Tribunal Update

[Spanish]

12 minutes ago, BathRam72 said:

Forgive me if this has been said as I have not had the time to read it all.

It appears to me that the EFL have lost and what they are doing now is clearly damage limitation, while still trying to impart some sort of punishment on Derby by putting doubt in the minds of potential signings.

Can't punish directly, so will disrupt as much as possible.

 

They really are unfit for purpose.

EFL towers

secretary; sorry boss we lost he case against Derby

exec; Bugger, Gibson wont be happy

secretary; that's not the only problem, IDC think we are useless

exec; well that's not a surprise.  How can we get out of this mess, oh I tell you what lets appeal and keep our fingers crossed that we get a better result on the same evidence if we try again

[Bob The Badger]

18 hours ago, ilkleyram said:

It seems to me that @Spanish and @duncanjwitham make some interesting points a few pages ago but, again, context is all important.

We need, I would suggest, a governing body of some kind. One that garners, reflects, adjudicates upon and leads its members. That leadership should reflect the current context in which the members operate. The EFL is failing on a number of accounts. Its ownership tests, for example, its response to Bury and Wigan's problems, its negotiation of TV deals, its relationship with the PL and the problem of parachute payments skewing its top league, are all examples. Covid has created the greatest threat to 72 clubs and therefore the EFL itself (bar those, mainly, in receipt of parachute payments) in my lifetime. Bigger even than the establishment of the Premier League. And where is the leadership from the EFL? Missing in relative inaction other than to extend its P &S rules by a year. Pathetic.

And then there is the mess that is P&S itself. Tribunals should be seen for what they are - failures of the system, not opportunities to correct the system and/or punish.  If the rules were clear and understood and accepted by the members the EFL supposedly represent then there would be little reason for the Tribunal system; if the Tribunal system worked properly - and it’s too easy for the EFL to say that they are not responsible for the timescales involved, they set up the system - then clubs would be punished in the season in which transgressions took place, not seasons later. The P&S system is neither one thing or another - it doesn’t equalise competition nor does it reign in spending. It’s a mess.

And then there’s our case. People have said that Mel was unwise to raise in the Tribunal his views about the EFL state. Probably rightly without any non-emotional evidence. Equally though the EFL should be asking themselves a whole series of questions, starting with: why does one of our largest, best supported clubs, of significant importance to our TV sponsors feel the way they do about their governing body?  Why do other members vote the CEO of this club as their representative if they are so ill thought of? What can we do to repair relations with one of our key members? They might also ask themselves what they can do to repair relationships between two of their senior members (us and Gibson) on the basis that continuing tension will not be helpful and that to do so might demonstrate good leadership on the EFL's part.

And then there’s the appeal. If the EFL was properly run it should have taken the result of the Tribunal as a 10-0 thrashing and then said to itself, right, what can we do? We need to form a view upon and ask our members to vote/decide upon a series of issues: 1) do we accept that clubs can sell their grounds and include the proceeds for P&S calculations? If so, what is the acceptable system of valuation and how are the proceeds paid and dealt with?  2) Form a view around amortisation and put the alternatives to the membership. Can there be two different ways of amortising players? What are the rules and procedures that are acceptable to the EFL and its members and what are the punishments for transgressions? In finding answers to both questions they could show leadership, build bridges with Derby and Mel and clarify the rules for all clubs. They might even speed up the process of dealing with cases that are dubious. 
Instead they are doing what all feeble governing bodies with feeble leaders do, they are letting their disciplinary body decide how they should operate and run. The chances of change are probably remote, sadly.

Great post mate, I hope people read it rather than scan it as being too long and move on.

 As somebody who used to sell HR outsourcing you are 100% right in so much as, tribunals only happen when there's been a custer of some description.

That is a point that most people don't know/think about and once the process is progressing gets forgotten about/underreported by those who do/should know.

[B4ev6is]

Just gibson throw bottle out of his pram.

[cheron85]

1 hour ago, Spanish said:

EFL towers

secretary; sorry boss we lost he case against Derby

exec; Bugger, Gibson wont be happy

secretary; that's not the only problem, IDC think we are useless

exec; well that's not a surprise.  How can we get out of this mess, oh I tell you what lets appeal and keep our fingers crossed that we get a better result on the same evidence if we try again

The one note of caution I would flag to this is - The Independent Commission have now published a report which outlines exactly where the EFLs argument fell apart the first time around - They now have a road map for how they could potentially bring a new case to bear

I'm not saying it has any more merit that before - But if I was a lawyer and someone gave me a giant report essentially telling me the exact things which were done wrong in the previous case I'd have a much better shot at making something stick the second time around

[Spanish]

14 minutes ago, cheron85 said:

The one note of caution I would flag to this is - The Independent Commission have now published a report which outlines exactly where the EFLs argument fell apart the first time around - They now have a road map for how they could potentially bring a new case to bear

I'm not saying it has any more merit that before - But if I was a lawyer and someone gave me a giant report essentially telling me the exact things which were done wrong in the previous case I'd have a much better shot at making something stick the second time around

appellants always seem to have an advantage in the appeal for the reasons you have mentioned

[Ghost of Clough]

Thinking about this more...

