Derby finally accept 21 point deduction.

[PistoldPete]

21 minutes ago, vonwright said:

I think the EFL's position will be that football owners are generally willing choose to cover losses, which may put them and their clubs in a precarious position but is done by choice. The extra financial burden of COVID was very real, and might have led Mel (or any other owner) to decide they wouldn't (or couldn't) cover the losses any more. But that wouldn't mean COVID was _solely_ responsible for us going into administration, since if we hadn't willingly run up huge debts before, we would have been able to absorb it. I don't think we have a good answer to the question why COVID losses were entirely responsible for forcing us into administration, and the (bigger) debts we had already run up before weren't responsible at all.

The short(ish) answer is twofold.

The losses sustained when Mel was spending too much were costs that he had budgeted for, so sustainable in the short term. But covid losses were not within his budget.

 

Also on a legal point, causation is decided by the proximate events , not the historic chain of events that preceded the event of administration.       

 

[PistoldPete]

11 minutes ago, Abu Derby said:

The way these appeals work it’ll be well into next year before the verdict is reached. 

No I think this one will be much quicker. It was with Wigan.  

[Pearl Ram]

15 minutes ago, 86 Hair Islands said:

Already had two, have we not! The former found in our favour, the latter saw the fitting post-appeal punishment as being nothing more than a paltry £100K fine. 

Frankly, you can roll your eyes all you like, but we're now in administration and I'd say that's ample punishment for using an amortisation policy that was neither outlawed under the EFL's own regs, nor FRS 102 non-compliant. These facts seem to have been lost in a tidal wave of fear and self-loathing that I'm totally at a loss to understand.

OK. ?

[RandomAccessMemory]

I’m glad the administrators are appealing the deduction, it may not work, but I think it has a good chance when I read the rules on the EFL site.

Quote

12. Sporting Sanctions 

Introduction

The following Regulation provides for how sporting sanctions will be applied to Clubs when the Club, or any Group Undertaking, becomes subject to or suffers an Insolvency Event, and also makes provision for an appeals mechanism, but only on the grounds of ‘Force Majeure’.

By way of clarification the following are identified as circumstances which it is intended would be embraced under the category of ‘Force Majeure’. It is intended that this appeals process should be limited to circumstances which are deemed unforeseeable and unavoidable. In all these examples, each case would have to be considered on its own merits:

Club Income: In the event that a club suffers material adverse effects upon the loss of anticipated income streams which mean that it is unable to meet its liabilities as and when they fall due. This could only be grounds for appeal, however, if the loss occurs during the currency of a binding agreement (i.e. not upon expiry).

Quote

12.10  A Club may appeal:

12.10.1  against a decision of the Board to impose a points deduction arising from an Insolvency Event of a Group Undertaking under Regulation 12.2; and/or 

12.10.2  against an automatic deduction of points imposed where a Club, Premier League club or National League Club suffers an Insolvency Event under Regulations 12.1, 12.6 or 12.7 respectively, 

but only on the ground that the relevant Insolvency Event(s) arose solely as a result of a Force Majeure event (‘Sporting Sanctions Appeal’). 

12.11  For the purposes of this Regulation 12, a ‘Force Majeure’ event shall be an event that, having regard to all of the circumstances, was caused by and resulted directly from circumstances, other than normal business risks, over which the Club and/or Group Undertaking (as the case may be) could not reasonably be expected to have control and its Officials had used all due diligence to avoid the happening of that event.

If they have the proof of the bits in bold being true, and I’d have thought the accounts would show this very clearly, then why wouldn’t you appeal it?

This is different to Wigan’s situation that keeps being mentioned, their owner bought the club during Covid, you cannot argue they did their due diligence when we were already in lockdown when they purchased the club, they at the very least would have known the possibility of it continuing at that point.

I think you have to ask yourself, prior to Covid would you ever have anticipated what happened? Around 18 months of no one being in Pride Park, losing two thirds of your income but still having to try and cover all of your outgoings? I know I wouldn’t. How can you possibly have a contingency plan that covers that large an amount?

Yes, other clubs have lost money too due to Covid, but this isn’t about them, this is about how it affected us and us only, and is subject to the rules above. I think it’s best to ignore the noise from fans of other clubs.

[G STAR RAM]

5 hours ago, JuanFloEvraTheCocu'sNesta said:

My point is that other clubs who might be in a perilous situation right now might decide to try and wipe the slate clean right now, not if this happens again in future. If they see us 'get away with it' then a few other clubs might think "screw it, lets take advantage whilst we can"

I'm not sure you are fully understanding the administration process and how serious it is.

Its not a case of just write off the debts and then carry on as normal.

