duncanjwitham

The thing is though, an expert witness doesn't even really have to comment on our specific position.  They just had to say it's fine to use ERVs for intangible assets without a guaranteed purchaser, maybe state the type of situations where it's acceptable or unacceptable to use them etc. The DC can then make their own determination as to whether we meet those criteria or not. 

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.

I don't think it would have made any difference at all.  The first step was proving that we were even allowed to do what we were doing - having failed to do that, whether we were doing it well or not is irrelevant.  If we'd found a random accountant to stand up in the DC and say that what we were doing is perfectly normal, then that would have probably been enough.  The "error in law" was ignoring the expert in the room - if we'd had competing experts and the DC had found ours more credible, then there would have been no error. The DC were already convinced what we were doing was okay, so getting an expert witness to agree to it should have been a rubber-stamping exercise.
Beyond that, the DC were satisfied our methods for calculating ERVs were OK (despite the shoddy record-keeping etc), and the LAP found no grounds to overrule that.  So keeping better records would have made no difference.  The screwup the club is responsible for is not getting our own expert witness.  That's what ultimately cost us.
Obviously that doesn't excuse the poor record-keeping, it's quite frankly pathetic and embarrassing for the club to be admitting that in a legal proceeding

That's not the core of it though, is it?  The LAP found that we couldn't use ERVs at all.  They were disparaging about our methods for doing the calculations, but choose not uphold any of the appeals on that issue because the original DC made no mistakes (didn't "err in law" or whatever it was). The only thing they upheld (beyond the issue from the DC about not being clear in the accounts) was that the DC ignored the professors testimony, which was specifically on the use of ERVs at all. The EFL's argument was basically that you cannot use ERVs unless you have a guaranteed purchase (which players will never have) and that's what the LAP ruled was correct.  So it wouldn't matter if we had a perfect, 100% reliable method for calculating them, because we cannot *guarantee* that we can sell a player for that ERV, we cannot expect to gain any economic benefit from it.

That's not the core of it though, is it?  The LAP found that we couldn't use ERVs at all.  They were disparaging about our methods for doing the calculations, but choose not uphold any of the appeals on that issue because the original DC made no mistakes (didn't "err in law" or whatever it was). The only thing they upheld (beyond the issue from the DC about not being clear in the accounts) was that the DC ignored the professors testimony, which was specifically on the use of ERVs at all. The EFL's argument was basically that you cannot use ERVs unless you have a guaranteed purchase (which players will never have) and that's what the LAP ruled was correct.  So it wouldn't matter if we had a perfect, 100% reliable method for calculating them, because we cannot *guarantee* that we can sell a player for that ERV, we cannot expect to gain any economic benefit from it.

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

Are we 100% exactly what we are under the embargo for? The non-release of accounts for the last 2 years is definitely one reason, so could it not be the case that we now file those (with straight-line amortisation, now we know that's required) and the embargo is lifted? Then we just sit on the resubmissions until the last minute. As far as I know, any embargoes related to the charges were dropped when we were cleared at first, and there's been no suggestions that they have been reapplied since.

There are, but they are "debts" not "DEBTS?". As far as we know (big proviso here, I know) they're basically loans, presumably with fixed payment schedules that we are (hopefully!) comfortable with.  It's not like we have creditors banging at our door for the cash. It's sort of the same as the difference between having a £50k mortgage on your house and having a £50k gambling debt on your credit cards.

There are, but they are "debts" not "DEBTS?". As far as we know (big proviso here, I know) they're basically loans, presumably with fixed payment schedules that we are (hopefully!) comfortable with.  It's not like we have creditors banging at our door for the cash. It's sort of the same as the difference between having a £50k mortgage on your house and having a £50k gambling debt on your credit cards.

That's my take on it. However, there is plenty of other stuff to blame Morris and co for: Not documenting their new policy properly, in the accounts or by keeping our own records of how we calculated the valuations.  Not appointing our own expert to the disciplinary panel.  And that's before you get to the massive overspending on stupid signings, hire 'em fire 'em approach to managers and so on.

Page 30 (on the document, page 31 in the PDF) onwards in here: 
https://www.efl.com/siteassets/image/202021/general-news-images/efl-v-Derby-county--decision.pdf
"‘This was more about [the EFL] wanting an understanding of the process, as they accept that there is nothing they can question on it as it is an acceptable accounting policy under accounting standards. We discussed this with them and they are now comfortable with the treatment’" etc
 

The EFL can argue all they want that they didn’t understand the application of the method, but they certainly understood the implications of it. That email (to himself) is a plain as day, they knew that there was the potential for being a large charge in the last year of the contract.

I'm sure our official explanation is that we switched to this method because we thought it was genuinely a better model for how we consume player assets. 
If you want the tinfoil-hat-on version, then maybe we started out doing this in 2015/16(?) because we thought it would be enough to cover us for any potential losses, but when it turned out not to be enough, we sold the stadium to make up the shortfall.  Now the stadium sale is ratified and included, it's enough on it's own to cover the losses without the amortization change.

I'm sure our official explanation is that we switched to this method because we thought it was genuinely a better model for how we consume player assets. 
If you want the tinfoil-hat-on version, then maybe we started out doing this in 2015/16(?) because we thought it would be enough to cover us for any potential losses, but when it turned out not to be enough, we sold the stadium to make up the shortfall.  Now the stadium sale is ratified and included, it's enough on it's own to cover the losses without the amortization change.

Not to mention, it's pretty damning on the clarity of the FFP rules that an apparent "football finances expert" has no clue how £12m worth of transactions should be handled properly.

That's my take on it. However, there is plenty of other stuff to blame Morris and co for: Not documenting their new policy properly, in the accounts or by keeping our own records of how we calculated the valuations.  Not appointing our own expert to the disciplinary panel.  And that's before you get to the massive overspending on stupid signings, hire 'em fire 'em approach to managers and so on.

That's my take on it. However, there is plenty of other stuff to blame Morris and co for: Not documenting their new policy properly, in the accounts or by keeping our own records of how we calculated the valuations.  Not appointing our own expert to the disciplinary panel.  And that's before you get to the massive overspending on stupid signings, hire 'em fire 'em approach to managers and so on.

"Tight" is kind of okay though.  It's not pass/fail, it's a sliding scale of points deductions depending on how much you overspend.  If we only overspend by a few million, it's a relatively small deduction (1 point per £1m overspend) - not ideal, but not instant relegation material.

That's my take on it. However, there is plenty of other stuff to blame Morris and co for: Not documenting their new policy properly, in the accounts or by keeping our own records of how we calculated the valuations.  Not appointing our own expert to the disciplinary panel.  And that's before you get to the massive overspending on stupid signings, hire 'em fire 'em approach to managers and so on.