£10m FFP Bill

[ramblur]

Sorry, couldn't edit something I posted. 'Old system' should have read ' current system'.

[AdamRam]

3 minutes ago, ramblur said:

Sorry, couldn't edit something I posted. 'Old system' should have read ' current system'.

From someone who doesn’t post on anything financially related purely because I don’t have the background to make a comment or contribution one way or the other, thank you for your posts.

i have often read them and must admit to my guilty pleasure of going to the pub and being able to educate the few with your words of wisdom passing them of as my own.  I haven’t got a scooby if they are accurate or not, but they sound it, so that will do for me...thanks once again!

[RamNut]

1 hour 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.

 

 

 

I think the level of expenditure generally is too high. Thats why we are making big losses even after those losses have been drastically reduced by player sales. 

I can understand that prem league clubs with massive incomes can afford a cat 1 academy. With our income being a maybe a third of theirs i would question whether we can really afford it. The Ffp rules might allow unlimited academy spend, but that doesn't mean its good for the club. Unless mel keeps writing all these debts off, the losses will continue to drive player sales. Since wembley we've prob spent £20m on running the academy. Have we produced £20m worth of players?

other clubs have decided that funding academy coaching for 9-15 year olds is basically a waste of money.

 

[RamNut]

Quote

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.

we'll see 

[Ghost of Clough]

11 minutes ago, RamNut said:

I think the level of expenditure generally is too high. Thats why we are making big losses even after those losses have been drastically reduced by player sales. 

I can understand that prem league clubs with massive incomes can afford a cat 1 academy. With our income being a maybe a third of theirs i would question whether we can really afford it. The Ffp rules might allow unlimited academy spend, but that doesn't mean its good for the club. Unless mel keeps writing all these debts off, the losses will continue to drive player sales. Since wembley we've prob spent £20m on running the academy. Have we produced £20m worth of players?

other clubs have decided that funding academy coaching for 9-15 year olds is basically a waste of money.

 

The youth players who joined aged 9 just after Wembley are now how old? And you expect them to be in the first team / sold on already? ?‍♂️

Wven those 15 year olds who have had limited exposure to the full benefit of Cat 1 status are only 19 now. It’ll take a few years until we see he full benefit but I think most of us will agree that the quality of player seems to be improving. 

[ramblur]

14 minutes ago, AdamRam said:

From someone who doesn’t post on anything financially related purely because I don’t have the background to make a comment or contribution one way or the other, thank you for your posts.

i have often read them and must admit to my guilty pleasure of going to the pub and being able to educate the few with your words of wisdom passing them of as my own.  I haven’t got a scooby if they are accurate or not, but they sound it, so that will do for me...thanks once again!

Cheers for that. If someone just posts figures extracted from the accounts ( which a schoolkid could do), and maybe googles one or 2 accounting terms, then be wary. For me, the acid test is can that person come up with analysis that clearly requires some accounting knowledge? These posts are the certificates, these posts are the exams.

I know that several members look at the accounts, and with that in mind I always try to show how any analysis is derived, by reference to the accounts. If something I say doesn't stack up, then someone will pick me up on it ( and rightly so).. @Diag Ram is quite obviously qualified ( and probably Chartered), but if I were working at the coal face all week, I wouldn't want to come on here for more gruel. He did make a brief appearance, but he may well have a young family, so I don't blame him from exiting something which is (largely) thankless. @Carnero also shows promise, based on posts I've seen.

[ramblur]

9 minutes ago, RamNut said:

we'll see 

I might. If you confess to not understanding the accounts, you're hardly likely to. I don't think there's an accounting equivalent of 'Specsavers'.

[RamNut]

15 minutes ago, ramblur said:

I might. If you confess to not understanding the accounts, you're hardly likely to. I don't think there's an accounting equivalent of 'Specsavers'.

Stop being so rude. 

everybody welcomes your insight, which is why i referenced you several times in earlier posts. You can pick a quarrel if your prefer however  the facts seem fairly certain.

we are spending way beyond our income

we are excessively reliant on a sugar daddy to bankroll an unhealthy situation.

we need to cut costs to avoid having to sell our best players or ask MM to write another multi-million ££££ cheque.

