The Administration Thread

[Maharan]

22 minutes ago, duncanjwitham said:

(I'm not an accountant proviso here, take with a pinch of salt etc etc...)

If the deal isn't an arms-length transaction (e.g. a Morris company selling to a Morris company), then the deal has to be done at 'market value' (i.e. valued by a 3rd party valuer in the case of property).  The only reason we were able to gain any profit from our deal was that the stadium was undervalued on our books at the time (having not been revalued for a while).  It was revalued from ~£40m to ~£80m, sold on, and we pocketed the difference.  Any other club where the stadiums real-world value is higher than it's current book value was free to do the same, as Villa and Wednesday (and maybe others?) did.

But if we were to buy it back (prior to going into admin), we would have had to sell it back for market value, which would basically have been for £80m again. So we gain nothing in that transaction in P/L terms (other than the stadium being back in our ownership, of course).  The same going forward, we could move it back to the other company, but it would be for very close to what we paid for it.

The only things that's changed now, is that it is an arms-length transaction. DCFC is 'owned' by the administrators, and the stadium by Morris, so he's free to sell it to us for whatever he likes, and his company will register the change in P/L (i.e. if he sells it back to us for £20m, he'll have to eat a ~£60m loss on it).  But from our point of view, there's no change, £20m cash goes out, a £20m asset comes in.  Of course we could in theory do the same trick, by moving our £20m asset to ourselves for it's true value of £80m, but that loophole has been closed by the EFL.

Erm… I think I follow, cheers! 

[Elwood P Dowd]

57 minutes ago, Charlotte Ram said:

Mel has given a personal guarantee on the MSD stadium/academy loans ( see companies house), if he does not pay instalments or redeem the loan he loses his house and all his possessions.

Charlotte Ram is right and this information is already in the public domain, you might have thought that any Journalist  worth his salt might have done a little research before publishing stories about Mel and the ground being an issue. Ask yourself, bearing in mind my previous posts, if you were in Mels shoes what would you want to do with ground?

In my expirence people tend to act in their own self interest. 

Owning a football ground with no football team to play in it must very frightening prospect, I wonder what such an event would do the the value of the ground, who would want it.

 

Edited January 11, 2022 by Elwood P Dowd

[RadioactiveWaste]

9 minutes ago, Elwood P Dowd said:

Charlotte Ram is right and this information is already in the public domain, you might have thought that any Journalist  worth his salt might have done a little research before publishing stories about Mel and the ground being an issue. Ask yourself, bearing in mind my previous posts, if you were in Mels shoes what would you want to do with ground?

In my expirence people tend to act in their own self interest. 

Owning a football ground with no football team to play in it must very frightening prospect, I wonder what such an event would do the the value of the ground, who would want it.

 

Unless there's a redevelopment angle, no club, site use changed and houses built. I'm not sure if that washes, but it's an angel.

I doubt pride park is worth more for redevelopment than as a stadium, but I've really no idea.

[Carnero]

4 minutes ago, RadioactiveWaste said:

Unless there's a redevelopment angle, no club, site use changed and houses built. I'm not sure if that washes, but it's an angel.

I doubt pride park is worth more for redevelopment than as a stadium, but I've really no idea.

Also...

 

[i-Ram]

1 hour ago, Charlotte Ram said:

Mel has given a personal guarantee on the MSD stadium/academy loans ( see companies house), if he does not pay instalments or redeem the loan he loses his house and all his possessions.

I would not rule out Mel having given a personal guarantee, and if I had been in MSD shoes I would have insisted on one, but what documented proof have you that he has given a guarantee? A guarantee is not a registerable charge at Companies House. Genuinely interested to know what you are driving at here.

[LazloW]

… and;

The club don’t own Moor Farm, but rent it from the Locko Estate (as far as I know, but might be wrong). It’s also is in the Green Belt, so while housing can’t be absolutely ruled out it, it wouldn’t be straight forward. 

My guess is that the stadium would be worthless in terms of redevelopment. The costs of demolition would be significant and can’t see it being worth it for a few low value industrial sheds (really can’t see it ever going for housing for various reasons and the market for massive supermarkets is long gone).

[i-Ram]

46 minutes ago, duncanjwitham said:

(I'm not an accountant proviso here, take with a pinch of salt etc etc...)

If the deal isn't an arms-length transaction (e.g. a Morris company selling to a Morris company), then the deal has to be done at 'market value' (i.e. valued by a 3rd party valuer in the case of property).  The only reason we were able to gain any profit from our deal was that the stadium was undervalued on our books at the time (having not been revalued for a while).  It was revalued from ~£40m to ~£80m, sold on, and we pocketed the difference.  Any other club where the stadiums real-world value is higher than it's current book value was free to do the same, as Villa and Wednesday (and maybe others?) did.

But if we were to buy it back (prior to going into admin), we would have had to sell it back for market value, which would basically have been for £80m again. So we gain nothing in that transaction in P/L terms (other than the stadium being back in our ownership, of course).  The same going forward, we could move it back to the other company, but it would be for very close to what we paid for it.

