having said that,however, these published regs won't give the full details.

[Diag Ram]

​Ok I'm with you now.It was your reference to a fine that threw me,which to me would indicate breaching the £13m for 15/16 and subsequently being promoted.We could have a big spree this summer (even if we'd breached FFP in 14/15) and still stay within the 15/16 limits.

Just to give others a taste of what this extra £7m boost to the FFP limit might allow,you could,for example,increase wages by £3m and buy £12m worth of players (incl League levy+agents' fees) on 3 year contracts,giving £4m amortisation/year. I'm in no way suggesting this is what we would do,and I think it would be grossly unfair to expect it.My own guess is that sales might have to (at least part) balance incomings.

Going back to the fine situation,I've seen some suggest that multiple FFP breaches without promotion would lead to a fine.I've seen no mention of this in the regs and have just assumed that all that would happen would be a continuation of transfer embargo.Having said that,however, these published regs won't give the full details.

​In that example, that would assume no sales of players. I presume that there is very little in the balance sheet (if anything) in relation to the majority of our sellable players, so any sales of those players should be almost 100% profit.

As promised, here's a very rough guide as to what we might expect (not including any player sales)

Less TV money                     (2,000)   No play offs

Additional Match receipts       600       Hard to predict, but attendances have been higher and prices increased

Fall in revenue therefore      1,400

Additional wages                  1,700     New contracts in the summer, plus loan signings.

Player amortisation              900         Due to George Thorne etc

Other costs                         1,500         Loan fees etc. May be a little generous!

Less Clough sacking            (900)

Additional costs                   3,200

"FFP Loss" 2014                  (4,000)          Estimated "FFP loss," excluding stadium depreciation etc.

Possible "FFP Loss" 2015  (8,600)           Being 4,000 plus 1,400 plus 3,200 from above

Limit                                      (6,000)          So around £1.5m to find

So not quite as bad as I originally said. There are, of course, so many uncertainties to this calculation, so hopefully there is additional sponsorship revenue that would help us to cover this, or possible cost reductions elsewhere. Although we took a gamble I'd like to think that the board, who championed FFP so strongly, will have a contingency plan in place.

[ramblur]

We must both be missing something big somewhere because SR has said in the DET that we'll be "comfortably" within the 14/15 guidelines.

I'm assuming a typo near the end,and you really meant to put 'around £2.5m to find'?  The only comments I'd make would only worsen the situation. I think you might be a bit undercooked on amortisation as PBSE gave nearly £8m for total expenditure on new players,with very little of value going out to compensate.The waiver of interest in 13/14 won't be repeated in 14/15,so there could be a swing of £1m there (depending on what has actually happened with the stadium loan).

[Diag Ram]

Whoops sorry £2.5m.

Rush would have to say we'll be ok, otherwise clubs interested in Hughes or Hendrick will smell blood and bid low, knowing we need a quick sale. 

I guess we would need more detail on excluded costs. I might email the football league and see if I can get more information.

This is starting to get a bit geeky! Haha. 

[ramblur]

Welcome to the club.I did email the League a few years ago,and I did get a reply.Unless it does mean June player sale/s,then I can only imagine the exemptions are far greater than we imagine and/or gate receipts surged more than we thought.This latter one is quite interesting,because I seem to remember some sections got significant increases (S/Ts) and then others had price rises as well,so gate receipts could have increased significantly,given that attendances also increased a lot.However,VAT has to be stripped out of these increases.

It still seems to me that there's far more to claw back than these 2 items might provide.When Sam says we won't know for 9months (they did once report just DCFC in January,but then thought better of it for future years),he's actually wrong,because the League publish the sinners long before we report in late March/April.Must try and find out when the League announced the embargoes last year-I know it was reported in DET.

[davenportram]

South stand went up by £55 per adult for early renewals (lower tier) and the upper tier went up by more as it changed from Cat E to Cat D. Some other areas changed category (but normally renewals are honoured at the old category)

[ramblur]

South stand went up by £55 per adult for early renewals (lower tier) and the upper tier went up by more as it changed from Cat E to Cat D. Some other areas changed category (but normally renewals are honoured at the old category)

​Do you know what happened to walk up prices,dav? With increased gates,any increases here would be significant in total.Trouble is,we never know what impact concessions have,so it's impossible to even guess.

I had to smile when SR said gates had gone up from 20k to 30k because of the changes.Bit of top and tailing going on there (or should I say,just tailing).We didn't average 30k,neither did we average 20k for League games.Nigel's last gates were 21.188 Blackburn, 21465 Reading ,23,437 Leicester,  23514 Burnley. 

[davenportram]

​Do you know what happened to walk up prices,dav? With increased gates,any increases here would be significant in total.Trouble is,we never know what impact concessions have,so it's impossible to even guess.

I had to smile when SR said gates had gone up from 20k to 30k because of the changes.Bit of top and tailing going on there (or should I say,just tailing).We didn't average 30k,neither did we average 20k for League games.Nigel's last gates were 21.188 Blackburn, 21465 Reading ,23,437 Leicester,  23514 Burnley. 

I think average comparing the seasons was 24,000 to 29,000 so a 20% ish increase. Not insignificant however I think we had 17,000 ST holders in 13-14 and 14-15 had 22,000 so the number of walkups didn't increase massively.

[ramblur]

I think average comparing the seasons was 24,000 to 29,000 so a 20% ish increase. Not insignificant however I think we had 17,000 ST holders in 13-14 and 14-15 had 22,000 so the number of walkups didn't increase massively.