Its unsustainable.

[RamNut]

35 minutes ago, Ghost of Clough said:

The youth players who joined aged 9 just after Wembley are now how old? And you expect them to be in the first team / sold on already? ?‍♂️

Wven those 15 year olds who have had limited exposure to the full benefit of Cat 1 status are only 19 now. It’ll take a few years until we see he full benefit but I think most of us will agree that the quality of player seems to be improving. 

I didn't suggest that 13 year olds should be in first team - silly argument.

many clubs prefer to recruit youngsters at 16. 

Many championship clubs have billionaire backing but they still don't run cat 1 academies. If we chose to do so, fine. But we don't seem to be able to afford to spend 20% of our income on it. 

So what is everyones solution.?

spend spend spend and then run to Mel? How long can that go on for?

producing our own players is an important part of any strategy, its just a question of cutting our cloth accordingly, and finding the most cost-efficient way to do so.

[Van der MoodHoover]

10 minutes ago, RamNut said:

Stop being so rude. 

everybody welcomes your insight, which is why i referenced you several times in earlier posts. You can pick a quarrel if your prefer however  the facts seem fairly certain.

we are spending way beyond our income

we are excessively reliant on a sugar daddy to bankroll an unhealthy situation.

we need to cut costs to avoid having to sell our best players or ask MM to write another multi-million ££££ cheque.

Its unsustainable.

I think that much seems clear. I personally like accounts to tell a story. And that doesn't always happen which is perhaps a difference of emphasis between a "true" accountant and a user of accounts  (I have served as an investment analyst in the past ).

The story here is of bankrolling - ffp has gained a lot of prominence but really that is just a contrived cap on bankrolling. 

The story is for me about what Mel is bankrolling and how each piece fares. 

We have a first team, an academy,  various bits such as the yard and a miscellany of revenue generation. So how is each bit doing? We might suppose that the academy loses a bit each year,  the first team costs a packet but if it wins the big cash prize then it pays for itself, and bits n pieces.

Trying to tell that story from accounts can be like some form of 21st century torture! ?

[ramblur]

8 minutes ago, RamNut said:

Stop being so rude. 

everybody welcomes your insight, which is why i referenced you several times in earlier posts. You can pick a quarrel if your prefer however  the facts seem fairly certain.

we are spending way beyond our income

we are excessively reliant on a sugar daddy to bankroll an unhealthy situation.

we need to cut costs to avoid having to sell our best players or ask MM to write another multi-million ££££ cheque.

Its unsustainable.

I've no problem with the above, and have said roughly the same things myself. What I do take issue with is someone making wild assumptions on the back of confessed ignorance. If you find that rude, then tough - you've brought it on yourself. When the accounts came out I made a point of saying that I wouldn't field questions on the complex consolidated accounts, and the events of the last couple of months show exactly why. It's only these ridiculous articles that forced me into something I didn't want to do.

I've the patience of a saint in fielding questions on the only thing that should matter to the average fan, viz the Club's accounts. I couldn't care less if Sevco were selling central heating to the Eskimos- it would have nothing to do with the club.

The bottom line is, if you'd have restricted your comments to the above, then I've have had no issues. I'll leave you with this:- show me anywhere in the Club's accounts that shows the Club owes Mel money.  

[RamNut]

6 minutes ago, ramblur said:

I've no problem with the above, and have said roughly the same things myself. What I do take issue with is someone making wild assumptions on the back of confessed ignorance. If you find that rude, then tough - you've brought it on yourself. When the accounts came out I made a point of saying that I wouldn't field questions on the complex consolidated accounts, and the events of the last couple of months show exactly why. It's only these ridiculous articles that forced me into something I didn't want to do.

I've the patience of a saint in fielding questions on the only thing that should matter to the average fan, viz the Club's accounts. I couldn't care less if Sevco were selling central heating to the Eskimos- it would have nothing to do with the club.

The bottom line is, if you'd have restricted your comments to the above, then I've have had no issues. I'll leave you with this:- show me anywhere in the Club's accounts that shows the Club owes Mel money.  

