duncanjwitham

I think the big thing for me is, the club clearly knew they were doing something a bit unusual. So if I was them, I'd be documenting the hell out of it.  There would be spreadsheets for every player with the values we'd plugged in to get the final figures, with printed and dated copies, the rationale for any oddities (player X is valued at £Ym on transfermarkt but we think he's worth £Zm because...) and so on.  If the club can't produce that, then they've either been sloppy with their record-keeping (bad), they never had a process and made up figures to fit what we needed for the accounts (very bad), or they never did this process at all and invented it post hoc to cover their backsides (very, very bad).  Obviously I hope it's just sloppy record-keeping, but it's an open goal for social-media speculation.

I think the big thing for me is, the club clearly knew they were doing something a bit unusual. So if I was them, I'd be documenting the hell out of it.  There would be spreadsheets for every player with the values we'd plugged in to get the final figures, with printed and dated copies, the rationale for any oddities (player X is valued at £Ym on transfermarkt but we think he's worth £Zm because...) and so on.  If the club can't produce that, then they've either been sloppy with their record-keeping (bad), they never had a process and made up figures to fit what we needed for the accounts (very bad), or they never did this process at all and invented it post hoc to cover their backsides (very, very bad).  Obviously I hope it's just sloppy record-keeping, but it's an open goal for social-media speculation.

It's purely for accounting purposes, it's not saying we use websites to decide on fees for buying or selling players or anything.  The reason to use a website is to have a 3rd party opinion factored into the valuations, so it's not just a matter of the club plucking values out of the air to suit our own needs.  We had to demonstrate that our method is reliable and systematic, and cross-checking against a website is a reasonable idea IMO.  It's sort of the same principle as getting a 3rd party valuer in to value the stadium etc.  The bigger worry is that we didn't appear to document any of this process, not that the process involved a website.

This was the previous panel.  The EFL put up Professor Pope who apparently knows nothing about day-to-day accounting. We put up nobody.  The only thing the appeals panel could do was basically say if the previous panel had made a technical mistake (i.e. got the law  or procedure wrong).  They decided that the previous panel hade made a mistake in ignoring Professor Pope because he was the only expert in the room and so accepted his word as gospel.  It basically came down to a matter of accounting expertise and we had no experts to argue our corner at all.  The only explanations I can think of are we either didn't understand the rules of the game we were playing, we couldn't be bothered to do it properly, or we tried to cheap out and get by without an expert. And I don't know which of those is worst.

It's clear why they don't have those powers though. The point is that the original panel had a qualified accountant on it and actually sat with the experts and witnesses and talked through the case in great detail. The appeal panel had none of that, so they're just constrained to ruling on technical matters of law and procedure etc.  It's deliberately designed to work that way.

It's purely for accounting purposes, it's not saying we use websites to decide on fees for buying or selling players or anything.  The reason to use a website is to have a 3rd party opinion factored into the valuations, so it's not just a matter of the club plucking values out of the air to suit our own needs.  We had to demonstrate that our method is reliable and systematic, and cross-checking against a website is a reasonable idea IMO.  It's sort of the same principle as getting a 3rd party valuer in to value the stadium etc.  The bigger worry is that we didn't appear to document any of this process, not that the process involved a website.

It's purely for accounting purposes, it's not saying we use websites to decide on fees for buying or selling players or anything.  The reason to use a website is to have a 3rd party opinion factored into the valuations, so it's not just a matter of the club plucking values out of the air to suit our own needs.  We had to demonstrate that our method is reliable and systematic, and cross-checking against a website is a reasonable idea IMO.  It's sort of the same principle as getting a 3rd party valuer in to value the stadium etc.  The bigger worry is that we didn't appear to document any of this process, not that the process involved a website.

The offer was to adjourn just for the second charge. We could have got the stadium one sorted and dealt with the second one when we were ready.  There are no excuses for it
(For clarity, I still think the decision is wrong we should not be charged or punished for it. But it's seemingly mostly down to us screwing up that we didn't win, which is incredibly frustrating.)

However, from the original IDC report, by Pope’s own admission, it does appear some clubs are using methods other than straight-line amortisation, so there must be other methods that are seen as permissible?

They seem to be implying that because no one else has ‘ever’ done it, or thought to do it, then we shouldn’t either. One of the problems with that is that numerous accountants have thought it was an ok method to use, one academic didn’t, and they, a trio of lawyers, decided to go with the academics view, rather than that of the actual accountants.
Also, surely everything anyone ever does had a starting point somewhere, someone had to be the first to do it, otherwise things would never have happened and things will never evolve any further if everyone takes that stance.

Point 74 doesn’t make any sense, does it? It states many times in FRS 102 that consumption of future economic benefits includes both its use and its disposal, this isn’t ‘an appeal to common sense’ it is written plainly in black and white, how else are you supposed to take it?
Point 75, again I’m confused and feel like I must be missing something, surely it’s more that he couldn’t have done otherwise because there was evidence of other clubs financial statements apparently using different methods? Isn’t this because the wording of 18.22 makes it permissible? Why would you want him to be able to have done otherwise if it wasn’t right?

