EFL Verdict

[kevinhectoring]

1 hour ago, Mucker1884 said:

Is that so?  How come HMRC aren't chasing us?

I hasten to add, that is a genuine question by someone who knows the square root of FA.  I'm not trying to pretend I know the answer, or blatantly calling you out.

I think HMRC really focus on the tax return not the accounts but obviously there is a close link. The club made losses so I would guess none of this impacts on corporation tax payable (not even sure if amort of this kind is tax deductible, others will know). So I don’t think the tax aspects would be a big deal 

[Carnero]

19 minutes ago, cosmic said:

Why would you screenshot this and not just upload the edited photo?

What?

[RoyMac5]

1 hour ago, Carnero said:

If you say so.

You bought that off ebay! ?

?

[Spanish]

1 hour ago, Carnero said:

If you say so.

Well done, congrats but does that make you better than 3 lawyers and a professor of accountancy.  I need to understand who is best placed to decide if our actions are compliant and is it you that is that person

[Malty]

I wrote about this before …

amortisation works like this. A transfer fee for a 5 million pound player with a contract length of 5 years would “amortise” at 1 million pounds per year if you used a straight line method.

In simple terms that’s one million pound of loss per year for 5 years.

if you imagine that you might extend a contract or sell the player in years three four or five then you might decide to use a different method. So if you think you could sell the player for 4 million pounds after 4 years then the total balance you need to write off is only 1 million pounds. Which would be a loss of 250k per year over 4 years.

The problem in the original panel is that we changed policy without properly disclosing it in our accounts. So we might have changed for example from the straight line method to the residual value one above.

The appeal seems to now suggest that the new policy that we used was against accounting standards completely.

Either decision in my view is very much objective. The residual policy is ok in my view if you can predict the value of a player - and there are plenty of places now where you can predict a future value of a player. So I’m not sure it really is against accounting standards.
 

In the first panel that suggested we changed accounting policies without disclosing it, well i suspect that practicing accountants would be able to debate as to whether this really is a change of accounting standards or just a change to a part of the policy. For example you might argue in the case above that we were just changing the residual value from nil to 4 million pounds, but the underlying policy is still a a straight line method. So no need to disclose a change in accounting policy.

Im conclusion, I think Derby could easily appeal this decision again and win. Unless someone comes to the table with a compromise arrangement, the costs for the EFL and us will continue to rise until someone finally loses, and I wouldn’t be surprised if it was the EFL that loses. I think that Mel has the deepest pockets.

[Carnero]

1 minute ago, RoyMac5 said:

You bought that off ebay! ?

?

?

[Carnero]

1 minute ago, Spanish said:

Well done, congrats but does that make you better than 3 lawyers and a professor of accountancy.  I need to understand who is best placed to decide if our actions are compliant and is it you that is that person

No, it's the people who audited the accounts and signed an unqualified audit report to that end, as per my original response ?

[RoyMac5]

Just now, Spanish said:

Well done, congrats but does that make you better than 3 lawyers and a professor of accountancy.  I need to understand who is best placed to decide if our actions are compliant and is it you that is that person

What you miss is the fact that the person best placed might not be the one deciding our appeal!

I'm not sure what you're trying to prove here. Mel stretched the rules - the EFL knew but didn't get it - obviously it was done to gain an advantage. That is why people employ good accountants, not to break the rules but to use the lack of specific rules to their advantage. When the EFL decide they don't like it they change the rules.

[Carnero]

37 minutes ago, cosmic said:

Why would you screenshot this and not just upload the edited photo?

 

[i-Ram]

2 hours ago, Carnero said:

If you say so.

Oh no. Please tell me you are one of those online crazies who buy dodgy certificates to make oneself look important or worthy, and you’re not an Accountant.

[Spanish]

38 minutes ago, eccles the ram said:

If we are going to be 'punished' then would our auditors have a case against the EFL as they are questioning the accounts validity? Also i believe chairman of other clubs would be looking very closely as this pans out. Don't believe every club in this division is whiter than white! Whose going to be next in the EFL firing line?

I think you make a good point, similar to the valuers for PP. 

[Carnero]

3 minutes ago, i-Ram said:

Oh no. Please tell me you are one of those online crazies who buy dodgy certificates to make oneself look important or worthy, and you’re not an Accountant.

[Spanish]

13 minutes ago, RoyMac5 said:

What you miss is the fact that the person best placed might not be the one deciding our appeal!

I'm not sure what you're trying to prove here. Mel stretched the rules - the EFL knew but didn't get it - obviously it was done to gain an advantage. That is why people employ good accountants, not to break the rules but to use the lack of specific rules to their advantage. When the EFL decide they don't like it they change the rules.

Not trying to prove anything at all, why would I. Just sifting through the public records for answers.  You seem to be upset that I want to discuss this in a balanced way.  Lots on here seem to only want to read EFL to blame, DCFC blameless.  I’ve quoted the accountancy rules so I am not convinced the efl have changed any rules as such.

