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Derby County FFP and the EFL

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  • Why does anyone read the Mail...or any paper for that matter. Use. Your brain

  • @Malone said:
    I saw someone say bet Rooney isn't paying for equipment etc as Gareth did for us years back.
    It turns out he's doing exactly that.

    He's certainly no villain in what is a pretty difficult situation.

    It’s an honourable thing for sure. But I would temper that with the facts he’s paid 90k a week and has agreed to DEFER some of that (therefore is a football creditor) and has a reported net worth of £120m so putting your hand in your pocket when you have ‘king big pockets isn’t so philanthropic.

  • edited January 2022

    That is true of course, but such thinking always makes me think a little of this analogy.

    https://www.moore.co.uk/msuk/moore-south/news/april-2016/the-tax-system-explained-using-a-beer-analogy

  • That is a very silly article.

  • Ha, knew you wouldn't like it :D

  • If you worked for Moore you'd be embarrassed to have that article on your website.

    https://edition.cnn.com/2017/10/30/politics/sarah-sanders-press-briefing-beer-taxes/index.html

  • Firstly, I would like to thank you all for the very reasonable tone of the replies when you might have been forgiven for getting "emotional". I agree completely that the cause of the current situation is one man, Mel Morris, who let a dream (The PL) get in the way of common sense and usual good business practice. Going back to when he bought the club and what he's put in since, he's thrown in excess of £200M at the club and then somehow managed to mismanage it to where we are now. I have known for 2 years that we were sailing pretty close to the wind and further spending would see us fall foul of FFP. As it was, the EFL found, on their appeal, that the amortisation part of our accounting methodology "might have been explained better". The sliding scale is perfectly legal under FRS102 (UK Law). The EFL lost the original tribunal which contained 2 accountants. The appeal committee had nobody with a knowledge of accounting which might cause one to find their findings questionable. If you're ruling on an accounting question, wouldn't you expect to have at least one person with inside knowledge? I'd think so. Anyway, two appeal grounds dismissed, the 3rd allowed on the "better explanation". £100K fine, revert to the EFL preferred amortisation method and resubmit the accounts from 15/16 onwards. We all knew the result, FFP exceeded. 9 point penalty on top of the 12 point penalty for going into Admin. Like all Rams fans I am amazed that Mel threw as much at the club as he did and wonder what it all went on. Here's a fact you might not know. Mel managed to spend twice our income each year. Fans worked this out from known facts. Annual income around £35M. Debts in excess of £200M (£140M to Mel and £65M to HMRC and others. 6 years at 35M = 210M and you owe more than £200M. I would say unbelievable but it's true. One of the debts was to St John's Ambulance for £8K. Fans started a go fund me and raised rather more than the £8K for St John's. One of you referred to us suing someone. That is news to me, who did we sue? Another offered "Mel building on pride Park" as one way he could recover some of his losses. The Admins have a signed agreement with Mel that the new owners have first refusal on Pride Park to buy, lease, rent before buying..... whatever so he won't be bulldozing the stadium to build a shopping centre just yet. Personally, we are just 8 days away from having to provide proof of funds (£7M) to be able to complete the season. If we can't do that, as things stand, the EFL will retract the "golden ticket" and we are out of the League. Gone. One thing that astounds me is that HMRC allowed the debt we have to them to get as high as £26M. When the new rules come in based on the fan led inquiry and backed up by Westminster legislation, at least this shouldn't happen again. IMO the EFL should not wait on any legislation. The recommendations are already known and there is nothing to stop the EFL implementing the necessary actions immediately. There is a school of thought that we are all in a League run under EFL rules. Derby has been found to have transgressed the rules and been fined by the EFL for one transgression, deducted 12 points for entering Admin and 9 points for exceeding FFP limits following the resubmission of the accounts. Is any further action from anybody "double jeopardy"? I shall be flying back this weekend and will be at Pride Park for what may well be DCFC's very last game. I'm an optimist by nature but, right now, a phoenix club playing in L2 or the Vanarama next season is looking likely. I sincerely hope I'm wrong. That's all for now except to repeat my wish for you to achieve promotion this season. Good luck.

  • Sorry, I got reeled in by the headline. Apparently the player rejected the move. But not being funny, they should have take it out of his hands.

