Derby County Accounts 13/14

[Diag Ram]

So my understanding of that is, from 2016/17:

- In a season, can lose up to £15m, no equity injections or anything required.

- If lose over £15m, "regulation" will be applied.

- If lose over £39m over three seasons, then sanctions are applied, presumably fines/transfer embargos etc.

2014/15- £3m loss, up to £6m if equity injected

2015/16- £2m loss, up to £13m if equity injected

I presume that exceptional costs etc. will apply in all cases.

Ramblur- Am I right?

[Chris_D]

i think it's £15m total across all three seasons, but split any way, so 3x5, or 2x6+3 etc.  can go to max £39m but there will be regulation for doing so.

so you can average £13m each season, but will face further regulation for doing so - not including any going up to/coming down from prem.

[davenportram]

on the discounted costs is there any way of determining the cost of the academy? That's is discounted too. Perhaps clubs should be putting these costs in notes to the accounts. Complete transparency

[davenportram]

and isn't cat 1 a minimum of £1.5m investment. (sure I read that in the requirements when we announced we were aiming to get it) so that's £1.5m at least you can discount.

[ramblur]

It doesn't reiterate exceptional costs (exemptions),so I've assumed they stay the same.You seem to have got it entirely right.By deduction,if you were allowed to lose £15m over 3 seasons (£5m/season) without further requirements,this implies an equity injection of £3m (£5m-£2m) needed if you lose (in FFP terms) £5m.

I'm wondering if our owners took a pragmatic approach this year.As you rightly say,if we fall foul of FFP we could still spend away this summer and take a Jan embargo on the chin (this could be risky-imagine if we'd faced a Jan embargo this year),in the knowledge that the £13m maximum FFP loss for 15/16 would soon have us back complying. Mind you a profitable sale could still pull us back into compliance,which may have been part of a contingency plan.Like you,I have no insider info,but as things stand I can't imagine compliance for 14/15.As well as the things you rightly mentioned,I'd be amazed if amortisation hasn't shot up this year (with only the likes of Coutts/Freeman leaving  -not much amortisation savings there).

[ramblur]

Dav,if you're right about youth development,the exemption is on net costs (ie net of any Prem League contributions).Whilst I said my guess was that we could post a headline loss of £8.5m this year and still comply,I also wouldn't be surprised if we could post £9m+ (though £10m would amaze me).Haven't a clue what our work in the community exemption might be.

[CornwallRam]

I seem to remember £1.5m figure being from when we were Cat 2 - I think I read that Cat 1 requires £2.5m

 

Don't forget they've done a lot of work at Moor Farm this season - I'm led to believe that this was well over £1m. I believe that this counts as capital expenditure and is also exempt from the FFP calculation. I would guess that £10m is quite possible for the season just gone.

[ramblur]

To be fair to CornwallRam,he posted up the possibility of (possibly pragmatic) non compliance this year,with the chance that the Jan embargo might be lifted.The only 2 problems I had with this were :-

1) As the results are based on audited accounts,I couldn't see the League accepting  forecasts half way through the year as a basis for lifting an embargo.

2) We were at the forefront of championing FFP originally,so it might be a tad awkward to fall foul of it ourselves.However,I do seem to remember SR saying that they would be monitoring the way FFP was going and might change tack accordingly.  

[ramblur]

CornwallRam,if your £2.5m figure is correct,then I could see a headline loss of £10m being ok (though I suspect it may be greater than this).It's only the depreciation on the capital costs that are exempt,not the total costs. (and there's also the small point that this depreciation cost adversely affects the headline loss in the first place.The Lord giveth,and the Lord taketh away.)

[ramblur]

If any of you are wondering why I'm still posting on financial stuff,I'll clarify my position.I won't be reporting on future accounts,nor will I be researching and posting up on documents appearing at CH ,as these are just too much for me now.However,I've a mass of information stored in my head and links bookmarked,so I might still chip in from time to time,depending on how I feel.However,if somebody picks up the baton I'll be taking very much a back seat,as I wouldn't want anyone to imagine me hovering in the background and waiting to pounce.

[CornwallRam]

Finally found some info on the budget.

Category 1
• The top level category will require clubs to have an approximate budget of £2.325m
• Have a full Bme staff of at least 18
• Provide at least 5 hours contact time with players each week
• The current 90 minute travel rule will not apply

http://clients.squareeye.net/uploads/sd/The_Elite_Player_Performance_Plan.pdf

Also it seems that we spent £1.6m upgrading and received £800k as a grant from the Premier League

http://www.premierleague.com/en-gb/news/news/2014-15/mar/030315-best-young-players-sold-on-joining-derby-talent-hothouse.html 

 

[ramblur]

I suppose the big question is whether this grant relates purely to the upgrade,or whether it includes an element of grant that clubs get anyway towards the running of academies.

