finance Derby - deal to end administration is collapsing

[TIL 1010 4,722]

1 hour ago, wcorkcanary said:

C

 

Comprehension not a strong point? That's exactly what he's saying, including himself.  Just as people who know little about football post about it incessantly. Equally people with a skewed view of history rarely stop (T)wittering😉  on about past grievances, real or imagined.

Though I do admire a man that recognizes the limit of his abilities and acknowledges that others may know more.

You are quickly turning from being unfunny to looking rather a tragic individual . Read my post to Badger again and note the emoji at the end but then again your haste to reply to anything i post has somewhat blurred your vision.

Edited June 12, 2022 by TIL 1010

[Dr Greenthumb 746]

On 11/06/2022 at 09:16, Peregrine Shorts said:

Jez Moxey is on his way to save them

Tbf to Moxey, he played a role in getting Wolves present owners in

[wcorkcanary 4,329]

1 hour ago, 1902 said:

I disagree. There's loads and you won't prove me wrong.

Good point.

[wcorkcanary 4,329]

1 hour ago, TIL 1010 said:

You are quickly turning from being unfunny to looking rather a tragic individual . Read my post to Badger again and note the emoji at the end but then again your haste to reply to anything i post has somewhat blurred your vision.

I only reply to your silliest posts, mostly when you're shoite stirring or sniping, which to be fair gives me plenty to do. ... And I thank you for the sport.  😇👍😉

I did appreciate the picture of Pongo though , and I do realise that despite your rufty tufty brash exterior, you really are quite a sweet guy.  X

[TIL 1010 4,722]

13 minutes ago, wcorkcanary said:

I only reply to your silliest posts, mostly when you're shoite STIRRING AND SNIPING, which to be fair gives me plenty to do. ... And I thank you for the sport.  😇👍😉

 

Which of course is something you don't do as your posts today go to show.

[Nuff Said 5,089]

Any neutral coming across this thread and looking for interesting opinions, or even just opinions, about the current situation at Derby is going to be sorely disappointed. Any chance we can draw a line and discuss the actual topic? 🙄

[ricardo 7,347]

8 minutes ago, Nuff Said said:

Any neutral coming across this thread and looking for interesting opinions, or even just opinions, about the current situation at Derby is going to be sorely disappointed. Any chance we can draw a line and discuss the actual topic? 🙄

You should know by know that the thread topics are largely irrelevant by page 2.

[Badger 2,405]

4 hours ago, TIL 1010 said:

I hope you are not suggesting that one or two on here who multi post about finances are not real accountants Badger ? 😜

Accountants make up a relatively small percentage of those whose work or qualifications require a good knowledge of accounts TIL. Most senior mangers in companies have to be capable of having oversight of financial and management accounts.

Many will have taken management courses at some stage during our careers in which financial and management accounts form a key component and module (normally mandatory). There will be others who have had to "learn on the job" through their roles in (normally smaller) companies.

On top of that there is a huge number of academic and vocational qualifications in which a knowledge and understanding of accounts is essential, ranging from a A levels in accountancy, through a plethora of business admin courses. 

Chartered Accountants sit at the top of this tree who have a highly specialised and technical role have crucial knowledge of the legal framework around accounts - although many (I am told by accountant friends) chose to move into related commercial roles.

[hertfordyellow 460]

On 11/06/2022 at 10:15, Badger said:

UEFA have changed the rules - clubs will have to limit wages/ transfer fees and agent fees to 70% of revenue by 2025 (being phased in). Hasn't yet been applied to EPL and EFL but it's almost certain that it will be (or something similar).

(When/ if we get our rich new owner they won't be able to subsidise the playing side in any case  - but I don't want to spoil peoples' fun 😃)

https://www.uefa.com/returntoplay/news/0274-14da0ce4535d-fa5b130ae9b6-1000--explainer-uefa-s-new-financial-sustainability-regulations/

This is the exact measure proposed in the fan led review that the government said they will implement in its entirety.

[MrBunce 245]

As a "real" accountant...

