Financial Fair Play investigation

[Rollo Tomassi]

The Esk saying the likelihood is a points deduction if charged. A points deduction but maybe less than the 9 that Portsmouth got for going into administration.

I think the only thing we could maybe survive is a 5 point deduction - 10 points will sink us.

If we get a points deduction for one breach then Man City are gonna end up in Sunday League football for 100 breaches!

 

[blulouie]

We do not know the full details at present but clearly there is a discrepancy which requires further scrutiny.
Perhaps as some are suggesting it is tied into examination of the latest years accounts ?
It is possible that even our best efforts have failed to deliver the position we had assured the PL we would be in.
In which case we will have breached the rules regardless how hard we worked to ameliorate it after the event.

Yes atm it's all conjecture, but one thing is for sure this will take months & months. Then if the club don't agree with the findings there will an appeal.

I think this should be put on the back burner for now , there's a very pressing matter on the pitch that should have the utmost importance.

 

[davek]

If we get a points deduction for one breach then Man City are gonna end up in Sunday League football for 100 breaches!

As @The Esk says, it could be any form of punishment, as unlike the EFL there's no set punishment. They could fine Everton and transfer embargo them and deduct points. Or do all that and defer the points deduction element and see how Everton get on. It's uncharted territory we're in here.

My own feeling on this now is that we will get a decision against us, but it'll likely be survivable.

The Esk asks "what would be the point in fining Everton when cash issues are what's got us here?". He also asks "what punishment is a transfer embargo when we've practically been on one for a season?"

But the Esk also says the nuclear option of expulsion wont likely be used, so my own question would be "why avoid expelling Everton if you then hand them a points deduction so significant for a club that will have averaged about 37/38 points over the last two season that it'll sink them? Just sink them.".

 

[blulouie]

This is the crux of it. Originally, I was supportive of the principle that P&S/FFP would help ensure the financial stability of clubs, so clubs did not fold.

I still think there's a place for such regulations, too. However, intentionally or unintentionally, the rules have created a glass ceiling that means most can't compete.

Those key clubs, who were financially thriving when they were imposed, have been provided an advantage, and that advantage protects their closed shop.

In layman's terms, clubs can't spend more to close the gap or they'll fall foul of the rules unless they get success, which like us is unlikely. That puts you at risk.

I don't know what the right way is to fix it, but a bond or something with x-amount of money to cover losses over a period of ten or so years could be it.

Spot on this.

 

[Villa_Fan]

Auditors are paid by the club client because it’s a legal requirement to have an audit. They are certainly not a partner with the club to produce the accounts as club sees fit. Auditors do not follow the guidance of the club on accounting treatments and as long the numbers presented are consistent with that treatment give it the thumbs up. The whole purpose of the audit is to test those assumptions and accounting treatments.

The “Covid losses” are more of a P&S thing, but because they are clearly stated in the preamble of the 2021 accounts, they then have to be audited. The club stated in those accounts that the Covid losses were something mad like £170m. Because that number is stated in the accounts (even though not specifically affecting the P&L or balance sheet it’s in the waffle at the front), the fact those accounts had a clean audit opinion, the auditors must have been given substantiation for that number.

Not saying it doesn’t smell a bit funny mate, but that audit opinion is sacrosanct and not in any way complicit with what the club wants to portray. BDO would certainly value there own existence more than having Everton as a client.

Yes, it is a legal requirement but the club can elect to use any auditor they choose. Also, during the process of the creation of the audited accounts the auditors are in contact with the business and regularly seek clarification as to their interpretation. The two parties may have differing opinions and they negotiate a consensus and it is then accounted for and reported as agreed

 

[Villa_Fan]

More clubs have gotten into financial bother 10 years following FFP than the 10 years prior to its introduction man !

If FFP was fair then why not implement a transfer or salary cap across the board regardless of a clubs revenue ?

You could also have a system where if say Moshiri or your owner could prove that a £50 millions bid for a player would be paid from the owners own pocket / clubs revenues then the transfer is agreed whereas if its from a bank loan etc. a deal is refused by the PL.

