EFL charge Derby over ffp

[Ramslaar]

1 minute ago, Paul71 said:

Coventry have never owned the Ricoh. Always been tenants.

 

Really like you paul always on the money and has good rounded views.

[Comrade 86]

1 hour ago, europia said:

Yes which ever way you try to sugar coat it, DCFC is living beyond its means. Massively over inflated player wages and poor financial management are the root cause. The club has sold its main asset, Pride Park, in order to try and circumvent EFL rules. Once you have sold an asset, it's gone. 

Just an observation, but Coventry City who no longer own their ground, will be playing their home cup tie against Birmingham City, at Birminghams ground, where Coventry are currently tenants for home fixtures. Absolutely bonkers. 

[RamNut]

Everyone  seems to be very re-assured by the club statement.

Having thought about it, i think this is the only way that the EFL can get itself off the hook of the legal action brought by boro.

if they adjudicate the issue in Derby's favour as they appear to have done so far, then they are answerable and responsible for the judgement. They will have to defend their competency and decision making in court. 

however, if instead, they allow due process to occur and refer the matter to the independent panel, then their legal defence is that they have  dealt with the issue properly, and now the panel has responsibility for the adjudication.furthermore since they have presumably included all of the grievances raised, it is difficult to see on what basis boro's legal action could succeed.

now they will face possible legal action from Derby. 

 Derby has stated that we will challenge the right of the EFL to bring charges in these curcumstances. If i am right in my assumption that the EFL will argue that previous dialogue constitutes non-binding negotiations and is not the formal approval of the EFL Executive, then i think we could lose that argument. 

I don't know the mechanics of the EFL approval process, but i assume that they will argue that they do not give approvals on the hoof; that the approval process is a single decision made after the formal submission of all relevant info; and that the previous dialogue does not absolve the club of their responsibility for compliance and their duty to prove their case. presumably the EFL then employ auditors to scrutinise and verify the submissions. 

The next issue is whether the actual valuation in the dcfc accounts is "fair value". The EFL rules state that transaction with "related parties" may actually occur at rates which are not "fair value", but that for the purposes of ffp, the club must identify "fair value" and make an appropriate adjustment as necessary. "fair value" is defined as the amount that an arms length, external party would pay. 

In my mind, the EFL auditors have concluded that Derby have not proven that the actual valuation is "fair". Someone has procured another independent valuation to help determine the issue. This new evidence is the reason that the EFL has now issued the charge. The EFL will argue that they have adjudicated it fairly. Pick the bones out of that? The independent panel will have to decide. Whether they decide in Derby's favour or not, the EFL are off the hook. If i was a betting man, i wouldn't bet that we would win. I raised my concerns about it at the time and was surprised when the EFL appeared to rule that everything was hunky dory. 

as for the second issue of amortisation and residual values? Derby have been open about this method of accounting and previous years submissions have been approved, therefore we seem to be well placed to win that argument. presumably the issue is not whether it's a valid accounting method for accounts submitted to companies house, but whether it is compliant with the protocols of ffp. It seems odd that we are the only club that has gone off piste. 

The  issue for me is whether the sale of the ground was a get out of jail card for ffp, or whether it was a genuine transaction to enable ground development to occur. Once the club no longer owns the stadium, i can't see how the additional income generated is of any benefit to the club. The sale of the ground was never publicised. I Was the person who broke the story of the plans to put a roof over Pride Park on this forum and i was told it was all very hush hush with the implication of major bollockings if word got out. I don't understand the reason for the secrecy. I don't understand why nothing was announced at the fans forum. It looks to me like an ffp rabbit-out-of-the-hat strategy. I hope the EFL change the rules to specifically exclude profits from stadium sales as a valid strategy for demonstrating compliance with ffp. FFP was never intended to force clubs to sell their stadiums, and this seems to me to be a fundamentally bad idea. Ffp was meant to deal with revenue not one-off capital receipts.

I think we will end up having a points deduction of some sort, but the panel might be lenient. Surely our defence that we engaged with the EFL throughout and in good faith, must carry some weight? Unfortunately we weren't quite as transparent with the fans.

Who knows. As ever with Derby County, we seem to make as many headlines off the pitch as we do on it.   

[RadioactiveWaste]

7 minutes ago, RamNut said:

I think we will end up having a points deduction of some sort, but the panel might be lenient. Surely our defence that we engaged with the EFL throughout and in good faith, must carry some weight? We weren't quite as transparent with the fans.

