The Administration Thread

[duncanjwitham]

37 minutes ago, Mostyn6 said:

Had a bizarre conversation the other day, apparently Mel was not allowed to pump any further money into the club without incurring further points penalties etc and it’s been suggested EFL forced his hand and us into Administration. Sounds far-fetched but actually I bet he couldn’t put more money in. Apparently he wasn’t allowed to pay HMRC out of his own pocket. 

Been a while since I dug into the FFP rules, but I suspect it's combination of half-truths and misunderstandings TBH.  There are limits to what an owner can inject for FFP purposes (and how it has to be injected), and it is possible that COVID (combined with overspending) pushed us over that limit.  But Morris could still have put the money in to avoid admin, and challenged the points deduction (extraordinary times etc etc).  And the EFL were fiddling with the FFP rules at various points too, because of the general situation (both the expansion to a 4-year rolling window, and additional £5m allowance were added), so it may well have been allowed anyway.

The other thing is, any injections have to be cash or equity, they can't be loans (or anything with an expectation of repayment). So it's possible Morris was willing to loan the club the extra money, but didn't want to just give it (given that he was trying to sell the club). And that wouldn't have been counted for FFP purposes - it would have kept us out of admin, but probably resulted in a points deduction again.

But even beyond that, my gut feeling (purely from looking at the numbers) is that Morris decided that when COVID significantly drove up the ~£1m a month he was putting in, he decided enough was enough and stopped putting money in altogether (hence the rising debt and additional borrowing).  So any limits are a moot point if that was true, as he wasn't putting anything in.

[Curtains]

6 minutes ago, duncanjwitham said:

Been a while since I dug into the FFP rules, but I suspect it's combination of half-truths and misunderstandings TBH.  There are limits to what an owner can inject for FFP purposes (and how it has to be injected), and it is possible that COVID (combined with overspending) pushed us over that limit.  But Morris could still have put the money in to avoid admin, and challenged the points deduction (extraordinary times etc etc).  And the EFL were fiddling with the FFP rules at various points too, because of the general situation (both the expansion to a 4-year rolling window, and additional £5m allowance were added), so it may well have been allowed anyway.

The other thing is, any injections have to be cash or equity, they can't be loans (or anything with an expectation of repayment). So it's possible Morris was willing to loan the club the extra money, but didn't want to just give it (given that he was trying to sell the club). And that wouldn't have been counted for FFP purposes - it would have kept us out of admin, but probably resulted in a points deduction again.

But even beyond that, my gut feeling (purely from looking at the numbers) is that Morris decided that when COVID significantly drove up the ~£1m a month he was putting in, he decided enough was enough and stopped putting money in altogether (hence the rising debt and additional borrowing).  So any limits are a moot point if that was true, as he wasn't putting anything in.

Oh not this old argument .

Mel had to keep paying the players wages in Covid times with no income to the club coming in or more points deductions would of occurred.

The Tax non payment didn’t incur points deductions.

His options were reducing at that point .

The EFL know this !

 

 

Edited April 25, 2022 by Curtains
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[duncanjwitham]

7 minutes ago, Curtains said:

Oh not this old argument .

Mel had to keep paying the players wages in Covid times with no income to the club coming in or more points deductions would of occurred.

The Tax non payment didn’t incur points deductions.

His options were reducing at that point .

The EFL know this !

 

 

I assume you're on about my last paragraph, about Morris stopping putting money in altogether? It's only a gut feeling, but my reasoning is that Quantuma estimated that COVID has cost us £30m-£40m in lost income (over 2 years), but the actual debt accrued over that time is nearer £60m (HMRC + MSD + everything else).  That difference only really makes sense if Morris stopped putting in any money at all (~£1m a month he was putting in over 2 years pretty much balances the equations).  Obviously that's all very hand-wavy, back-of-a-fag-packet maths, but we don't have actual accounts to get real numbers from at the moment.

[Curtains]

Just now, duncanjwitham said:

I assume you're on about my last paragraph, about Morris stopping putting money in altogether? It's only a gut feeling, but my reasoning is that Quantuma estimated that COVID has cost us £30m-£40m in lost income (over 2 years), but the actual debt accrued over that time is nearer £60m (HMRC + MSD + everything else).  That difference only really makes sense if Morris stopped putting in any money at all (~£1m a month he was putting in over 2 years pretty much balances the equations).  Obviously that's all very hand-wavy, back-of-a-fag-packet maths, but we don't have actual accounts to get real numbers from at the moment.