[Diag Ram]

Chris_D is right, the £15m is over the three year period.

Does anyone know if the development costs can be added back from the loss if it is actual capital expenditure? Techically, as capital expenditure, it will never hit the loss in the first place, it goes onto the balance sheet and is charged as a cost gradually over the life of the work.

I'm happy to take up the mantle of reporting on accounts etc. As it's my day job too, I hope that I can continue the good work Ramblur has done over the years informing everyone of the financial situation at the club! If there's enough interest, I might run a couple of other clubs' results too, as it shows how well the club is being run, and how committed the board is.

[ramblur]

All I can remember of the exemptions on capital expenditure (from the original rules) was a reference to the fact that depreciation on tangible fixed assets could be exempt,but it didn't specify which (didn't even mention land and buildings from what I remember).All it did was give an example of allowable exemption in respect of stadium depreciation.From this,the only concrete thing I was ever able to say was that our headline loss could be at least nearly £1.5m more than the FFP allowance,anything else being pure guesswork.

I'd be fairly confident that the depreciation relating to any additional capital expenditure on the training ground would be exempt.However,I wouldn't want to give fans the impression that there'd be some kind of FFP gain because of the Academy upgrade.All I can see happening is that any non capital expenditure (e.g. wages of extra coaches) will be charged to P/L direct,and then exempted as part of net youth development costs for FFP purposes (thus no real change).Similarly,depreciation on capital improvements (e.g. new pitch) would be charged to P/L via the 'paper charge' of depreciation,and then exempted from FFP -again no net change.

Whilst I might upgrade my estimate of the headline loss we might be able to make to comply with FFP,by the same token the loss itself would also increase because of the additional expenditure on the training complex.

Anyway,a big thanks to DiagRam for taking over from me.I wish you well and am confident you'll do a fine job.It's a massive relief for me.

[ramblur]

on the discounted costs is there any way of determining the cost of the academy? That's is discounted too. Perhaps clubs should be putting these costs in notes to the accounts. Complete transparency

​To be fair,accounts aren't published for the benefit of supporters,it's just a (probably irritating for the companies concerned) requirement that limited liability status brings.From what I've seen, our accounts divulge as much as most football clubs,and more than many.For instance,they could if they wanted to opt not to include a cash flow statement in the DCFC accounts,because of an available exemption.Having said that,however,if they'd scrapped this statement fans may have been a bit suspicious,seeing as previous owners had always included it. 

[ramblur]

Just noticed that the opening post of this thread contains the following line (written after a paragraph talking about the challenges FFP presented) :-

"Both the current and future forecasted financial results put the Club in a position to meet the assessment criteria".

Now the post itself didn't have this in quotation marks,which means it can't be attributed to anyone from within the club (though that's where it surely must have come from). Of course this came after the January window was done and dusted,with the only real imponderable being whether we would appear in the play offs or gain automatic promotion (or neither). 

[davenportram]

Just noticed that the opening post of this thread contains the following line (written after a paragraph talking about the challenges FFP presented) :-

"Both the current and future forecasted financial results put the Club in a position to meet the assessment criteria".

Now the post itself didn't have this in quotation marks,which means it can't be attributed to anyone from within the club (though that's where it surely must have come from). Of course this came after the January window was done and dusted,with the only real imponderable being whether we would appear in the play offs or gain automatic promotion (or neither). 

the opening post is a direct copy and paste of the article in the official site, so it is a club statement.

[Diag Ram]

That statement was made when we thought we'd be in play offs minimum. I think the board thought that too. I reckon they'll go for broke next season, looking to win promotion and take a fine if necessary.

there are new accounting standards coming in next year which removes some of the current exemptions, including the cash flow one. Although even if DCFC didn't put a cash flow in, GD would have to anyway even under the current regime. 

[ramblur]

I'd agree that they'd have anticipated play offs at least,but losing in the play off semis nets you very little (due to pooling of gate receipts,allied to a share going to the League),so they must surely have had a minimum expectation of promotion or losing play off finalists, if this income were to pull us back in line with FFP. I find it surprising that an amount less than £2.5m (going on the previous year) might do this.

On the cash flow issue,I should perhaps have pointed out that because the senior holding company produced a consolidated cash flow statement (and always has done),they needn't have produced one for DCFC ( the exemption has been exercised in respect of Gellaw 101).

Thanks to Dav for clarification on OP.I must admit I didn't pay much attention to the link,and for some reason thought it to be a DET report,with quotes from Rush.

[ramblur]

Tried to edit my last post to add the following,but there seems to be a glitch (big white band covering last part of post to be edited).

DiagRam,you must be expecting a bumper summer spree if you think we might breach FFP of £13m?