[angieram]

23 minutes ago, Malty said:

I wrote about this before …

amortisation works like this. A transfer fee for a 5 million pound player with a contract length of 5 years would “amortise” at 1 million pounds per year if you used a straight line method.

In simple terms that’s one million pound of loss per year for 5 years.

if you imagine that you might extend a contract or sell the player in years three four or five then you might decide to use a different method. So if you think you could sell the player for 4 million pounds after 4 years then the total balance you need to write off is only 1 million pounds. Which would be a loss of 250k per year over 4 years.

The problem in the original panel is that we changed policy without properly disclosing it in our accounts. So we might have changed for example from the straight line method to the residual value one above.

The appeal seems to now suggest that the new policy that we used was against accounting standards completely.

Either decision in my view is very much objective. The residual policy is ok in my view if you can predict the value of a player - and there are plenty of places now where you can predict a future value of a player. So I’m not sure it really is against accounting standards.
 

In the first panel that suggested we changed accounting policies without disclosing it, well i suspect that practicing accountants would be able to debate as to whether this really is a change of accounting standards or just a change to a part of the policy. For example you might argue in the case above that we were just changing the residual value from nil to 4 million pounds, but the underlying policy is still a a straight line method. So no need to disclose a change in accounting policy.

Im conclusion, I think Derby could easily appeal this decision again and win. Unless someone comes to the table with a compromise arrangement, the costs for the EFL and us will continue to rise until someone finally loses, and I wouldn’t be surprised if it was the EFL that loses. I think that Mel has the deepest pockets.

I agree with what you have written, but I think you mean subjective, not objective.

If it was objective we wouldn't be having all this debate! 

[angieram]

42 minutes ago, RoyMac5 said:

What you miss is the fact that the person best placed might not be the one deciding our appeal!

I'm not sure what you're trying to prove here. Mel stretched the rules - the EFL knew but didn't get it - obviously it was done to gain an advantage. That is why people employ good accountants, not to break the rules but to use the lack of specific rules to their advantage. When the EFL decide they don't like it they change the rules.

They haven't even changed the rules, Roy. They have just found a second set of experts who agree with their interpretation of the rules as they didn't like the fact that the first set of experts didn't agree with them.

To be fair to the EFL, I think they explained their objections rather better the second time around. However, that does not excuse them from the fact that the regulations as they stand do not specifically state the method of amortisation that a club should use. This means there is no definitive right or wrong, just "qualified" opinion. 

Add to that the fact they didn't spot this for themselves for three whole years, and only seem to think it has been worth spending time and money on after they lost the main aspects of the original case ("well we can't get them for that so we'll try and push this!") then I think there is good reason for Derby County FC, our lawyers,  auditors, the IDC and most supporters to feel aggreived. 

I say most supporters because I am well aware that there are one or two who persistently want to believe the EFL version rather than the club's,  although why any right minded supporter would want to do this when there is no actual regulation to back this up is totally beyond me! 

Edited June 27, 2021 by angieram
Spelling!

[mwram1973]

43 minutes ago, RoyMac5 said:

You bought that off ebay! ?

?

From me ?

[i-Ram]

I do hope that when the full DC decision is revealed that the appeals committee confirm that they come to the conclusion that £100k was a sufficient penalty given when the Rams purchased Butterfield, Johnson, Blackman, Anya and Camara, they did genuinely think they were buying some players with some enduring value. DCFC have been victims of a miss-selling scam that has been going on for ages, and it still persists to this day.

[cosmic]

42 minutes ago, Carnero said:

 

I love this ? much better, Carnero!

[Spanish]

17 minutes ago, angieram said:

They haven't even changed the rules, Roy. They have just found a second set of experts who agree with their interpretation of the rules as they didn't like the fact that the first set of experts didn't agree with them.

To be fair to the EFL, I think they explained their objections rather better the second time around. However, that does not excuse them from the fact that the regulations as they stand do not specifically state the method of amortisation that a club should use. This means there is no definitive right or wrong, just "qualified" opinion. 

Add to that the fact they didn't spot this for themselves for three whole years, and only seem to think it has been worth spending time and money on after they lost the main aspects of the original case ("well we can't get them for that so we'll try and push this!") then I think there is good reason for Derby County FC, our lawyers,  auditors, the IDC and most supporters to feel aggreived. 

I say most supporters because I am well aware that there are one or two who persistently want to believe the EFL version rather than the club's,  although why any right minded supporter would want to do this when there is no actual regulation to back this up is totally beyond me! 

If this is aimed at me I think you are wrong.  The truth lies somewhere between both versions.  But if I am not permitted to explore the version portrayed by the enemy without being labelled as not right minded so be it.  Criticise the post not the poster.  I have posted the reg as I read it 

[Van der MoodHoover]

The one thing that dcfc is absolutely guilty of is completely squandering the short term P&S advantage gained from tweaking the amortisation approach by signing such a load of old tat and mismanaging them to be worthless. 

By incurring all these losses from anya, blackman, Butterfield et Al they rather illustrate the point that a cautious approach to player valuation is closer to our reality.... ?