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Middlesbrough to sue the EFL over Derby's Stadium Purchase


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On 12/09/2019 at 22:46, therealhantsram said:

Odd one this. I thought clubs waived their rights to sue the governing body as a condition of being members. 

Suspect (not checked so this could be garbage on my part) that it's the national association you're not allowed to sue, which would be the FA.

My impression on actually seeing the story rather than the wild headlines is that a "solicitor's letter" will never amount to suing the league. It's just making their sour grapes public. I agree with the thread comments that something odd is going on with Gibson. Perhaps he's trying to create a climate of being wronged to help him walk away from Boro without it looking that he's leaving them in the lurch. A sort of "it's not my fault but I caan't go on when others don't play by the rules" excuse for getting out before he loses any more money.

 

 

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On 14/09/2019 at 02:10, walkleyowl said:

How is FFP ethical? It's a restriction of trade in it's purest form. 

Since 2016 when Villa and Newcastle came down the transfer market down here has truly exploded, we are seeing relegated teams chucking ridiculous amounts in one window to get straight back, using monies intended to ward off financial implosion by offering 8 figure fees and high 5 figure wages for what were standard to decent tier 2 players. So clubs who don't have the same type of external income either roll over so we would see the same clubs up and down and the PL almost a closed shop, barring a meltdown or they try to match fees and wages but then fall foul of FFP. 

Do I agree us and Derby were right to flog the stadium, no but we had little choice. Owners, providing they offer assurances should be allowed to match parachute payments or the PPs are removed from calculations. 

But the actual point is, the games fuxked.

Agreed. FFP is clearly not fit for purpose. But parachute payments piss me off the most. 

They’re clearly meant for paying off premier league contracts. So why is it so difficult to put that money in a separate trust account to be used for that sole purpose. 

Instead they’re used to buy yet more players on premier league wages in a desparte gambit to get straight back up. If the gambit doesn’t work, they’re in an even worse financial position. Villa would have been buggered if they hadn’t scraped promotion at the last chance. 

And that all has the side effect of skewing the market in the championship and other clubs without parachute payments having to overspend and breach ffp and put themselves at risk to be even slightly competitive.

It just pisses me off that it would be so easy to govern. Parachute payments in trust account. Done. Easy. Peace in the Middle East overnight. 

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Why are we all blaming the FFP rules or parachute payments we know what the rules of engagement are either we accept them or go and find another league to play in

It's not the EFL or Premierships fault that we have failed dismally over the past seasons to gain promotion by throwing money at the situation and still coming up short, it's not the EFLs fault that we needed to circumnavigate these rules by having to sell our ground back to ourselves because of our own failings. 

We knew the rules we just crapped it up on a grand scale. 

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31 minutes ago, Tyler Durden said:

Why are we all blaming the FFP rules or parachute payments we know what the rules of engagement are either we accept them or go and find another league to play in

It's not the EFL or Premierships fault that we have failed dismally over the past seasons to gain promotion by throwing money at the situation and still coming up short, it's not the EFLs fault that we needed to circumnavigate these rules by having to sell our ground back to ourselves because of our own failings. 

We knew the rules we just crapped it up on a grand scale. 

And then used said rules to fall onside.

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10 hours ago, RamNut said:

Ffp has been a great leveller.

it has made the championship the most even and competitive league there is.

 

But a few teams have gained promotion by disregarding these rules and then making a payment when they’re in the money league.

Good if you go up, but not so if you don’t. Bit like Forest under Fawaz.

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10 hours ago, RamNut said:

Ffp has been a great leveller.

it has made the championship the most even and competitive league there is.

 

Why should there be a leveller?

If someone has the tools to be better than the competition then they should be able to use it, even if thats financial.

It happens in most sports.

Should in F1 the top teams be forced to spend less and also not employ the best drivers?

Should certain countries in athletics not be allowed to provide better facilities for their athletes than other countries?

Maybe we should go further and say the likes of Ronaldo and Messi should play with lead boots on because its not fair on other players.

 

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2 hours ago, Tyler Durden said:

Why are we all blaming the FFP rules or parachute payments we know what the rules of engagement are either we accept them or go and find another league to play in

It's not the EFL or Premierships fault that we have failed dismally over the past seasons to gain promotion by throwing money at the situation and still coming up short, it's not the EFLs fault that we needed to circumnavigate these rules by having to sell our ground back to ourselves because of our own failings. 