The club were charged for "recording losses in excess of the permitted amounts provided for in EFL Regulations for the three-year period ending 30 June 2018".

Surely any appeal on the outcome from the IDC can only be in relation to the club failing P&S. The statement released by the EFL this time around stated "appeal against the outcome of an independent Disciplinary Commission in respect of misconduct charges".

Does this mean the EFL have accepted that they shouldn't have originally charged us for "recording excess losses". How can they appeal against a charge they've accepted to be wrong?

As I said the other day... if they had approached us from the beginning and said the policy wording in the accounts is inadequate, I'm guessing the only action out of that would be to make corrections to the policy wording in the next set of accounts (after clarifying how it works). I fail to see how the outcome from that would be a fine and/or a points deduction, so that shouldn't be an option now.

[Gaspode]

2 minutes ago, Ghost of Clough said:

.....Does this mean the EFL have accepted that they shouldn't have originally charged us for "recording excess losses". How can they appeal against a charge they've accepted to be wrong?.....

 

Perhaps they're appealing against the only part we were found guilty of (i.e. not being clear enough about the amortisation policy) - they're evidently upset that they weren't found to be completely 100% incompetent and now want to get a full house by having that verdict overturned.....

[Ghost of Clough]

11 minutes ago, Gaspode said:

Perhaps they're appealing against the only part we were found guilty of (i.e. not being clear enough about the amortisation policy) - they're evidently upset that they weren't found to be completely 100% incompetent and now want to get a full house by having that verdict overturned.....

But should they be able to appeal the verdict from their original charge (failing P&S) based on 'new charges' (misconduct)?

[cheron85]

1 hour ago, Ghost of Clough said:

But should they be able to appeal the verdict from their original charge (failing P&S) based on 'new charges' (misconduct)?

I think they're assuming that we would have recorded losses had we used linear accounting

However - The club seems confident that wouldn't be the case anyway and they would just need to prove that under either system they're fine and then the charges just go away

[Ghost of Clough]

According to the Decision Document, the particulars of the 2nd charge were:

1. the approach assumes non-zero residual values when amortising registration rights and transfer fee levies where residual values cannot be reliably determined. [Issue withdrawn by the EFL]
2. the approach does not amortise on a straight line basis nor does the amortisation schedule reflect the expected pattern of consumption of future economic benefits from the intangible asset. [It was concluded that the policy doesn't have to be straight-line to be acceptable, and the amortisation does reflect the expected pattern of consumption. Another panel of 'judges' may disagree with the second part]
3. the approach anticipates an economic benefit that the Club does not fully control arising from the sale of an intangible asset. [This does not make it an unacceptable policy]
4. the approach reassesses the estimated residual values [ERVs] of intangible assets where the residual values [ERVs] cannot be reliably estimated. [This does not make it an unacceptable policy]
5. the Club did not adequately disclose in its financial statements the nature and/or the effect of the changes in its residual value estimates.

On appeal, the EFL had/have a very small chance of successfully pursuing to second and fourth particulars by referencing the likes of Butterfield, Blackman, etc...). However, it was stated by the IDC that unreliability in estimating the ERVs does not mean the policy is unacceptable. This basically means it pointless in the EFL appealing against this particulars.

As we are aware, the policy stated in the accounts was inadequate, and this is the only area the EFL can be appealing, resulting in their 'misconduct charges'. Usually, a 'Decision' document and 'Decision on Sanction' document have been released. It's only in the second document where where a punishment is revealed. So far, this document has not been published, meaning we do not know why the IDC felt a 'guilty' verdict for the 5th particular has not resulted in any sort of punishment. As such, it's difficult to judge the merit of the EFL's appeal, but we can look at the reason for the original charge(s) - failing P&S. Based on the Decision document, we know we were £17.5m below the limit in 2018 using our current amortisation policy. Using the very basic straight-line amortisation method (used by just a few clubs) I estimate us to be about £15m worst off. This would improve if we use the more commonly used method of making adjustments due to contract extensions.

