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Confirmation that the £4,462,000 loss recorded as Loss on disposal of asset under construction is writing off the expenditure relating to Warren Farm.
Shareholder financing was reduced from that in 2018/19. £7.4m as opposed to £11.4m
The club did take advantage of the loans made available by the EFL to help with Covid to the tune of £584,000, but still were able to increase their commitment to the community trust.
And from the post report events:
Heston was bought for £4,500,000. Thank you Ruben
Dickie, Dykes, Willock, Kelman, Walsh and Bonne cost a combined total of £7,003,000 of which £1,165,500 is contingent on future events. I wasn't aware that Bonne was only on loan until January this year when the permanent transfer was completed.
None, these accounts are up to May 20, Eze was sold in August.
The end of parachute payments drop broadcasting rights from two thirds of our revenue to under half and push wages up to 110% of revenue.
Player amortisation has dropped from over £4m the previous season to £600k. amazingly the book value of our squad is only £55k - or one Liam Kelly.
The 2019/20 season is being assessed in conjunction with the 2020/21 season for FFP. If that was not the case we would have had over £5m headroom using an estimated £4m for disallowable costs and a further £2m for Covid costs.
I think that this summer’s transfer activities are going to be defined by cash flow more than FFP. The continued tight control over expenditure, the sale of Eze and the temporary changes to FFP will mean that we are comfortably within our permitted losses, but the massive effect of Covid on income for all clubs at our level and down seems to get glossed over.
If we want to move on Todd Kane, who is going to have the money to buy him? We’ve seen the frightening sets of accounts published recently by the likes of Reading and Birmingham. Admittedly both clubs are basket cases, but it needs to be remembered that these accounts have been for the season only briefly affected by Covid. Every club, including QPR, will be suffering horrendous operating losses for the current season and I expect soft registration embargoes to be commonplace in the Championship.
If we are looking to the owners for an influx of capital, how do we think Westports Malaysia and Air Asia have been coping in the pandemic? I don’t expect to see much money change hands this summer.
The P&S calculation is based on Earnings Before Tax (EBT) not Operating Profit. Typically Operating Profit would not include the profit made from player sales and in Reading's case the sale of their training ground and stadium. I still think that they would be in breach from numbers I've previously worked out on them, but there are two temporary changes to FFP which will see them get a stay of execution.
The assessment of the 2019/20 season has been postponed for one year and it will be assessed in conjunction with the 2020/21 season using an average of the two seasons. As clubs are required to submit management figures for the current season by 1st March each year, the initial assessments of these figures, alongside the 2017/18 and 2018/18 accounts should already be underway.
The other temporary changes to the P&S calculation is to the scope of the permitted adjustments to the EBT. In addition to the existing disallowable costs for items such as expenditure on youth development, community schemes and women’s football, for the 2019/20 and 2020/21 seasons costs directly attributable to Covid-19 can also be excluded. This not only covers costs such as making grounds and training facilities Covid secure and testing players and staff for Covid, but also lost revenue, such as ticket sales, sponsorship, advertising, hospitality and catering, from matches played behind closed doors. Derby's financial team have presumably found a whole host of new loop holes to exploit.
From the FFP perspective the £32million loss is misleading. That is their operating loss. Kieran Maguire's tweet also show that they made £11m profit on player sales reducing the loss to £21million. They will be lucky to get loans written off taken into consideration though. The £21million will be reduced further by disallowable costs.
If I've got my dates right, the 19/20 season is going to be assessed in conjunction with the 20/21 season after allowing for any direct cost and lost revenue due to the pandemic. If the dates haven't been allowed to slip, clubs will be submitting their 20/21 projections to the EFL by the end of this month. However, as the dates for submitting accounts to Companies House have been extended by 3 months there is every chance that the same applies to the projections.
The last I read on this, last season and this one were to be assessed together with clubs allowed to exclude Covid costs - such as getting the ground Covid secure - and they can also factor in lost income. Sounds like a mine field.
I've just skimmed through the independent commissions report. They had a few chartered surveyors calculate the depreciated replacement cost of Pride Park based on a cost per seat basis from other stadia adjusted by construction tender price indices. The mid point of these re-build costs was £83.45 million and so they were happy to accept the sell price of £81 million as a fair market price.
There are over 100 pages in the report and this isn't my field so I hope I've used the terminology correctly.
I need to re-read the report a couple more times to fully get to grips with it properly, but it starts by mentioning an agreement reached in August 2018 where the Wednesday chairman agreed, in principle, to but Hillsborough to ensure that Wednesday don't breach their FFP spending limit for the rolling 3-year period which ended on 31st July 2018. Senior personnel of the EFL were involved in those discussion and were ok with it all despite it being after the event. It only started to fall apart 10 months later when, I think, Wednesday had failed to deliver on some of their promises. The EFL were in contact with Wednesday through out this debacle. For them to claim that Wednesday tried to back date the deal without their knowledge is ridiculous and it was that claim which set back the resolution process by months.
