Derby County

[Jersey Canary 143]

Have I missed something as I can’t remember the result of their FFP case against them. Does anyone know where we are up to with this? 

[A Load of Squit 5,134]

27 minutes ago, Jersey Canary said:

Have I missed something as I can’t remember the result of their FFP case against them. Does anyone know where we are up to with this? 

https://www.independent.co.uk/sport/football/football-league/derby-county-points-deduction-ffp-efl-championship-a9687526.html

 

[Jersey Canary 143]

30 minutes ago, A Load of Squit said:

https://www.independent.co.uk/sport/football/football-league/derby-county-points-deduction-ffp-efl-championship-a9687526.html

 

Thanks for that. I must have missed that whilst I was in holiday. 

[sgncfc 1,223]

But that's not up to date. The EFL have appealed that decision on one of the counts - not the ground sale, but the amortisation of player values over their contracts. The EFL say you have to fully discount (so the player has no value at the end of his contract); Derby still give them a value - not sure of the logic of their argument but basically that gives Derby a different financial result and keeps them within FFP rules.

They still might get a penalty, but probably not a points deduction.

If the EFL lose the appeal, everyone could adopt Derby's method and effectively nullify FFP. Strange though that the ICA haven't issued a practice note for it - or maybe they have and I missed it.

[Surfer 1,547]

There is no logic to having any book value for a player at the end of their contract. Because by definition they can walk away without a transfer fee. Find them guilty and deduct 12 points please...

[BroadstairsR 2,138]

If any club deserves a points deduction it's Derby County.

Weren't they the first to use the selling the ground ruse? This is just another way of getting more cash to spend in the transfer market from a rich owner. The binners sold their training ground to Evans for similar reasons though, I recall.

They have been overspending for seasons now .... it never seems to get them anywhere though.

Putting a value on players who have completed their contractual obligations and can walk for free is also stretching things beyond anything that was intended by the introduction of FFP. It is fake accounting and nothing else.

I am left wondering why they seem to be getting let off lighter than other miscreants.

Edited September 13, 2020 by BroadstairsR

[Jersey Canary 143]

The good thing is Derby seemed to have wasted the sale money which will put them a bit of a pickle going forwards as you can only sell your ground once. 

[dylanisabaddog 4,875]

9 hours ago, sgncfc said:

But that's not up to date. The EFL have appealed that decision on one of the counts - not the ground sale, but the amortisation of player values over their contracts. The EFL say you have to fully discount (so the player has no value at the end of his contract); Derby still give them a value - not sure of the logic of their argument but basically that gives Derby a different financial result and keeps them within FFP rules.

They still might get a penalty, but probably not a points deduction.

If the EFL lose the appeal, everyone could adopt Derby's method and effectively nullify FFP. Strange though that the ICA haven't issued a practice note for it - or maybe they have and I missed it.

Did they say expired contracts have a value or did they argue that contracts shouldn't be amortised in a straight line? If it's the latter, they may have a point. Otherwise they will surely lose on appeal. 

Either way, it seems Derby have got round accountancy problems by getting a 5 year old child to sign off the accounts 

[sgncfc 1,223]

I'm not sure of their detailed argument, just the headline that Derby have put values on players once out of contract - or rather have depreciated them less than they should (which leaves them with a value) in order to improve their figures. There could be a position made that if a player signs a new contract their value at that point must be higher than already booked. McLean just signed for an extra year to 2023; so if we value him now at say £10m, that's depreciation of £3.3m pa, whereas last years £10m value over a 2 year period is £5m pa. 

Football clubs have always written off over the contract term I believe - one reason perhaps why Lewis got a 5 year deal, which used to be rare. Bur there is also an argument that straight line depreciation is debatable for footballers who may get better or worse with age. A 5 year deal for a 33 year old shouldn't really be written off over the whole term.

Covid may also impact valuations - that reduces the depreciation, so improves the Profit & Loss but also reduces the net asset figure on the balance sheet for a football club whose major assets are their players. Short term gain for long term pain, as the accountants would tell you. 

But there are inconsistencies all over the depreciation guidance issued to companies - writing down furniture, even IT equipment, over 3 or 5 years for instance, when in reality it's worthless almost as soon as it's purchased. Same for cars - having level depreciation when cars lose 30% of their value on day two of ownership.

I could write a book about the arguments I've had with auditors over the years.......!

Depreciation policy is set by the Board and approved/justified by auditors but the EFL are presumably questioning compliance with their own internal guidance.

And I know this is silly, but the comment that you can only sell the ground once is only partially true because of the structure of the sale into a separate trust with a non-commercial valuation.......

[Midlands Yellow 3,943]

They deserve a points deduction for having the worst stadium and pitch in the 70s for top flight football. Their match day programme was a newspaper too. 

Edited September 13, 2020 by Midlands Yellow

[Surfer 1,547]

Yes I can see an argument for having accelerated depreciation in the final year of a contract as resale price is probably highest with one year left on the contact. But there can be no arguments for depreciation of an asset that you no longer own... i.e. contact ended.