 

Regarding the 'new' misconduct charges:

• The policy wording in the accounts were inadequate
• The response from the club to the EFL detailing the policy still remained incomplete [May 2019]
• The club refused to answer requests by the EFL for clarification [Note: this was after we were charged]
• There were no documents detailing the policy - only the outline discussions with the EFL, and the amortisation schedule which listed amortisation charges for each player over the course of their contract.
• The policy methodology only came to light during the witness statements

What must be brought to light is that these misconduct allegations wouldn't have been brought up if the EFL had queried the policy from the beginning. The club stated they were only aware of a problem with the policy once we were charged. Doesn't this highlight how much time and money has been wasted during a period a lot of EFL clubs were worried about survival? Resolve the situation as it should have been (rewording of the policy, then vote through changes to ensure everyone uses the same policy, vote through changes to prevent clubs selling stadiums, training grounds, etc...

[Ghost of Clough]

26 minutes ago, cheron85 said:

I think they're assuming that we would have recorded losses had we used linear accounting

However - The club seems confident that wouldn't be the case anyway and they would just need to prove that under either system they're fine and then the charges just go away

See my post above. It would take a big swing in amortisation for it to be a problem. I'll go into more detail (and probably correct myself)

Using our method, we've had a total amortisation charge of roughly £45m since the start of the 15/16 season. Amortisation coming up is almost entierly down to the following players: Lawrence, Wisdom, Waghorn, Marriott, Jozefzoon, Holmes, Evans, Malone and Bielik. If we want to calcualte a total up until the end of 20/21, we sum up the total fees for those players, minus 1 year for Lawrence (contracted for another year), and 3 years off Bielik - c£20m. £45m + £20m averaged over the 6 relevant years means we should have had an amortisation charge not far off £10.8m per year, resulting in a worst-case change of £17.5m. It'll actually be less than this as part of their transfer fees will have already been amortised

[Gritstone Ram]

28 minutes ago, Ghost of Clough said:

See my post above. It would take a big swing in amortisation for it to be a problem. I'll go into more detail (and probably correct myself)

Using our method, we've had a total amortisation charge of roughly £45m since the start of the 15/16 season. Amortisation coming up is almost entierly down to the following players: Lawrence, Wisdom, Waghorn, Marriott, Jozefzoon, Holmes, Evans, Malone and Bielik. If we want to calcualte a total up until the end of 20/21, we sum up the total fees for those players, minus 1 year for Lawrence (contracted for another year), and 3 years off Bielik - c£20m. £45m + £20m averaged over the 6 relevant years means we should have had an amortisation charge not far off £10.8m per year, resulting in a worst-case change of £17.5m. It'll actually be less than this as part of their transfer fees will have already been amortised

I’m not that clued up on this but my understanding is this is all revolving around how the depreciation of players value is calculated. 
What consideration is given in the unlikely event that one of our players gains in value like Ince or Vydra or even the academy players that potentially have a sell on value such as we have just seen with Lowe and Bogle.

[Ghost of Clough]

36 minutes ago, Van Gritters said:

I’m not that clued up on this but my understanding is this is all revolving around how the depreciation of players value is calculated. 
What consideration is given in the unlikely event that one of our players gains in value like Ince or Vydra or even the academy players that potentially have a sell on value such as we have just seen with Lowe and Bogle.

Players can not gain book value. So academy players book value is very low (contract extension fees, agent fees, etc). The same applied to bought in players. For example, if we pay £4m for Jozwiak and he turns into a £20m player by the end of the season, his book value can be a max of £4m (plus fees).

To realise their ‘true value’, you’d have to sell them. The same principle applied with our stadium sale. 

[Rev]

1 minute ago, Ghost of Clough said:

Players can not gain book value. So academy players book value is very low (contract extension fees, agent fees, etc). The same applied to bought in players. For example, if we pay £4m for Jozwiak and he turns into a £20m player by the end of the season, his book value can be a max of £4m (plus fees).

To realise their ‘true value’, you’d have to sell them. The same principle applied with our stadium sale. 

On the same measure, it can be surprising how much value can be gained by free/cheap transfers.

I reckon by the time Martin and Bryson left, you'd be looking at a P&S loss well over a million between the pair, based on multiple new contacts, and the resultant costs.

No big deal in the overall picture, and good VFM, but just illustrates how the cheapest deal can affect things.

 

[Gritstone Ram]

8 minutes ago, Ghost of Clough said:

Players can not gain book value. So academy players book value is very low (contract extension fees, agent fees, etc). The same applied to bought in players. For example, if we pay £4m for Jozwiak and he turns into a £20m player by the end of the season, his book value can be a max of £4m (plus fees).

To realise their ‘true value’, you’d have to sell them. The same principle applied with our stadium sale. 

So no matter what it doesn’t take into account the true value of the squad or potential value even if you’re sat with a potential £20m player from the academy.

[Ghost of Clough]

10 minutes ago, Van Gritters said:

So no matter what it doesn’t take into account the true value of the squad or potential value even if you’re sat with a potential £20m player from the academy.

That’s right. 

[DarkFruitsRam7]