Derby County - brings back nightmare times (5 Viewers)

The Philosopher said:

Derby will find a buyer, can’t see them going the way of Bury - they’re too big a brand and have their own stadium.

I’d have gladly swapped SISU up until a couple of years ago. But:

-Unless I’m wrong the only debt that the club has is to itself - IE SISU companies.
-By hook, crook or miracle we are in the Champ, playing in Cov with a decent back-room set up and team.
-Seems to be some genuine potential of a tie-in with Warwick Uni.
-Joy seems to actually care now.

SISU made some huge mistakes but seem to have got a grip now.



The only other interested person would be Hoffman - but he is best running the PL. When we get there he can rig it for us and dock all the other teams 100 points. (Satire)

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Yes you are wrong. The debt of Otium is owed to two funds managed by SISU Capital which charge interest at 11%+. So no the debt is not owed to sisu companies/ itself. It is still a legal debt due to a separate legal entity based abroad. The structure of debt has been the same since 2008. It is not internal debt that is owed to itself and magically disappears in the wash

They also started repaying in it pre covid. That's money taken out of the club and not available to the manager

Not to mention the 3m now owed to the efl.

It looks like joy is enjoying the excitement around our current performances doesn't mean she will change the way she has always operated the club or indeed her core business. Glad she enjoys it as we all are but to read anything more substantial in to it ? Her biggest driver is still her core business not ccfc I believe

Did she ever not care? What is it she really cares about? What really drives her?

The university project is still only PR for now. Lots of talk not a lot else so far.

How do we know Hoffman is still interested or indeed is the only person interested?

Sorry too many assumptions

Derby do not own the stadium. Not to mention the charges on that piece of real estate which places control of the stadium with major creditors. Unless someone is prepared to get an agreement with those creditors and pay off the football creditors then Derby could still go out of existence in its present form.

Sooner or later a big name will go

oldskyblue58 said:

Yes you are wrong. The debt of Otium is owed to two funds managed by SISU Capital which charge interest at 11%+. So no the debt is not owed to sisu companies/ itself. It is still a legal debt due to a separate legal entity based abroad. The structure of debt has been the same since 2008. It is not internal debt that is owed to itself and magically disappears in the wash

They also started repaying in it pre covid. That's money taken out of the club and not available to the manager

Not to mention the 3m now owed to the efl.

It looks like joy is enjoying the excitement around our current performances doesn't mean she will change the way she has always operated the club or indeed her core business. Glad she enjoys it as we all are but to read anything more substantial in to it ? Her biggest driver is still her core business not ccfc I believe

Did she ever not care? What is it she really cares about? What really drives her?

The university project is still only PR for now. Lots of talk not a lot else so far.

How do we know Hoffman is still interested or indeed is the only person interested?

Sorry too many assumptions

Derby do not own the stadium. Not to mention the charges on that piece of real estate which places control of the stadium with major creditors. Unless someone is prepared to get an agreement with those creditors and pay off the football creditors then Derby could still go out of existence in its present form.

Sooner or later a big name will go

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I respect a lot of your views on football finances, but I think you are a strictly figures man, and as such you fail to build in outside factors into your rationale. Football is not like normal business, and brings an emotional attachment that does not otherwise apply. If you happen to prefer a Big Mac over a Whopper, you are unlikely to be discussing the pros and cons on an internet forum or going to your local MacDonalds and cheering everytime someone buys a Big Mac. Derby will not go out of existence.

Legia Sky Blue said:

I respect a lot of your views on football finances, but I think you are a strictly figures man, and as such you fail to build in outside factors into your rationale. Football is not like normal business, and brings an emotional attachment that does not otherwise apply. If you happen to prefer a Big Mac over a Whopper, you are unlikely to be discussing the pros and cons on an internet forum or going to your local MacDonalds and cheering everytime someone buys a Big Mac. Derby will not go out of existence.

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Portsmouth nearly did despite having won the Cup not long before. And perhaps it’s what needs to happen to wake people up

Perhaps I am as far as I write here doesn't mean I don't have or understand the passion. I do tend to keep it to the facts on here I accept that.

