Relegation?

[Sith Happens]

10 minutes ago, G STAR RAM said:

Dont really have a problem with either club.

Both small clubs with low income that were bankrolled by rich owners.

Don't disagree with that. My problem is the EFL. There appears a huge inconsistency with how they handle cases.

Yes these may be old cases now but how do you go from fining a club a few quid to potentially relegating clubs for lesser offences?

Would be around the same time Forest had a transfer embargo for multiple windows, yet Bournemouth / QPR get a slap on the wrists.

Just let owners spend what they wants provided its not 'loans/borrowing'.

[G STAR RAM]

1 minute ago, Paul71 said:

Don't disagree with that. My problem is the EFL. There appears a huge inconsistency with how they handle cases.

Yes these may be old cases now but how do you go from fining a club a few quid to potentially relegating clubs for lesser offences?

Would be around the same time Forest had a transfer embargo for multiple windows, yet Bournemouth / QPR get a slap on the wrists.

Just let owners spend what they wants provided its not 'loans/borrowing'.

Maybe the EFL have realised that clubs just laugh at them when they hand out fines?

[Ghost of Clough]

23 hours ago, G STAR RAM said:

I'd love to hear your rationale behind your statement that "...realistic chance that we go into administration".

How do you think this would benefit the club and what effect on MM personally?

 Can’t see it myself, but others may think MM will stop putting the money in. 

23 hours ago, G STAR RAM said:

I'm using the 2018 accounts as a reference point and have no idea how youve reached your conclusion.

Where have you heard that the main issue is the amortisation method used? Reliable source?

I believe there’s a higher probability of being punished for amortisation than the stadium due to us having the valuation done by an unrelated professional party. The amortisation policy is only used by us in the football industry in this country.

Stadium = c£40m swing for 3 periods

Amortisation (and profit on sales) = c£16.5m swing for period ending in 2018, c12m swing in 2019, c£0 in 2020, -£13m in 2021, -£15.5m in 2022, with things levelling off after that. 

The stadium is the single biggest impact by far. Ironically, if we’re ‘guilty’ of improper amortisation and was past figures readjusted, Cocu could have a massive transfer budget (an extra £28.5m)

 

Note: figures are based on approximate transfer fees (in and out), and using the approved amortisation policy based on initial player contracts and adjusted with contract extensions.

23 hours ago, G STAR RAM said:

I'm pretty sure there must be some guidance to the punishments that can be handed down for breaching FFP rules, I very much doubt expulsion from the EFL would be allowable.

The disciplinary commission (I think that’s what they’re called) can give out whatever punishment they feel worthy. However, in the Birmingham case they referred to applying some consistency to punishments - sticking to the EFL’s sanctioning guidelines which were brought in after the period in question. 
 

Points deducted for overspending: 
£0-2m = 3 points
£2-4m = 4 points
£4-6m = 5 points
£6-8m = 6 points
£8-10m = 7 points
£10-12m = 8 points
£12-13m - 9 points
£13-14m = 10 points
£14-15m = 11 points 
£15m+ = 12 points

Aggravating factors increasing punishment (9 points max.): 
- A trend of increasing spend = 3 points
- other undefined factors = unknown points

Mitigating factors decreasing punishment:
- Admitting to breaching limits = 1 point
- other undefined factors = unknown points

[Ghost of Clough]

1 hour ago, Paul71 said:

Out of interest, lets assume they miss that deadline and we have a run going and sneak into the play offs and win them....we go up...then what do they do?

Assume points deduction only applies in EFL?

Any of three options as it hasn’t happens before . The potential punishment is to be handed out by the Premier League, a financial settlement is agreed with the EFL, or the EFL will wait for us to drop back down before handing the penalty out. 

[Ghost of Clough]

53 minutes ago, wyschtonram said:

I believe so, this is why QPR were fined after relegation ? Also, if Bournemouth come down will their fine be applied for breaking FFP guidelines when they went up ?

Both instances were before the EFL and Premier League P&S rules were aligned. 

[Tyler Durden]

48 minutes ago, Paul71 said:

Just had a look and you are right. They recorded losses of 38 million in one season alone yet got fined just 4.75 million. Yet another example of utter incompetence at the EFL.

I hope you're still saying that after they let us off with a suspended points deduction ?

[Sith Happens]

36 minutes ago, Tyler Durden said:

I hope you're still saying that after they let us off with a suspended points deduction ?

Considering they have actually admitted they are to blame for our situation then even a suspended deduction will be too much IMO.

