Tribunal Update

[Carnero]

35 minutes ago, duncanjwitham said:

I've seen a few people suggest that the amortisation policy is dodgy, because they think we're having players leaving on a free when they still have a book-value.  But I don't think any of the people I've seen talking about it actually know how our policy works, so they're just guessing based off hearsay of how other people think it works.

I agree.

If 21 year old "Player X" is signed for £5m on a 5 year contract, using the straight line method then his balance sheet value would be £1m after 4 years when he might still be expected to be a £5m+ rated player at that point.

Using our method, where I imagine we project the value of each player as at 1 year remaining on a contract, our depreciation may go £0, £0, £0, £0, £5m. Or it may go £0, £0, £0, £1m, £4m. Rather than 5 lots of £1m.

Nobody knows, but it's certainly not "dodgy" when it is in line with FRS102, it actually makes more sense.

[duncanjwitham]

10 minutes ago, Carnero said:

I agree.

I've always assumed it looks something a bit like this (for a £5m player on a 5 year contract again):

With the blue line being a standard amortisation, and the red line being what we're doing.  With the £4m residual value (in this example) depending on the the players age etc.

[JfR]

Written reasons for Sheffield Wednesday's deduction have been published now. Very long read, but worth it if you have the time to do so:
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday-fc---decision.pdf
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday---decision-on-sanction.pdf

[Spanish]

8 minutes ago, JfR said:

Written reasons for Sheffield Wednesday's deduction have been published now. Very long read, but worth it if you have the time to do so:
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday-fc---decision.pdf
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday---decision-on-sanction.pdf

decision on sanction s12 is interesting can't copy it

[Spanish]

1 minute ago, Spanish said:

decision on sanction s12 is interesting can't copy it

s 25 too this is well worth a read

[therealhantsram]

1 hour ago, QuitYourJibbaJivin said:

 

Wow. So a clear statement from Wed, that the EFL wanted points deductions for DCFC in a different season to Weds despite us being charged at the same time.

That alone is an utter disgrace.

[cheron85]

17 minutes ago, duncanjwitham said:

I've always assumed it looks something a bit like this (for a £5m player on a 5 year contract again):

With the blue line being a standard amortisation, and the red line being what we're doing.  With the £4m residual value (in this example) depending on the the players age etc.

Yeh I've always assumed that too - Which just seems like logic to me - We all know that a (practically) player's value tends to hold across several years and then plummets within the final year - So I'm unsure why clubs would amortise them as if they lose value consistently - That would be like doing the same with a car when everyone knows they lose value massively within the first year

The only wrinkle is there's some suggestion we've been handing out "year and a month" contracts - Where the player technically leaves mid-summer and therefore is still on the books at the end of the reporting year - But I don't see how that makes a huge difference cos their value at that point would be like £10k

[DCFC1388]

Reading the report it seems like the sale of Pride Park and the valuation isnt an issue.

Also looks like EFL are saying we failed P&S for the 3yr cycle ending 17/18 I think like Sheff Weds

Can someone confirm what the 3 year cycle figures actually were? 

[RadioactiveWaste]

14 minutes ago, JfR said:

Written reasons for Sheffield Wednesday's deduction have been published now. Very long read, but worth it if you have the time to do so:
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday-fc---decision.pdf
https://www.efl.com/siteassets/image/201920/1920-judgements/efl-v-sheffield-wednesday---decision-on-sanction.pdf

So if read that right, the basis of Wednesday's deduction was the sale wasn't complete at the end of the period?

[Animal is a Ram]

I can't help but feel that both Wednesday and Derby have been targeted because both clubs have made the EFL look like mugs, and they want to at least appear as if they're doing something about it to other member clubs (looking at you Boro/Barnsley).

Or, Shaun Harvey's apparently poor handling of the Wednesday situation, perhaps:

This guy's thread on the matter is quite useful, and in a little more transparent English than the report linked...

[JfR]

9 minutes ago, RadioactiveWaste said:

So if read that right, the basis of Wednesday's deduction was the sale wasn't complete at the end of the period?

Not just that it was completed after the period, but that the entire process occurred after the period. On July 31st 2018 the club believed they had failed FFP, the process of the stadium sale being taken entirely after that period to retroactively offset those losses outside of the accounting period. Wednesday escaped punishment for acting in poor faith as the EFL actively assisted them in doing this, leading them to believe it was acceptable. However, they did not escape FFP punishment as due to the retroactive nature of the stadium sale, they could not argue that the EFL misleading them caused them to fail FFP, as they had already failed it by that point.

[duncanjwitham]

2 minutes ago, cheron85 said:

Yeh I've always assumed that too - Which just seems like logic to me - We all know that a (practically) player's value tends to hold across several years and then plummets within the final year - So I'm unsure why clubs would amortise them as if they lose value consistently - That would be like doing the same with a car when everyone knows they lose value massively within the first year

I assume the problem is that a car's value is fairly predictable - e.g. you lose X% when you drive off the showroom floor, then gradually depreciate over Y years depending on the usage/mileage.  The only thing that's likely to significantly change it's value is writing it off in an accident, or a radical change in the industry (like electric cars becoming mandatory).

A players value is much less so.  He has an injury, he loses 50% of his value, he has a good season, he might gain 50% and so on.  There's no way of dealing with any of that in mathematical/accounting terms, so clubs just stick to straight-line depreciation and expect the differences to average out in the end (some players will be sold for massively over their value, some will just leave for nothing etc).

