Tribunal Update

[RamNut]

Just now, Gritty said:

The fact we have made massive lumpy write-offs suggests to me we have failed to accurately estimate the fair value

Yes. When we signed them.

[Shaftesbury Street]

8 minutes ago, Gritty said:

The purpose of 'fair value accounting' is to ensure the assets are 'fairly valued' each year in the accounts. The fact we had players valued at large values going into their final year of their contracts wasn't a fair value because we could never have realised that value. 

Depends on the consistencies of the amortisation (which they showed evidence of) and the differring circumstances of each player and contract.

Like when a 18 year old academy player breaks through and bangs 10 goals in their first season? Is that 0 to £5 mill in asset value? Or a purchase from the lower leagues has two average seasons and then scores 20 goals in the final season of his contract? Or a player that was about to leave on a free but you extent for a year?

It's not a straight line or a consistent depreciation over time. 

[R@M]

2 minutes ago, The Scarlet Pimpernel said:

I think the report from the original hearing confirmed that we carry out a playing staff valuation every six months. Based upon the valuation at that time our calculations are made. This seems very sensible to me. I don't see the problem GIBSON has? Anybody able to enlighten me?

FIFY

[StarterForTen]

A question about straight line accounting...

If you sign a 21-year old player for £4m on a four year contract and write down that loss over the term, what happens to his 'book value' when, at 24 and a mainstay of a good team, he signs a new four year contract?

His straight-line value three years into his original deal would be £1m but his market value could well be ten times that. You would only be able to realise that value in the accounts if he were to be sold.

If you are being punished for losses as part of FFP then you have to be allowed to adjust your balance sheet for profits too, which is why (in broad stroke terms) Derby's amortisation policy on players is a wholly understandable way of doing it. Perhaps it just needs greater clarity and evaluation parameters.

[Gritty]

Not sure tbh. I'm not an accountant.  Just try and read the financial statements

Let's just hope we win the appeal and can put this behind us

[JuanFloEvraTheCocu'sNesta]

The EFL have shown themselves to be totally against any form of creativity or innovation, be that on the broadcasting side, financial side, marketing side, anything really. 

They want clubs to keep quiet, stop asking awkward questions about the value of TV deals, how the EFL screens new owners, or how the EFL plan to actually help clubs in trouble. We should just all remain silent and take whatever ******** they decide to arbitrarily dish out from their self serving disciplinary and executive processes and not try to impose any sort of governance on them at all. 

Disgusting bunch of cretins. 

[Spanish]

42 minutes ago, angieram said:

Having slept (badly) on this news I  am still feeling devastated, to be honest.

It seems to me to be a further huge drain of resources - money, time and focus - that will occur before it is settled. What a waste of all three that should be being spent to help all EFL clubs to better navigate the perilous tides of post pandemic football.

While this is happening, where is the guidance and steer from the EFL to help clubs through to calmer waters? Sadly not in evidence, four days before the start of the season. 

The previous independent commission found that the EFL weren't acting maliciously in bringing these charges. I wonder what they are thinking now?

I am in a minority but I thought all those comments about the EFL being beastly where poor and made our great club look small and snively.  Don't tweak the nose of the governing body and expect a comfortable life.  For someone of Mel's experience I thought that was beneath him and hardly helped our case.  Win the case but leave an escape route for the other side this isn't a TV drama.  The EFL are a complete waste of space but probably not a battle we can win without the support of all the bigger clubs.  We will lose the appeal but get no penalty 

[RamNut]

4 minutes ago, Spanish said:

I am in a minority but I thought all those comments about the EFL being beastly where poor and made our great club look small and snively. 

All that “enemy of the EFL state” stuff was a bit silly. 

[Tamworthram]

8 minutes ago, Spanish said:

I am in a minority but I thought all those comments about the EFL being beastly where poor and made our great club look small and snively.  Don't tweak the nose of the governing body and expect a comfortable life.  For someone of Mel's experience I thought that was beneath him and hardly helped our case.  Win the case but leave an escape route for the other side this isn't a TV drama.  The EFL are a complete waste of space but probably not a battle we can win without the support of all the bigger clubs.  We will lose the appeal but get no penalty 

I agree. Should have been the time to be the bigger man, show a bit of emotional intelligence and make it easy for the other side to accept defeat gracefully rather than continue to poke the hornets nest. 

[duncanjwitham]

6 minutes ago, Spanish said:

We will lose the appeal but get no penalty 

Is that even a thing that can happen though, in a practical sense? Obviously they're appealing against at least one of the first 4 parts of charge 2 (i.e. the ones they lost) - I can't imagine they're stupid enough to appeal against something they actually won... So surely if we're found guilty, we have to change our amortisation policy to a straight line one (as does any other club in the league that isn't already), which potentially triggers changes in our P&S submissions for the last 5(?) seasons.  The previous tribunal report already confirmed that the EFL have the right to review P&S submissions at any point of the rolling 3 year window and demand changes, so we're right back into failing P&S again, which pretty much has automatic points deductions attached to it.