[Tyler Durden]

10 minutes ago, Paul71 said:

Considering they have actually admitted they are to blame for our situation then even a suspended deduction will be too much IMO.

So why the hysteria on here then?

(Not particularly aimed at yourself)

Morris seems very bullish about winning, what's the concern 

[Sith Happens]

2 minutes ago, Tyler Durden said:

So why the hysteria on here then?

(Not particularly aimed at yourself)

Morris seems very bullish about winning, what's the concern 

For me I do have a gut feeling we will win, or in recognition of our due diligence in ensuring our processes were within the rules receive a small slap on the wrists (suspended deduction as you alluded to). My annoyance, anger, whatever you want to call it is what appears to have been the announcement was timed to ensure maximum impact to us, right at the start of the window and also potentially impact the investment.

I may be a million miles off but it really does smack of the EFL attempting to cover their own due to the threat of legal action from Boro.

Personally I hope we win then Mel sues anyway.

[Tyler Durden]

2 minutes ago, Paul71 said:

For me I do have a gut feeling we will win, or in recognition of our due diligence in ensuring our processes were within the rules receive a small slap on the wrists (suspended deduction as you alluded to). My annoyance, anger, whatever you want to call it is what appears to have been the announcement was timed to ensure maximum impact to us, right at the start of the window and also potentially impact the investment.

I may be a million miles off but it really does smack of the EFL attempting to cover their own due to the threat of legal action from Boro.

Personally I hope we win then Mel sues anyway.

I think the timing of the investigation has been coincidental to be fair, referring to the other threads it looks like we've made a good job of clucking things up ourselves regards investors without the need for help from the EFL.

I don't see much merit in poking the hornets nest by countersuing the EFL if we do win given that in all probability we will be playing in the Championship for at least another season after this one 

[Sith Happens]

3 minutes ago, Tyler Durden said:

I think the timing of the investigation has been coincidental to be fair, referring to the other threads it looks like we've made a good job of clucking things up ourselves regards investors without the need for help from the EFL.

I don't see much merit in poking the hornets nest by countersuing the EFL if we do win given that in all probability we will be playing in the Championship for at least another season after this one 

Fair enough, I am probably more cynical and less trusting in the EFL's motives than you are.

I just cannot believe that the involvement of Boro hasn't influenced them in their actions.

[Tyler Durden]

20 minutes ago, Paul71 said:

Fair enough, I am probably more cynical and less trusting in the EFL's motives than you are.

I just cannot believe that the involvement of Boro hasn't influenced them in their actions.

Yes I think part of this is to appease Boro's protestations, for me as long as the EFL are seen to progress their complaints against us and then find no case to answer subsequently then this draws a line under the case and leave Boro with no formal recourse other then Gibson periodically moaning like a drain when it suits him 

[CornwallRam]

On 29/02/2020 at 08:49, G STAR RAM said:

I'd love to hear your rationale behind your statement that "...realistic chance that we go into administration".

How do you think this would benefit the club and what effect on MM personally?

I'm using the 2018 accounts as a reference point and have no idea how youve reached your conclusion.

Where have you heard that the main issue is the amortisation method used? Reliable source?

I'm pretty sure there must be some guidance to the punishments that can be handed down for breaching FFP rules, I very much doubt expulsion from the EFL would be allowable.

EFL regs on the punishment - 

92.1 The Disciplinary Commission may at any time make a decision, and may make more than one decision at different times on different aspects of the matters to be determined.

92.2 A decision may:

92.2.1 order a party to do or refrain from doing anything;

92.2.2 order a specific performance;

92.2.3 make a declaration on any matter to be determined;

92.2.4 issue a reprimand or warning as to the future conduct of a party;

92.2.5 order the payment of compensation to The League, any Club, any other club, Player or other person;

92.2.6 order a suspension of membership of The League;

92.2.7 order a deduction of points;

92.2.8 impose a financial penalty payable to The League;

92.2.9 recommend expulsion from membership of The League;

92.2.10 order a withdrawal or loss of benefit otherwise available to members of The League e.g. basic award or ladder payment;

92.2.11 impose an embargo on registration of Players;

92.2.12 order any other sanction as the Disciplinary Commission may think fit; and

92.2.13 order that interest be payable on any sums awarded under this Regulation for such period and at such rates as the Disciplinary Commission thinks fit.

92.3 These sanctions may be imposed immediately or may be deferred or suspended for such period and on such terms as the Disciplinary Commission shall decide.

