duncanjwitham

And they spent more on players the season we signed Waghorn anyway, I think.

IIRC Gibson’s argument was that we had used our extra financial headroom to outbid them on buying Waghorn. And apparently having Waghorn, for reasons that science can not yet explain, gave us an advantage ?‍♂️.

IIRC Gibson’s argument was that we had used our extra financial headroom to outbid them on buying Waghorn. And apparently having Waghorn, for reasons that science can not yet explain, gave us an advantage ?‍♂️.

IIRC Gibson’s argument was that we had used our extra financial headroom to outbid them on buying Waghorn. And apparently having Waghorn, for reasons that science can not yet explain, gave us an advantage ?‍♂️.

IIRC Gibson’s argument was that we had used our extra financial headroom to outbid them on buying Waghorn. And apparently having Waghorn, for reasons that science can not yet explain, gave us an advantage ?‍♂️.

This thread...

Agree - what I struggle with is all these comments saying I'd accept x points over 9-12......but for what?  Surely if we'd breached a clear rule then why all the delays?  If it were that clear the EFL would already have hit us with something.  The fact we haven't makes me think the EFL have very little over us that can legally justify a large points deduction, or any for that matter. The amount of points is moot to a degree if DCFC feel that strongly that no crime has been committed.  The EFL have been made to look complete numpties as a result of us being found not guilty, aside from, shock horror, poor communication about our accounts. Because we've made them look silly they are trying everything they can (in my opinion) to make us suffer until they feel they have retribution.  Smacks of spoilt child. 
If they do sanction us with a justifiable points deduction, that is clearly backed by evidence of a breach of the rules, then we ought to have no choice but to accept it.  Right now, as painful as it is, I can understand why there is a delay as I suspect there is no clear breach and DCFC are rightly fighting it tooth and nail. 

I've never actually looked at the Sheffield Wednesday written reasons for the appeal points reduction, so just had a skim through.  The main reason their points deduction was reduced was because their stadium sale, while not occurring in the right year, was actually pretty close to it (a couple of weeks after their accounting period closed).  And they'd informed the EFL of their intention to sell long before that.  So their LAP basically took that as mitigating circumstances - they were actively trying to do something that would've meant they were within the allowed limits, and so they should get some credit, even though they never quite made it in time.
How that would translate to a potential appeal/agreed-decision from us is interesting, because we never actually took the corrective action that Sheffield Wednesday took. But we had no reason to think we actually had to, because as far as we were concerned we'd met the limits (allowing for the stadium sale etc).  So I honestly don't know if there's any direct parallels or precedents set between the 2 cases.  I certainly don't think you can just say something like they got theirs halved, so ours should be too.

I'm not sure the club has ever asserted that. In public anyway.  The clubs stated position was always that the ERV method was a better fit for how we intended to use the transfer market (buying players, developing them and selling them on) than a straight-line method.  And under FRS102, that's fine - you are supposed to use the model that best suits your particular use-case (providing it's legal, of course).
The "gained no advantage" line comes from DC2, but it should be made clear that specifically applies to the amortization method alone, not any indirect results of it.  The amortization policy itself didn't give us more leeway in the transfer market, that's why we basically got a slap-on-the-wrist fine for it.  The net result of that policy might have been in some years we gained more leeway, at the expense of having less leeway in future years.  The position in DC2 was that if that is the case, and that extra leeway allowed us to overspend, it should be dealt with as a separate issue, because it's not the amortisation policy that's wrong, it's the overspend.

I'm not sure the club has ever asserted that. In public anyway.  The clubs stated position was always that the ERV method was a better fit for how we intended to use the transfer market (buying players, developing them and selling them on) than a straight-line method.  And under FRS102, that's fine - you are supposed to use the model that best suits your particular use-case (providing it's legal, of course).
The "gained no advantage" line comes from DC2, but it should be made clear that specifically applies to the amortization method alone, not any indirect results of it.  The amortization policy itself didn't give us more leeway in the transfer market, that's why we basically got a slap-on-the-wrist fine for it.  The net result of that policy might have been in some years we gained more leeway, at the expense of having less leeway in future years.  The position in DC2 was that if that is the case, and that extra leeway allowed us to overspend, it should be dealt with as a separate issue, because it's not the amortisation policy that's wrong, it's the overspend.

