Administration is it the best option now

[Ken Tram]

Does anyone know anyone who wants to go to university ...

https://www.ucfb.ac.uk/your-degree/undergraduate-degrees/ba-hons-football-business-finance/

... and then be able to give qualified football financial advice!

[Gringo]

18 minutes ago, Ken Tram said:

Would you mind kindly explaining the situation relating to the stadium?

Has the club sold the stadium? And if so, would it not be separate from the club's assets?

In fact, I would not mind a tiny explanation about what actually happened in relation to the stadium!

Mel bought the stadium through a separate company  which then raised finance on that asset, there is a charge on the stadium by MSD who appear to have made a loan with the stadium and the academy as security.

[Ken Tram]

Maybe an MSc in Football Business would be a good investment?

The course blurb explains ...

"Events like relegation can cause a club to lose millions of pounds overnight, so it is essential to have the knowledge and experience to be able to deal with such events."

[Curtains]

Seems like history made the Leagues wary and that’s why points deduction is a deterrent to Administration 
 

https://en.wikipedia.org/wiki/Administration_(British_football)

[Gaspode]

42 minutes ago, Curtains said:

Seems like history made the Leagues wary and that’s why points deduction is a deterrent to Administration 
 

https://en.wikipedia.org/wiki/Administration_(British_football)

There has to be a deterrrent. At one time it was seen as an easy option - clubs ran up big debts and cleared them overnight with no thought to the huge damage that administration does. Madness to think admin is a good outcome for anyone....

[Curtains]

20 minutes ago, Gaspode said:

There has to be a deterrrent. At one time it was seen as an easy option - clubs ran up big debts and cleared them overnight with no thought to the huge damage that administration does. Madness to think admin is a good outcome for anyone....

Madness the situation DCFC have got themselves in. 
 

[Curtains]

Before anyone says any thing it’s the EFL who are to blame IMO but DCFC have not made it easy for themselves 

 

[Curtains]

Parachute payments a real evil 

https://en.m.wikipedia.org/wiki/Administration_(British_football)

[i-Ram]

24 minutes ago, Curtains said:

Before anyone says any thing it’s the EFL who are to blame IMO but DCFC have not made it easy for themselves 

Why is our position anything significant to do with the EFL? Do they own the club? Do they write the cheques? Do they select the players and managers we contract? We are members of the EFL. We agree to, and have a part in drawing up, the rules and procedures of the EFL as members. We even had a senior representative on the board in the last 3 years. The club should operate within those rules, or secure an agreement with fellow members for any rule change that is prohibitive to the success and fairness of the league system.

[Allen]

Feel we need a complete reset/restart as we can't carry on as we are as it just goes from bad to worse. Unfortunately, have given up all hopes of any sort of decent new owners under the current circumstances. Feel the proverbial has to hit the fan before we can restart and just hope when it does happen it won’t completely destroy the club. What a sad state of affairs it all is.

[Curtains]

10 minutes ago, i-Ram said:

Why is our position anything significant to do with the EFL? Do they own the club? Do they write the cheques? Do they select the players and managers we contract? We are members of the EFL. We agree to, and have a part in drawing up, the rules and procedures of the EFL as members. We even had a senior representative on the board in the last 3 years. The club should operate within those rules, or secure an agreement with fellow members for any rule change that is prohibitive to the success and fairness of the league system.

I think they have to be perceived to be punishing us to pacify the likes of Boro and Wycombe and now Bristol City etc 

They shouldn’t take notice of these people and just deal with the issues. 
 

Like I say DCFC haven’t helped themselves but the rules issues around parachute payments makes it virtually impossible for clubs like Derby who missed promotion to the promised land to compete on fair playing field. 

The other clubs in the EFL might wake up one day when they get into trouble .

The amortisation rules are a joke. 

Edited July 27, 2021 by Curtains

[Chris_Martin]

38 minutes ago, Curtains said:

Before anyone says any thing it’s the EFL who are to blame IMO but DCFC have not made it easy for themselves 

 

Although it doesn't seem like it, the EFL are not just out to get DCFC. 

