£10m FFP Bill

[RamNut]

@Carnero

That seems a bit like wishful thinking.

the sevco accounts discriminate between the company and the group. The group figures cover derby county's trading.

The point is, the losses are enornmous and probably show where the £3m loss per month figure originates from.

and if @ramblur Can confirm that a £36m loss became a £14.9m loss only because £21m was covered by mel and is recorded as a debt to the group, to be either written off or repaid by a future owner, then the real losses incurred are much higher and worrying.

Presumably next years accounts will show that the 16-17 £21.2m loss became a £7.9m loss with another £14m covered by mel and the debt to him further increases from £95m to £110m. I'm no accountant but i find these figures alarming. They suggest to me that we are far from sustainable. Comparing our accounts to aston villa it is apparent that the only way to cover these losses is with premier league tv money. Our income from tv was £7m (from memory). Villa received £48m presumably relating to the period before they got relegated. Thats why tv has ruined football. the finances throughout the championship do not work. The only way to cover losses is with the extra £40m of tv income.

 

 

 

 

 

 

[RamNut]

Its even worse when you think that that the £21m loss was also after receiving £7m in profits on players, and the £36m loss was after receiving £9m from player sales plus an extraordinary £9m in income from something else (undefined). 

My other conclusion was that championship clubs simply cannot afford to pay transfer fees, so any club which is spending (e.g. Rumours of forest, or villa or whoever ) is simply heading for a financial crash at some point if they don't go up.

[Carnero]

@RamNut it's not wishful thinking at all. The football club IS debt-free. I cannot explain this to you any clearer than in my previous comment, if you're not prepared to accept this then that's up to you.

You're failing to understand how company accounts work if you're trying to attribute SevCo 5112 debt to DCFC.

Yes DCFC makes significant losses. Fortunately these have been personally covered by MM via the parent company SevCo 5112.

DERBY COUNTY FOOTBALL CLUB IS DEBT-FREE (AS OF 30 JUNE 2017).

I'm out.

[Anag Ram]

I know it's a drop in the ocean but fans can  help the club by going along to watch.  

6,000 empty seats for the play-offs against Fulham was embarrassing. 

I'm a  little surprised that the club doesn't use the stadium more for other forms of entertainment.

[RamNut]

14 minutes ago, Carnero said:

@RamNut it's 

Yes DCFC makes significant losses. Fortunately these have been personally covered by MM via the parent company SevCo 5112.

Err.....isn't that exactly what i have said.

the issue i'm trying to highlight is that the annual trading position of derby county fc appears to be significantly worse than quoted losses of £7.9m and £14.9m suggest.

Furthermore there exists a recorded debt of @£95m to mel morris.

now.....i don't think this can carry on, and without significant additional  tv money or other income , ultimately we seem to be heading for the rocks. Its not healthy at all, which the derby county are debt free scenario would imply. We are racking up losses and debts every month. We certainly can't afford to be crowing about aston villas financial plight.

Drastic measures would seem to be required such as zero spend on players, halve the wage bills, and slash the academy spend?

 

 

[B4ev6is]

They do mate

A mate of mine is a boxer and had a match at pp recentley.

[Papahet]

Get the Chili Peppers back at PP. Packed out stadium. Club gets a share of the ££

Easy. Derby seriously lacks a entertainment venue, win win for everyone.

[Rev]

4 minutes ago, Papahet said:

Get the Chili Peppers back at PP. Packed out stadium. Club gets a share of the ££

Easy. Derby seriously lacks a entertainment venue, win win for everyone.

I assumed that was why we'd installed the world's loudest PA system.

[1967Ram]

46 minutes ago, Anag Ram said:

I know it's a drop in the ocean but fans can  help the club by going along to watch.  

6,000 empty seats for the play-offs against Fulham was embarrassing. 

I'm a  little surprised that the club doesn't use the stadium more for other forms of entertainment.

Was this due to fans being switched off/ sent to sleep by the Snake's brand of football? If so, hopefully we will see an increase in the gates under Lampard.

[Guest]

The financial cuts being made appear extremely severe. The academy players and parents were told this week that the club will no longer provide transport to away games and will not provide meals to the boys after matches. The parents are now expected to meet those needs. Considering that academy investment is discounted from FFP, it indicates that every last penny is under scrutiny.