The Derby comments were more to illustrate the possibility of failure to save. I dont accept just because it is Derby they will automatically be OK. However I expect some sort of deal to happen just hope it doesn't just paper over the cracks. Also i said in its present form

Everyone, especially football fans keep saying a football club in not a normal business. Because of the connection to fans no it isnt. Because of artificial protection rules it isnt. However I think I could argue that treating it as a normal operating business can and does work, can provide success..... ask joy Seppala, she basically runs ccfc as a normal business living within its means. Pity more clubs don't do that

I assume at one point CCFC was either going to be a basket case or with some shrewd investment ( MR and AV ) enhance their net worth to the point where somebody may interested in purchasing - it would not happen without a stadium deal though - who knows where we will end up but let’s enjoy it

Derby are negotiating with hmrc to get the tax bill cut, I bet a lot of normal people wish they could do the same.

Terry Gibson's perm said:

Derby are negotiating with hmrc to get the tax bill cut, I bet a lot of normal people wish they could do the same.

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I love hmrc I’m 66 and I’ve just received my first tax rebate, I’m hoping for many more

oldskyblue58 said:

Perhaps I am as far as I write here doesn't mean I don't have or understand the passion. I do tend to keep it to the facts on here I accept that.

The Derby comments were more to illustrate the possibility of failure to save. I dont accept just because it is Derby they will automatically be OK. However I expect some sort of deal to happen just hope it doesn't just paper over the cracks.

Everyone, especially football fans keep saying a football club in not a normal business. Because of the connection to fans no it isnt. Because of artificial protection rules it isnt. However I think I could argue that treating it as a normal operating business can and does work, can provide success..... ask joy Seppala, she basically runs ccfc as a normal business living within its means. Pity more clubs don't do that

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Always enjoy your analysis OSB
I suppose the biggest similar example is Man U where the Glazers have loaded huge debts on the club while taking out millions at the same time
You're right though a big club will eventually go
Just like banks, where many were seen as too big to fail until one did

better days said:

Always enjoy your analysis OSB
I suppose the biggest similar example is Man U where the Glazers have loaded huge debts on the club while taking out millions at the same time
You're right though a big club will eventually go
Just like banks, where many were seen as too big to fail until one did

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I know not the English game but Barcelona are £1.3bn in debt under serious restrictions, had wage restrictions from 650m two seasons ago to 100m this, they looked fucked but too big to go.

I think Derby are on thin ice, to find a buyer is possibly the easy part but I read somewhere they currently have debts of £60million+ and I think a tax debt on top. Under EFL rules football debt must come first but hmrc might dispute that leaving Derby with more point deductions.
As someone said on radio how can
you be looking to negotiate debt
down yet pay an employee £50k a
week.
They also said there couldn’t be a worst time for all this due to covid there are loads of companies going to the wall

I'll give any club/fans as much sympathy and support as they gave us when we were on the edge. (excepting Sunderland, Sunderland can disappear down an old mine shaft for me), much nicer than wishing the Luftwaffe had done a better job!!!
don't think Derby will have much backing, considering how much cheating Morris allegedly did

Terry Gibson's perm said:

Derby are negotiating with hmrc to get the tax bill cut, I bet a lot of normal people wish they could do the same.

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They can

slowpoke said:

I think Derby are on thin ice, to find a buyer is possibly the easy part but I read somewhere they currently have debts of £60million+ and I think a tax debt on top. Under EFL rules football debt must come first but hmrc might dispute that leaving Derby with more point deductions.
As someone said on radio how can
you be looking to negotiate debt
down yet pay an employee £50k a
week.
They also said there couldn’t be a worst time for all this due to covid there are loads of companies going to the wall

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There was a change in the law, which places HMRC as the primary creditor. Therefore, the exchequer will get their money.
After that the EFL & FA rules dictate that all football creditors must be paid in full, so any new owner is liable for that money too. Otherwise, Derby could adversely affect the trading of other clubs.
Bottom line - £15m to HMRC, plus "£Xm" to other clubs.......then the new owner must either rent the ground and training ground or buy both.

Now is the time to enjoy being a city fan as joy seems to be along with the rest of us.
I think she knows that we won't forget all memories of sisu the first 7 odd years nor should we as long it stays in the past not to be repeated.pusb.