We knew the rules we just crapped it up on a grand scale. 

Middle borough also knew the rules. But instead of using the parachute payments for the purpose for which they were intended, they spunked it all on players like assambolonga and Christie. They failed miserably, and now they’re in the poo and trying to blame anyone and everything else, rather than trying to find a creative solution within the rules. 

Or maybe suing everyone is their creative way to raise funds. 

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Yep, I messed the last post up! ?

I'll try again, it's one of them days. *Sigh*

2 hours ago, Tyler Durden said:

Why are we all blaming the FFP rules or parachute payments we know what the rules of engagement are either we accept them or go and find another league to play in

It's not the EFL or Premierships fault that we have failed dismally over the past seasons to gain promotion by throwing money at the situation and still coming up short, it's not the EFLs fault that we needed to circumnavigate these rules by having to sell our ground back to ourselves because of our own failings. 

We knew the rules we just crapped it up on a grand scale. 

Every other club knew the rules too, they're on the EFL's website, but that doesn't stop them complaining about what we did it does it?

We didn't circumnavigate the rules as they used to specifically disallow profits from the sale of tangible fixed assets, they don't any longer, so that means as they used to specifically disallow it and they now don't that means it's now allowed, right?

It's not like the rules have never said anything about this situation and if they didn't want it to say that then they shouldn't have removed that part.

Quote below is from the old rules (up to 2015/16) which excludes it -

Quote

4 Fair Play Result

4.1 A Championship Club’s Fair Play Result will be calculated in accordance with these Rules by reference to its Fair Play Information together with any additional information lodged in accordance with Regulation 16.5 and / or Rule 3.6.

4.2 The Fair Play Result is calculated as profit / loss before tax (as identified by the Accounts), adjusted to take into account:

4.2.1 profit / loss on disposal of tangible fixed assets;

4.2.2 depreciation / impairment of tangible fixed assets (net of any capital grants);

4.2.3 amortisation / impairment of intangible fixed assets (other than player registrations);

4.2.4 the element of any transaction(s) with Related Party(ies) (as defined in Appendix A), above or below fair value;

4.2.5 net expenditure on Youth Development Activities (as defined in Appendix B);

4.2.6 financial support for the Championship Club’s Charitable Community Scheme (as defined in Appendix C);

4.2.7 Permitted Exceptional Items (as defined in Appendix D); and

4.2.8 in the case of Promoted League One Clubs or Promoted Championship Clubs (as defined in Rule 8.1) only, Promotion Related Payments (as defined in Appendix E).

This quote is from the new rules (2016/17 onwards) which no longer excludes it -

Quote

1.1.2 Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude costs (or estimated costs as the case may be) in respect of the following:

(a) depreciation and/or impairment of tangible fixed assets, amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

(b) Women’s Football Expenditure;

(c) Youth Development Expenditure; and

(d) Community Development Expenditure.

Each of Youth Development Expenditure, Women’s Football Expenditure and Community Development Expenditure shall only be excluded from the calculation of Adjusted Earnings Before Tax if separately disclosed:

(i) by way of notes to the Annual Accounts; or

(ii) by way of supplementary information which reconciles to the Annual Accounts and which has been subject to independent audit.

The club have repeatedly said we got an independent valuation, the only way we can get the 'Fair Market Value' when it's a related party transaction, what else can they do?

Quote

1.1.8 Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

1.1.9 Group for the purposes of these Rules, has the meaning set out in Section 474(1) of the 2006 Act save that it shall also include any other entity that carries on any material aspect of the football operations of the Club.

1.1.10 Related Party Transaction means a transaction:

(a) disclosed in a Club’s Annual Accounts as a related party transaction; or

(b) which would have been disclosed as such except for an exemption under the accounting standards under which the Annual Accounts were prepared, in which case it must be detailed by way of supplementary information which reconciles to the Annual Accounts and which has been subject to independent audit.

Guidance

If the accounting standards applied by the Club do not require the Club to disclose Related Party Transactions within the notes to the Annual Accounts, the transactions should be detailed in a separate schedule and submitted to the Executive.