I can't believe how badly this has all gone. I recall posting about the Derby situation last year. Whilst it is an incredibly difficult situation, the administrators have done a poor job. I'm surprised. The two administrators, Hosking and Andrinkou are no slouches. They might not be A-listers, but they are both very experienced (Hosking has done some big ticket gigs and was involved with the Wimbledon administration, Andrinkou did some of the Portsmouth administrations, though was criticised for some of his conduct in that one). Kieran Maguire has said the 'bigger' firms passed on Derby. I can't recall the reason he gave but certainly the reputational concerns would have been a big part (it's always been part of the consideration for taking jobs in my line of work), I think the very bad situation Derby were in would have been another reason. 

That bad situation is the real key here (and I think I talked about it in the old thread). The issue is Derby have basically no assets (it doesn't own the ground as it "sold" it to Mel Morris). They are losing huge money, even after cutting costs, from an eyeball of the latest statement of affairs, Derby are losing over £1m a month. The club racked up a huge debt. Chief among that is the debt to HMRC, nearly £30m. This is because MM was using PAYE money to plug gaps in the finances rather than handing it over. Derby used the Covid moratorium to escape a winding up order from HMRC, just before that was due to expire they entered admin. No bones about it, the tax payer has been absolutely stiffed. 

What the administrators needed to do was get a quick sale. That would mean the losses wouldn't keep racking up. But it is a hard sell. Because of EFL rules, football creditors need to be paid in full (if I recall, some £8m or so). An entity called MSD holdings (the ones who've also lent money to Burnley) are due some £15m+, secured on the club's assets, they also need to be paid in full. Then to avoid further penalties, they'd need to pay unsecured creditors 25%. As a preferential creditor, HMRC are due repayment in full before the unsecured creditors, including football creditors. There's obviously a tension there, and it seems like tax payers are having to take a huge loss. Regardless, an investor would need to stump up a minimum of £30m for a league 1 club with no assets and barely any players. That's before a single penny is spent on improving the team. There's not many takers for that. 

Now a "regular" company would probably have been sold for £1 to a new buyer, the creditors would have been stiffed, the company left with a clean slate. But you can't do that with a football club, as the EFL would boot you out (by taking the club's golden share). 

This whole time, the situation could have been fixed by MM dipping into his pocket and handing the ground back to the club (or selling it to a prospective buyer for free). Instead, it's not clear he's helped things at all (he appointed the administrators and has been criticised by some of the bidders). 

So where are we now? Well the administrators agreed to sell the club to a highly questionable character. He hasn't stumped up the cash when it came to the put up or shut up point. Derby have run out of cash. They had funding till the end of the season, someone (nobody knows who) has reached into their pocket to pay May's bills. But as it standards Derby won't have the money to fund playing next season. In principle, the EFL can revoke Derby's right to play in league 1 next season unless they can show they can fulfill the fixtures. 

The fixture list should be out in 2 weeks. Derby should have to show by then that they have the dosh to complete the fixtures. The easiest way to do that is for someone to buy them and find the club. That ain't gonna happen in 2 weeks. So we're at a real sticky point. I don't know what will happen. 

It's an utter shambles and highlights the need for much better regulation of the game. 

[shefcanary 2,388]

9 hours ago, Badger said:

Simple answer is I don't know. I need the help of @shefcanary or another real accountant.

An administrator doesn't "administrate" for free.  It costs them to undertake this exercise, their fees (with a profit element) are paid out of monies recovered during the administration. They are also liable for any insolvent trading; in theory they should not be adding to the debt, if they do for no good reason, they can get struck off like any other company director would. The incentive therefore is to get it done quickly so they minimise the costs and the risk they incur. 

I'm therefore as puzzled by you that this administration has lasted so long, but assume it is because of their membership of the EFL and thus EFL rules taking precedence over normal company law. I'm a little lacking in knowledge of why that should be - sorry that's for someone else to answer. 

Edit: Now seen the answer above, it's all to do with the EFL Golden Share!

Edited June 12, 2022 by shefcanary

[Badger 2,405]

 

6 minutes ago, MrBunce said:

As a "real" accountant...

It's an utter shambles and highlights the need for much better regulation of the game. 