  • I really hope Derby survive - for all the reasonable fans out there. Cannot imagine a single Wycombe fan would want otherwise, but... those figures! I genuinely struggle to comprehend how losses and debts of that level can be built up by what is, in purely business terms, a medium-sized company, and for so little return on the pitch.

    Football finance is so far beyond broken you wonder if it should be nationalised.

  • @ReturnToSenda said:
    Sorry, I got reeled in by the headline. Apparently the player rejected the move. But not being funny, they should have take it out of his hands.

    If the player rejected it because it's forest, I'm sure other clubs will be circling now they know the asking price.

  • @Raminpeace Wycombe as a club and as a group of fans have massive sympathy for the position that Morris has put the Rams fans in to but Derby will not cease to exist that’s just hyperbole either a solution to your current woes will be found or it’s a phoenix and you’ll be playing league football again in a few years time with a Wimbledon sized chip on your collective shoulders.
    Whilst I agree with most of your statement “double jeopardy” isn’t applicable for our dispute and claim in regard to the deliberate late submission of accounts and the financial damages to WWFC.
    Good luck

  • As someone who has had sums clawed back from HMRC very speedily after THEY made the original mistake...I too find it incredible they allowed the debts to get so high! But I suspect 'wealth creators' like MM have people who make that happen!

  • It's a sod @Raminpeace but don't let the trees cover your view of the wood. There is no double jeopardy here. It won't be because of the threat of legal action by WWFC or Borough, it will for sure be that there is no way you can continue with the level od debt & what's on offer by the potential buyers.
    As our Chairman said in the radio interview, a threat of legal action by WWFC for a relatively small amount of circa £6-8 million, if it stands no chance of success, won't be the stumbling block. Smoke & mirrors are at play with MMs administrators.

  • @Username said:

    @ReturnToSenda said:
    Sorry, I got reeled in by the headline. Apparently the player rejected the move. But not being funny, they should have take it out of his hands.

    If the player rejected it because it's forest, I'm sure other clubs will be circling now they know the asking price.

    The task of Admin is to get as much revenue in as they can to pay the creditors. It seems our Administrators have decided that keeping our better players will best accomplish that. We aren't turning down all offers, BTW, Jordan Brown has gone on a permanent deal to Leyton Orient today. For now, I would imagine that unrealistically low bids will be knocked back. However, the closer we get to Tuesday without having £7M in the bank to ensure we can complete the season, those Unrealistic bids might start to look more inviting than they do today. Despite all the noises from the EFL and the club today, I'm still not positive there'll be a club to support after this weekend.

  • @Raminpeace said:

    @Username said:

    @ReturnToSenda said:
    Sorry, I got reeled in by the headline. Apparently the player rejected the move. But not being funny, they should have take it out of his hands.

    If the player rejected it because it's forest, I'm sure other clubs will be circling now they know the asking price.

    The task of Admin is to get as much revenue in as they can to pay the creditors. It seems our Administrators have decided that keeping our better players will best accomplish that. We aren't turning down all offers, BTW, Jordan Brown has gone on a permanent deal to Leyton Orient today. For now, I would imagine that unrealistically low bids will be knocked back. However, the closer we get to Tuesday without having £7M in the bank to ensure we can complete the season, those Unrealistic bids might start to look more inviting than they do today. Despite all the noises from the EFL and the club today, I'm still not positive there'll be a club to support after this weekend.

    Seems like a high risk high reward strategy to me. If you can attract a bidder that works, of not though it could lead to a fire sale on the last day, whereas they could have started an auction between multiple clubs throughout the window to get a reasonable return.

  • @Raminpeace I really am surprised that so many Derby fans are shocked at recent events. Radio One even had a soundbite from a Derby fan who runs a Derby podcast saying it came out of the blue. Really? I think most football fans have been questioning goings on at Derby for sometime now.
    Whilst nothing illegal (as far as I know) I never liked the signing of Rooney with the support of 32Red and his shirt number being that of the sponsor. The selling of the ground, surely another red flag. And although Derby can keep saying 'not doing nothing wrong' these are all oddities.

  • Can any accountant or knowledgeable person on here confirm the status of FRS102, oft quoted in the DCFC debate? My understanding is that it is an 'Accounting Standard' and not 'UK Law'.