The only things that's changed now, is that it is an arms-length transaction. DCFC is 'owned' by the administrators, and the stadium by Morris, so he's free to sell it to us for whatever he likes, and his company will register the change in P/L (i.e. if he sells it back to us for £20m, he'll have to eat a ~£60m loss on it).  But from our point of view, there's no change, £20m cash goes out, a £20m asset comes in.  Of course we could in theory do the same trick, by moving our £20m asset to ourselves for it's true value of £80m, but that loophole has been closed by the EFL.

Thanks Duncan, as a non-Accountant too this would be my simplistic understanding, the only bit I would suggest is wrong is that the profit on sale was approx. £40m but as a Club we should have received the full sale price of approx. £80m (not pocketed the difference).

[Elwood P Dowd]

10 minutes ago, RadioactiveWaste said:

Unless there's a redevelopment angle, no club, site use changed and houses built. I'm not sure if that washes, but it's an angel.

I doubt pride park is worth more for redevelopment than as a stadium, but I've really no idea.

If it were a redevelopment angle then the ground would probably sell for the value of the land it stands on ☹️ 

[Guest]

12 minutes ago, RadioactiveWaste said:

Unless there's a redevelopment angle, no club, site use changed and houses built. I'm not sure if that washes, but it's an angel.

I doubt pride park is worth more for redevelopment than as a stadium, but I've really no idea.

Let’s hope one appears…

[duncanjwitham]

6 minutes ago, i-Ram said:

Thanks Duncan, as a non-Accountant too this would be my simplistic understanding, the only bit I would suggest is wrong is that the profit on sale was approx. £40m but as a Club we should have received the full sale price of approx. £80m (not pocketed the difference).

Yes, but in P/L terms, we were up by the difference - £80m cash came in, a £40m asset went out.  So that's +£40m in FFP terms.

[Crewton]

4 minutes ago, LazloW said:

The club don’t own Moor Farm, but rent it from the Locko Estate (as far as I know, but might be wrong). It’s also is in the Green Belt, so while housing can’t be absolutely ruled out it, it wouldn’t be straight forward. 

I think it can be ruled out unless Erewash BC change their Strategic Plan or the boundaries change. 

[Ghost of Clough]

2 hours ago, David said:

With regards to the stadium, would I be right in thinking to buy the stadium it would be best if we was in League 1 as they don't have the same FFP rules. You can spend 60% of your turnover on wages, stadium sale wouldn't matter would it?

If we was to somehow survive, could we afford to buy the stadium back so it's owned by the club whilst not falling foul of FFP/P&S?

The new owners could buy it under a different company, we would be in the same position as we was under Mel though. 

Could be wrong, happy to be corrected, just a football fan not an accountant.

You can effectively spend however much you want on whatever you want in L1 as long as the owner is willing to fund it. However, jump back up to the Championship and those seasons in L1 still count towards P&S.

I don't believe buying the stadium would fall within the P&S inclusions anyway.

[EraniosSocks]

[Steve How Hard?]

4 hours ago, Gaspode said:

The club have just tweeeted that Bristol Street Motors are now an official club partner - strange timing unless there is significant movement behind the scenes....perhaps there is imminent news?

 

4 hours ago, Ramarena said:

Has Ashley bought them out too? ?

There was a picture on here the other day where Ashley had his Bristols out so it could tie in with that.

Edited January 11, 2022 by Steve How Hard?

[StarterForTen]

2 hours ago, Ellafella said:

Every silver cloud has a grey lining. Get yourself down there there's a bargain to be had   but dont kick the tyres! 

Silver Cloud with a grey lining? That will be Mr Ashley's Rolls Royce perhaps?

[Tamworthram]

1 hour ago, Ghost of Clough said:

You can effectively spend however much you want on whatever you want in L1 as long as the owner is willing to fund it. However, jump back up to the Championship and those seasons in L1 still count towards P&S.

I don't believe buying the stadium would fall within the P&S inclusions anyway.

How does that work with the 60% of turnover rule?

[Ghost of Clough]

1 minute ago, Tamworthram said:

How does that work with the 60% of turnover rule?

It's 60% of typical football income, plus 100% of 'bonus' income (cup runs, player sales, etc). The owner 'donating' money via equity falls under the 2nd category.

[Tamworthram]

10 minutes ago, Ghost of Clough said:

It's 60% of typical football income, plus 100% of 'bonus' income (cup runs, player sales, etc). The owner 'donating' money via equity falls under the 2nd category.

Good spot and probably overlooked by many of us.

[Maharan]

14 minutes ago, Ghost of Clough said:

It's 60% of typical football income, plus 100% of 'bonus' income (cup runs, player sales, etc). The owner 'donating' money via equity falls under the 2nd category.

Which makes a mockery of the whole thing doesn't it?! I'm not complaining, just find that a bit odd!

[Tamworthram]

10 minutes ago, Maharan said:

Which makes a mockery of the whole thing doesn't it?! I'm not complaining, just find that a bit odd!

I guess it depends on the purpose of the restriction. If it's to create a level playing field and preventing owners from trying to buy success then it would fail. But if it's intended to prevent clubs accumulating unmanageable debt it should have an effect.