EFL appeal

[Reggie Greenwood]

7 minutes ago, Pearl Ram said:

So why are the EFL seemingly hell bent on “ getting” us ? This is what I’m trying to understand. Out of all the teams you mentioned, only Wednesday then Birmingham and Wigan who you didn’t mention have been punished. Unless I’ve missed the points deductions the ones that never got promotion thus escaping the EFL’s jurisdiction.

QPR and Bournemouth given a paltry punishment. Some of the others will be punished if and when they get relegated , Villa got very lucky last season staying up after a VAR mistake they would have been in line for massive penalty . Forest and Watford trading players between clubs with same owner is creative , Boro selling club debts to the owners haulage company to circumvent a heavy FFP loss is creative (and possibly against tax laws) . You need to ask the question of the EFL and Steve Gibson what their beef is . 
I would like to say something about where Forests funding comes from but hopefully that will be sorted sometime. 

[Pearl Ram]

7 minutes ago, Ghost of Clough said:

It won't even be an embargo ?

Sorry for boring you.

[Pearl Ram]

2 minutes ago, Reggie Greenwood said:

QPR and Bournemouth given a paltry punishment. Some of the others will be punished if and when they get relegated , Villa got very lucky last season staying up after a VAR mistake they would have been in line for massive penalty . Forest and Watford trading players between clubs with same owner is creative , Boro selling club debts to the owners haulage company to circumvent a heavy FFP loss is creative (and possibly against tax laws) . You need to ask the question of the EFL and Steve Gibson what their beef is . 
I would like to say something about where Forests funding comes from but hopefully that will be sorted sometime. 

But here’s the thing I don’t get, if it’s common knowledge Gibson did actually sell club debts to his haulage company, why has that never been investigated as rigorously as it possibly should have been, is it fact or hearsay ?

Oh and I believe Gibson’s beef is because we knocked them down to 7th on the last day of the season when Lampard was here and they thought the play offs were in the bag.

Anyway, been nice conversing but there’s no need to reply, I’m not enjoying it on here tonight so I’m going to take a breather. 

[Ken Tram]

2 hours ago, Ghost of Clough said:

My rough P&S calculations comparing the current ERV method and the possible adjusted contract extension method:

Changes to amortisation and transfer profits accounted for.

I'm only just about misunderstanding ERV.

And now you're intruding another method!

24 hours ago, I hadn't heard of player amortisation! 

[Bob Mash]

Anybody else think we should stop the we're 'being picked on by the nasty efl' gubbins? This 'Oh woe is me' stuff is a bit cringey I think. What will be will be. 

[Reggie Greenwood]

Just now, Pearl Ram said:

But here’s the thing I don’t get, if it’s common knowledge Gibson did actually sell club debts to his haulage company, why has that never been investigated as rigorously as it possibly should have been, is it fact or hearsay ?

Oh and I believe Gibson’s beef is because we knocked them down to 7th on the last day of the season when Lampard was here and they thought the play offs were in the bag.

Anyway, been nice conversing but there’s no need to reply, I’m not enjoying it on here tonight so I’m going to take a breather. 

It’s fact but wasn’t against the rules at the time ( would be now as EFL changed this after ) just like selling the stadium to yourself isn’t. It’s just “creative “ . Just makes Gibson a hypocrite in my eyes happy to use the ( lack of )  rules for himself but cry when someone else has the temerity to do it. If I was him I’d be bollocking my financial guys for not thinking of it themselves. 
Not having a go at you @Pearl Ram at all just pointing out that a lot of other clubs have been “creative “ as you put it not just DCFC .

Hope that makes sense COYR 

 

[JfR]

3 minutes ago, Reggie Greenwood said:

It’s fact but wasn’t against the rules at the time ( would be now as EFL changed this after ) just like selling the stadium to yourself isn’t. It’s just “creative “ . Just makes Gibson a hypocrite in my eyes happy to use the ( lack of )  rules for himself but cry when someone else has the temerity to do it. If I was him I’d be bollocking my financial guys for not thinking of it themselves. 
Not having a go at you @Pearl Ram at all just pointing out that a lot of other clubs have been “creative “ as you put it not just DCFC .

Hope that makes sense COYR 

 

Even with this specific EFL case, it was recognised by the EFL's own witness that, while our method is in their view "unique", we are not the only club to use a non-straight-line method of amortisation, but for whatever reason the EFL don't have an issue with other clubs' "creativity" in their amortisation policies.

[Ken Tram]

24 minutes ago, LE_Ram said:

Yep so assuming Derby chose to amortise the players contract over the length of their contract, they would have nil residual value at the end of their contract.

For example, take a scenario where Derby sign a player for £4m on a 4 year contract.