CDK said:

Now is the time to enjoy being a city fan as joy seems to be along with the rest of us.
I think she knows that we won't forget all memories of sisu the first 7 odd years nor should we as long it stays in the past not to be repeated.pusb.

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I can’t wait until when I can forget about her.

Can't help thinking that "football is not a normal business " too often is a convenient excuse for poor management, excessive risk and ego by owners that fans have too easily bought in to.

It also suits the football authorities to promote that claim because it allows them to hide non normal business practices behind community. That shelters poor and weak regulation

Yes there are special circumstances relating to community but that doesn't mean owners should ride rough shod over that community or leave their business brains at the board room door for sake of ego. If football is special then that increases the need for those governing to safeguard community.

Good management doesn't exclude, success, risk or even ego. Competent owners do not put their clubs at undue risk. But that doesn't mean there can't be some risk. Running financial operations in a normal business like manner and proper meaningful communication should be pre requisites at all clubs

Sometimes things go wrong that are unforseen but an owners duty is to be guardians of the community asset.

It seems owners competency is a factor of wealth. If football is not a normal business then how does simple wealth qualify an owner to run a club ?

Just the way I see it

oldskyblue58 said:

Can't help thinking that "football is not a normal business " too often is a convenient excuse for poor management, excessive risk and ego by owners that fans have too easily bought in to.

It also suits the football authorities to promote that claim because it allows them to hide non normal business practices behind community. That shelters poor and weak regulation

Yes there are special circumstances relating to community but that doesn't mean owners should ride rough shod over that community or leave their business brains at the board room door for sake of ego. If football is special then that increases the need for those governing to safeguard community.

Good management doesn't exclude, success, risk or even ego. Competent owners do not put their clubs at undue risk. But that doesn't mean there can't be some risk. Running financial operations in a normal business like manner and proper meaningful communication should be pre requisites at all clubs

Sometimes things go wrong that are unforseen but an owners duty is to be guardians of the community asset.

It seems owners competency is a factor of wealth. If football is not a normal business then how does simple wealth qualify an owner to run a club ?

Just the way I see it

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Absolutely!!!!

Sometimes things go wrong that are unforseen but an owners duty is to be guardians of the community asset.

Flying Fokker said:

Not Mike Ashley then!

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He is rumoured to be interested in buying them.

Nice try

Frostie said:

Nice try

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It should be allowed and then if they are still wrong they get more points deducted like when you make an appeal as a player.

Similar appeal didn't work for Wigan

The accounts don't support the argument either. Since 2015 Derby have been making operating losses in excess of 20m. That's before putting in any amortisation of player contracts correct or otherwise

Results have been buffered by a series of one off positives of a capital not revenue nature and incorrect accounting practices.

So to argue that it was all the fault of covid is a little disingenuous and likely to get short shrift from the efl. The club has been using one off capital disposals and increasing loans subsequently made in to share capital to cover day to day operations. And doing it for years. Not a great strategy.

Operationally the club has been living beyond its means for years ( or the years we can access). Not filed accounts for 2019 or 2020 so it is unclear what has happened in those years.

Plenty of other teams have survived covid financial problems. Which points to covid exacerbated the problem but wasn't the underlying cause of the Derby failure. Poor management and ownership together with living beyond means. Derby couldn't afford the players they signed and that was a problem well before 23/03/2020.

Mel Morris does demonstrate the pitfalls of a fan owner, he's obviously been very successful in his own right but appears to have acted with his heart over his head all the way through his tenure.

fernandopartridge said:

Mel Morris does demonstrate the pitfalls of a fan owner, he's obviously been very successful in his own right but appears to have acted with his heart over his head all the way through his tenure.

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It very nearly worked for them twice I think.
That's the pitfall and a slice of luck or not.

better days said:

Always enjoy your analysis OSB
I suppose the biggest similar example is Man U where the Glazers have loaded huge debts on the club while taking out millions at the same time
You're right though a big club will eventually go
Just like banks, where many were seen as too big to fail until one did

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They're selling a load of shares as well. Club will get nothing.