Unfortunately to some it’s all down to MM and it’s hard to argue against that now .

I hear it all the time Mel this Mel that but it helps no one especially not DCFC .

I’m just saying he was begrudgingly paying players wages whilst unsuccessfully trying to sell the club .

The EFL decided the Ground sale (which we were cleared on and now clubs like Stoke are doing ) was wrong .

The EFL decided our amortisation method on players was wrong ( which we were cleared on but lost on EFL appeal )

Then Covid really screwed DCFC and Mel and Pearce along with what others perceive as mismanagement.

The Boro and Wycombe appeals wouldn’t allow Derby to move on along with the Ground ownership issues.

Maybe not paying Tax which is immorally wrong IMO was the only option at the time .

Now I say to Mel do the right thing if you possibly can and sort the Ground out with DCC 

 

 

 

[Mostyn6]

1 hour ago, Gee SCREAMER !! said:

That makes no sense at all.  He wouldn't be paying more in, he'd be paying what he should have. I think you heard or saw something you shouldn't have.  Did the people who told you this look like 

If there was not enough money in the club to pay the HMRC bill, then how could it be paid without him putting more money in??

[Gee SCREAMER !!]

1 minute ago, Mostyn6 said:

If there was not enough money in the club to pay the HMRC bill, then how could it be paid without him putting more money in??

The EFL won't stop him paying money that's already due though.  That makes no difference to how much the clubs paying out .  That money isn't paying more in, it's catching up. He was funding the club in excess of a million a month so there was never any actual pot of liquid cash like most/ all clubs in this league.

[Mostyn6]

4 minutes ago, Gee SCREAMER !! said:

The EFL won't stop him paying money that's already due though.  That makes no difference to how much the clubs paying out .  That money isn't paying more in, it's catching up. He was funding the club in excess of a million a month so there was never any actual pot of liquid cash like most/ all clubs in this league.

but any money paid in that ISN'T part of turnover is technically classed a 'loss' in the P&S rules.

[Ghost of Clough]

1 minute ago, Mostyn6 said:

but any money paid in that ISN'T part of turnover is technically classed a 'loss' in the P&S rules.

All that money that wasn't paid had already been accounted for in the P&S calculations. Mel paying the money due would have had zero impact on P&S so would have been able to pay it off without any problem

[PistoldPete]

1 minute ago, Ghost of Clough said:

All that money that wasn't paid had already been accounted for in the P&S calculations. Mel paying the money due would have had zero impact on P&S so would have been able to pay it off without any problem

Only impact I can think of is that he had planned to sell the club and then write off his loans, which would have helped our FFP situation although EFL has stopped us doing that now anyway. Doesn't excuse him not paying HMRC etc.

[G STAR RAM]

45 minutes ago, Curtains said:

Oh not this old argument .

Mel had to keep paying the players wages in Covid times with no income to the club coming in or more points deductions would of occurred.

The Tax non payment didn’t incur points deductions.

His options were reducing at that point .

The EFL know this !

Is this correct. 

If MM was still paying the players wages, what was the £20m loan from MSD for?

[Curtains]

7 minutes ago, G STAR RAM said:

Is this correct. 

If MM was still paying the players wages, what was the £20m loan from MSD for?

Good point I have no idea .

PS The point deduction issue is still relevant though 

 

Edited April 25, 2022 by Curtains

[Gee SCREAMER !!]

18 minutes ago, Mostyn6 said:

but any money paid in that ISN'T part of turnover is technically classed a 'loss' in the P&S rules.

but it's already been accounted for previously.

[RipleyRich]

16 hours ago, 1967RAMS said:

I would be shocked if Kirshner turns out to be a credible buyer. I suspect he’s just enjoying the limelight and will disappear as soon as he needs to stump up the cash. I think he’s buying time in the hope that someone with actual money throws their hat into the ring with him 

Its already cost him a lot of money to get this far, I don't think hes playing games!