The EFL argue that the only economic benefit a club gets from the player is them playing matches, and at the end of their contract they can leave for £nil - so you would amortise in line with that economic benefit - the player is expected to play over their contract so you would amortise their registration fee over the 4 years on a straight line - £1m per year gets expensed and increases your loss/decreases the profit. If they leave on a free at the end of their contract, you’ve already amortised down to £nil so there’s no impact to your profit - the carrying amount is £nil and your proceeds on the sale are £nil so there’s no profit or loss.

In that situation, if a player leaves at the end of year 3 for £3m, they’d have had 3 years of amortisation so be carried in the accounts at £1m, and you’d recognise a profit on the sale of the player of £2m.

Derby however say that they get more than just the benefit of the player playing matches, in that they also expect them to be sold before contract expiry. So your economic benefits are the player playing matches and the cash you get in from selling them. This is where ERV comes in - expected recoverable value - this is the amount Derby expects to be able to sell a given player for. Some players won’t be given an ERV if Derby don’t expect to sell them - for example, if our player above was 34 and expected to retire after playing at Derby, the treatment would be the same - £1m charged every year and no value at the end.

However, if it was someone like, say Joz, well DCFC would argue that if he plays well they’ll sell him on - so they decide when and for how much do we think we’ll sell. For example, if they think they’ll sell the player for £3m in three years, they will only charge £333k per year amortisation because you’d expect that by the time they’re sold for £3m, they’re carried in your accounts for £3m.

In both situations, the net P&L impact is the same over the whole contract - it’s just using Derby’s method the profits you make on a transfer are smaller, because your player is valued higher in your accounts, because you’ve charged less total amortisation.

It’ll be interesting to read why the EFL have won this appeal, because as far as I’m aware, both are compliant with the accounting standard.

Thank you!

I am guessing that varying Estimated Recoverable Value (ERV) is open to abuse and manipulation? - not that we are accused of that.

Presumably, the greater the variation of practices, the more difficult it is for the EFL to monitor Financial Fair Play (FFP)?

EFL need to monitor. Clubs want to manage. And there's a bit of argy bargy.

And on that basis, I could envisage there being some rationale for a charge of non compliance, because the rules are there for a reason?

[Ken Tram]

1 hour ago, Ken Tram said:

Maybe this is why they were leaking so much! People will remember the hype about Derby being guilty ... but not the birthing stories about a partial breach.

Thanks, EFL.

I'm sorry to quote my own post, but my misspelling has made this far funnier that it was intended.

And I am going to laugh at my own joke!? (Boring stories...)

[Sparkle]

1 hour ago, dcfcollie said:

Might be a really stupid question but.. if they are supposedly finding us guilty of not filing our accounts properly according to accounting practices. Then why aren't the HMRC after us as well?

Because what we did is perfectly legal apparently 

[Yani P]

EFL probably still pissed we were exploring things like Premier League 2 with Leeds and others..

[Norman]

Just now, Yani P said:

EFL probably still pissed we were exploring things like Premier League 2 with Leeds and others..

That and criticising the TV deal, wanting our own Rams TV service that wasn't part of the EFL streaming service so we could choose our own prices etc. 

Hasn't Mel gone on record that he feels the EFL have a personal agenda against him? 

[Ken Tram]

1 hour ago, Ramtastic ones said:

Various posts refer to" the vindictive nature of the efl's actions". I would say it is worse than vindictive in that they failed to act upon information submitted to them and only raised issue when wonky 'boro started crying. Lacking any real fortitude, instead of telling said parties to go fourth, they acted. Were they (the efl) a compitent organisation, they would have and should have, challenged Derby when the first set of accounts showing this practice were submitted and nipped it in the bud. 

Yes! Good decision making bodies have very low appeal rates.

Poor ones have high rates of appeal.

In some processes, the appeal is almost part of the process, meaning that no-one does their job properly in the first place!

You're right - if EFL had done their job properly in the first place, this wouldn't have happened.

Of course ... maybe the EFL did do their job properly, and did raise concerns ... and maybe Derby insisted upon doing things the Derby Way!?

[G STAR RAM]

1 hour ago, Spanish said:

We pushed the envelope because we overspent and couldn’t afford the straight line amortisation.  The weak EFL rules allowed us to do it.  However it was obvious that we were in trouble and this is a dog eat dog world particularly in football and we were never going to get away with it.  Spending big on butterfield and BJ and getting nothing back will have undermined our methodology.  

At which point in time the auditors should point out that we are not using appropriate accounting policies. 

I might be wrong here (its been a while since I did this sort of stuff) but amortisation is an accounting estimate, a change of accounting policy would require a note in the accounts but would not require the accounts to be retrospectively amended.

