Derby County Financial Accounts

[duncanjwitham]

49 minutes ago, CornwallRam said:

c£10m on non player wages seems very high. Especially as a lot of staff were made redundant during admin. Is there any detail on that?

There's not much detail in the accounts, other than this section: 

So confirmation that Clowes and co aren't taking anything from the club themselves.  It's not clear who is covered by the £624k - presumably Stephen Pearce is in there, possibly some of the other management too.

The £10m difference does seem very high though.  I just looked at Bolton's last set of accounts (2021/22) for comparison, and their entire wage bill (including players) was only ~£10m and that appears to be including the wages of 120 staff in their stadium hotel.  It seem *very* unlikely that we're spending the same on non-playing staff that Bolton are spending on everyone.  There must be something else going on - is it including part of that £13m we paid Quantuma to cover player wages during the admin season or something?

[angieram]

9 minutes ago, MadAmster said:

Income £20M. Total wage bill of all players and staff 17.2M. Ground Rent £850K. Gas and electric on top of that. Rental and gas etc at Moor Farm - no idea. Looks like "break even" but only because the parent company filled the gap with an interest free loan in excess of £35M.

Full report available at https://www.dcfc.co.uk/media/get/Derby County (The Rams) Limited - 30 June 2023 080324.pdf

Thank you for the link. I much prefer to read the report than other people's interpretations of the report. 

[eddielewis]

16 minutes ago, MadAmster said:

If we went to 75% for the playing staff and then added the £10M for the non playing staff we'd be in the red...  and even further so with all the other costs.

I'm not suggesting we need to go anywhere near that limit because we already have a good league 1 squad by spending 45% 

It would be interesting as I say what would be the our internal limits for next season based on which league we are in.

Will we keep it around this percentage if we don't go up but just fine tune ie Hourihane is a big earner and will probably leave will we replace like for like in terms of wages or find a cheaper option.

And if we do go up what will be limit as wages will naturally go up in terms of the calibre of players we will need. Obviously in the Champ these turnover rules do not apply it would be sensible to stick to this principle.

Edited March 8 by eddielewis

[Tamworthram]

2 hours ago, Stive Pesley said:

I hadn't really thought much about the shirt sponsor being "given away" to the NSPCC, but presumably a commercial sponsor would be paying quite a lot of money (£100k+?) to be the main sponsor on the shirt of a club the size of Derby, so donating that spot to the NSPCC would count as a charitable donation and lower our tax bill?

Am I being dumb (again)? 
 

Why would there be a tax (corporation tax) bill if we made a loss? 

[MadAmster]

22 minutes ago, eddielewis said:

I'm not suggesting we need to go anywhere near that limit because we already have a good league 1 squad by spending 45% 

It would be interesting as I say what would be the our internal limits for next season based on which league we are in.

Will we keep it around this percentage if we don't go up but just fine tune ie Hourihane is a big earner and will probably leave will we replace like for like in terms of wages or find a cheaper option.

And if we do go up what will be limit as wages will naturally go up in terms of the calibre of players we will need. Obviously in the Champ these turnover rules do not apply it would be sensible to stick to this principle.

Indeed. Not only sensible but, as David Clowes has said, it's his intention that the club be run in a sustainable, self sufficient manner, financially, and that should see wages kept at around this level against income.

[Justa]

For me this is a timely little reminder of what Clowes has done and how lucky we are to have a club.

Quite sobering really….

[Stive Pesley]

22 minutes ago, Tamworthram said:

Am I being dumb (again)? 
 

Why would there be a tax (corporation tax) bill if we made a loss? 

A UK business can make a charitable donation and claim tax relief on the donation. Either by deducting the value of the donation from the total profits before tax is calculated (reducing taxable profits), or by reducing the Corporation Tax it pays by an amount equal to the basic rate tax on the grossed-up value of the donation.

 

[Ghost of Clough]

I think my estimates for the year weren't too far out on the important details considering I didn't have much to go on - only 5 year old accounts and predicted changes due to relegation.
£500k overstatement on our losses when ignoring the 1 off impairment charge. An overestimate on the turnover by £1.3m (mainly due to commerical/hospitality) and £1.3m underestimate on the wages (half of which down to SP's pay).

Comparison of 22/23 estimate/actual and revised 23/24 estimate:

 

Edited March 8 by Ghost of Clough

[Rich84]

1 hour ago, duncanjwitham said:

There's not much detail in the accounts, other than this section: 

So confirmation that Clowes and co aren't taking anything from the club themselves.  It's not clear who is covered by the £624k - presumably Stephen Pearce is in there, possibly some of the other management too.

The £10m difference does seem very high though.  I just looked at Bolton's last set of accounts (2021/22) for comparison, and their entire wage bill (including players) was only ~£10m and that appears to be including the wages of 120 staff in their stadium hotel.  It seem *very* unlikely that we're spending the same on non-playing staff that Bolton are spending on everyone.  There must be something else going on - is it including part of that £13m we paid Quantuma to cover player wages during the admin season or something?

Nearly £2m of the £10m is Social security and pensions from @Ghost of Cloughbreakdown above.

Also, the wages for all of the academy players and coaches will be in there and with the academy being cat 1 I suspect that would be a decent chunk, plus the staffing costs for PP with the bigger crowds should be factored in.

