Embargo.

[Half Fan Half Biscuit]

6 minutes ago, duncanjwitham said:

This to me gets to the root of it.  The LAP document is entirely about Cost Model vs Revaluation Model, and saying we're using the Cost Model but sneaking in features of the Revaluation Model.  I don't believe (not an expert etc) that that's what we were doing at all.  We weren't 'revaluing' the assets in the sense that we had pride Park revalued before we sold it.  We were purely trying to estimate (as reliably and systematically as possible) what percentage of a players "economic benefits" we might derive from selling them on.  So none of the arguments about active markets and public prices apply, because we weren't 'revaluing' in that sense.  I think the DC, with their accountant on board understood this and waved it through.  The LAP with no experience in the field *at all* did not grasp this and that's why we are where we are. 

Again, not an expert etc.

Yes - I stand corrected - Club weren't actually revaluing players above cost so revaluation method wasn't being used. Therefore nothing FRS102 says about that method applies.

So it comes down to 

18.22 . . . The entity shall choose an amortisation method that reflects the pattern in which it expects to consume the asset’s future economic benefits. If the entity cannot determine that pattern reliably, it shall use the straight-line method.” 

 

[duncanjwitham]

1 minute ago, Half Fan Half Biscuit said:

Yes - I stand corrected - Club weren't actually revaluing players above cost so revaluation method wasn't being used. Therefore nothing FRS102 says about that method applies.

So it comes down to 

18.22 . . . The entity shall choose an amortisation method that reflects the pattern in which it expects to consume the asset’s future economic benefits. If the entity cannot determine that pattern reliably, it shall use the straight-line method.” 

Exactly. And the DC found that our method was both systematic and reliable. The EFL appealed over those too, and the LAP found no reason to overturn them.  So as far as the EFL's disciplinary process goes, we have a reliable way to determine the way we expect use those economic benefits.  We're just not allowed to use it because... erm... ?‍♂️

[Leeds Ram]

39 minutes ago, Spanish said:

If we gained no advantaged though why TF has this torture been endured.  It makes no sense to me at all.  We chose an alternative unique method and we gained no advantage?????

If there was absolutely no advantage to be gained why did we choose such an unusual method? So unusual no other club in the football league used  the same method.  From the little I've read (and am happy to be shown I'm wrong) it does seem as though we gained an advantage through minimising losses via  a unique way of measuring amortisation. Now that's a separate question from do other clubs use loopholes to gain a systematic advantage over others where we can look at others and point out some hypocrisies going on and it's even separate from the question of whether we really did anything wrong. But it looks (again from the little I have read) that we used a method that did give us a significant advantage over others. 

I'm in the camp now where the EFL aren't backing down and Mel should come to an agreement even if it is a points deduction. Dragging this on isn't in the club's best interest, it is simply burning the club and even if we come away with a victory it'll likely be a pyrrhic one with us looking at potential relegation. I don't know if it's ego that's the issue here, that Mel can't tolerate being told he's wrong and is fighting it all the way to get some kind of vindication that he was in the right all along  but I'm finding it difficult to understand why we haven't come to a mutual agreement on this still. 

Edited September 9, 2021 by Leeds Ram

[Spanish]

30 minutes ago, duncanjwitham said:

Well at least one of them was, by design. The rules say at least one of the DC members must be an accountant for matters like this.  

Although us not providing our own expert witness is ultimately the reason we lost IMO.  And it's a mistake entirely of our own making.

It's interesting - the LAP written reasons explicitly state that the evidence of our accountants and auditors can't be classed as "expert evidence" because they were called as factual witnesses, not experts. And because of that, it did not give the DC the chance to examine their qualifications and experience and decide whether they were worthy of taking into account. But the exact same applies to Pope - they did have chance to examine his qualifications and experience and found them lacking, so disregarded him.  The LAP didn't get to speak to Pope or cross-examine him, they are entirely going by documents arising from the first hearing.  So they've taken the quotes I posted earlier and basically decided the fact he was unaware of the rules he was being an expert on, didn't actually matter ?‍♂️.

good points as usual.  I interpreted that they didn't cross examine him because no new evidence is allowed in an appeal?

the lack of our own expert witness was picked up by LAP wasn't it?

[G STAR RAM]

7 minutes ago, Leeds Ram said:

From the little I've read (and am happy to be shown I'm wrong) it does seem as though we gained an advantage through minimising losses via  a unique way of measuring amortisation. 

But minimising losses in one year would only lead to higher losses in a subsequent year, so overall no advantage is gained.

