17/18 Financial Results

[SaintRam]

Just now, Animal is a Ram said:

Mel brought this up at the forum last week.

This is a move to help DCFC's numbers AND to safeguard in the event of a sale of the club. Would prevent any new ownership demanding a mortgage or sale of the stadium. That said, maybe it makes DCFC a harder sell if PPS doesn't come with it?

I don't think it's any harder to sell, but it's certainly worth less.

[RAMesses III]

Don't forget we signed Owen Bradley in October 2017. What salary is he on? What was the transfer cost for him to move from Radio Derby? He is probably most of that £65 million loss.

[68 Guns]

I'm no Financial wizard  but are we not getting carried away with the £65 million thing? 

The ground was on Derbys books as a £41 million asset. £80 mill sale = £39 million profit as the club no longer have the £41 million asset on the books

 

[Ghost of Clough]

I can't personally see how they'd allow us to use all "£80m" for FFP when it was supposedly valued in the accounts for £41m

[SaintRam]

Just now, Charlie Dram said:

I'm no Financial wizard  but are we not getting carried away with the £65 million thing? 

The ground was on Derbys books as a £41 million asset. £80 mill sale = £39 million profit as the club no longer have the £341 million asset on the books

 

Ah, that's a good point. I'm a bit in the dark with how FFP factors in assets but that could well be the case.

Makes the loss that year 25m and you can see where all the money is.

 

Excellent work Charlie. Case closed.

[Ghost of Clough]

1 minute ago, Charlie Dram said:

I'm no Financial wizard  but are we not getting carried away with the £65 million thing? 

The ground was on Derbys books as a £41 million asset. £80 mill sale = £39 million profit as the club no longer have the £41 million asset on the books

 

Ahh, now that would make much more sense

[Ghost of Clough]

4 minutes ago, Animal is a Ram said:

Mel brought this up at the forum last week.

This is a move to help DCFC's numbers AND to safeguard in the event of a sale of the club. Would prevent any new ownership demanding a mortgage or sale of the stadium. That said, maybe it makes DCFC a harder sell if PPS doesn't come with it?

Selling the stadium for twice it's value is the surprising part... Pearce and Mel have worked wonders to pull off such a fantastic piece of business.

[Cam the Ram]

1 minute ago, ram59 said:

I don't understand the negativity over this transaction. It has enabled us to avoid a breach of ffp and given us time to get our finances in order. 

The questions 'what if MM sells the ground to a SISU?' are irrelevant. He could have sold the whole club to a SISU anyway. The fact that they're now owned by 2 separate companies owned by MM makes no practical difference. 

I would think that MM would put protective measures in hand, should the worst happen. 

I can't speak for others, but I have a negative reaction to it because we're in a position where this had to be done. It seems to me it's almost like a get out of jail free card and it's so frustrating that it's had to come to this. Transferring staff costs from Derby to his other company and buying the stadium from the club, whilst not against the rules (as far as we know), is a little bit deceptive. And yet again the club haven't actually released the financial accounts for those smarter chaps on here to analyse, but instead have released a press statement making out everything is rosy. 

[Wolfie20]

45 minutes ago, Carl Sagan said:

Genius! Surely that gets round everything FFP? Or should I read the posts after this which maybe say otherwise?

I wouldn't bother - the moaners still moan

[EssendonRam]

The way I see it, this can only be a good thing for both Mel and the club. It seems to me that it gives the club a fresh start in relation to FFP at least for this year and the next three. (How ridiculous is it if FFP doesn’t allow clubs that own their own stadium to spend more freely than a club that doesn’t though?) 

As others have said, that allows Frank to enter the summer window without the constraint of first having to sell. Not only does it give Frank the ability to chase targets more effectively, it means that other clubs can’t hold us over a barrel any longer; at least not as much as they have been able to do.

That’s possibly critical, too, in terms of keeping Frank, if we’re honest about it.

The second reason it’s a positive is that it allows the club the leeway, once some of the player contracts expire at season’s end, to start operating on a more commercial basis without Mel needing to chip in every month. Not only would Mel and his bankers appreciate the end of the haemorrhaging from his pocket, it’ll allow potential new investors a cleaner slate too. I suspect that will make the prospect of new investment more likely; whether it makes it more likely to be a full or partial sale, I’m unsure. Intuition tells me that it means Mel’s more likely to at least retain a minority interest but, on the other hand, it probably makes a “peppercorn sale”   of the club easier and might be (again, as others have suggested above) Mel’s insurance policy to flesh out potential asset strippers (although, obviously, the club’s a better asset with the stadium).

Of course, it may mean that the new investment comes in the form of the expansion of PPS. If FFP is purely on annual profit or loss, that may’ve been a constraint of stadium redevelopment if the stadium is owned by the club. Even though capital expenditure shouldn’t affect annual profit performance, distinct (albeit related) ownership of the stadium could avoid any risks associated with a redevelopment affecting the club’s operations, especially our ability to stay comfortably within FFP constraints. Think Spurs’ cost overruns and Arsenal’s stadium financing charges coming straight off a Championship club’s bottom line by way of example.