[EnigmaRam]

7 minutes ago, Brailsford Ram said:

The financial cuts being made appear extremely severe. The academy players and parents were told this week that the club will no longer provide transport to away games and will not provide meals to the boys after matches. The parents are now expected to meet those needs. Considering that academy investment is discounted from FFP, it indicates that every last penny is under scrutiny.

Oh my god their own parents have to feed their own kids!! 

I’m only joking mate but that was always an extravagance that was unnecessary. They should be delighted to have the opportunity.

[eddie]

2 hours ago, 1967Ram said:

Was this due to fans being switched off/ sent to sleep by the Snake's brand of football? If so, hopefully we will see an increase in the gates under Lampard.

It was in our case, completely. We aim to rectify that next season - the Memsahib and I are buying season tickets next week.

[ramblur]

4 hours ago, RamNut said:

@Carnero

That seems a bit like wishful thinking.

the sevco accounts discriminate between the company and the group. The group figures cover derby county's trading.

The point is, the losses are enornmous and probably show where the £3m loss per month figure originates from.

and if @ramblur Can confirm that a £36m loss became a £14.9m loss only because £21m was covered by mel and is recorded as a debt to the group, to be either written off or repaid by a future owner, then the real losses incurred are much higher and worrying.

Presumably next years accounts will show that the 16-17 £21.2m loss became a £7.9m loss with another £14m covered by mel and the debt to him further increases from £95m to £110m. I'm no accountant but i find these figures alarming. They suggest to me that we are far from sustainable. Comparing our accounts to aston villa it is apparent that the only way to cover these losses is with premier league tv money. Our income from tv was £7m (from memory). Villa received £48m presumably relating to the period before they got relegated. Thats why tv has ruined football. the finances throughout the championship do not work. The only way to cover losses is with the extra £40m of tv income.

The £36m loss (15/16)was theconsolidated lossonly £14.9m of it (as part of the group) relates to the club. The £21m of goodwill that was written off was nothing to do with the club's profits/losses, and arose within another company in the group. To buy Derby County, you can't just buy their shares, as these are held by a holding company. Mel bought Derby by buying out the Global Derby shares held by previous owners, and paid more than the net book value that their interest represented, hence the introduction of the (balancing) figure of goodwill. It's good practice to write down goodwill against profits as quickly as possible, and you can't do it much quicker than immediately. If this is where The Mail got their £3m loss per month from, then it's risible, and shows a complete lack of accounting knowledge. Articles like this, and others, are a pure pest, because members seem to believe them.

I, like everyone else (bar visitors from other clubs) on here am a Rams fan, and you can rest assured that if I had any concerns I'd express them, which I've done. We need to bring down the normal income/expenditure loss by at least a net £5m from the position at 30/6/17 by next season, but I expect this to be (more than) achieved. My biggest concern is the possibility of losses on transfers next year- if certain players just allow their contracts to run down, imo we'd be hard pressed to do anything about this. I see it as one of Frank's biggest challenges.

I said some time ago that financial laypersons should stay well clear of the consolidated accounts, as they wouldn't have a hope of understanding what was going on, and you're a manifestation of this. I also said I wouldn't be answering questions on these, as I'd spend all week trying to field questions, but would answer anything on DCFC. These pesky articles, and the (false) concerns they've generated amongst fans has meant I've been dragged into it, and it hacks me off big time.

The consolidator, Sevco 5112 (and a company within its own right) shortened its year end in 16/17 to fall in line with the rest of the group, which has resulted in a 10 month accounting period (for that year only). This means that the consolidated accounts not only reflect 10 months of Sevco 5112 (a c£3.6m loss), but 10 months only of the DCFC results, and any other company within the group. The £24m of turnover you mentioned elsewhere only represents 10 months of DCFC turnover, which is why your figure is well short.

The £21m consolidated loss you mention would comprise the £3.6m Sevco loss, a small Global Derby loss ( probably admin expenses) and 10 months only of the DCFC loss. You might think that if DCFC made a full year loss, then that missing 2 months would just increase the full year consolidated loss, but this is where you ( and The Baron) have gone badly wrong, because you can't just add 1/5th to the DCFC figures across the board. The consolidated accounts are missing the summer window transfer profits, which makes a big difference and has obviously confused you. I calculate that the full year consolidated loss would be a combination of the £7.9m DCFC loss, a pretty insignificant Global Derby loss, and whatever the full year Sevco 5112 loss might have been, so it's probably somewhere near £12m in total for the full year. The only thing that should concern any fan is the £7.9m DCFC loss. Thankfully, Sevco will consolidate a full year next year.