[RoyMac5]

33 minutes ago, atherstoneram said:

Doesn't have to be specified, that would be covered under the scope of the rules

Then they have to prove we gained an unfair advantage and neither panel did.

[atherstoneram]

Just now, RoyMac5 said:

Then they have to prove we gained an unfair advantage and neither panel did.

No they don't.It doesn't say that at all.

Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

[RadioactiveWaste]

Just now, atherstoneram said:

No they don't.It doesn't say that at all.

Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

Both panels found we had not done that. The outcome was (eventually) that we were finded £100k and ordered to redo our accounts. Had we been found to have "managed our affairs or submitted information which is intended to seek to or take any unfair advantage" I think we'd have had a harsher penalty at that point.

What's going on now is what our redrawn accounts show, which, none of us have seen.

[Grumpy Git]

I really don't get what the EFL are all about here if they are looking for "retrospective action"?

In any sporting environment there are rules. I work in motorsport and if you can gain an advantage by "sailing close to the wind" (but NOT actually breaking any rules) that is exactly what you do. An example of this was Mercedes F1 having a trick to alter the front wheel geometry by pushing the steering wheel in or out (it allowed the car go faster on the straights). F1 simply changed the rules from the start of the new season, they didn't say Mercedes couldn't do it (or punish them for being clever).

The basic problem here is that the EFL are a bunch of amateurs and not fit for purpose, (which is a travesty given how much cash is floating about in professional football).

Edited September 9, 2021 by Grumpy Git

[Leeds Ram]

20 minutes ago, G STAR RAM said:

But minimising losses in one year would only lead to higher losses in a subsequent year, so overall no advantage is gained.

It's gaining an advantage in that specific year though isn't it. It wouldn't necessarily lead to higher losses in future years as I would assume that's revenue dependent. My non expert reading is that it's giving the club headroom for further spending and delaying a large loss for future years when it may be able to be mitigated. 

Edited September 9, 2021 by Leeds Ram

[atherstoneram]

5 minutes ago, RadioactiveWaste said:

Both panels found we had not done that. The outcome was (eventually) that we were finded £100k and ordered to redo our accounts. Had we been found to have "managed our affairs or submitted information which is intended to seek to or take any unfair advantage" I think we'd have had a harsher penalty at that point.

What's going on now is what our redrawn accounts show, which, none of us have seen.

And the outcome may be interesting one way or another.

[RoyMac5]

13 minutes ago, atherstoneram said:

No they don't.It doesn't say that at all.

Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

You appear to be practicing pedantry, no doubt to gain an advantage. Must get David to change the forum rules re pedants.

[RadioactiveWaste]

2 minutes ago, Grumpy Git said:

I really don't get what the EFL are all about here if they are looking for "retrospective action"?

In any sporting environment there are rules. I work in motorsport and if you can gain an advantage by "sailing close to the wind" (but NOT actually breaking any rules) that is exactly what you do. An example of this was Mercedes F1 having a trick to alter the front wheel geometry by pushing the steering wheel in or out (it allowed the car go faster on the straights). F1 simply changed the rules from the start of the new season, they didn't say Mercedes couldn't do it (or punish them for being clever).

The basic problem here is that the EFL are a bunch of amateurs and not fit for purpose, (which is a travesty given how much cash is floating about in professional football).

I did enjoy that innovation from Mercedes, along the same lines as the red bull flexi-wings, the F-duct, the double defusser, the mass damper (that really was a clever one).

 

[i-Ram]

1 hour ago, G STAR RAM said:

We also gain an advantage by selling our tickets for higher prices than other clubs and the sponsorship deals.

The club are correct that we have gained no advantage as the amortisation will just appear in another years accounts, the total amortisation however will be the same.

For an accountant and auditor of 23 years you are being disingenuous with that comment. The change in amortisation policy created extra headroom for spend (and losses) in the P&S calculations for a season or two, at a time when Morris was happy to throw his cash at everything, and am I not right in saying when the club took a big hit at the end of a number of players contracts (Johnson, Anya, Butterfield) thats when the clever Stadium revaluation took place?

Edited September 9, 2021 by i-Ram

[Spanish]

29 minutes ago, duncanjwitham said:

Exactly. And the DC found that our method was both systematic and reliable. The EFL appealed over those too, and the LAP found no reason to overturn them.  So as far as the EFL's disciplinary process goes, we have a reliable way to determine the way we expect use those economic benefits.  We're just not allowed to use it because... erm... ?‍♂️

DC2 is an odd read.  The best I can surmise is the breach is the impermissible use of resale values in amortisation calculations.   I am not sure how we can put in restated accounts which include an element of this if that is the case 

[ariotofmyown]

15 minutes ago, G STAR RAM said:

But minimising losses in one year would only lead to higher losses in a subsequent year, so overall no advantage is gained.