Any way you slice it though, it has to be a good move for Derby.

 

 

[WystonRam]

Basically , operationally we are losing a lot of money and I can only hope this was done as at the end of this season a lot of the high earners will be gone ?

[Cam the Ram]

8 minutes ago, SaintRam said:

Actually, @Cam the Ram this does make some sense. I can put my finger on how £25m could be lost. I'm struggling to do the same for £65m.

So perhaps this purchase is being made in two installments of £40m? 

If true, a £25 million loss without the stadium sale during a season that we sold our 2 best players in Ince and Hughes is very worrying.

[DarkFruitsRam7]

12 minutes ago, RAMesses III said:

Don't forget we signed Owen Bradley in October 2017. What salary is he on? What was the transfer cost for him to move from Radio Derby? He is probably most of that £65 million loss.

@OwenB87

[EnigmaRam]

Sorry guys but all I’m seeing is we got £1.9 mil for rowett.  ducking genius! ??

[Gritty]

Calling it what it is, this seems a dodge to get around the FFP rules. Whether the EFL will agree that what we did is within the letter and/or the spirit of the rules remains to be seen.  As a Derby fan I hope they do of course. But I wouldn't be totally confident we're in the clear until the EFL has signed off

Turning to what has happened.  The stadium was in our accounts valued at £41mn. We sold it for £80mn (and this was on the basis of an independent valuation it seems) booking a £39mn profit.  Even with that one off £39mn boost we only posted an overall profit of £14.6mn for FY 17/18.  That means were it not for the stadium being sold we'd have lost £24.4mn.  

Let's assume the EFL accept what we have done is within the rules.  Next year we will be assessed for the year 18/19.  We can't pull the stadium trick again. We still have loads of players with a wage bill significantly greater than our total revenue.  But a loss last year (£7.9mn), combined with a profit this year (£14.6mn) means we can afford to lose £45.7mn in 18/19. That's because for FFP we can lose £39mn over 3 seasons (£14.6mn-£7.9mn-£45.7mn=£39mn).

You might think £45.7mn gives us a ton of room to go on a spending spree. But it doesn't because this year we will need to write off the value of any players that leave.  We don't know what we are currently valuing BJ, Butterfield, Blackman, Ollsson, Nugent etc in the accounts. But if it's anything above zero (and previous accounts show we have amortised the value of players very little since their purchase) then all that value will be written down to zero and count as a FFP loss next year.  I'm not for one second suggesting that will use up all the £45.7mn leeway.  But I can see it using up a good £10mn-£12mn.  Assuming we make the same operating loss of £24.4mn again (because of this year's wage bill being roughly the same as last years) that takes us up to £34.4mn-£36.4mn.  Again, well within £45.7mn.

Let's hope the EFL accepts what we've done

[admira]

Not sure that this is a good thing long-term or not. Yes it's got us over that season's accounts but we can only sell the stadium once so if we don't start getting our house in order, then it's the start of a slippery slope. Our main asset is now out of our hands. 

[Spanish]

3 minutes ago, Cam the Ram said:

I can't speak for others, but I have a negative reaction to it because we're in a position where this had to be done. It seems to me it's almost like a get out of jail free card and it's so frustrating that it's had to come to this. Transferring staff costs from Derby to his other company and buying the stadium from the club, whilst not against the rules (as far as we know), is a little bit deceptive. And yet again the club haven't actually released the financial accounts for those smarter chaps on here to analyse, but instead have released a press statement making out everything is rosy. 

some like Florest don't own their ground, others have mortgaged it up to the hilt.  I don't think it is deceptive at all to use an asset in this way

[SaintRam]

1 minute ago, Cam the Ram said:

If true, a £25 million loss without the stadium sale during a season that we sold our 2 best players in Ince and Hughes is very worrying.

Most transfers are in installments nowadays - I don't know if you can submit the full overall fee to FFP or not but if we go by actual money received then we wouldn't have seen all of it.

Plus, their fees combined total less than £15m, I think.

Pretty sure also our wages went up, we offered a new deal to Martin the January before, then brought in Lawrence, Huddlestone, Davies, Wisdom and Jerome.

 

PLUS, the year before we recorded a loss of £7.9m - that's suspiciously close to the FFP limit of £8m. I'm pretty sure some restructuring occurred to push some expenses back a year.

[Owen87ITK]

14 minutes ago, RAMesses III said:

Don't forget we signed Owen Bradley in October 2017. What salary is he on? What was the transfer cost for him to move from Radio Derby? He is probably most of that £65 million loss.

Undisclosed fee. 

Though I hear the studios at BBC Radio Derby are gold-plated these days. 

[RamsFan10]

Next can Mel just buy the team bus for £300m. Only downside would be Neymar would have to drive to away games.