  • You are right it is technically not law, it is as you say a standard agreed on by all members of the accountancy profession and as such they are expected to apply all the FRSs as they are relevant to a particular client accounts.
    (Full details here for those of you hard of sleeping - https://www.frc.org.uk/getattachment/69f7d814-c806-4ccc-b451-aba50d6e8de2/FRS-102-FRS-applicable-in-the-UK-and-Republic-of-Ireland-(March-2018).pdf)

  • As I understand it, it’s irrelevant for amortising football player values for a number of reasons, not least the fact that the EFL has a standard which clubs are expected to follow.

  • I believe that when I had to go through the ball-ache of amortizing for my lot, I read that when adopting a standard I was required henceforth to continue amortizing using the same standard. This did make me wonder whether DCFC have always used the same amortizing standard and if not, whether there is some process that needs to be gone through with HMRC when changing your standard for any reason. Also, I think that the EFL insist upon one standard throughout the EFL in order to ensure for a level playing field, so I'm pretty sure that the 'UK tax law permits it' argument is ignoring several factors which have a bearing here.

  • @Ed_ said:
    I believe that when I had to go through the ball-ache of amortizing for my lot, I read that when adopting a standard I was required henceforth to continue amortizing using the same standard. This did make me wonder whether DCFC have always used the same amortizing standard and if not, whether there is some process that needs to be gone through with HMRC when changing your standard for any reason. Also, I think that the EFL insist upon one standard throughout the EFL in order to ensure for a level playing field, so I'm pretty sure that the 'UK tax law permits it' argument is ignoring several factors which have a bearing here.

    I think that I read somewhere that DCFC changed their amortisation method (although at all times complying with FRS102) without reflecting the change in the notes attached to the accounts in the financial year of that change. Can anybody confirm? Underhand perhaps if true?

  • I thought the amortization issue was based on the fact players can't have easily assessible value. There's too many factors and blaggers involved and it fluctuates too easily. People are wanting players drummed out after a bad run and then they're heroes again with a goal. There isn't a steady queue of teams after midfielders with a year left on their contact like there are houses or stock.
    Wether they cheated shouldn't be up for question anyway, they have admitted various charges and their latest penalty was a negotiated settlement. The only question is wether they deliberately delayed to avoid relegation and they've pretty much admitted that too.

  • One thing that astounds me is that HMRC allowed the debt we have to them to get as high as £26M.

    Hi @Raminpeace always an interesting one with HMRC, at the end of the day there have been many clubs owing them huge sums over the years and they want / need that money back, so will never be to keen to take clubs to the cleaners and risk not getting paid.

  • @Ed_ said:
    I believe that when I had to go through the ball-ache of amortizing for my lot, I read that when adopting a standard I was required henceforth to continue amortizing using the same standard. This did make me wonder whether DCFC have always used the same amortizing standard and if not, whether there is some process that needs to be gone through with HMRC when changing your standard for any reason. Also, I think that the EFL insist upon one standard throughout the EFL in order to ensure for a level playing field, so I'm pretty sure that the 'UK tax law permits it' argument is ignoring several factors which have a bearing here.

    It appears that DCFC informed the EFL of the change at the start of the 15/16 season. The EFL signed off on the accounts that season. And 16/17 and 17/18. It wasn't until the end of the 18/19 season, a season in which we nicked Waghorn off you at the last minute and then made the playoffs and Boro didn't that Mr Gibson threatened to sue the EFL for over £100M. He withdrew the threat when the EFL agreed to go after Derby (source an interview with Rick Parry). Part of it "might have been explained better" cost us £100K and the resubmission of the accounts now using linear amortisation which cost us a further 9 point deduction. 21 points in total.

    Like some of you, I'm amazed that some fans appear amazed by it all. I mean, Mel did tell us "he'd never allow the club to exceed FFP". Many bought that hook, line and sinker. The red flag I saw was the whole picture around the ground sale. Another thing where the EFL was kept up to date on what was happening. Based on a valuation that took into account using the stadium for things other than football (concerts, boxing, "wrestling" and other events) DCFC got given a valuation of £85M and put that forward to the EFL. After studying it, the EFL came back and said they'd sanction it if it was reduced to £80M. Then we saw the accounts for that season including the ground sale..... we made a £14.6M profit. Ergo, we would have lost the best part of £65M without the ground sale. As I said in an earlier post, it transpires that we spent over £400M over 7 years and had income of just over £200M. Mel gambled and lost and now the players, staff both footballing and non-footballing plus the fans are the ones paying what still might be the ultimate price. Hopefully the EFL implements the proposals from the fan led review NOW rather than wait for Parliament to enshrine them in law. What happened at Leeds, Leicester and now at Derby should be made absolutely impossible through proper checks and balances. It's a sorry mess. I hope I still have a club to support next week. There's still s decent chance I won't have.