Is there likely to be pay offs when the staff left with PW coming in? Darren Walsall etc?

[Tamworthram]

1 hour ago, Stive Pesley said:

A UK business can make a charitable donation and claim tax relief on the donation. Either by deducting the value of the donation from the total profits before tax is calculated (reducing taxable profits), or by reducing the Corporation Tax it pays by an amount equal to the basic rate tax on the grossed-up value of the donation.

 

Yes I know all that but if we've made a loss there is no corporation tax to reduce.

[Poynton ram]

Trying to get my head around player valuations within intangibles. Are the accounts saying the whole squad is only worth @ £2m after allowing for payments due on certain players? I know our valuation of players was one of the things that got us into a mess but that figure seems low particularly in the context of Cashin’s “value” and what fee we have received for Bird. Or perhaps I am misunderstanding the numbers

[Carnero]

1 hour ago, Ghost of Clough said:

I think my estimates for the year weren't too far out on the important details considering I didn't have much to go on - only 5 year old accounts and predicted changes due to relegation.
£500k overstatement on our losses when ignoring the 1 off impairment charge. An overestimate on the turnover by £1.3m (mainly due to commerical/hospitality) and £1.3m underestimate on the wages (half of which down to SP's pay).

Comparison of 22/23 estimate/actual and revised 23/24 estimate:

 

Nice work GoC 

[Stive Pesley]

25 minutes ago, Tamworthram said:

Yes I know all that but if we've made a loss there is no corporation tax to reduce.

I'm not an accountant, so I stand to be corrected but can't losses be carried forward and used to offset against future profits, reducing the tax liability in subsequent years? That may not be it, but I feel sure there must be some financial benefit to the club in "giving away" shirt sponsorship to a charity, otherwise we are deliberately throwing income away when every penny counts

[duncanjwitham]

11 minutes ago, Rich84 said:

Nearly £2m of the £10m is Social security and pensions from @Ghost of Cloughbreakdown above.

Also, the wages for all of the academy players and coaches will be in there and with the academy being cat 1 I suspect that would be a decent chunk, plus the staffing costs for PP with the bigger crowds should be factored in.

Is there likely to be pay offs when the staff left with PW coming in? Darren Walsall etc?

Bolton are actually employing significantly more people than we are though (Bolton first, us second):

I suspect we're subcontracting the matchday staff out or something, so they possibly aren't even appearing as club employees on our count at all.  Obviously the academy staff are going to cost more at a Cat 1 academy vs Bolton's Cat 3, but again I find it hard to believe that out academy staff cost more in wages than our first team players do.  

 

[duncanjwitham]

29 minutes ago, Poynton ram said:

Trying to get my head around player valuations within intangibles. Are the accounts saying the whole squad is only worth @ £2m after allowing for payments due on certain players? I know our valuation of players was one of the things that got us into a mess but that figure seems low particularly in the context of Cashin’s “value” and what fee we have received for Bird. Or perhaps I am misunderstanding the numbers

For accounting purposes, the players "value" is what you've cost to acquire him (transfer fees, agents fees etc) amortised (i.e. spread out) over the length of his contract.  Cashin will be valued at near £0m in the accounts because we've not really paid anything to get him.  The same with Bird, and any other player who has come through our academy.  The £2m is basically the remainder of Bielik's contract, plus a few other bits and bobs.

[Poynton ram]

6 minutes ago, duncanjwitham said:

For accounting purposes, the players "value" is what you've cost to acquire him (transfer fees, agents fees etc) amortised (i.e. spread out) over the length of his contract.  Cashin will be valued at near £0m in the accounts because we've not really paid anything to get him.  The same with Bird, and any other player who has come through our academy.  The £2m is basically the remainder of Bielik's contract, plus a few other bits and bobs.

Ah ok, that makes sense, thanks for clarifying

[Tamworthram]

24 minutes ago, Stive Pesley said:

I'm not an accountant, so I stand to be corrected but can't losses be carried forward and used to offset against future profits, reducing the tax liability in subsequent years? That may not be it, but I feel sure there must be some financial benefit to the club in "giving away" shirt sponsorship to a charity, otherwise we are deliberately throwing income away when every penny counts

I'm not an accountant either but, reading the government website, it doesn't look as if you can according to the second bullet point. In any event, I doubt we'll be making a profit any time soon.

If you donate more than your profit

The most you can deduct is the amount that reduces your company’s profits to zero.

If you donate more than your total profits you can’t:

• declare trading losses on your tax return
• carry over any remaining amount to your next tax return

[hintonsboots]

45 minutes ago, Stive Pesley said:

I'm not an accountant, so I stand to be corrected but can't losses be carried forward and used to offset against future profits, reducing the tax liability in subsequent years? That may not be it, but I feel sure there must be some financial benefit to the club in "giving away" shirt sponsorship to a charity, otherwise we are deliberately throwing income away when every penny counts

We should approach Niall Horan and Keiran Lee for some joint sponsorship a sort of double entry.

[Oldben]

How many league one clubs are profitable.

To recover clowes money he first needs to get the Club promoted to championship and then some how to the Premier league.

[rammieib]

So the £36m that Clowes has put in as interest free loans - this has paid of the 19m or so we owed companies after coming out of admin, Quantuma fee and operating cash?