It's kind of both. From a purely accounting point of view, our ERV method probably does better reflect the way we intend on using players (buying them, developing them, selling them on for profit).  But it does have the effect - particularly for players on long (4+ year) contracts - of deferring the amortisation of players beyond a 3-year FFP window.  It was up to the tribunal to decide if we were genuine in our reasons or were deliberately trying to evade the rules, and they seemed to settle more on the first.

I'd love to know if any other clubs are using future economic benefits from disposal for anything at all (I mean literally anything, not just players), because if they're expressly banned by the EFL's head-canon version of FRS102, then they're all due a big punishment too.

Their argument is that you can't guarantee that you can sell a player, because another club might not want to buy, or the player might not want to leave, so you can't assume he has any value at all.  But that literally rules out future economic benefits from disposal for anything at all ever, so I don't understand how it makes any sense.

The document basically says if the appeals panel determined a sanction it would be final, no appeals either way, but if they passed it back to the original tribunal it could be appealed.  Passing it back to the tribunal would require consent of both parties.  The document then progresses as through they will be making the sanction themselves (hence no appeals), but the statements yesterday mentioned referring back. I'd assume that both parties have agreed to go back to the original tribunal (hence we can appeal), but it's not totally clear.

Their argument is that you can't guarantee that you can sell a player, because another club might not want to buy, or the player might not want to leave, so you can't assume he has any value at all.  But that literally rules out future economic benefits from disposal for anything at all ever, so I don't understand how it makes any sense.

That's something that struck me as odd.  The rules are very clear that the original tribunal had to contain an accountant for matters like this.  But the appeals panel have basically ignored that expertise and decided the only expert present was the EFL's witness so they have to take his opinion as fact.  So why even have an accountant on the panel in the first place?

From page 42 of the document. I could be misunderstanding, but are they really saying that if you buy a house you have no expectation of being able to sell it at all?  And after 40 years a house is effectively worthless? And then saying players are basically the same? Because that's an insane position to take.

From page 42 of the document. I could be misunderstanding, but are they really saying that if you buy a house you have no expectation of being able to sell it at all?  And after 40 years a house is effectively worthless? And then saying players are basically the same? Because that's an insane position to take.

From page 42 of the document. I could be misunderstanding, but are they really saying that if you buy a house you have no expectation of being able to sell it at all?  And after 40 years a house is effectively worthless? And then saying players are basically the same? Because that's an insane position to take.

An undisclosed amount of dough.

Yep, and even if you discard the merits of each party's argument/interpretation, it's a bit pathetic that it's come to this really.
Derby could potentially be punished based on the fact that we interpreted a standard one way, and the witness the EFL found interpreted it another.
How does any of this help English Football? Why does the EFL find it necessary to appeal against the initial decision? Quite simply the EFL isn't fit for purpose. 

This is where you’ve gone wrong. You’ve bought accounting standards to a mudslinging contest.

This is where you’ve gone wrong. You’ve bought accounting standards to a mudslinging contest.

Basically, all we did is instead of doing an equal share each year (e.g. 25% per year on a 4 year contract), we split it differently depending on how likely we were to be able to sell the player. So someone like Vydra, we might have done something like 5%, 5%, 5%, 85%.  On the grounds that a player doesn’t plummet in value like that in real terms. Which was backed up when we sold him for a profit 2 years into that contract.  Other players we would have split differently - Huddlestone was probably done in equal shares per year since we had no chance of getting money for him.  Obviously some didn’t work as planned, and we would have taken a big hit in the final year when we let them leave on a free instead of selling them.

I understood it to be the opposite.  We assess the ERV of every player every 6 months, up until the point we decide they have no resale value, they then amortize down to zero in a straight-line over the rest of their contract.  So for some players, that would be from day 1 because we never intend selling them (Curtis Davies and Huddlestone, for example), others it would be when they hit a certain age (Waghorn maybe) or when they got injured (George Thorne's second injury maybe).  When a player hits the final year of their contract, they will be added to the no-resale-value list if they aren't on it already, because they can leave on a free.
 
If one was being facetious, you could easily read that as the EFL saying "you keep saying you intend on selling players, but then sign a bunch of 30 year olds, play them out of position, sack the manager that signed them and then pay them to go away"...

Basically, all we did is instead of doing an equal share each year (e.g. 25% per year on a 4 year contract), we split it differently depending on how likely we were to be able to sell the player. So someone like Vydra, we might have done something like 5%, 5%, 5%, 85%.  On the grounds that a player doesn’t plummet in value like that in real terms. Which was backed up when we sold him for a profit 2 years into that contract.  Other players we would have split differently - Huddlestone was probably done in equal shares per year since we had no chance of getting money for him.  Obviously some didn’t work as planned, and we would have taken a big hit in the final year when we let them leave on a free instead of selling them.