If anyone wonders how I convert a £7.9m headline loss to a c£2m FFP loss, the answer's quite simple. In the 2 previous years, the Club released the FFP results, so it was simple to deduct these figures from the headline losses, to work out the FFP exemptions. In both cases the difference was well over £5m, and with the subsequent infrastructure spend, this could easily have risen to £6m in 16/17.

Mel owns shares in DCFC. If you owned shares in Tesco, the company wouldn't 'owe' you any money. You could only get your money back by dividends/sale of shares. You couldn't ask Tesco for £x, just as Mel can't simply take any cash out of the Club. This is the difference between equity and loan capital (within the Club). With the latter he could have taken money out of the Club to repay his loan, but as it's equity he can only get 'repayment' out of Sevco 5112, as @Carnero pointed out.

 

 

 

 

 

 

[ramblur]

I keep mentioning normal (bread and butter) income and expenditure, so I'd better explain what I mean by this, and I'll do it by citing the kind of things that I'd exclude from this. I'll start off with the recent compo received. We can't expect to receive this every year, so it can't be included in the underlying position. In the past we've generated exceptional income by the cancellation/waiver of loans. These same debts can't be cancelled/ waived in future years, so that's excluded as well. We will have received play off / cup income this year, which could be non recurring, but there's not much I can do about this as both are lost within global figures ( however, in 13/14 the Club did give a flavour of the play off income). You could argue that transfer dealing is an annual part of a club's business, but it can swing wildly from year to year, so can't be considered to be part of the underlying position.

Therefore, when I say we need to shed a minimum of £5m of net expenses from the 16/17 result to get us in line with (just) the average annual maximum FFP loss, I mean this on the basis of the underlying normal   income/ expenditure position. Put quite simply, if we don't do this then we have to rely on exceptional income/ transfer profits to bale us out, not a great position to be in.

[RamNut]

any scenario where we face an annual sale of our best players to offset losses is just going to undermine any progress we make on the football side.

Its absolutely right to reconsider what is an appropriate spend on the academy. If the annual cost of a cat 1 academy is £5-6m this is a relatively small spend for a premier league club with £70-100m of income. For Derby - even if the turnover is upscaled from £24m to £30m, the spend is a much more significant proportion of income - income which we don't have. 

As for money 'owed' to mel morris, i am simply quoting word for word what it says in the accounts, which i posted. The point is simply the degree to which we - like many other championship clubs - seem unduly reliant on a billionaire owner to subsidise our activity. 

Happy to receive an explanation of how a £22m group loss for 16-17 relates to a dcfc loss of £7.9m. 

 

 

 

[Rev]

17 minutes ago, RamNut said:

any scenario where we face an annual sale of our best players to offset losses is just going to undermine any progress we make on the football side.

Its absolutely right to reconsider what is an appropriate spend on the academy. If the annual cost of a cat 1 academy is £5-6m this is a relatively small spend for a premier league club with £70-100m of income. For Derby - even if the turnover is upscaled from £24m to £30m, the spend is a much more significant proportion of income - income which we don't have. 

As for money 'owed' to mel morris, i am simply quoting word for word what it says in the accounts, which i posted. The point is simply the degree to which we - like many other championship clubs - seem unduly reliant on a billionaire owner to subsidise our activity. 

Happy to receive an explanation of how a £22m group loss for 16-17 relates to a dcfc loss of £7.9m. 

 

 

 

What concerns you about the academy spend?

It's not taking funding from the 1st team as academy spending is exempt anyway for FFP calculations, so it's not as if we're spending money that could be put to better use.

 

 

 

[ramblur]

2 minutes ago, RamNut said:

any scenario where we face an annual sale of our best players to offset losses is just going to undermine any progress we make on the football side.

Its absolutely right to reconsider what is an appropriate spend on the academy. If the annual cost of a cat 1 academy is £5-6m this is a relatively small spend for a premier league club with £70-100m of income. For Derby - even if the turnover is upscaled from £24m to £30m, the spend is a much more significant proportion of income - income which we don't have. 