 

[vonwright]

50 minutes ago, PistoldPete said:

On legal point, causation is decided by the proximate events , not the historic chain of events that preceded the event of administration.      

 

I'm not sure you can say the 'historic chain of events' will be irrelevant. It will be up to us to prove that COVID was the proximate cause of a forced administration. The EFL will argue that our COVID losses alone were not sufficient to force us into administration, that they at most exacerbated the losses and debts we recklessly incurred, and that that behaviour ('normal business risks') was the effective cause. A proximate cause isn't just the most recent contributory factor, and since this will come down to interpreting the rule book anyway, the EFL's wording is pretty clear: we will need to prove it was the sole cause of our (forced) administration.I  think we will fail, although a) I'm not a lawyer, and b) I fully accept it would be an interesting case.

On the other point, the Wigan case suggests the EFL will expect some explanation of why these specific COVID losses necessitated administration, above and beyond Mel just deciding he'd had enough. And the fact he'd willingly racked up bigger losses pre-COVID does seem relevant there. The EFL explicitly talked about how owners getting bored of losing money was sad, but their choice, and nothing to do with the FM clause.

 

[Ram-a-lama fa fa fa]

1 hour ago, PistoldPete said:

No I think this one will be much quicker. It was with Wigan.  

just had a quick look at headlines on google regarding wigan and it seems to taken about a month

[Gaspode]

4 minutes ago, vonwright said:

….On the other point, the Wigan case suggests the EFL will expect some explanation of why these specific COVID losses necessitated administration, above and beyond Mel just deciding he'd had enough. And the fact he'd willingly racked up bigger losses pre-COVID does seem relevant there. The EFL explicitly talked about how owners getting bored of losing money was sad, but their choice, and nothing to do with the FM clause.

 

Hadn’t the EFL been demanding assurances from Mel that he would be able to fund the club through till the end of the season? Suggests they thought he may have been struggling to pay rather than just getting bored of paying…..

[atherstoneram]

1 minute ago, Gaspode said:

Hadn’t the EFL been demanding assurances from Mel that he would be able to fund the club through till the end of the season? Suggests they thought he may have been struggling to pay rather than just getting bored of paying…..

Nothing of the sort,just fed up of putting money into the club month after month. He admitted he was only willing (not that he could not afford to) to put money into the club until a buyer was found and was reluctant to give an assurance to the EFL that he would fund the club for the season,that doesn't imply to me that he was struggling to pay, rather he didn't want to.

[kevinhectoring]

1 hour ago, RandomAccessMemory said:

I’m glad the administrators are appealing the deduction, it may not work, but I think it has a good chance when I read the rules on the EFL site.

If they have the proof of the bits in bold being true, and I’d have thought the accounts would show this very clearly, then why wouldn’t you appeal it?

This is different to Wigan’s situation that keeps being mentioned, their owner bought the club during Covid, you cannot argue they did their due diligence when we were already in lockdown when they purchased the club, they at the very least would have known the possibility of it continuing at that point.

I think you have to ask yourself, prior to Covid would you ever have anticipated what happened? Around 18 months of no one being in Pride Park, losing two thirds of your income but still having to try and cover all of your outgoings? I know I wouldn’t. How can you possibly have a contingency plan that covers that large an amount?

Yes, other clubs have lost money too due to Covid, but this isn’t about them, this is about how it affected us and us only, and is subject to the rules above. I think it’s best to ignore the noise from fans of other clubs.

Thank you I’d not looked at these rules before. The rule says the insolvency event needs to arise ‘solely’ as a result of the force majeure event. So as usual the outcome of any appeal is fraught with uncertainty. 

don’t think there will be an appeal. I think the admins will do a deal   

[Ghost of Clough]

1 hour ago, RandomAccessMemory said:

the relevant Insolvency Event(s) arose solely as a result of a Force Majeure event

This is the key bit though.

Can we defend our transfer activity (purchases and sales) whilst still claiming force majeure as the sole reason for administration?

[Guest]

2 hours ago, RoyMac5 said:

Would we? It's not about the 'huge debts' (what are they?) Surely we had cash flow problems. Those were solely down to Covid. 

Correct.  Cashflow (or lack of it) is the biggest killer of businesses.

[atherstoneram]

3 hours ago, Sparkle said:

I am very pleased that we are appealing this - we have suffered a £20 million loss directly and factually from ticket sales due to covid from loss of sales of tickets - we were never in danger of administration prior to that - the EFL have stopped us from spending money because they know we simply didn’t have it coming in and they were constantly looking for guarantees of who is going to pay our bills before Administration. Our losses are provable due to Covid and what other clubs do is of no relevance to our appeal.

if the administrators believe we should appeal then they clearly believe we have a case and they are the money men! 
if the the EFL believe no one should ever win an appeal against administration then why have one available ?