Ok.....bit by bit

club accounts may be relevant to ffp but.....as @HantsRam says.....and i agree...... how the parts are doing is relevant and so is how the whole group is doing. 

The group accounts stake that £95m is quote "owed to melvyn morris". I'm not going to fall into the trap of stating that the club owes £95m to mel morris. But £21m loss in 16-17 and £36m lost in 15-16 are big numbers. If ....as you suggest....the losses elsewhere in the group are relatively modest......then the football club is generating the lions share of those losses.  Ok in 15-16 there was some heavy spending on players which may be atypical. Ok in 16-17 there may be some further benefit yet to show in terms of summer sales. But the losses come from the football side of the business and the overspend is far worse than might be expected. I still think that to dtate the club is debt free and therefore imply the finances are healthy is a gross distortion.

my original post posed the question. If the debt to MM went from £75m to £98m in one year......inviting you to verify that.....then the level of bankrolling is double the £8m that others quoted.

 

 

[Ramsdens]

Reading this, as someone who is admittedly ignorant of detailed professional accounting practice, it seems there is an awful lot of erudite comment in this thread, and it makes pretty scary reading. There are SO many conflicting reports of Derby`s situation, ranging form dire to really dire (maybe I`ve got that all wrong, apologies if that offends anyone`s sensibilities (I really have tried to read up on our financial position)), but as a football fan who runs my own business (frankly I leave it to the professionals and concentrate on the the stuff I am moderately ok at) I still feel we have a lot to look forward to. We have an owner who is a very serious businessman (and all that entails), I dare say more successful then the majority of us (in business terms), who seems to have the club at heart and that`s quite rare today. He`s clearly aware of FFP and its ramifications and he`s just made a significant investment in our new management team. Ok, I feel we over-invested in our playing staff at times, but it`s done and gone now, we have to deal with what we have and move on, regrets, I`ve had a few...

[RamNut]

27 minutes ago, HantsRam said:

The story here is of bankrolling - ffp has gained a lot of prominence but really that is just a contrived cap on bankrolling. 

Is it even that?

it depends who is doing the bankrolling.

isn't it inviting owners to write off losses each year in order to artificially reduce apparent losses to £13m per annum. 

my theory is that the flood of tv money into premiership clubs has escalated wages. That escalation has affected championship wages. The owners, chairman, ceo's etc in the championship have allowed a situation to develop whereby the clubs have entered into player contracts that they can't afford. All clubs have wages which exceed income. Its crackers.

[Van der MoodHoover]

11 minutes ago, RamNut said:

Is it even that?

it depends who is doing the bankrolling.

isn't it inviting owners to write off losses each year in order to artificially reduce apparent losses to £13m per annum. 

my theory is that the flood of tv money into premiership clubs has escalated wages. That escalation has affected championship wages. The owners, chairman, ceo's etc in the championship have allowed a situation to develop whereby the clubs have entered into player contracts that they can't afford. All clubs have wages which exceed income. Its crackers.

Well, there's a lot of truth in what you say. 

The only "fair" element of ffp is - I think - stopping clubs loading up with debt then going out of business and reinventing themselves having "done a Leicester ".

It doesn't stop clubs being run in an unsustainable way if a sugar daddy is prepared to write off losses.

(Hmm sounds like Mrs Hants......)

So of course it isn't fair inasmuch as not all clubs will have such a backing organisation. 

[Ghost of Clough]

1 hour ago, RamNut said:

I didn't suggest that 13 year olds should be in first team - silly argument.

many clubs prefer to recruit youngsters at 16. 

Many championship clubs have billionaire backing but they still don't run cat 1 academies. If we chose to do so, fine. But we don't seem to be able to afford to spend 20% of our income on it. 

So what is everyones solution.?

spend spend spend and then run to Mel? How long can that go on for?

producing our own players is an important part of any strategy, its just a question of cutting our cloth accordingly, and finding the most cost-efficient way to do so.

But we won’t see the full benefit of Cat 1 for a few years more. Around this point we will hopefully be at the point where the academy becomes profitable. 