  • @StrongestTeam said:
    I thought the amortization issue was based on the fact players can't have easily assessible value. There's too many factors and blaggers involved and it fluctuates too easily. People are wanting players drummed out after a bad run and then they're heroes again with a goal. There isn't a steady queue of teams after midfielders with a year left on their contact like there are houses or stock.
    Wether they cheated shouldn't be up for question anyway, they have admitted various charges and their latest penalty was a negotiated settlement. The only question is wether they deliberately delayed to avoid relegation and they've pretty much admitted that too.

    I don't think we have admitted anything. Two initial charges. Both roundly denied. Found not guilty on both. EFL appealed the amortisation verdict and won on the "might have been explained better" decision. No appeal was permitted. 12 point deduction for Admin was appealed in the first instance and then withdrawn. The 9 point deduction for FFP was an agreed sanction (EFL wanted 12, we wanted 6 as we looked at Reading's case and they had exceeded FFP by far more than we had).

    If there is something we admitted to, I missed it and would greatly appreciate someone pointing out which charges we have admitted to.

  • @Raminpeace said:

    @StrongestTeam said:
    I thought the amortization issue was based on the fact players can't have easily assessible value. There's too many factors and blaggers involved and it fluctuates too easily. People are wanting players drummed out after a bad run and then they're heroes again with a goal. There isn't a steady queue of teams after midfielders with a year left on their contact like there are houses or stock.
    Wether they cheated shouldn't be up for question anyway, they have admitted various charges and their latest penalty was a negotiated settlement. The only question is wether they deliberately delayed to avoid relegation and they've pretty much admitted that too.

    I don't think we have admitted anything.

    And there's the start of your issues, but negotiating a settlement with people you continually berate and threaten to sue generally suggests you know you've done some wrong.
    Genuinely though there havve been mentions of a MM radio interview around the time of the admin where he as good as admitted to taking his time to get the season going, and that either didn't make the website or was deleted, it may form the basis of a complaint if it exists, it might be pish.

  • My understanding is that Derby County's accountants signed off on the accounts but the EFL did not, and that the £100K fine was imposed by the IDC, not the EFL.

    I also understand (but cannot be certain) that it was in a Radio Derby interview that Mel Morris admitted delaying the filing of accounts, to ensure that any penalty was imposed this year rather than last. Why is WWFC chasing DCFC and not MM? Because all the actions have been taken in the name of Derby County FC. If DCFC are unhappy with the way MM conducted their business that is a matter for DCFC to pursue with MM.

    I think that the reason DCFC do not have greater sympathy throughout football is because they won't admit anything. If the DCFC fanbase had protested MM's actions instead of celebrating them (until it all went pair shaped) then there wouldn't be so many people saying they have got what they deserve.

    I am astounded that the Administrators seem to be rearranging the furniture, rather than actively working to find income and reduce outgoings. I'm afraid I do not see this ending well, and even if a byer comes in, the DCFC fanbase are going to have to get used to the club living within it's means, regardless of where that puts them.

  • @bluenotes Just as Boris Johnson is morally bankrupt whilst swearing blind that technically he hasn’t broken any rules (everyone else either failed to tell him this or that or they flat out let him down with their own rubbish decisions) so Derby County feel that they have not transgressed at all whilst simultaneously finding themselves so far under water that they are fundamentally unsalvagable,

  • You can argue the technicality that FS102 is/isn't a tax law, Derby did/didn't change amortization method to gain the system. However, the truth is that after all the protracted EFL processes, including the appeals, Derby's were told to resubmit their accounts using the same amortization method as other clubs.
    At that time MM, knew they were going to be hit with a points deduction because the accounts would show spending breached the FFP rules. I believe that, in the now remove radio interview MM actually admitted to this course of action.

    Here's a link to the now deleted interview

    https://www.bbc.co.uk/programmes/p09wgqp4

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