Or they want to show prospective new owners that they have explored every avenue open to them and not to be accused at a later date of why they didn't appeal.

[europia]

14 hours ago, PistoldPete said:

There were no longer funds available to the club . That is the effect of administration not the cause.

 

the key question is whether Morris did everything he reasonably could to prevent administration. The question of the COVID loan arranged by Efl will be at issue. Why not take advantage of that?

I suspect that is why Efl has suddenly changed its story… from two public statements from Efl saying  Derby were not eligible for the loan … to now saying we didn’t apply. Why would we apply if we weren’t eligible?

There would be certain conditions associated with the loan being approved. Could well be that having up to date accounts at companies house was one of those. 

[jono]

8 hours ago, NottsRam77 said:

Bad signings are one thing 

a company having 2/3s of its revenue wiped off is another 

My point is that no single event causes these things … there is a chain of events. .. yes though, I am with you on this .. we may or may not have ridden the others. Damaged but alive .. Covid though ? not a chance, in our already weakened state. 

[plymouthram]

2 hours ago, RandomAccessMemory said:

I’m glad the administrators are appealing the deduction, it may not work, but I think it has a good chance when I read the rules on the EFL site.

If they have the proof of the bits in bold being true, and I’d have thought the accounts would show this very clearly, then why wouldn’t you appeal it?

This is different to Wigan’s situation that keeps being mentioned, their owner bought the club during Covid, you cannot argue they did their due diligence when we were already in lockdown when they purchased the club, they at the very least would have known the possibility of it continuing at that point.

I think you have to ask yourself, prior to Covid would you ever have anticipated what happened? Around 18 months of no one being in Pride Park, losing two thirds of your income but still having to try and cover all of your outgoings? I know I wouldn’t. How can you possibly have a contingency plan that covers that large an amount?

Yes, other clubs have lost money too due to Covid, but this isn’t about them, this is about how it affected us and us only, and is subject to the rules above. I think it’s best to ignore the noise from fans of other clubs.

Other clubs took loans from the EFL to cover losses during Covid, where Derby could'nt because of not having proof of paying back the loan. It makes me wonder, whether other clubs could go under or in to adminstration when or if they can't pay back the loan.

[europia]

56 minutes ago, vonwright said:

I'm not sure you can say the 'historic chain of events' will be irrelevant. It will be up to us to prove that COVID was the proximate cause of a forced administration. The EFL will argue that our COVID losses alone were not sufficient to force us into administration, that they at most exacerbated the losses and debts we recklessly incurred, and that that behaviour ('normal business risks') was the effective cause. A proximate cause isn't just the most recent contributory factor, and since this will come down to interpreting the rule book anyway, the EFL's wording is pretty clear: we will need to prove it was the sole cause of our (forced) administration.I  think we will fail, although a) I'm not a lawyer, and b) I fully accept it would be an interesting case.

On the other point, the Wigan case suggests the EFL will expect some explanation of why these specific COVID losses necessitated administration, above and beyond Mel just deciding he'd had enough. And the fact he'd willingly racked up bigger losses pre-COVID does seem relevant there. The EFL explicitly talked about how owners getting bored of losing money was sad, but their choice, and nothing to do with the FM clause.

 

Good points. I am pretty sure that any independent tribunal is going to look at the eye watering wage bill at DCFC that Mr Morris presided over, also the £28million outstanding to HMRC. The 'Covid ate my homework' excuse has become rather convenient for failing businesses. 

[Ghost of Clough]

2 minutes ago, europia said:

Good points. I am pretty sure that any independent tribunal is going to look at the eye watering wage bill at DCFC that Mr Morris presided over, also the £28million outstanding to HMRC. The 'Covid ate my homework' excuse has become rather convenient for failing businesses. 

What is this eye watering currnet wage bill then?

[plymouthram]

What ever way you look in to this whether its wrong or right. the current peoples running our club are financial experts who are willing to spend £300k on the appeal costs. They are not gambling like Mel has done with the club, they will put up a very strong case. The EFL put out a statement stating the appeal will be looked at by a elected board to look at Derby's case. The EFL are in a no win situation on this, Covid has caused a lot of business's to go under. Their witch hunt on the Derby led by the whinging chairman of another championship club does not put them in favour with the sports media/press (Daily Mail not included).

I feel we have a strong case, I am quitely confident that our 12 point deduction will be reduced.

[europia]

8 minutes ago, Ghost of Clough said:

What is this eye watering currnet wage bill then?

My post didn't refer to the current wage bill. Of interest would be the doubling of the wage bill (to circa £40m) from 2015 to 2017. All part of  DCFC's unsustainable finances as a championship club.