[SuperDerbySuperRams]

Infrastructure or academy spending doesn’t affect FFP in anyway, and it seems something that Mel is passionate about. I think Lampard’s appointment indicates that the heavy investment in the academy isn’t about to stop 

[ramblur]

23 minutes ago, RamNut said:

Ok.....bit by bit

club accounts may be relevant to ffp but.....as @HantsRam says.....and i agree...... how the parts are doing is relevant and so is how the whole group is doing. 

The group accounts stake that £95m is quote "owed to melvyn morris". I'm not going to fall into the trap of stating that the club owes £95m to mel morris. But £21m loss in 16-17 and £36m lost in 15-16 are big numbers. If ....as you suggest....the losses elsewhere in the group are relatively modest......then the football club is generating the lions share of those losses.  Ok in 15-16 there was some heavy spending on players which may be atypical. Ok in 16-17 there may be some further benefit yet to show in terms of summer sales. But the losses come from the football side of the business and the overspend is far worse than might be expected. I still think that to dtate the club is debt free and therefore imply the finances are healthy is a gross distortion.

my original post posed the question. If the debt to MM went from £75m to £98m in one year......inviting you to verify that.....then the level of bankrolling is double the £8m that others quoted.

 

 

Give me strength, how many more times do I have to say this.The £21m loss you quoted is the consolidated loss for a 10 month period only, and is distorted by the fact that (amongst other things), that 10 month period excludes very substantial transfer profits. I added up all the income and expenditure in the 10 month consolidated accounts, and then added up all the income and expenditure in the full year Club's accounts. When I subtracted the consolidated figures from the Club's figures ( which I'd guessed would account for the missing 2 months) and then adjusted the £21m consolidated loss to account for these differences, guess what figure I came up with? Exactly the Club loss, which I expected. Now folks may not understand the next bit, and I had to think about it myself. The consolidated accounts included the 10 month Sevco loss, together with (a small) 10 month Global Derby loss, but the expenditure figures in the consolidated accounts obviously reflected the expenditure forming these losses. Therefore, I could have left both losses and expenditure in,which I did, because it was easier, or deduct these losses from the £21m, and also deduct same from the expenditure (same difference). Thus I can confidently say (and I wouldn't say it otherwise) that if the consolidated accounts had featured the full year, then the loss posted would have been the club loss of £7.9m + the full year version of the 10 month Sevco 5112 loss of £3.6m + a pretty insignificant Global Derby loss - a figure far less than the £21m you spout. Have a look at the extracts you posted, and you might just see a reference to a 10 month period in the consolidated accounts.

Again, as I've already said, the 15/16 consolidated loss of £36m included the full impairment of £21m  of goodwill, which generated a paper loss in a company within the group which wasn't the Club, so the real, tangible loss was only c£15m.

The amounts you quoted in your last sentence are again distorted by a 10 month period, but if it makes you happy,£50m+ was introduced into the Club via equity in 15/16, with £40m+ in 16/17, though a good proportion of the latter appears to have been advance funding for this year ( also equity). I don't know where you got the measly £8m funding from, as it's been way more than that ( a situation that is about to change). As well as funding cash deficits on operations, Mel has also spent quite heavily on infrastructure and also appears to have spent quite significantly on enterprises to drive income streams, a good thing which the Club will benefit from significantly - things like 'The Yard' and Rams TV.

Because of the nature of double entry book keeping, when Mel introduces cash into Sevco ( to buy equity in the Club) -a debit- there has to be a corresponding credit (in this case a loan), and it's merely a record of what he's done. If you want to worry yourself to death over what's happening in holding companies, then work away, and see how many disciples you get ( and I wouldn't include @HantsRam without checking his posts.) If you really want some fun and games, have a look at the Global Derby and Sevco5113 accounts for 15/16, but don't expect me to respond to anything - I'll just sit back and have a chuckle. I can give you a cast iron guarantee that there are some juicy false assumptions to be made there.

For the benefit of others, the only thing I'm concerned about is the activity within the Club's ( and associated 3 'satellite' companies') accounts. I couldn't give a fig what's happening in holding companies' accounts. Members can either trust me or not on these issues; I'm past caring anymore. Countless hours of what's left of my life have now been spent on these wretched issues, and there won't be much more spent, particularly if I have to keep repeating stuff time and time again.