Rock - Club - Hard Place

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17 minutes ago, Ramleicester said:

Hi problem is that it was not an arms length transaction and they will need to prove that the valuation was fair. The reason for the arms length bit is to ensure any valuation is not 'manufactured'.

Despite Mel lodging an advice with Companies house that 'he is no longer a person with significant control' of DCFC (which is a bit daft) it is clearly not an arms length transaction which could be the problem at the end of the day.

I messed the post you quoted up, I asked for it to be deleted and posted a new one as I went over the time allowed to edit it.

Isn't that the whole point of getting the independent valuation done, to get the fair market value for the related party transaction? To make sure it's an 'arms length' value?

Quote

2.3 The Executive shall determine whether consideration included in the Club’s Earnings Before Tax arising from a Related Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, the Executive shall restate it to Fair Market Value.

2.4 The Executive shall not exercise its power set out in Rule 2.3 without first having given the Club  reasonable opportunity to make submissions as to:

2.4.1 whether the said consideration should be restated; and/or

2.4.2 what constitutes its Fair Market Value.

2.5 If the aggregation of a Club’s Earnings Before Tax for T-1 and T-2 results in a loss, any consideration from Related Party Transactions having been adjusted (if appropriate) pursuant to Rule 2.3, then the Club must submit to the Secretary the calculation of its Adjusted Earnings Before Tax for each of T, T-1 and T-2.

 

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12 hours ago, RamNut said:

Ffp has been a great leveller.

it has made the championship the most even and competitive league there is.

 

Its not levelling anything though. We have 7 teams in the league this year who can spend far more than any other Championship team due to parachute payments if they so desired. Thanks to FFP smaller teams like Burton will have very little resources to compete with even if their owner wanted to pump millions into the team. It just secures the positions of the bigger teams.

2 hours ago, TigerTedd said:

Agreed. FFP is clearly not fit for purpose. But parachute payments piss me off the most. 

They’re clearly meant for paying off premier league contracts. So why is it so difficult to put that money in a separate trust account to be used for that sole purpose. 

Instead they’re used to buy yet more players on premier league wages in a desparte gambit to get straight back up. If the gambit doesn’t work, they’re in an even worse financial position. Villa would have been buggered if they hadn’t scraped promotion at the last chance. 

And that all has the side effect of skewing the market in the championship and other clubs without parachute payments having to overspend and breach ffp and put themselves at risk to be even slightly competitive.

It just pisses me off that it would be so easy to govern. Parachute payments in trust account. Done. Easy. Peace in the Middle East overnight. 

I don't even understand why parachute payments are needed in the first place. You already get £100 mill prize money even if you finish bottom of the league. There are also at least half a dozen clubs who wrote relegation clauses into Prem players contracts which stated they would either take pay cuts or be allowed to leave in the event of relegation.

2 hours ago, Tyler Durden said:

Why are we all blaming the FFP rules or parachute payments we know what the rules of engagement are either we accept them or go and find another league to play in

It's not the EFL or Premierships fault that we have failed dismally over the past seasons to gain promotion by throwing money at the situation and still coming up short, it's not the EFLs fault that we needed to circumnavigate these rules by having to sell our ground back to ourselves because of our own failings. 

We knew the rules we just crapped it up on a grand scale. 

It doesn't matter whether we accept them or not. Any changes have to be voted on by all the EFL clubs. The rules are currently being reviewed, but our opinion is irrelevant if every other club votes them down.

We didn't circumnavigate any rules. We followed the rules precisely as laid down by the EFL, which allows sales of assets such as stadiums to be counted towards FFP. They changed the rules to allow this. 

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For the avoidance of doubt before I start to get jumped on unnecessarily I am not saying that we cheated by avoiding FFP sanctions by selling the ground back to ourselves nor do I question the motives of having to do this which was clear - I am saying let's not lose sight of WHY we had to do it in the first place which was our own dismal failings.

I care not a jot regards whether Boro want to sue the EFL or whether other clubs think what we did was unfair I AM interested in how we managed to land up in this situation in the first place 

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30 minutes ago, Tyler Durden said:

For the avoidance of doubt before I start to get jumped on unnecessarily I am not saying that we cheated by avoiding FFP sanctions by selling the ground back to ourselves nor do I question the motives of having to do this which was clear - I am saying let's not lose sight of WHY we had to do it in the first place which was our own dismal failings.