The club has been run badly for too long, can only blame ourselves. 

[i-Ram]

7 minutes ago, Curtains said:

I think they have to be perceived to be punishing us to pacify the likes of Boro and Wycombe and now Bristol City etc . They shouldn’t take notice of these people and just deal with the issues.

They have to take the views of their member clubs into account, but operate within the rules and procedures agreed by the members, which include Derby.

Like I say DCFC haven’t helped themselves but the rules issues around parachute payments makes it virtually impossible for clubs like Derby who missed promotion to the promised land to compete on fair playing field. 

Don’t disagree with any of that, but again those are the procedures that the members of the EFL signed up to. Morris in my view liked the idea of the parachute payments when he bought the club. He took a punt that he was buying a club on the up, who would secure the Premiership riches, and was prepared to bet heavily to get there.

The other clubs in the EFL might wake up one day when they get into trouble .

The amortisation rules are a joke. 

I am not convinced they are, as I don’t think there was any expectation when written that they might be ‘gamed’. I.e. that simple straight line methods would be applied by all member clubs. They do now need to be re-written, and be more robust in what is and what isn’t permitted

See above buddy.

For the record I think the EFL management are not fit for purpose.

1) To take so long to come to judgments is an absolute joke.

2) To enter into such a pisspoor contract with SKY TV.

3) To not pursue other obvious loopholes being exploited - e.g feeder clubs overseas.

[Ken Tram]

11 hours ago, Charlotte Ram said:

Mel bought the stadium through a separate company  which then raised finance on that asset, there is a charge on the stadium by MSD who appear to have made a loan with the stadium and the academy as security.

Thanks v much!

Does the following mean that any Administration or Liquidation of DCFC (however unlikely) would not directly force the sale of the Stadium or the Academy?

Are the stadium and academy owned separately from one another?

Are they also owned by entities separate from Derby County Football Club?

If so, can I assume that the entities are companies owned or controlled by Mel Morris? What are Mel's (?) entities actually called?

I looked up MSD and found this DET Article about Mr Dell, of MSD, who seems to have very very kindly(?*) lent money to Mel's Stadium Entity, with Mel's Academy Entity as collateral to secure the loan?

* I presume that the loan comes with an interest rate, but maybe not, as I do not know how high finance works?

Do DCFC, Academy and Stadium entities have additional contractual obligations towards one another - apart from the Academy Entity being collateral to secure the loan taken by the Stadium Entity from MSD?

Does DCFC have the ability to call-in debts from the Stadium entity or Academy entity? If so, could an Administrator enforce the repayment of any such debt?

Edited July 27, 2021 by Ken Tram

[Spanish]

3 minutes ago, Ken Tram said:

 

Does DCFC have the ability to call-in debts from the Stadium entity or Academy entity? If so, could an Administrator enforce the repayment of any such debt?

Ken just to jump in, I do believe that the debt would be enforced but I also suspect that all funding that has taken place since the deal has been injected by way of loan repayment rather than capital injection.  That would seem sensible from Mel's pov

[cheron85]

3 hours ago, Curtains said:

Like I say DCFC haven’t helped themselves but the rules issues around parachute payments makes it virtually impossible for clubs like Derby who missed promotion to the promised land to compete on fair playing field. 

I do find it interesting that we missed out in 2014 to a club who just blatantly ignored any attempt at FFP compliance - And then when they were brought back down to our league their fine was hugely reduced by the EFL because it could have put them out of business - We haven't flouted the rules anywhere near as blatantly and the EFL is hammering us

[Spanish]

3 minutes ago, cheron85 said:

I do find it interesting that we missed out in 2014 to a club who just blatantly ignored any attempt at FFP compliance - And then when they were brought back down to our league their fine was hugely reduced by the EFL because it could have put them out of business - We haven't flouted the rules anywhere near as blatantly and the EFL is hammering us

fine was big but where was the points penalty?

[cheron85]

34 minutes ago, Spanish said:

fine was big but where was the points penalty?

Don't think they had any - And that was only 3 years ago?