I'm not sure the club has ever asserted that. In public anyway.  The clubs stated position was always that the ERV method was a better fit for how we intended to use the transfer market (buying players, developing them and selling them on) than a straight-line method.  And under FRS102, that's fine - you are supposed to use the model that best suits your particular use-case (providing it's legal, of course).
The "gained no advantage" line comes from DC2, but it should be made clear that specifically applies to the amortization method alone, not any indirect results of it.  The amortization policy itself didn't give us more leeway in the transfer market, that's why we basically got a slap-on-the-wrist fine for it.  The net result of that policy might have been in some years we gained more leeway, at the expense of having less leeway in future years.  The position in DC2 was that if that is the case, and that extra leeway allowed us to overspend, it should be dealt with as a separate issue, because it's not the amortisation policy that's wrong, it's the overspend.

We're really not talking about "loopholes" are we though? Certainly not in the sense of finding some gap in the law that the authorities didn't intend to be there.  The EFL rules say we have to comply with FRS102. Our accountants (and seemingly every other accountant that's looked at it properly) think we do comply.  We just happen to do things a little bit differently because (shocker, I know! ?) companies choose to organise their accounts in a way that suits the way they want to do business.  You can't have flexibility in the rules and then have a toddler-tantrum when not everyone produces exactly the same thing.  And let's be clear - that flexibility is there by design, because those rules cover a multitude of different business-types that do different things in different ways, so you'll never get a single uniform set of rules from something like FRS102.  So we're again back at the same thing I keep saying - if the EFL want accounts produced in a very strict and controlled way, they need to write the rules for it and publish them.  You can't have the situation where the EFL are enforcing rules that aren't written down.

I'm not sure the club has ever asserted that. In public anyway.  The clubs stated position was always that the ERV method was a better fit for how we intended to use the transfer market (buying players, developing them and selling them on) than a straight-line method.  And under FRS102, that's fine - you are supposed to use the model that best suits your particular use-case (providing it's legal, of course).
The "gained no advantage" line comes from DC2, but it should be made clear that specifically applies to the amortization method alone, not any indirect results of it.  The amortization policy itself didn't give us more leeway in the transfer market, that's why we basically got a slap-on-the-wrist fine for it.  The net result of that policy might have been in some years we gained more leeway, at the expense of having less leeway in future years.  The position in DC2 was that if that is the case, and that extra leeway allowed us to overspend, it should be dealt with as a separate issue, because it's not the amortisation policy that's wrong, it's the overspend.

I'm not sure the club has ever asserted that. In public anyway.  The clubs stated position was always that the ERV method was a better fit for how we intended to use the transfer market (buying players, developing them and selling them on) than a straight-line method.  And under FRS102, that's fine - you are supposed to use the model that best suits your particular use-case (providing it's legal, of course).
The "gained no advantage" line comes from DC2, but it should be made clear that specifically applies to the amortization method alone, not any indirect results of it.  The amortization policy itself didn't give us more leeway in the transfer market, that's why we basically got a slap-on-the-wrist fine for it.  The net result of that policy might have been in some years we gained more leeway, at the expense of having less leeway in future years.  The position in DC2 was that if that is the case, and that extra leeway allowed us to overspend, it should be dealt with as a separate issue, because it's not the amortisation policy that's wrong, it's the overspend.

Exactly. And the DC found that our method was both systematic and reliable. The EFL appealed over those too, and the LAP found no reason to overturn them.  So as far as the EFL's disciplinary process goes, we have a reliable way to determine the way we expect use those economic benefits.  We're just not allowed to use it because... erm... ?‍♂️

Getting bigger sponsorship deals than our competitors give us a competitive advantage.
Getting bigger crowds than our competitors give us a competitive advantage. 
Having a better academy than our competitors should give us a competitive advantage.
Should the EFL charge us for any of the above?

