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Tribunal Update


Shipley Ram

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1 hour ago, RamNut said:

No-one can be confident about the outcome.
We don’t know what was disclosed or not disclosed, or how the valuation was achieved.

 

The valuation was done by a bona fida company using their  usual methods. 
I I recall correctly the EFL were informed of this value and asked for a slight adjustment which DCFC complied with. 

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18 minutes ago, Reggie Greenwood said:

The valuation was done by a bona fida company using their  usual methods. 
I I recall correctly the EFL were informed of this value and asked for a slight adjustment which DCFC complied with. 

Yep, as I’ve stated before in the thread, the valuation was done by the worlds second largest real estate company. It’s pretty ironclad if you ask me. 

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13 minutes ago, ThePrisoner said:

Yep, as I’ve stated before in the thread, the valuation was done by the worlds second largest real estate company. It’s pretty ironclad if you ask me. 

Almost like Mel wanted to get it right?!

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We need to get as many points on the board as possible is my opinion, not for the playoffs but because we may get a significant points reduction should the worst happen. 
As the tribunal is so late in the season - worst case scenario - any points deduction could apply for the start of next season. 
 

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As far as I recall, the EFl rules state that you can only make a profit if it’s a genuine commercial transaction to a third party. If the asset is sold to a related party then you can’t. I assume therefore that the whole crux of the matter will be whether the status of the buyer was or was not transparent. 
 

hopefully the judgement will be equally transparent.

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15 minutes ago, RamNut said:

As far as I recall, the EFl rules state that you can only make a profit if it’s a genuine commercial transaction to a third party. If the asset is sold to a related party then you can’t. I assume therefore that the whole crux of the matter will be whether the status of the buyer was or was not transparent. 
 

hopefully the judgement will be equally transparent.

The EFL dispute the value of the sale, not who it was sold to.

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Sith Happens

the upshot appears to be the EFL agreed the sale.  They also had no concerns how we valued players.

This has only come about because Gibson threatened to sue the EFL and they probably realised that he may have a case so decided rather than take it on the chin they would try and deflect it towards Derby. 

 

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38 minutes ago, RamNut said:

As far as I recall, the EFl rules state that you can only make a profit if it’s a genuine commercial transaction to a third party. If the asset is sold to a related party then you can’t. I assume therefore that the whole crux of the matter will be whether the status of the buyer was or was not transparent. 
 

hopefully the judgement will be equally transparent.

The regulations only specify that Related Party Transactions are recorded at Fair Market Value.

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

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.

Quote

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.

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.

By my reckoning the bolded quotes from the club statement below satisfy the third quote above?

Quote

The Stadium was valued by professional valuers immediately prior to the transaction. The transaction and valuation were discussed extensively with the EFL Executive, which asked for a relatively modest price adjustment which was accepted. The valuation report was prepared by a highly reputable and professional and independent firm, with industry experience, who had valued the stadium on two prior occasions, one in 2007, and one in 2013.

The Club discussed the rationale for the stadium sale with the EFL Executive, ahead of the transaction, supplied and discussed the valuation, and bar a small adjustment in respect of its FFP/P&S submissions, the Club was given written approval.

 

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It’s not just about the sale of Pride Park but also about our accounting practices. Once again Mel had that approved by the EPL but apparently it doesn’t conform to normal accounting practices.

not being a qualified accountant or having access to the books I have no idea if this is an issue 

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19 hours ago, RandomAccessMemory said:

The regulations only specify that Related Party Transactions are recorded at Fair Market Value.

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

By my reckoning the bolded quotes from the club statement below satisfy the third quote above?

 

Maybe you are right. I think that is a very useful post. However I thought I read somewhere that for the purposes of ffp, the definition of fair value was such that a profit could not be made. We made £40m ? Turning a £25m loss into a £15m profit. Has the club ever said that the valuation was £80m? In this scenario I assume the price is £80m and the valuation is £40m?

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20 hours ago, Woodley Ram said:

It’s not just about the sale of Pride Park but also about our accounting practices. Once again Mel had that approved by the EPL but apparently it doesn’t conform to normal accounting practices.

not being a qualified accountant or having access to the books I have no idea if this is an issue 

Not sure where you have got this from?

It's a very normal accounting practice, as is the sale and lease back of the ground.

The auditors have signed the accounts off and they made no reference to unsuitable accounting practices being used.

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24 minutes ago, RamNut said:

Maybe you are right. I think that is a very useful post. However I thought I read somewhere that for the purposes of ffp, the definition of fair value was such that a profit could not be made. We made £40m ? Turning a £25m loss into a £15m profit. Has the club ever said that the valuation was £80m? In this scenario I assume the price is £80m and the valuation is £40m?

Yes it is stated in the accounts.

The 'profit' is made by adjusting the value of the ground upwards from its previous valuation.

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13 minutes ago, G STAR RAM said:

Yes it is stated in the accounts.

The 'profit' is made by adjusting the value of the ground upwards from its previous valuation.

But the previous value in the accounts wasn’t £40m. From memory wasn’t it  @£56m?

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It all looks and smells like accountancy shenanigans rather than a genuine transaction. And that’s ultimately the problem.

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9 minutes ago, RamNut said:

It all looks and smells like accountancy shenanigans rather than a genuine transaction. And that’s ultimately the problem.

It’s a genuine transaction if money has been transferred from one party to another (which looks to be the case). 
I don’t think Wednesday have done this yet. 

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1 minute ago, Ghost of Clough said:

It’s a genuine transaction if money has been transferred from one party to another (which looks to be the case). 
I don’t think Wednesday have done this yet. 

It’s a genuine transaction if it’s a commercial transaction with an unrelated third party. 

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