[Reggie Greenwood]

9 minutes ago, duncanjwitham said:

Is that even a thing that can happen though, in a practical sense? Obviously they're appealing against at least one of the first 4 parts of charge 2 (i.e. the ones they lost) - I can't imagine they're stupid enough to appeal against something they actually won... So surely if we're found guilty, we have to change our amortisation policy to a straight line one (as does any other club in the league that isn't already), which potentially triggers changes in our P&S submissions for the last 5(?) seasons.  The previous tribunal report already confirmed that the EFL have the right to review P&S submissions at any point of the rolling 3 year window and demand changes, so we're right back into failing P&S again, which pretty much has automatic points deductions attached to it.

But this policy is neither against league or accounting rules .

[Spanish]

27 minutes ago, StarterForTen said:

A question about straight line accounting...

If you sign a 21-year old player for £4m on a four year contract and write down that loss over the term, what happens to his 'book value' when, at 24 and a mainstay of a good team, he signs a new four year contract?

His straight-line value three years into his original deal would be £1m but his market value could well be ten times that. You would only be able to realise that value in the accounts if he were to be sold.

If you are being punished for losses as part of FFP then you have to be allowed to adjust your balance sheet for profits too, which is why (in broad stroke terms) Derby's amortisation policy on players is a wholly understandable way of doing it. Perhaps it just needs greater clarity and evaluation parameters.

I don't like the method we use, never had.  It was never a core process change based on a fundamental belief that the standard practice was faulty.  I stand to be corrected but the sense I have was it was a solution to deal with the Clement overspending when we suddenly became aware that we could not fund a straight line policy

[Spanish]

15 minutes ago, duncanjwitham said:

Is that even a thing that can happen though, in a practical sense? Obviously they're appealing against at least one of the first 4 parts of charge 2 (i.e. the ones they lost) - I can't imagine they're stupid enough to appeal against something they actually won... So surely if we're found guilty, we have to change our amortisation policy to a straight line one (as does any other club in the league that isn't already), which potentially triggers changes in our P&S submissions for the last 5(?) seasons.  The previous tribunal report already confirmed that the EFL have the right to review P&S submissions at any point of the rolling 3 year window and demand changes, so we're right back into failing P&S again, which pretty much has automatic points deductions attached to it.

see Birmingham

[Spanish]

5 minutes ago, Reggie Greenwood said:

But this policy is neither against league or accounting rules .

we had a change to accounting practice that the IDP say was not properly disclosed

[ariotofmyown]

35 minutes ago, The Scarlet Pimpernel said:

Is the soft embargo from January - August not a punishment? 

Exactly what I was thinking. We've already been punished anyway! Maybe EFL just want to get rid of the costs if they haven't 100% lost, and will say we've already been punished 

[Reggie Greenwood]

Just now, Spanish said:

we had a change to accounting practice that the IDP say was not properly disclosed

They said it could have been clearer i believe which is different from not properly disclosed. Cannot see that getting much or any punishment, they only way i think they could look at the P&S was if the policy was against the rules.....................we will see but i remain confident the original decision will stand

[Woodley Ram]

2 hours ago, JustOneChrissyMartin said:

We weren’t found guilty they just said it needed to be clearer 

i think you will find the clarity of the policy bit was found proven which equals guilty 

[ariotofmyown]

34 minutes ago, StarterForTen said:

A question about straight line accounting...

If you sign a 21-year old player for £4m on a four year contract and write down that loss over the term, what happens to his 'book value' when, at 24 and a mainstay of a good team, he signs a new four year contract?

His straight-line value three years into his original deal would be £1m but his market value could well be ten times that. You would only be able to realise that value in the accounts if he were to be sold.

If you are being punished for losses as part of FFP then you have to be allowed to adjust your balance sheet for profits too, which is why (in broad stroke terms) Derby's amortisation policy on players is a wholly understandable way of doing it. Perhaps it just needs greater clarity and evaluation parameters.

Great post and I've been thinking the same sort of thing in the past.

A club could exceed the FFP losses due to say 4 big signing of 10 million. But they could have a squad full of academy products who are all worth 10 million. The actual value of the squad could be huge and the playing assets could be massively in profit.

[Spanish]

Just now, Reggie Greenwood said:

They said it could have been clearer i believe which is different from not properly disclosed. Cannot see that getting much or any punishment, they only way i think they could look at the P&S was if the policy was against the rules.....................we will see but i remain confident the original decision will stand

Maybe we all need to step back and take off the rams' specs.   There was enough criticism in the IDP report for an appeal to be considered. 

[duncanjwitham]

2 minutes ago, Spanish said:

see Birmingham

That was a completely different type of charge though - they breached an agreed business plan with the EFL.  If we're guilty of anything other than the failure-to-disclose part, we've potentially failed P&S for multiple years, which definitely has points deductions attached to it.

 

4 minutes ago, Spanish said:

we had a change to accounting practice that the IDP say was not properly disclosed

And that's such a minor indiscretion that the IDP didn't even think it warranted a punishment.