Time to quote my favourite Professor Pope bit from the DC1 written reasons again...

Although this runs it a close second...

they have very much said that they only want to review the charges not the result of any proven charges, hence the demand to restate.  I presume that don't want to get into they matter of what is compliant if they don't have to.  We will see but I suspect that this will not end up back with DC.  

Time to quote my favourite Professor Pope bit from the DC1 written reasons again...

Although this runs it a close second...

To me, DC2 reads very much to me like they know the LAP are wrong, but they just can't do anything about it. 
I suppose it's telling that DC2 doesn't seem to specify how we restate the accounts, only that we have to (and they must be FRS102 compliant). You could argue that if they had decided that straight-line was the only acceptable way, they would have mandated it in the ruling.

I'm not actually sure of the exact process, but my take on it was basically they read the written reasons and pointed to the bits where they thought the DC had screwed up and that's pretty much it. It certainly wasn't a full hearing with witnesses, and definitely with no new evidence. I think the club and EFL may have made submissions too, but I'm not even sure if they were present for the hearing, or just submitted in writing.  The only thing they had to go on to judge Pope's credibility was what was documented at the time - in the written reasons, and I suppose possibly in other notes etc (not sure on that bit).
And yeah, the lack of our own expert witness was mentioned both in DC1 and the LAP, IIRC.  Maybe hindsight's a wonderful thing, but it certainly seems like a massive mistake, of our own making, now.

This to me gets to the root of it.  The LAP document is entirely about Cost Model vs Revaluation Model, and saying we're using the Cost Model but sneaking in features of the Revaluation Model.  I don't believe (not an expert etc) that that's what we were doing at all.  We weren't 'revaluing' the assets in the sense that we had pride Park revalued before we sold it.  We were purely trying to estimate (as reliably and systematically as possible) what percentage of a players "economic benefits" we might derive from selling them on.  So none of the arguments about active markets and public prices apply, because we weren't 'revaluing' in that sense.  I think the DC, with their accountant on board understood this and waved it through.  The LAP with no experience in the field *at all* did not grasp this and that's why we are where we are. 
Again, not an expert etc.

Time to quote my favourite Professor Pope bit from the DC1 written reasons again...

Although this runs it a close second...

Well at least one of them was, by design. The rules say at least one of the DC members must be an accountant for matters like this.  
Although us not providing our own expert witness is ultimately the reason we lost IMO.  And it's a mistake entirely of our own making.
It's interesting - the LAP written reasons explicitly state that the evidence of our accountants and auditors can't be classed as "expert evidence" because they were called as factual witnesses, not experts. And because of that, it did not give the DC the chance to examine their qualifications and experience and decide whether they were worthy of taking into account. But the exact same applies to Pope - they did have chance to examine his qualifications and experience and found them lacking, so disregarded him.  The LAP didn't get to speak to Pope or cross-examine him, they are entirely going by documents arising from the first hearing.  So they've taken the quotes I posted earlier and basically decided the fact he was unaware of the rules he was being an expert on, didn't actually matter ?‍♂️.

We're really not talking about "loopholes" are we though? Certainly not in the sense of finding some gap in the law that the authorities didn't intend to be there.  The EFL rules say we have to comply with FRS102. Our accountants (and seemingly every other accountant that's looked at it properly) think we do comply.  We just happen to do things a little bit differently because (shocker, I know! ?) companies choose to organise their accounts in a way that suits the way they want to do business.  You can't have flexibility in the rules and then have a toddler-tantrum when not everyone produces exactly the same thing.  And let's be clear - that flexibility is there by design, because those rules cover a multitude of different business-types that do different things in different ways, so you'll never get a single uniform set of rules from something like FRS102.  So we're again back at the same thing I keep saying - if the EFL want accounts produced in a very strict and controlled way, they need to write the rules for it and publish them.  You can't have the situation where the EFL are enforcing rules that aren't written down.