Grendel said:

well if he spent as much on his next club as with then I don’t most rational fans would complain

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It does make me laugh with some Newcastle fans.

Mike Ashley is bad because we couldn't buy players
Steve Bruce is bad because he had much more money to spend on players

fernandopartridge said:

Mel Morris does demonstrate the pitfalls of a fan owner, he's obviously been very successful in his own right but appears to have acted with his heart over his head all the way through his tenure.

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Mel Morris took control and bought his 22% share holding May 2014, as you might expect there are several entities that own shares in shares in shares etc. that later became 100% control by Mel Morris

From that time wages which had matched turnover the four years previously started to increase. (wages matching turnover doesn't of course cover the administrative costs of £7m per year 2011 to 2014)

as a percentage of turnover wages were then as follows

2015 123% (wages 26.5m)
2016 155% (wages 35m)
2017 119% (wages 34.6m)
2018 137% (wages 40.5m)

Administrative costs increased from 2014 £7m pa to £12m pa in 2018

The sale of the ground took place in 2018. those financials showed a profit on the disposal of 40.8m which substantially masked poor operational results


Creditors & share capital increased from
2014 £84.6k (creditors 33.5m + shares and share premium 51.1m)
to
2018 £189.9m (creditors 25.7m + shares & share premium 164.5m) - shows how much additional shares were issued to largely convert loans


Assets went from
2014 £60.7m (Fixed assets inc ground 55.9m current 4.8m) players value = 2.6m
to
2018 £147.9m (fixed assets <no ground> 65m current 82.9m) player value = 50.5m There is a big value in there for group undertakings of 81m which looks to be the ground sale that at 30/06/2018 had not been paid for


that means the balance sheet in round terms on the above basis dipped from 23.9m negative to 42m negative in those 4 years but they no longer owned the ground and had not been paid for it as of 30/06/2018. The published balance sheet shows things in a different way

In Summary
So the club no longer owned a major long term asset, they would have to pay rent which increase costs (looks like £920k pa but that is a guess), they had a big debt due from a related company (was the cash ever paid over?) plus high value players that amortise over 3 or 4 years so decreasing in value on balance sheet , whilst paying more out in rising wages than they were earning, plus turnover fairly static at 29m and rising administrative costs . That was in 2018 you would assume things didn't get any better in 2019, 2020 or 2021 ..... and that's all before correcting the accounting policies. They were in a mess well before Covid hit


No real wonder it all went wrong really, or that they were struggling to find a buyer. Disaster waiting to happen, it was only a question of when really

Mel Morris and the Derby board went for the dream and it has back fired massively

I cannot believe they have appealed against their points deduction citing Covid as the reason they went into admin.

I guess you can't blame them for trying, but it would be a disgrace if they get away with it. Be nice if the EFL considered it in the double jeopardy manner they do for disciplinary appeals and have the option to increase the penalty should the appeal be considered frivolous.

torchomatic said:

I cannot believe they have appealed against their points deduction citing Covid as the reason they went into admin.

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It's almost as if no other teams had to deal with Covid but them, bunch of whiney feckers, take the punishment for a cheating owner.

Another factor to consider is that the cost of the appeal offers the Administrators another means of taking money away from the creditors and the salaries of back room staff, and instead into the pockets of whichever legal firm they pick to take this on. From the outside looking in it seems to me that Administrator's have authority and power that can easily be abused, or am I'm just being over cynical? When we had Appleton overseeing our Administration it always felt that his priorities in order were: 1) Himself, 2) SISU, 3/ CCFC.

I heard on radio that the EFL
have appointed independent body to investigate and decide the appeal.

slowpoke said:

I heard on radio that the EFL
have appointed independent body to investigate and decide the appeal.

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As is always the case.

Frostie said:

As is always the case.

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Which is what happened SW last season.
Who got it reduced,by around half I think.

Frostie said:

Nice try

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Could be that any potential buyers are only interested in Derby as a championship team. So the administrators have to at least try to make some sort of an appeal to give any potential deal a chance.

Value of Derby in championship is going to be more than Derby in league 1 so staying in current division gives greatest return to creditors.

Still think they are going to be league 1 next season though

Who appointed the administrators? Might give a good indication as to who controls the process and their intentions