 

I other areas of life the regulator position is usually "It's not our job to tell you how to comply with the rules, it's our job to enforce them" but then I've never heard of a situation where a regulator told a party "ok, do that.....oh wait, no you can't do that, here's the enforcement against you"

 

[NottsRam77]

29 minutes ago, RamNut said:

Everyone  seems to be very re-assured by the club statement.

Having thought about it, i think this is the only way that the EFL can get itself off the hook of the legal action brought by boro.

if they adjudicate the issue in Derby's favour as they appear to have done so far, then they are answerable and responsible for the judgement. They will have to defend their competency and decision making in court. 

however, if instead, they allow due process to occur and refer the matter to the independent panel, then their legal defence is that they have  dealt with the issue properly, and now the panel has responsibility for the adjudication.furthermore since they have presumably included all of the grievances raised, it is difficult to see on what basis boro's legal action could succeed.

now they will face possible legal action from Derby. 

 Derby has stated that we will challenge the right of the EFL to bring charges in these curcumstances. If i am right in my assumption that the EFL will argue that previous dialogue constitutes non-binding negotiations and is not the formal approval of the EFL Executive, then i think we could lose that argument. 

I don't know the mechanics of the EFL approval process, but i assume that they will argue that they do not give approvals on the hoof; that the approval process is a single decision made after the formal submission of all relevant info; and that the previous dialogue does not absolve the club of their responsibility for compliance and their duty to prove their case. presumably the EFL then employ auditors to scrutinise and verify the submissions. 

The next issue is whether the actual valuation in the dcfc accounts is "fair value". The EFL rules state that transaction with "related parties" may actually occur at rates which are not "fair value", but that for the purposes of ffp, the club must identify "fair value" and make an appropriate adjustment as necessary. "fair value" is defined as the amount that an arms length, external party would pay. 

In my mind, the EFL auditors have concluded that Derby have not proven that the actual valuation is "fair". Someone has procured another independent valuation to help determine the issue. This new evidence is the reason that the EFL has now issued the charge. The EFL will argue that they have adjudicated it fairly. Pick the bones out of that? The independent panel will have to decide. Whether they decide in Derby's favour or not, the EFL are off the hook. If i was a betting man, i wouldn't bet that we would win. I raised my concerns about it at the time and was surprised when the EFL appeared to rule that everything was hunky dory. 

as for the second issue of amortisation and residual values? Derby have been open about this method of accounting and previous years submissions have been approved, therefore we seem to be well placed to win that argument. presumably the issue is not whether it's a valid accounting method for accounts submitted to companies house, but whether it is compliant with the protocols of ffp. It seems odd that we are the only club that has gone off piste. 

The  issue for me is whether the sale of the ground was a get out of jail card for ffp, or whether it was a genuine transaction to enable ground development to occur. Once the club no longer owns the stadium, i can't see how the additional income generated is of any benefit to the club. The sale of the ground was never publicised. I Was the person who broke the story of the plans to put a roof over Pride Park on this forum and i was told it was all very hush hush with the implication of major bollockings if word got out. I don't understand the reason for the secrecy. I don't understand why nothing was announced at the fans forum. It looks to me like an ffp rabbit-out-of-the-hat strategy. I hope the EFL change the rules to specifically exclude profits from stadium sales as a valid strategy for demonstrating compliance with ffp. FFP was never intended to force clubs to sell their stadiums, and this seems to me to be a fundamentally bad idea. Ffp was meant to deal with revenue not one-off capital receipts.

I think we will end up having a points deduction of some sort, but the panel might be lenient. Surely our defence that we engaged with the EFL throughout and in good faith, must carry some weight? Unfortunately we weren't quite as transparent with the fans.

Who knows. As ever with Derby County, we seem to make as many headlines off the pitch as we do on it.   

Great post 

just one thing, in Derby’s statement I’m sure they say they discussed the valuation of the stadium with an EFL executive /EfL and adjusted it accordingly 

if that is the case, then Derby have already shown willing to listen and act reasonable when valuing the stadium  

I just can’t see how now the EFL have any sort of case having had that dialogue to throw it all back at us 

 

[Gisby]

10 minutes ago, RadioactiveWaste said:

I other areas of life the regulator position is usually "It's not our job to tell you how to comply with the rules, it's our job to enforce them" but then I've never heard of a situation where a regulator told a party "ok, do that.....oh wait, no you can't do that, here's the enforcement against you"

 

Couldn’t agree more, my industry is exactly this .... the regulator\compliance office make the rules & we interpret them but if ever they were to ‘sign off’ any actions we had undertaken which they then retrospectively deem to have breached the rules then there is only one party that carries the can and it’s not us!!! Despite all the noise I simply can’t see how the EFL can arrive at their decision to charge the club and even more so how they expect to win?? Unless they have more up their sleeve, if not then Mel & DCFC will make toast of them surely.