​So if I'm reading things properly,we have 7000 walk ups x any price increases +5000 more S/Ts ,with possible price rises ,and maybe some rises for the pre existing 17,000 S/T holders -looks to be over £1m to me,even after stripping VAT.

[davenportram]

​So if I'm reading things properly,we have 7000 walk ups x any price increases +5000 more S/Ts ,with possible price rises ,and maybe some rises for the pre existing 17,000 S/T holders -looks to be over £1m to me,even after stripping VAT.

id say so. Then we had a new shirt sponsor which would have increased a bit on Buy mobiles, new deals naming parts of the ground too. Toyota renewed their deal - maybe at an increase. Could interest payments be lower too?

[ramblur]

I'd better explain this interest situation.Although interest on investor loans was never actually payed,it was charged to P/L over the years.The subsequent waiver of the £1m+ accumulated interest charges meant that these earlier charges to P/L had to be reversed (in total).Now normally the interest charge for the year (stadium +HP interest) would be c£500k,but because of this £1m+ credit in 13/14 ,the net effect on interest would have been a c£500k credit,i.e. reducing the loss.

Now because this waiver can't be repeated in 14/15,we already have a £500k negative impact on interest (thus increasing loss v 13/14) ,but it doesn't end there as the interest charge for 14/15 has to be introduced.Now I can't say that this will be £500k as before,because there may have been a change in the stadium loan,hopefully reducing interest.

What we can say however is that the adverse swing v 13/14 will be £500k + whatever interest 14/15 brings (if no change in 14/15 interest v 13/14, then the adverse swing in 14/15 would be c£1m (thus matching the positive swing in 13/14.)

To put it another way,if interest hadn't been waived,then our 13/14 headline loss would have been £8m,as opposed to £7m. 

[G STAR RAM]

Not seen any mention of the ground naming rights yet, anyone know how this is being reflected in the accounts?

Is it £7m split equally across 10 years?

[ramblur]

Not seen any mention of the ground naming rights yet, anyone know how this is being reflected in the accounts?

Is it £7m split equally across 10 years?

​All you can say on that is that sponsorship and advertising income rose by £813k in 13/14,so there was at least scope to include £700k within this figure.A further complication is that the deal wasn't concluded until Nov 2013,so 13/14 might not include a full year's income.

[Diag Ram]

Not sure how much extra revenue the Just Eat shirt sponsorship deal generated either compared to Buymobiles. Hopefully this, combined with the season tickets, is all good news. Agree that amortisation may be under-cooked though, unless we can apply for some kind of waiver re: Thorne, as he didn't play this season (impairment of players, due to serious injury or relegation, is usually allowed by the League as far as I can see).

[ramblur]

The bad news on that one is that the original regs only talked of exemptions in respect of career ending injuries.

[Spanish]

The bad news on that one is that the original regs only talked of exemptions in respect of career ending injuries.

​haven't Fulham and some others already use this extensively?

[ramblur]

​haven't Fulham and some others already use this extensively?

​I don't know about Fulham's case,but do they charge the whole of the transfer fee (+extras) to the year in which bought (as opposed to employing amortisation)? I think Swansea used to do this.If that's the case,I don't know what the League's stance would be - for FFP purposes it might mean that such clubs may have to rejig their published accounts and rework figures as though amortisation had been employed,to bring in line with the majority.

[Spanish]

just from reading....

'When most players are bought, their transfer fee is spread evenly over the course of their contract in a club’s accounts. So, the £50 million Chelsea paid for Fernando Torres in a five-year deal added £10 million per-season to their outgoings.

Fulham reversed this process, in an attempt to reduce their losses for this season and beyond. They would not comment on the reason for that, but it is understood that complying with FFP rules in the Championship was one motivation.

Fulham are unlikely to have been the only team to exploit this chasm. Cardiff City, relegated alongside them last season, reported £3.99 million and £6.58  million impairments in their two most recent sets of accounts.

Bolton Wanderers and Wolverhampton Wanderers’ respective 2012-13 financial figures also show impairments of £11.2 million and £12.5 million for what was the final season before FFP monitoring began.'

link http://www.telegraph.co.uk/sport/football/teams/queens-park-rangers/11587937/QPR-may-regret-failing-to-exploit-FFP-loophole.html

[ramblur]

Impairment usually arises where you feel the carrying value of an asset is overstated,and I wouldn't be at all surprised to see it feature in the accounts of relegated clubs  (without FFP conspiracy theories). If you cast your mind back to Clod,there you have a relatively expensive (for us) player,whose asset value would have borne 1 year's amortisation in 07/08,which,I presume, would have left a carrying value of £2m+. Because he would have been a high earner,and because probably nobody would have been willing to pay £2m (in fact I don't think anyone was prepared to pay 50p),there would have been a strong case for impairment.However,he was ditched during 08/09 and so,instead of impairment featuring,the loss in value would be represented in the global figure for profit/loss on sale of players' regs.

Therefore,in the cases you mention,it might simply be the case that there are players featuring that other clubs might not particularly want (either because of price and/or wages) and the parent company feels this situation wouldn't change.The difference here being that the players in question would still be on the clubs' books when such impairments were applied.

As the League point out,the clubs' auditors still have to ok such impairments.

In 13/14,our own accounts featured £581k for impairments.My guess (and only that) is that it related to Sammon.