EastR may be in a better position to provide more details.
Terry Venables, my first hero — Column9th Jan 2018 16:05 As former QPR player and manager Terry Venables celebrates his 75th birthday, A Kick Up The R’s columnist Simon Dorset reviews the career of the man who made him fall in love with our club.12
The following is point 12 from the decision document.
The Commission is aware that there is some controversy concerning the appropriateness of the sale of a club's stadium to enable the P&S requirements to be met. This case has nothing to do with that controversy. The EFL accepted, in principle, that this was an acceptable practice and the Club does not, of course, stand alone as a club that has sought to utilise such a mechanism. That it failed to do so effectively is the reason why its breach of the Rules could not be remedied so as to result in effective compliance.
The EFL's case against Derby is purely to do with the price they sold Pride Park for, not that they sold it although there is also a large question mark over the way in which their amortise their player registrations.
Pride Park - £80m Hillsborough - £60m Villa Park - £56m Madejski - £26m St Andrews - £22m
They will have to go some to breach FFP in the next couple of seasons.
Their attempt to not breach the spending limit in the 3-years ending 2018 by selling Hillsborough failed on a timing issue. The profit from the sale (£38m) will have been moved into their 2019 submission and I've seen nothing in the report questioning the price they sold their ground for.
As I understand things, they will have to keep their losses down to £13m for 2019, £26 million for the 2 season up to 2020 and then will be back on £39m on a 3-year rolling period. With exception revenue of £38m in 2019 they should comfortably achieve that. It just remains to be seen whether the EFL go after them for selling Hillsborough above the market value to a related party.
Personally I’m not in favour of restrictive practise. If a club is able to generate more revenue they should be able to spend it as they see fit. However, I suspect that the cap has been set so that it doesn’t cause to many issues for the higher revenue clubs and the smaller ones won’t have enough funds to get anywhere near it.
Leagues 1 and 2 voting for a salary cap is hardly a major step forwards considering that they already had one called Salary Cost Management Protocol. That is how FFP worked in those divisions. League 1 clubs were only allowed to spend 60% of their income on salaries, League 2 clubs 55%.
What they have now voted in seems to be to the advantage of relegated clubs from the Championship who will be able to keep their higher earners on their existing contracts as anything they are paid above the league average will be discounted down to that average.
That isn't the end of their troubles. If, when they exit administration, they are not in a position to pay their creditors 25p in the £, they will get hit with a further 15 point penalty.
The easiest way of calculating how much we can lose and remain within FFP is to add up the loss made in the previous two seasons and take that off the £39 million allowed.
17/18 - Loss £22.5, Est Excluded £4 = £18.5 18/19 - Loss £10.3 Est Excluded £4 = £6.3
£39 - £18.5 - £6.3 = £14.2
Note that figures is after removing the estimated excluded cost, so £18.2 in the accounts.
I'd be very surprised if we lose half as much as that. Lee Hoos is doing a tremendous job with our finances.
This figure is of course only for guidance as to where we sit as there will not be any FFP assessments for this year's accounts due to a temporary relaxation of the rules. As Brian said, the following season we have a shed load of costs rolling out of our equation. I'll need to find something else to talk about then....
Alternatively, if you have the table from that article to hand, just add the current headroom to the loss rolling out of the equation. £11.6m + £6.4m = £18.2m
FB, see the table just over half way down. The accounting wizardry I referred to in the article means that we lost as good as £1m less (for FFP purposes) than I show in the table.
Accounting for success — Column28th Feb 2020 14:20 With the club’s latest set of accounts mixing an improved picture with still stark realities of the club’s situation, our resident grown up Simon Dorset assesses where we are with FFP.10
I've spent a bit of time digging into Reading's accounts to see how they had managed not to breach FFP after seeing a headline declaring that “Reading announce £40.6m loss as players wages soar”. In each of their last three sets of published accounts, Reading had benefited enormously from significant, one-off transactions. In 2016/17 loans of over £9million were written off. I’d hazard a guess that the loans were from Sir John Madejski and he agreed to waive repayment of them as part of the sale of the club to Dai Yongge and his sister Dai Xiu Li. The following season was boosted by the profit of around £6.5million on the highly publicised sale of the Madejski Stadium to Renhe Sports Management Company (owned by Dai Yongge). Last season Reading sold their training ground to the same company for any even greater profit of around £8million despite their new training facility at Bearwood Park not being ready. Those transactions have enabled Reading to dress up their profit and loss to the tune of almost £24million over the last three seasons; it is very hard to envisage what else they sell to avoid facing up to their underlying problem.
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