 

4 minutes ago, shefcanary said:

I'm therefore as puzzled by you that this administration has lasted so long, but assume it is because of their membership of the EFL and thus EFL rules taking precedence over normal company law. I'm a little lacking in knowledge of why that should be - sorry that's for someone else to amswer. 

👍  Thanks for the detailed responses.

I don't know if you listen to the Price of Football podcast but Maguire has been highly critical of  the  administrators for months - apparently he was an insolvency practitioner for a while (he says that's why he went into teaching! 😃). There are rumours that Ashley is very unhappy with them as well.

MSD is the Dell computers guy: he has made a thing of lending to football clubs at a significant premium. Other clubs owe them a lot of money - Southampton and Burnley.

The EFL thing has always been in place to protect other clubs: it seems unfair in some way, but as long as the EFL hold's firm there's not much the administrators can do about it - the clubs would be worthless without a league to go into.

How long does the "normal" (yes I know) administration last - 9 months seems a very long time - is there any limit on it? (I guess it has been funded so far by player sales, but that must be running out, unless they have some outstanding kids.)

As you say, Mr Bunce, can they really keep this gong when fixtures need to be published? I know Palace got very close to the wire about a dozen years ago (their buyers got an amazing deal and have done very well out of it) but it looks worrying like Derby could actually go under. 

I still guess that at some stage someone will blink and a deal will be done: it's like a high stake bluff in Poker (I hope).

 

[MrBunce 245]

I do indeed listen to the PoF podcast, it is excellent (and a source of information for a lot of my post above, along with EFL published documents and other football forums). 

I'm on board with Kieran about the IPs. I've come across Hosking briefly in my work on a case. Along with Andronikou, there was nothing to suggest they'd make such a balls up of this like they have. That said, I'm always a little wary of any IP. At an old firm, my boss's boss was the kind of fella you'd have to check you'd still have your watch on after shaking his hand. 

With Ashley, you've got to take it with a pinch of salt. He's a notorious hard bargainer. So I would not be surprised if he was offering a far worse deal for the creditors (and ultimately it's the creditors that the administrators are working for). 

R. E. MSD, I had initially referred to them in less flattering terms but thought it wise to change it. Put it another way, if you are relying on them, then something has gone wrong. Maguire is much less complimentary. 

In terms of a "normal" administration, it could be anything. Usually they do a pre-pack. That is where you agree to a sale before the company goes into admin. It goes into admin for a day and is immediately sold. This brings certainty to the restructuring but it is controversial as it can be detrimental to some creditors (often the pension scheme).

9 months is a long time, particularly here where Derby are losing money every day and so the situation is getting worse. If a company can be turned around into a breakeven, then they can last a while as the IP might look for a better deal and choose to wait it out. The other time this happens is when lengthy investigations are needed with the aim of potentially claiming money from parties that acted fraudulently or contributed to the failure of the company - a classic example is the Carillion liquidation where the auditors are facing a big claim against them. 

In this case, Derby have been borrowing money (it appears to be from MSD) to keep running. But it's only adding to the debt pile. 

I tend to agree that a deal is the most likely outcome. That is what tends to happen as there's money to be made! 

Edited June 12, 2022 by MrBunce

[Badger 2,405]

It will hardly come as a shock, but Kirchner has now officially withdrawn his bid. 

"The joint administrators can confirm that today, Mr Kirchner has withdrawn his offer to acquire the business and assets of The Club," a Quantuma statement read. "We are aware that some will be concerned by this news, however, the joint administrators wish to reassure The Club’s staff, players and supporters that they are continuing to actively engage with a growing number of interested parties, each of whom have a real willingness to complete a deal as soon as possible.

"The joint administrators would remind all stakeholders of the process in place for those parties who wish to acquire The Club. "The joint administrators are running a competitive bidding process. Bids should be best and final and not contain any referential element.

"Clearly, any bid is subject to interested parties entering into an NDA, accessing the data room, and undertaking their own due diligence. "Of the parties we are engaging with, some are more progressed in this process than others."

 

9 months! 🤦‍♂️

 

[Foxy2600 297]

On 12/06/2022 at 16:55, ricardo said:

You should know by know that the thread topics are largely irrelevant by page 2.