92.4 At any time a Disciplinary Commission may determine (either of its own accord or as a result of representations from a person, Club or club and in any event in its sole discretion) that if the complaint is upheld, it may wish to exercise the power under Regulation 92.2.5 to award compensation.  If the Disciplinary Commission so determines, it shall notify the parties to the proceedings and the potential recipient(s) of this fact. The Disciplinary Commission may then make appropriate directions as to the receipt of evidence of loss from the relevant recipient(s) as well as directions on the receipt of evidence in response from the parties to the proceedings.

92.5 The Disciplinary Commission shall have the power to abridge the time period set out in Regulation 94.3 (time limits for appeal) if there is a compelling reason why the appeal (if any) needs to be concluded expeditiously.

92.6 Any financial sanction and any order for costs shall be paid to The League within 14 days of the date on which the sanction or costs were imposed.  Any compensation shall be paid in accordance with the order of the Disciplinary Commission.

 

As for the administration thing - I'm not going to breach confidences and tell you my sources. Both are second hand, so I might have been told a complete pack of lies, but I believe them, especially as I have heard similar things from both parties - via different channels. One is someone with impeccable, but admittedly former connections to the club in a capacity where they would certainly have know. One is from someone well connected on football in general - but with no direct connection to the club.

What I have heard - which I freely admit may be complete rubbish, is that when Mel bought the club, he set a limit on how much he would invest. He breached that limit last season. He's now in the uncomfortable position of having to breach his own fiscal rules. His remaining fortune is not infinite. At some point, he will stop putting any more cash in. He's working very hard to manage that. He's trying to cut costs to make the club more sustainable and trying to get external investment or even a sell the club on. Assuming that Mel isn't completely drained of finances, I believe he will keep us out of administration - both because he's a fan and administration would make his previous investment almost worthless. But if Mel can't or won't invest further - and impending relegation might make him think it's pointless, administration could soon follow. We have numerous creditors, the most pressing of which would be HMRC. IMO, administration is most unlikely, but not impossible.

Also, the same sources, plus an accountancy friend - though I've no idea how he'd actually know, have said that the stadium sale is just a dispute on numbers. The difference is likely to be relatively small, so only small (possibly 3) points deduction likely at worst. The amortization thing is seen as massive issue as if they let us get away with it, it ends the P&S system. Clubs can just revalue their assets to make the P&L say anything. Also considered to be really risky for clubs getting into real financial problems and a green light for dodgy owners.

[therealhantsram]

On 27/02/2020 at 15:42, Tamworthram said:

I think those that would welcome league one do so on the assumption we'd bounce back within a year (or two max.) The novelty of new grounds might be fun. But, as you have pointed out, there are some clear examples of where this doesn't always happen. 

That's right. The FFP rules in League 1 make it extremely difficult for the big clubs to get out. We do not want to go down!

[Ghost of Clough]

@CornwallRam

You suggest we could be deducted 3 points for the stadium. Accounts indicate we were at least £7m under budget for the period ending 2018, whereas some reports say £8m. To have those 3 points deducted, we’d have to see a swing of up to £10m in the sale price. I wouldn’t say that’s a “relatively small” difference in ground valuation. 

[RandomAccessMemory]

@CornwallRam

What I don't understand from what you've said, if the 'amortisation thing' is seen as a 'massive issue', given that we've been using that method for our amortisation since the 2015/16 accounts, and I seem to remember it being widely spoken about as being different, would it not have been rather pertinent to tell the club before mid-January 2020 that it was not an acceptable method according to the EFL? (Noting that the Club statement said 'newly notified' re. the amortisation charge.)

The EFL rules (unless they are not the full ones on their website, although I don't see why they wouldn't be?) do not make any reference to acceptable methods of amortisation, in fact the word amortisation is only used a total of six times, three being for the 2015/16 set of rules, and three being 2016/17 onwards.

There's also a BBC article that says Kieran Maguire wrote to the EFL in June 2018 to 'query the accounting policy' re. our amortisation, he was apparently never contacted by the relevant EFL finance team, and their supporter services department responded and suggested he contact the club or its auditors and that the information he provided would be handed to the finance department. Yet it took them EIGHTEEN MONTHS after his contacting them for them to charge us for it, presumably during which time we were also working to the same method. And also during which time (March 2019) the EFL said via statement that Birmingham were the only club to have failed FFP for the three year period ending 2017/18. I do wish they'd make their minds up! Given this statement it does rather look like they've only recently decided that they don't like our method (I wonder why this is?) by which time the club are not in a position to do a single thing about it as what's done is done.

https://www.efl.com/-more/governance/efl-rules--regulations/appendix-5---financial-fair-play-regulations/

https://www.bbc.co.uk/sport/football/51322797

https://www.efl.com/news/2019/march/efl-statement-birmingham-city/

[G STAR RAM]