[Spanish]

19 minutes ago, DCFC1388 said:

Reading the report it seems like the sale of Pride Park and the valuation isnt an issue.

Also looks like EFL are saying we failed P&S for the 3yr cycle ending 17/18 I think like Sheff Weds

Can someone confirm what the 3 year cycle figures actually were? 

yep speed read that and the charges were the sale was put through on the wrong date and it was falsely dated to defeat PS.  First charge was approved and the penalty is for a breach after restating the figures. and charge was thrown out with pointed criticism to EFL.  The sale and lease back was not questioned

[Animal is a Ram]

9 minutes ago, DCFC1388 said:

Reading the report it seems like the sale of Pride Park and the valuation isnt an issue.

Also looks like EFL are saying we failed P&S for the 3yr cycle ending 17/18 I think like Sheff Weds

Can someone confirm what the 3 year cycle figures actually were? 

Derby reported losses of £7.9m in 2016-17, and £14.7m in 2015-16. - Derby Telegraph.

So, with a cap of £39m, leaves about £16m spare for 2017-18.

The stadium was sold with a valuation of £80m resulting in a pre-tax profit of £14.6m. 

EFL are arguing that as the stadium was listed as a £40m asset in previous accounts, the value was substantially inflated - so using this figure would blow a hole in the finances, and 17-18 would be a loss of £26.4m, £8m over the allowed figure.

Taking the club statement as gospel, however, the sale had written agreement with the EFL after being professionally valued, and adjusted at the EFL's request - same story with the amortisation method. 

So, the EFL fluffed it, and now want to row back on all of it. I still don't particularly understand how this is possible. If I was told explicitly I could sell my house for £200k, after having it professionally valued - the estate agent couldn't turn round 6 months later and say sorry, rules have changed, can't do that now, it's only worth £150k...

[ThePrisoner]

2 minutes ago, Spanish said:

yep speed read that and the charges were the sale was put through on the wrong date and it was falsely dated to defeat PS.  First charge was approved and the penalty is for a breach after restating the figures. and charge was thrown out with pointed criticism to EFL.  The sale and lease back was not questioned

So from that you can imagine the panel would be wondering why the EFL signed off on all our dealings and then decided to change their mind? Not a leg to stand on in my mind is a view I've had since the club put that statement out and now I'm feeling even more confident.

[Ramraiders]

Hearing that 9 point deduction is on its way in the next week!

[Spanish]

29 minutes ago, DCFC1388 said:

Reading the report it seems like the sale of Pride Park and the valuation isnt an issue.

Also looks like EFL are saying we failed P&S for the 3yr cycle ending 17/18 I think like Sheff Weds

Can someone confirm what the 3 year cycle figures actually were? 

Swiss ramble out this up, his twitter has the 3 year P&S assessment but I can't copy it

[dcfcreece1601]

I can't help but feel like this will drag on for months and will hinder all player incomings and outgoings and also future investment while it is all uncertain 

[angieram]

22 minutes ago, JfR said:

Not just that it was completed after the period, but that the entire process occurred after the period. On July 31st 2018 the club believed they had failed FFP, the process of the stadium sale being taken entirely after that period to retroactively offset those losses outside of the accounting period. Wednesday escaped punishment for acting in poor faith as the EFL actively assisted them in doing this, leading them to believe it was acceptable. However, they did not escape FFP punishment as due to the retroactive nature of the stadium sale, they could not argue that the EFL misleading them caused them to fail FFP, as they had already failed it by that point.

I think the stuff about the EFL actively encouraging Sheffield W3dnesday to do this at the time is really morally unacceptable. The EFL seem to conveniently be laying the blame for this at Shaun Harvey's door, who no longer works for them (but who left them not with any cloud over his performance but rather with a golden handshake.) Wednesday accepted his guidance at face value.

However, what the Independent Commission is saying is that they still broke the P & S rules so are guilty.

This therefore could also apply in our case, that we accepted EFL advice that led us to do something that broke the rules. That is scary.

Our defence then, must solely rest on whether we complied with the regulations which were in place around our two charges. If we argued that the EFL sanctioned us to do it (as they apparently did Wednesday) then that argument won't hold water.

At what point in all this is any action going to be taken against the EFL about their fitness for purpose in both cases? 

 

[Spanish]

Just now, angieram said:

I think the stuff about the EFL actively encouraging them to do this at the time is really morally unacceptable. They seem to conveniently be laying the blame for this at Shaun Harvey's door, who no longer works for them (but who left them not with any cloud over his performance but rather with a golden handshake.) Wednesday accepted his guidance at face value.

However, what the Independent Commission is saying is that they still broke the P & S rules so are guilty.

This therefore could also apply in our case, that we accepted EFL advice that led us to do something that broke the rules. That is scary.

Our defence then, must solely rest on whether we complied with the regulations which were in place around our two charges. If we argued that the EFL sanctioned us to do it (as they apparently did Wednesday) then that argument won't hold water.

At what point in all this is any action going to be taken against the EFL about their fitness for purpose in both cases? 

 

no it was a bout the timing which they believe was an honest mistake by the club so has to be restated.  so on the basis that our sale and leaseback is acceptable and the valuation is strong then I'm still unsure what we have done wrong.  SWFC did the same transaction just they messed up the paperwork.