Yes there was that recent one that started out commenting on some 'White Board' with some nasty names on it and its now progressed into the UK government 'ethnic cleansing' Rwanda....😜

[Nuff Said 5,089]

6 minutes ago, Foxy2600 said:

Yes there was that recent one that started out commenting on some 'White Board' with some nasty names on it and its now progressed into the UK government 'ethnic cleansing' Rwanda....😜

I honestly have no idea what you’re talking about. Is the thread still there?

[Nuff Said 5,089]

On 12/06/2022 at 20:33, MrBunce said:

This whole time, the situation could have been fixed by MM dipping into his pocket and handing the ground back to the club (or selling it to a prospective buyer for free).

Can he do that if there are loans to MSD secured against it? He’d have to pay those off as well wouldn’t he? 
 

Given how much cash he’s set light to already, you can understand his reluctance but as you say the whole thing is a reflection of just how poorly run the club was under his ownership.

[Foxy2600 297]

2 hours ago, Nuff Said said:

I honestly have no idea what you’re talking about. Is the thread still there?

Looks like Admin have removed the 'White Board' and the link via Twitter but the thread is still there - top of the shop!

That was the only tentative link to football, the next 14 pages have Segued into Rwanda via Marxism, Racism, Sexism and every other 'ism' imaginable.... 

[Badger 2,405]

It seems that a local businessman has loaned Derby enough money to continue trading and start the season.

He is rumoured to be one of the interested parties in taking over the club. I wonder what would happen if he fails to get it over the line and the new owner refuses to include this new loan as part of the deal to buy the club?

 

[sgncfc 1,223]

So Clowes have bought the stadium from Morris and then loaned the club enough money to get them to start the season? That's a biggish loan, given they have only 5 players under contract.

[shefcanary 2,388]

They have acquired the stadium, so pretty much done deal for them now I have to assume.  But having the stadium owned by a Property Development Company should up the anti in the boardroom for the team manager!

[cornish sam 945]

I wonder how much they paid for the stadium considering the efl said that Mel Morris had paid a fair market value when he dodged the ffp issue with it...

Also, it's all very well saying that they can start the season, but, bury were kicked out for not being able to guarantee they could complete the season, I have seen nothing to suggest derby can make that guarantee yet.

[City fan 78]

I don't think Derby will start the season, the league will expel them. 

[ron obvious 1,501]

On 12/06/2022 at 20:35, shefcanary said:

An administrator doesn't "administrate" for free.  It costs them to undertake this exercise, their fees (with a profit element) are paid out of monies recovered during the administration. They are also liable for any insolvent trading; in theory they should not be adding to the debt, if they do for no good reason, they can get struck off like any other company director would. The incentive therefore is to get it done quickly so they minimise the costs and the risk they incur. 

I'm therefore as puzzled by you that this administration has lasted so long, but assume it is because of their membership of the EFL and thus EFL rules taking precedence over normal company law. I'm a little lacking in knowledge of why that should be - sorry that's for someone else to answer. 

Edit: Now seen the answer above, it's all to do with the EFL Golden Share!

Jarndyce v Jarndyce ...

[Peregrine Shorts 315]

It looks like Rooney has walked out on them now

[Terminally Yellow 2,448]

13 minutes ago, Peregrine Shorts said:

It looks like Rooney has walked out on them now

I'm genuinely surprised he's lasted as long as he has. 

[TIL 1010 4,722]

Derby County FC cannot possibly carry on like this from day to day. Time to pull the plug for goodness sake no matter how hard it will be for the fans.

[Google Bot 3,259]

Wycombe still in League One cause of this **** too, let's not forget.  

[Branston Pickle 3,638]

Oh no - what are the media (particularly the bbc) going to do now that they are just ‘Derby’?!

[Nuff Said 5,089]

12 hours ago, shefcanary said:

They have acquired the stadium, so pretty much done deal for them now I have to assume.  But having the stadium owned by a Property Development Company should up the anti in the boardroom for the team manager!

Ante, not anti.

 

Yours pedantically