[Inverurie Ram]

@RamNut you need to spend more time concentrating on the song writing, let the club deal with the facts and figures!

"Steven Gibson, you're such a ducking Venus, Steven Gibson you're a horses rse"............

All sing along to this tune........

 

[TigerTedd]

I like a relatable analogy. 

This looks like your in a car park, you see a space that isn’t really a space, but looks like you could park there without causing any problems, but you wonder why no one else has thought of parking there. 

Luckily, there’s a parking attendant right there, so you pull over and ask, ‘am I alright to park there mate?’

he says he can’t se a problem with that. So you park, go about your business, and come back to a parking ticket. 

I’d be ducking livid. 

Mind you, it turns out that parking attendant was the new guy, who didn’t really know what he was talking about. 

turns out it wasn’t just an unused verge, it was emergency access, with plenty of signage, and while I was away a fire engine couldn’t get in.

Should I have noticed that before I parked, should the parking attendant? Can I fall back on saying the parking attendant said it was okay, when there are clear signs all over the place?

[Sith Happens]

As it's now over to an independent body it will be interesting what they make their decision on.

If its the facts we broke the rules we may get punished. It depends if they can take into account gross negligence on the efl part. 

I can see a punishment and subsequent legal action from Derby against the Efl.

The cynic in me wonders however how independent the review will be.

 

[Steve Buckley’s Dog]

5 minutes ago, Paul71 said:

As it's now over to an independent body it will be interesting what they make their decision on.

If its the facts we broke the rules we may get punished. It depends if they can take into account gross negligence on the efl part. 

I can see a punishment and subsequent legal action from Derby against the Efl.

The cynic in me wonders however how independent the review will be.

 

I have no doubt that the Steve Gibson independent review and arbitration service will come to a fair decision. 

[GenBr]

6 minutes ago, TigerTedd said:

 

Should I have noticed that before I parked, should the parking attendant? Can I fall back on saying the parking attendant said it was okay, when there are clear signs all over the place?

What are the clear signs in our case then? The EFL rules don't contain anything to inform us. If anything the signs on the parking space are telling us the opposite and that is totally fine to park where we want.

[Mucker1884]

27 minutes ago, RadioactiveWaste said:

I other areas of life the regulator position is usually "It's not our job to tell you how to comply with the rules, it's our job to enforce them" but then I've never heard of a situation where a regulator told a party "ok, do that.....oh wait, no you can't do that, here's the enforcement against you"

 

Precisely my thoughts.

I was particularly drawn to this section of yesterday's official club statement...

"While the Club accepts the EFL’s FFP/P&S regulations are complex and open to interpretation, it is critical when such matters have been discussed and reviewed in detail, that written approval from the EFL is the only basis on which a Club can be assured it has complied. These charges by the EFL Executive bring this fundamental aspect of governance into question."

 

All this crap about "fair valuation" and "In all matters and transactions relating to The League each Club shall behave towards each other Club and The League with the utmost good faith." (Reg 3.4... which I believe was what they used to fine the DYS for spygate?) is far too loose.  Much too open to interpretation.  They could pretty much do away with most, if not all, rules/regs, and just use reg 3.4!  

Yes, by all means, slap DCFC's wrist, and change/re-word the rules accordingly for the future (as they did after spygate... or they said they would.  No idea if they actually have yet?).  But punish us?  EFF OFF!

[Chester40]

11 minutes ago, TigerTedd said:

I like a relatable analogy. 

This looks like your in a car park, you see a space that isn’t really a space, but looks like you could park there without causing any problems, but you wonder why no one else has thought of parking there. 

Luckily, there’s a parking attendant right there, so you pull over and ask, ‘am I alright to park there mate?’

he says he can’t se a problem with that. So you park, go about your business, and come back to a parking ticket. 

I’d be ducking livid. 

Mind you, it turns out that parking attendant was the new guy, who didn’t really know what he was talking about. 

turns out it wasn’t just an unused verge, it was emergency access, with plenty of signage, and while I was away a fire engine couldn’t get in.