8 hours ago, CornwallRam said:

What I have heard - which I freely admit may be complete rubbish, is that when Mel bought the club, he set a limit on how much he would invest. He breached that limit last season. He's now in the uncomfortable position of having to breach his own fiscal rules. His remaining fortune is not infinite. At some point, he will stop putting any more cash in. He's working very hard to manage that. He's trying to cut costs to make the club more sustainable and trying to get external investment or even a sell the club on. Assuming that Mel isn't completely drained of finances, I believe he will keep us out of administration - both because he's a fan and administration would make his previous investment almost worthless. But if Mel can't or won't invest further - and impending relegation might make him think it's pointless, administration could soon follow. We have numerous creditors, the most pressing of which would be HMRC. IMO, administration is most unlikely, but not impossible.

Also, the same sources, plus an accountancy friend - though I've no idea how he'd actually know, have said that the stadium sale is just a dispute on numbers. The difference is likely to be relatively small, so only small (possibly 3) points deduction likely at worst. The amortization thing is seen as massive issue as if they let us get away with it, it ends the P&S system. Clubs can just revalue their assets to make the P&L say anything. Also considered to be really risky for clubs getting into real financial problems and a green light for dodgy owners.

Interested to know about the HMRC creditor? At 30 June 2018 we had £60m net assets, where has that all gone?

If your accountancy friend has said that a company can just revalue its assets to make the p&l say anything, I would suggest to them that they should start looking for another job.

[Ghost of Clough]

19 hours ago, CornwallRam said:

Also, the same sources, plus an accountancy friend - though I've no idea how he'd actually know, have said that the stadium sale is just a dispute on numbers. The difference is likely to be relatively small, so only small (possibly 3) points deduction likely at worst. The amortization thing is seen as massive issue as if they let us get away with it, it ends the P&S system. 

Just been thinking about this again. A deduction due to the amortisation policy could see us lose 6 points (less with mitigations), whereas a £10m difference in stadium profit would see us lose 3 points (less with mitigations), so I suppose your point of which is the bigger worry stands. But, I don't agree with it resulting in 'ending P&S'. After a period of 3/4 years of using our method, things level out.

[CornwallRam]

On 01/03/2020 at 15:41, RandomAccessMemory said:

@CornwallRam

What I don't understand from what you've said, if the 'amortisation thing' is seen as a 'massive issue', given that we've been using that method for our amortisation since the 2015/16 accounts, and I seem to remember it being widely spoken about as being different, would it not have been rather pertinent to tell the club before mid-January 2020 that it was not an acceptable method according to the EFL? (Noting that the Club statement said 'newly notified' re. the amortisation charge.)

The EFL rules (unless they are not the full ones on their website, although I don't see why they wouldn't be?) do not make any reference to acceptable methods of amortisation, in fact the word amortisation is only used a total of six times, three being for the 2015/16 set of rules, and three being 2016/17 onwards.

There's also a BBC article that says Kieran Maguire wrote to the EFL in June 2018 to 'query the accounting policy' re. our amortisation, he was apparently never contacted by the relevant EFL finance team, and their supporter services department responded and suggested he contact the club or its auditors and that the information he provided would be handed to the finance department. Yet it took them EIGHTEEN MONTHS after his contacting them for them to charge us for it, presumably during which time we were also working to the same method. And also during which time (March 2019) the EFL said via statement that Birmingham were the only club to have failed FFP for the three year period ending 2017/18. I do wish they'd make their minds up! Given this statement it does rather look like they've only recently decided that they don't like our method (I wonder why this is?) by which time the club are not in a position to do a single thing about it as what's done is done.

https://www.efl.com/-more/governance/efl-rules--regulations/appendix-5---financial-fair-play-regulations/

https://www.bbc.co.uk/sport/football/51322797

https://www.efl.com/news/2019/march/efl-statement-birmingham-city/

It's very odd indeed. Logically, if they had a problem with our amortisation system, why has it taken so long? I can't begin to work that one out.

[CornwallRam]

20 hours ago, G STAR RAM said:

Interested to know about the HMRC creditor? At 30 June 2018 we had £60m net assets, where has that all gone?

If your accountancy friend has said that a company can just revalue its assets to make the p&l say anything, I would suggest to them that they should start looking for another job.

A very odd post. Bills are paid in cash, not assets. The assets of a football club are also very hard to to turn into cash quickly. As an accountant, I am sure you know that cash flow is what causes companies to fold. Our cash flow is almost completely dependent on the largess of our owner.