I care not a jot regards whether Boro want to sue the EFL or whether other clubs think what we did was unfair I AM interested in how we managed to land up in this situation in the first place 

You're right, we did mess up big time. It's also possible that the club always knew that they had a "get out of jail free" card? Obviously they wouldn't have thought "let's buy players who aren't good enough at over inflated prices and then sell the stadium to ourselves to escape punishment", but you get what I'm saying hopefully.

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55 minutes ago, GenBr said:

I don't even understand why parachute payments are needed in the first place. You already get £100 mill prize money even if you finish bottom of the league. There are also at least half a dozen clubs who wrote relegation clauses into Prem players contracts which stated they would either take pay cuts or be allowed to leave in the event of relegation.

They were originally brought in to help make sure relegated clubs from the PL didn't go into financial a death spiral. They have become something else. I think there was also thinking that they wanted newly promoted teams to give it a go and not accept relegation for fear of taking on too many liabilities.

I'm in the camp that says make them only be available for liabilities taken on the Premier league. 2-3 seasons post relegation funding of promotion challenges wasn't the intention and really shouldn't be how that money is used.

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16 minutes ago, richinspain said:

You're right, we did mess up big time. It's also possible that the club always knew that they had a "get out of jail free" card? Obviously they wouldn't have thought "let's buy players who aren't good enough at over inflated prices and then sell the stadium to ourselves to escape punishment", but you get what I'm saying hopefully.

Yes totally concur that the clubs motives were honourable and that they didn't maliciously buy players at over inflated transfers prices on obscenely expensive contracts.

Did Morris have the ruse of selling the ground in his back pocket as a contingency I hope so as that would have shown some foresight rather than desperation.

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8 minutes ago, Tyler Durden said:

For the avoidance of doubt before I start to get jumped on unnecessarily I am not saying that we cheated by avoiding FFP sanctions by selling the ground back to ourselves nor do I question the motives of having to do this which was clear - I am saying let's not lose sight of WHY we had to do it in the first place which was our own dismal failings.

I care not a jot regards whether Boro want to sue the EFL or whether other clubs think what we did was unfair I AM interested in how we managed to land up in this situation in the first place 

Did we actually have to do the sale to get through FFP though, or did we just think it was a good thing to do to allow ourselves some breathing space in future years while the rules allow it to be done?

The figures make it look like without the sale we would have lost something like £24-25m last season, but do we know if that was including the things that could be excluded for FFP purposes? Youth, infrastructure, community expenditure. If it was then there's a high chance it would have been less than £20m, probably still more than the £13m allowable, but did we go up to that amount in both the preceding seasons, taking us right up to the limit for the last one of the 3?

It's difficult to know just from the published figures whether we did it because we had to, or whether we did it because we wanted to, to allow us to compete again in the future seasons.

Mel was clear on Talksport on Friday morning to say it wasn't a loophole we used and that the rules are very specific.

I've seen Leeds fans on Twitter comparing it to Spygate, saying they got in trouble for not breaking a rule, and that we've gone 'against the spirit' etc, but one of the (many) things that's different about this is that the rules were changed specifically to allow it to happen (and the other clubs must have been aware of this rule change, didn't they vote on the rule changes? Strange if no one from any of the clubs involved saw the change in wording before they voted?) rather than there never having been a specific rule in place for it in the first place.

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17 minutes ago, richinspain said:

You're right, we did mess up big time. It's also possible that the club always knew that they had a "get out of jail free" card? Obviously they wouldn't have thought "let's buy players who aren't good enough at over inflated prices and then sell the stadium to ourselves to escape punishment", but you get what I'm saying hopefully.

The EFL's rules originally had a clause that specifically stated that the sale of assets such as stadiums, etc could not be included in FFP calculations. This was only removed from the rules in 2017, which is well after our big spending season when we brought the likes of Johnson and Butterfield in.

The only season since then that we haven't made a profit on transfers is this year and that was virtually entirely offset by the money we got from Frank. We've become a lot more financially prudent since certain people left the club (not saying it is that persons fault entirely, but they aren't blameless either).