[Curtains]

32 minutes ago, Ghost of Clough said:

All that money that wasn't paid had already been accounted for in the P&S calculations. Mel paying the money due would have had zero impact on P&S so would have been able to pay it off without any problem

Except he was having to pay players wages etc etc during Covid and the EFL wouldn’t allow him to pay the Tax office before the players allegedly 

[G STAR RAM]

2 hours ago, Mostyn6 said:

Had a bizarre conversation the other day, apparently Mel was not allowed to pump any further money into the club without incurring further points penalties etc and it’s been suggested EFL forced his hand and us into Administration. Sounds far-fetched but actually I bet he couldn’t put more money in. Apparently he wasn’t allowed to pay HMRC out of his own pocket. 

I think alot of people have been very nice in their responses, I'll be a little more blunt...what a load of tripe.

How on earth do the EFL stop someone from clearing liabilities out of their own pocket.

Dont mean to be harsh with my response but its this sort of crackpot theory that people will repeat on social media and then all of our legitimate and genuine gripes with the EFL end up looking silly.

[CornwallRam]

4 hours ago, G STAR RAM said:

It is irrelevant what the other 71 clubs were doing. Accounts have to follow FRS, not what other companies are doing.

If a players value decreases on a linear basis, it should have been very easy for the EFL to prove this, they must have had thousands of examples.

The method that DCFC chose for amortisation eas probably much more realistic than straight line amortisation. 

The only reason it was so bad for us was because our signings were awful and so many of them left for nothing at the end of their contracts.

I seem to remember that the much esteemed and missed Ramblur said that we needed to change our amortisation policy from straight line to remain FRS compliant. The implication was that residual values offered a more realistic valuation, so all clubs would have to change to remain compliant. 

I have sometimes wondered if Ramblur's surname is Pearce...or maybe I have just remembered it incorrectly. 

[RadioactiveWaste]

Im prepared to believe that due to certain intricacies in how the club was structured under Mel's ownership (why the businessess were structured the way they were only Mel and Pearce know) may have made things less than straightforward - ultimately, it was the responsibility of Mel Morris and he stopped paying for his mistakes.

I'm also prepared to believe that there are more reasons for some of Mel's positions on things than flat out "won't pay" - he maybe has to protect himself from a different angle (I've no idea what though) - however, even if that is true, which I don't know and only guess at, he is solely responsible for putting himself and thus the club into thses positions and deserves zero sympathy for getting us here.

Or in short, Mel Morris is a Jeremy Hunt.

[PistoldPete]

18 minutes ago, CornwallRam said:

I seem to remember that the much esteemed and missed Ramblur said that we needed to change our amortisation policy from straight line to remain FRS compliant. The implication was that residual values offered a more realistic valuation, so all clubs would have to change to remain compliant. 

I have sometimes wondered if Ramblur's surname is Pearce...or maybe I have just remembered it incorrectly. 

I think there is something in that.. we should look at an independent valuation of a player on transfermarkt website rather than use what we paid for the player as the base figure. But EFL don’t know the meaning of the word independent. 

[Gringo]

1 hour ago, PistoldPete said:

I think there is something in that.. we should look at an independent valuation of a player on transfermarkt website rather than use what we paid for the player as the base figure. But EFL don’t know the meaning of the word independent. 

Or buy a Greek club and sell the player to them and book a terrific profit instead of a write off each year of their contract, has this been thought of by any other East Midlands club?

[G STAR RAM]

2 hours ago, CornwallRam said:

I seem to remember that the much esteemed and missed Ramblur said that we needed to change our amortisation policy from straight line to remain FRS compliant. The implication was that residual values offered a more realistic valuation, so all clubs would have to change to remain compliant. 

I have sometimes wondered if Ramblur's surname is Pearce...or maybe I have just remembered it incorrectly. 

Not as up on FRS as I used to be but there was definitely a change where assets should be recognised at fair value with impairment reviews taking place every year.

So as long as there was a method for calculating residual value every year, I also agree that straight line is not appropriate as it clearly does not reflect reality.

The calculation of residual value was always the grey area and the one where I thought we may be bending the rules.

However, the auditors must have been persuaded that the calculations we were using gave a true and fair view.