[Spanish]

Just now, cheron85 said:

Don't think they had any - And that was only 3 years ago?

no they didn't get any, it was rhetorical.

No idea why one wasn't applied and in those days the LAP decisions were not published, well I can't find any

[Ken Tram]

13 hours ago, Charlotte Ram said:

Mel bought the stadium through a separate company  which then raised finance on that asset, there is a charge on the stadium by MSD who appear to have made a loan with the stadium and the academy as security.

 

1 hour ago, Ken Tram said:

Thanks v much!

Does the following mean that any Administration or Liquidation of DCFC (however unlikely) would not directly force the sale of the Stadium or the Academy?

Are the stadium and academy owned separately from one another?

Are they also owned by entities separate from Derby County Football Club?

If so, can I assume that the entities are companies owned or controlled by Mel Morris? What are Mel's (?) entities actually called?

I looked up MSD and found this DET Article about Mr Dell, of MSD, who seems to have very very kindly(?*) lent money to Mel's Stadium Entity, with Mel's Academy Entity as collateral to secure the loan?

* I presume that the loan comes with an interest rate, but maybe not, as I do not know how high finance works?

Do DCFC, Academy and Stadium entities have additional contractual obligations towards one another - apart from the Academy Entity being collateral to secure the loan taken by the Stadium Entity from MSD?

Does DCFC have the ability to call-in debts from the Stadium entity or Academy entity? If so, could an Administrator enforce the repayment of any such debt?

 

1 hour ago, Spanish said:

Ken just to jump in, I do believe that the debt would be enforced but I also suspect that all funding that has taken place since the deal has been injected by way of loan repayment rather than capital injection.  That would seem sensible from Mel's pov

Could MJD potentially pick-up the club, stadium and Academy for £1 ... if my interpretation of what you and Charlotte have said is correct?

Are you saying that the "sale" of the stadium and/or Academy, were not actually sales - but they are simply collateral for loans?

But in that case, why would loan repayments be being made into DCFC?

Or were the loans - not loans of cash, but loans of buildings?

Are you saying ... DCFC loaned £80m* (?) to a business entity - but that entity did not receive cash, but instead received a stadium worth (£80m*). And then this separate entity now makes loan repayments to DCFC.

* Or whatever was the value of the stadium.

Presumably, this separate Stadium entity now own the stadium, but either way, they owe DCFC £80m*?

Therefore, at any point, DCFC could call-in this debt, and ask the Stadium Entity to either pay back £80m, or ask for the stadium back?

And if the stadium was given back as part of repayment, DCFC would then own it again, and a hypothetical Administrator could sell it.

Is any of this correct so far?

But, if the Stadium entity has taken a loan from Mr Dell at MJD, using the Academy as collateral for security (presuming that the Academy is owned by either the Stadium Entity, or possibly a separate Academy entity ...

Then, if DCFC went into administration ... and if the Stadium Entity went into administration and defaulted on its loan to MJD ... 

 ... MJD would own the Academy, and probably the stadium.

Could MJD then choose to buy DCFC from the Administrator for a knock down price because DCFC would not have a Stadium or Academy (Training Centre)? Or potentially buy it for £1 if no-one else would take on a club with debts, and with DCFC then bring a club without a stadium or Training Centre or Academy?

And then ... would MJD end up owning the club, the Stadium and the Academy and Training Centre (along with the club's footballing debts) ... in effect, for whatever amount it was that MJD loaned to the Stadium Entity.

But, if someone else were to buy DCFC in the meantime, then, presumably, they could could call in the debts, and get the Stadium and Academy back?

On the other hand, if potential buyers were to buy the club, and the Stadium Entity were to go into Administration, new owners might not be guaranteed of getting the Stadium or Academy?

So, do MJD only "win" if DCFC go into Administration, or could they have a "win" if the Stadium Entity were to go into Administration - and if DCFC continued to exist?

Could someone write a short book explaining the finances? Here on the forum, lots of us chime in with comments here and there - but it's probably meaningless without understanding the big picture.