Should I have noticed that before I parked, should the parking attendant? Can I fall back on saying the parking attendant said it was okay, when there are clear signs all over the place?

I too really love a good analogy. This is a bloody great one. I bow down to your superior analogy skills. Look forward to more in the future. 

[Ghost of Clough]

33 minutes ago, NottsRam77 said:

Great post 

just one thing, in Derby’s statement I’m sure they say they discussed the valuation of the stadium with an EFL executive /EfL and adjusted it accordingly 

if that is the case, then Derby have already shown willing to listen and act reasonable when valuing the stadium  

I just can’t see how now the EFL have any sort of case having had that dialogue to throw it all back at us 

 

I wonder how much adjustment. Does the reported £30m difference in valuation relate to actual sale value or the adjusted P&S value? If the later, they’re very close to saying it should have been sold at the £41m book value. 

[Chester40]

4 minutes ago, GenBr said:

What are the clear signs in our case then? The EFL rules don't contain anything to inform us. If anything the signs on the parking space are telling us the opposite and that is totally fine to park where we want.

The very clear signs/parking spaces are that the EFL dont want clubs to get into debt.. but they will allow £40m over a three year period. Derby think they have found a loophole no one else has seen... 

Analogy stands up for me.. 

[Mucker1884]

13 minutes ago, TigerTedd said:

I like a relatable analogy. 

This looks like your in a car park, you see a space that isn’t really a space, but looks like you could park there without causing any problems, but you wonder why no one else has thought of parking there. 

Luckily, there’s a parking attendant right there, so you pull over and ask, ‘am I alright to park there mate?’

he says he can’t se a problem with that. So you park, go about your business, and come back to a parking ticket. 

I’d be ducking livid. 

Mind you, it turns out that parking attendant was the new guy, who didn’t really know what he was talking about. 

turns out it wasn’t just an unused verge, it was emergency access, with plenty of signage, and while I was away a fire engine couldn’t get in.

Should I have noticed that before I parked, should the parking attendant? Can I fall back on saying the parking attendant said it was okay, when there are clear signs all over the place?

Not the best analogy, if you don't mind me saying. 
In Derby's case, there are no signs for Derby to have noticed, and there was no fire engine.  
I'll give you the bit about the parking attendant not knowing what he was talking about, though!  ?

[papa_lazarou]

2 minutes ago, Chester40 said:

I too really love a good analogy. This is a bloody great one. I bow down to your superior analogy skills. Look forward to more in the future. 

Not really an accurate representation of events though is it. You'd need to state you'd been parking in the same spot for a number of years and nothing had been indicated as an issue, the attendant had said it was ok, again and again and again (he isn't the new boy, more likely the old fart who's been around awhile and likes to sleep in his booth). Nor has the car being parked causing any obstruction to an emergency vehicle, more likely it's blocked the bloke in with the flash mercedes who has also parked in a similar spot and doesn't like the the fact someone has had a similar idea.

All a bit of fun I get it.... But it's not a fair analogy.

 

[Mucker1884]

5 minutes ago, Ghost of Clough said:

I wonder how much adjustment. Does the reported £30m difference in valuation relate to actual sale value or the adjusted P&S value? If the later, they’re very close to saying it should have been sold at the £41m book value. 

"relatively modest"

?

[Bald Eagle's Barmy Army]

21 minutes ago, TigerTedd said:

I like a relatable analogy. 

This looks like your in a car park, you see a space that isn’t really a space, but looks like you could park there without causing any problems, but you wonder why no one else has thought of parking there. 

Luckily, there’s a parking attendant right there, so you pull over and ask, ‘am I alright to park there mate?’

he says he can’t se a problem with that. So you park, go about your business, and come back to a parking ticket. 

I’d be ducking livid. 

Mind you, it turns out that parking attendant was the new guy, who didn’t really know what he was talking about. 

turns out it wasn’t just an unused verge, it was emergency access, with plenty of signage, and while I was away a fire engine couldn’t get in.

Should I have noticed that before I parked, should the parking attendant? Can I fall back on saying the parking attendant said it was okay, when there are clear signs all over the place?

Should have done a Lawrence and got a taxi. 

[Rambalin]

The problem with this is going to be ongoing for sometime and throw the league into turmoil.

If there is any sort of points punishment then Derby will take it too court, and say the deducted points cause us to be relegated.The court rules the deduction is illegal and this results in another club then being relegated in our place.Then surely they will appeal it and threaten court action.

With the speed of the legal system next season would not be able to begin till all cases are heard and ruled upon.