2 minutes ago, RandomAccessMemory said:

Did we actually have to do the sale to get through FFP though, or did we just think it was a good thing to do to allow ourselves some breathing space in future years while the rules allow it to be done?

The figures make it look like without the sale we would have lost something like £24-25m last season, but do we know if that was including the things that could be excluded for FFP purposes? Youth, infrastructure, community expenditure. If it was then there's a high chance it would have been less than £20m, probably still more than the £13m allowable, but did we go up to that amount in both the preceding seasons, taking us right up to the limit for the last one of the 3?

It's difficult to know just from the published figures whether we did it because we had to, or whether we did it because we wanted to, to allow us to compete again in the future seasons.

Mel was clear on Talksport on Friday morning to say it wasn't a loophole we used and that the rules are very specific.

I've seen Leeds fans on Twitter comparing it to Spygate, saying they got in trouble for not breaking a rule, and that we've gone 'against the spirit' etc, but one of the (many) things that's different about this is that the rules were changed specifically to allow it to happen (and the other clubs must have been aware of this rule change, didn't they vote on the rule changes? Strange if no one from any of the clubs involved saw the change in wording before they voted?) rather than there never having been a specific rule in place for it in the first place.

We sold the stadium for £80 million and only recorded a profit of £15 mill even with this. I'm not an accountant, so maybe I'm misreading the figures, but surely this means we would have been miles out from an FFP perspective.

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56 minutes ago, GenBr said:

The EFL's rules originally had a clause that specifically stated that the sale of assets such as stadiums, etc could not be included in FFP calculations. This was only removed from the rules in 2017, which is well after our big spending season when we brought the likes of Johnson and Butterfield in.

The only season since then that we haven't made a profit on transfers is this year and that was virtually entirely offset by the money we got from Frank. We've become a lot more financially prudent since certain people left the club (not saying it is that persons fault entirely, but they aren't blameless either).

We sold the stadium for £80 million and only recorded a profit of £15 mill even with this. I'm not an accountant, so maybe I'm misreading the figures, but surely this means we would have been miles out from an FFP perspective.

I'm not an accountant either, but the £80m figure is misleading, it wasn't £80m profit, you have to take off the net book value from that to get the profit.

Approximate figures of £80m - £41m = £39m profit on the sale, profit on the accounts = £14.6m so £14.6m - £39m = -£24.4m. So if I've got that right the loss without the sale would have been circa £24.4m?

I'm not sure if the club accounts still include the youth, community etc expenditure, if they do then you remove the allowable figures for that from the £24.4m to get the FFP loss?

I remember a post from ramblur after the 2016/17 accounts were released where they thought the club accounts were consolidating the other accounts, if that was and is still the case then I don't think the FFP loss would have been £24.4m as you've got the other companies figures included in that.

Sure they normally say it's something like £5m (could be more if you run it to a higher level than required) for running a Category One academy? If that was included in those figures then that's not included for FFP.

BBC article has our losses for 2015/16 and 2016/17 as £14.7m and £7.9m respectively, if they included things that could be excluded for FFP like the youth expenditure then we should have been well under the £26m allowed for those 2 seasons combined (in the £39m 3 year cycle), meaning in theory we could lose more in 2017/18, although you wouldn't want to go too far over the £13m because it limits you for future seasons when the prior ones are knocked off. If there's circa £5m per season to be knocked off those figures then we should have been under the £39m even if the £24.4m didn't include anything we could knock off for FFP?

I think? ?‍♀️

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16 hours ago, RamNut said:

Ffp has been a great leveller.

it has made the championship the most even and competitive league there is.

 

 

5 hours ago, Paul71 said:

Why should there be a leveller?

If someone has the tools to be better than the competition then they should be able to use it, even if thats financial.

It happens in most sports.

Should in F1 the top teams be forced to spend less and also not employ the best drivers?

Should certain countries in athletics not be allowed to provide better facilities for their athletes than other countries?

Maybe we should go further and say the likes of Ronaldo and Messi should play with lead boots on because its not fair on other players.

 

Keep your trousers on, it was just a statement of fact, not a value judgement.

 

 

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30 minutes ago, RamNut said:

 

Keep your trousers on, it was just a statement of fact, not a value judgement.

 

 

Keep yours on it was just a comment and opinion. 

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