[ramblur]

59 minutes ago, RamNut said:

Is it even that?

it depends who is doing the bankrolling.

isn't it inviting owners to write off losses each year in order to artificially reduce apparent losses to £13m per annum. 

my theory is that the flood of tv money into premiership clubs has escalated wages. That escalation has affected championship wages. The owners, chairman, ceo's etc in the championship have allowed a situation to develop whereby the clubs have entered into player contracts that they can't afford. All clubs have wages which exceed income. Its crackers.

Not possible. If they can somehow persuade external creditors  to write off/ waive debt, then that's a different matter (with the benefit of hindsight,didn't do us much good.

I'd actually agree with your last paragraph. The constant quest of the 'Holy Grail' seems to be wrecking clubs, and I fear a big shake out, as only 3 can go up each year. Luckily, after trying his best to get us up, Mel appears to be pulling us out of the nose dive and getting us to operate like a 'proper' club again ( and our,increasing, turnover levels allow us to do this at a decent level). 

[bigbadbob]

11 minutes ago, ramblur said:

Give me strength, how many more times do I have to say this.The £21m loss you quoted is the consolidated loss for a 10 month period only, and is distorted by the fact that (amongst other things), that 10 month period excludes very substantial transfer profits. I added up all the income and expenditure in the 10 month consolidated accounts, and then added up all the income and expenditure in the full year Club's accounts. When I subtracted the consolidated figures from the Club's figures ( which I'd guessed would account for the missing 2 months) and then adjusted the £21m consolidated loss to account for these differences, guess what figure I came up with? Exactly the Club loss, which I expected. Now folks may not understand the next bit, and I had to think about it myself. The consolidated accounts included the 10 month Sevco loss, together with (a small) 10 month Global Derby loss, but the expenditure figures in the consolidated accounts obviously reflected the expenditure forming these losses. Therefore, I could have left both losses and expenditure in,which I did, because it was easier, or deduct these losses from the £21m, and also deduct same from the expenditure (same difference). Thus I can confidently say (and I wouldn't say it otherwise) that if the consolidated accounts had featured the full year, then the loss posted would have been the club loss of £7.9m + the full year version of the 10 month Sevco 5112 loss of £3.6m + a pretty insignificant Global Derby loss - a figure far less than the £21m you spout. Have a look at the extracts you posted, and you might just see a reference to a 10 month period in the consolidated accounts.

Again, as I've already said, the 15/16 consolidated loss of £36m included the full impairment of £21m  of goodwill, which generated a paper loss in a company within the group which wasn't the Club, so the real, tangible loss was only c£15m.

The amounts you quoted in your last sentence are again distorted by a 10 month period, but if it makes you happy,£50m+ was introduced into the Club via equity in 15/16, with £40m+ in 16/17, though a good proportion of the latter appears to have been advance funding for this year ( also equity). I don't know where you got the measly £8m funding from, as it's been way more than that ( a situation that is about to change). As well as funding cash deficits on operations, Mel has also spent quite heavily on infrastructure and also appears to have spent quite significantly on enterprises to drive income streams, a good thing which the Club will benefit from significantly - things like 'The Yard' and Rams TV.

Because of the nature of double entry book keeping, when Mel introduces cash into Sevco ( to buy equity in the Club) -a debit- there has to be a corresponding credit (in this case a loan), and it's merely a record of what he's done. If you want to worry yourself to death over what's happening in holding companies, then work away, and see how many disciples you get ( and I wouldn't include @HantsRam without checking his posts.) If you really want some fun and games, have a look at the Global Derby and Sevco5113 accounts for 15/16, but don't expect me to respond to anything - I'll just sit back and have a chuckle. I can give you a cast iron guarantee that there are some juicy false assumptions to be made there.

For the benefit of others, the only thing I'm concerned about is the activity within the Club's ( and associated 3 'satellite' companies') accounts. I couldn't give a fig what's happening in holding companies' accounts. Members can either trust me or not on these issues; I'm past caring anymore. Countless hours of what's left of my life have now been spent on these wretched issues, and there won't be much more spent, particularly if I have to keep repeating stuff time and time again.

So we do owe  mel Morris  £95 million after all then