That is true, but isn't the advantage with our method that it allowed us to push costs beyond the 3 year FFP window?

Another club may have to sell players towards the end of year 3 to make sure they didn't lose too much money for FFP.

We would be able to wait until years 4 or 5 when the players contract was up. (This ended up screwing us over anyway as most of these expensive recruits were worthless, so we had to sell the ground to cover ourselves for FFP.)

I'm sure it's not as black and white as that, but isn't this the general reason why we did it?

I'm not saying we should be punished for this, especially as the EFL seemed to say it was fine originally.

[duncanjwitham]

19 minutes ago, Spanish said:

good points as usual.  I interpreted that they didn't cross examine him because no new evidence is allowed in an appeal?

the lack of our own expert witness was picked up by LAP wasn't it?

I'm not actually sure of the exact process, but my take on it was basically they read the written reasons and pointed to the bits where they thought the DC had screwed up and that's pretty much it. It certainly wasn't a full hearing with witnesses, and definitely with no new evidence. I think the club and EFL may have made submissions too, but I'm not even sure if they were present for the hearing, or just submitted in writing.  The only thing they had to go on to judge Pope's credibility was what was documented at the time - in the written reasons, and I suppose possibly in other notes etc (not sure on that bit).

And yeah, the lack of our own expert witness was mentioned both in DC1 and the LAP, IIRC.  Maybe hindsight's a wonderful thing, but it certainly seems like a massive mistake, of our own making, now.

[angieram]

Just forgetting about the rules for a moment (I think we all agree they aren't very clear) we need to think why we did what we did at that moment in time.

What we did was acheive a short term gain against FFP by keeping the purchase value of some pretty decent players in the first couple of years of their contracts. We were signing plenty at that stage.

This was done at a time we were playing very well, and it might have been the difference in allowing us to make that extra purchase (or maintain high wages for existing players) that gets us over the line and wins us promotion. 

Because we didn't get promotion, it didn't work. The players' contracts ran down, we didn't sell many of them at anything like their book value so the short term gain disappeared and we were back to the same situation as every other club. 

Even though we continued using this method of amortisation (because the EFL at the time didn't object to it) the advantage has gone because for every new player maintaining a high book value there is another player coming to the end of a contract so our amortisation 'hit' evens out as pretty much the same as every other club. 

So, we were subsequently charged by the EFL when this matter was brought to their attention when trying to get us on another charge of incorrectly selling the stadium to ourselves, which of course we were found not guilty of. (Not of not selling it, but of doing so incorrectly.) The reason was, there was nothing in the rules to stop us doing this.

Now there's nothing in the rules to stop us using our method of amortisation either. So the EFL relied on at appeal an interpretation of the rules by an 'expert' who isn't an accountant but who they had brought in to specifically question the ruling of the first panel, which disagreed with the EFL's view of something which they didn't even know about until it was pointed out to them! 

[kevinhectoring]

1 hour ago, Wolfie said:

Riiiiight, so it's purely coincidental that the other 72 clubs do it the other way.

Believe the club spin if you like. I've made my point.

‘The other way’? Isn’t it, ANother way?

All the LAP said is our method does not work. I don’t think they said amortisation has to be on a straight line basis. 

We were required to deliver accounts in accordance with the judgement.  So maybe Mel has produced a set of accounts that does not use straight line. But which use a third method, one which suits us better than straight line. 
 

I wonder whether we might end up with two sets of accounts ...

[RadioactiveWaste]

4 minutes ago, Leeds Ram said:

It's gaining an advantage in that specific year though isn't it. It wouldn't necessarily lead to higher losses in future years as I would assume that's revenue dependent. 

In terms of the ammortisation it absolutly does, the £6m over 4 years ends up at £0 at the end of the 4 years weather you write down £1.5m each year or £0.5m, then £1m, then £2m then £2.5m (hypothetically) or hypothetically you sold the player after year 2 for £4m if you'd written down the value in a straight line, you've made £1m over the value you had him listed at, if you'd only written down £1m of the value you'd have made a loss of £1m against his book value.

It's all about manipulating things into different accounting years - so yes you might manipulate things to your advantage in one year (and personally I'm pretty damn sure that's why we did it) but that will mean a bigger hit in a later year.