As for money 'owed' to mel morris, i am simply quoting word for word what it says in the accounts, which i posted. The point is simply the degree to which we - like many other championship clubs - seem unduly reliant on a billionaire owner to subsidise our activity. 

Happy to receive an explanation of how a £22m group loss for 16-17 relates to a dcfc loss of £7.9m. 

 

 

 

But, as I've spent a long time explaining, you're quoting from the Sevco accounts, not the Club's accounts. If Mel hadn't used the vehicle of a holding company to acquire the shares, and if the previous owners hadn't used a holding company to acquire Club's shares in the first place...........and if Mel had then just  bought the shares as an individual, with no holding company, then the situation would be no different - he wouldn't have been able to take cash out of the Club ( other than by dividends, which seems very remote - to do this we'd need to be profit making). The only other way he could do this would be a full or partial sale of shares.

If you'd bothered to read my post carefully, you'd have seen that I fully answered your last sentence. Any business conducted within other group companies ( apart from the 3 new 'satellite' companies, whose results are integrated into the Club's results) is nothing to do with the Club itself - it's just one member company of the group.

I've no intention of replying to 'rogue' articles in future, because I'm not going to repeat the same points ad infinitum. I'll just let those like you get on with it and sit back and watch the carnage. You say you don't understand the accounts, yet you go rabbiting on about them, jumping to false conclusions derived from the lack of knowledge you admit to.

For those who don't understand the consolidated accounts ( and if you did, you might be in the wrong job) and don't want to be involved, I'll give one piece of advice :- look to see if an accounting qualification appears alongside the author's name of any blog/ article. If not , be very wary of anything that's said.

[ramblur]

4 minutes ago, reveldevil said:

What concerns you about the academy spend?

It's not taking funding from the 1st team as academy spending is exempt anyway for FFP calculations, so it's not as if we're spending money that could be put to better use.

 

 

 

Quite right, and it all boils down to what Mel's willing to finance in future. FFP doesn't restrict the amount of share capital he can introduce into the club ( he could introduce £1bn if he wanted), it merely stops him spending money on the operations side (e.g wages), if it resulted in FFP losses over the limit allowed.

[needles]

@ramblur Do you think FFP is a logical thing for football? Does it help, in your opinion, or should it be abandoned?

[ramblur]

2 minutes ago, needles said:

@ramblur Do you think FFP is a logical thing for football? Does it help, in your opinion, or should it be abandoned?

The original concept of driving the FFP result down to zero ( or better) was a great idea, as it would have driven Championship wages/ transfer fees down to realistic, sustainable levels. However, the usual suspects of relegated clubs/ Premier League ( with its clout of being able to cut off funding), together with some other clubs that wanted to spend a lot more, seems to have disrailed this. What we have left is better than nothing.

One of the biggest gripes I have with the current, 3 year revolving position, is that any club that had been very prudent in previous years ( like us) couldn't take advantage of this in the 3rd year, without getting hammered in future cycles. Imo, the rule should have been that if you stayed below £13m in any year, irrespective of what happened in previous years, then you cleared the hurdle. Only if you exceeded £13m would previous years be taken into account.

I'll give you an example :- we posted FFP losses of £9m and c£2m in 15/16 and 16/17 respectively, so we could in theory post £28m in 17/18. However, if we did this, we'd only have £11m to play with ( in total) for the following 2 years. Now let's see what happens under my proposed system, and assume we posted £28m in 17/18, and £13m in 18/19. Our 3 year position under the old system would have had us well over the limit for 16/17/ 17/18 / 18/19, yet if you were to look at the position over 4 years ( £9m/ £2m/ £28m /£13m) , you'll see that the average over the period would be £13m. I could build up a hypothetical scenario running up to 2050, and containing several 3 year cycles way over £39m, but I could guarantee that the average ( from inception to 2050) couldn't exceed £13m.

What scuppers this idea? The usual suspects, Relegated clubs get the advantage of higher allowable losses (Prem) in previous year/s. In their first season down, their 3 year cycle would either be P/P/C, or C/P/C for those who'd gone up and come straight back down. Any such club that failed to go straight back up would have P/C/ C in their 2nd year, and only if they then failed to get promoted again would they revert to C/C/C (like the rest of us) in the third year. Now with C/C/C it's easy to come up with the £13m average, but you can't do the same for relegated clubs in those first 2 years down. Do you think that they'd agree to anything that would make life easier for the 'plebs'?