Sure someone will tell me if my views are outdated!

[Yani P]

EFL have always been piss poor at securing decent financial media deals for clubs..they just sit under the Premier League dinner table begging for scraps then pretending they are tge guardians of the football pyramid..in reality they have and continue to do a woeful job..

[JfR]

4 minutes ago, Norman said:

That and criticising the TV deal, wanting our own Rams TV service that wasn't part of the EFL streaming service so we could choose our own prices etc. 

Hasn't Mel gone on record that he feels the EFL have a personal agenda against him? 

In the original hearing:
"We heard factual evidence on behalf of the Club by:
  a) Mel Morris. Mr Morris has throughout the relevant period been the owner and Chairman of the Club. He gave evidence about his purchase of Pride Park from the Club and the background to that sale. His witness statement also contained a considerable amount of evidence about the Club’s wider relationship with the EFL – a relationship which he characterises as
    i) Involving ‘dislike’ of him and the Club by the EFL
    ii) Him being an ‘enemy of the EFL state’, and
    iii) The EFL having an ‘axe to grind against [him] personally'"

Edited May 11, 2021 by JfR

[RadioactiveWaste]

9 minutes ago, Ken Tram said:

Thank you!

I am guessing that varying Estimated Recoverable Value (ERV) is open to abuse and manipulation? - not that we are accused of that.

Presumably, the greater the variation of practices, the more difficult it is for the EFL to monitor Financial Fair Play (FFP)?

EFL need to monitor. Clubs want to manage. And there's a bit of argy bargy.

And on that basis, I could envisage there being some rationale for a charge of non compliance, because the rules are there for a reason?

I am guessing that varying Estimated Recoverable Value (ERV) is open to abuse and manipulation? - not that we are accused of that.

A cynical club up against FFP limits may be tempted to maniupulate these to make compliance in certain years easier (but kicking the bitter pill down the road) - This was one point Derby argued very strongly and convinced the orginal panel that was not the case in Derby's accouts.

Presumably, the greater the variation of practices, the more difficult it is for the EFL to monitor Financial Fair Play (FFP)?

Given the ability to govern demonstraited by the EFL in this case, I'd put a fair bet on most of the clubs being better informed on what the rules do and don't say than the regulator (but, the power to enforce the lies with the EFL). Te main thing the arises from this whole afair is that the EFL need to write better regulations. As in just write the regulations better.

And on that basis, I could envisage there being some rationale for a charge of non compliance, because the rules are there for a reason? - oh we're getting misconduct nailed on I think.

 

 

[uttoxram75]

1 hour ago, MrPlinkett said:

Poses the question,  if so many clubs are having to be creative,  does it mean the rules aren't fit for purpose 

The rules were only ever introduced to stop someone else doing a Man City and gatecrashing the top table. Any talk of keeping football sustainable was absolute hogwash.

[Ken Tram]

How funny would it be if the panel criticise the EFL for unclear guidance (in retribution for appealing their decision)!

And then instruct the EFL to ask Derby to draft regulations that reflect more accurate accountancy practices!

And, instruct the EFL to pay all of our costs!

And, then, in my imaginary world ... assuming that the EFL had been seeking a 12 point deduction and a relegation - as an equitable compensation - Derby are automatically promoted to the Premier League, and we start the season on 12 points!

10 minutes ago, RadioactiveWaste said:

I am guessing that varying Estimated Recoverable Value (ERV) is open to abuse and manipulation? - not that we are accused of that.

A cynical club up against FFP limits may be tempted to maniupulate these to make compliance in certain years easier (but kicking the bitter pill down the road) - This was one point Derby argued very strongly and convinced the orginal panel that was not the case in Derby's accouts.

Presumably, the greater the variation of practices, the more difficult it is for the EFL to monitor Financial Fair Play (FFP)?

Given the ability to govern demonstraited by the EFL in this case, I'd put a fair bet on most of the clubs being better informed on what the rules do and don't say than the regulator (but, the power to enforce the lies with the EFL). Te main thing the arises from this whole afair is that the EFL need to write better regulations. As in just write the regulations better.

And on that basis, I could envisage there being some rationale for a charge of non compliance, because the rules are there for a reason? - oh we're getting misconduct nailed on I think.

 

 

 

Edited May 11, 2021 by Ken Tram

[G STAR RAM]

1 hour ago, dcfcollie said:

Might be a really stupid question but.. if they are supposedly finding us guilty of not filing our accounts properly according to accounting practices. Then why aren't the HMRC after us as well?

Why would HMRC be after us? We are a loss making entity so no taxes to pursue.

If ground was overvalued that would only work in their favour. 

Amortisation does not affect taxes (I think) and even if it did they are not going to be missing out on anything if we are understating it.