As it stands we have a system where you and I will never see either of our club win a league title. How is that fair or competitive ?

I agree the system could be improved but none of that takes away from its purpose of it which is to ensure clubs operate in a sustainable way. My belief is that the owner of the club should be permitted to put any amount of money they want into the club, but they must actually have the money to put into the club and put the total funds of the 'proposed investment' into an escrow account so that the club is protected if the owner does a runner. Owners should not be allowed to take on unsustainable debt which just puts the club's existence at risk. I assume the big problem for Everton is that the costs of the stadium have gone from 500m to 750m and that 250m has to come from somewhere and without Usmanov to bankroll it the onus is on Moshiri or EFC. Moshiri is clearly not funding it thus why he is looking for investment. So who underwrites this investment? Will it be EFC? what happens if Moshir borrows 250m and EFC is relegated and Moshiri does a runner? Do you think that is a situation that should be allowed to happen?

 

[Rollo Tomassi]

As @The Esk says, it could be any form of punishment, as unlike the EFL there's no set punishment. They could fine Everton and transfer embargo them and deduct points. Or do all that and defer the points deduction element and see how Everton get on. It's uncharted territory we're in here.

My own feeling on this now is that we will get a decision against us, but it'll likely be survivable.

The Esk asks "what would be the point in fining Everton when cash issues are what's got us here?". He also asks "what punishment is a transfer embargo when we've practically been on one for a season?"

But the Esk also says the nuclear option of expulsion wont likely be used, so my own question would be "why avoid expelling Everton if you then hand them a points deduction so significant for a club that will have averaged about 37/38 points over the last two season that it'll sink them? Just sink them.".

Oblivion is ours

 

[gwladysnight]

This is the crux of it. Originally, I was supportive of the principle that P&S/FFP would help ensure the financial stability of clubs, so clubs did not fold.

I still think there's a place for such regulations, too. However, intentionally or unintentionally, the rules have created a glass ceiling that means most can't compete.

Those key clubs, who were financially thriving when they were imposed, have been provided an advantage, and that advantage protects their closed shop.

In layman's terms, clubs can't spend more to close the gap or they'll fall foul of the rules unless they get success, which like us is unlikely. That puts you at risk.

I don't know what the right way is to fix it, but a bond or something with x-amount of money to cover losses over a period of ten or so years could be it.

There are clear ways to smash through the glass ceiling though. Spending on Stadiums and academies is exempt from FFP. Brighton would be a good example of a club that has spent on their Stadium and invested heavily in young talent. They are now competing for the top 6 and are in the semi-final of the FA Cup.

My worry would be how much debt we would be in without P&S and FFP. Imagine how much more money this board could have pissed away if they didn't have to attempt to comply with the P&S rules. Imagine how high our wage bill would be if we were free to spend what we wanted.

Our problem is not a lack of finance it is the fact that those people running the club haven't got a clue how to spend what we have.

 

[Damo_1878]

I am.

It sounds like the esk is saying that if Everton had sold Richarlison and Gordon in the summer rather than keep Gordon until the January then we wouldn;t be facing this referral now as we'd be complaint with the requested £100M brought into the club.

We eventually did though so it's a bit churlish for them to bring this referral about.

It was £100 m in one financial year. Not spread across two financial years.

So basically Bill Kenwright and Denise Barrett Baxendale reneged on the Premier League's agreement

So seems like fans and shareholders aren't the only ones screwed over by them

 

[JLW]

There are clear ways to smash through the glass ceiling though. Spending on Stadiums and academies is exempt from FFP. Brighton would be a good example of a club that has spent on their Stadium and invested heavily in young talent. They are now competing for the top 6 and are in the semi-final of the FA Cup.

My worry would be how much debt we would be in without P&S and FFP. Imagine how much more money this board could have pissed away if they didn't have to attempt to comply with the P&S rules. Imagine how high our wage bill would be if we were free to spend what we wanted.

Our problem is not a lack of finance it is the fact that those people running the club haven't got a clue how to spend what we have.

You're right about Brighton they are having a tremendous season and deservedly so, they also by the looks of it are a well run club but come the summer they will lose 3/4 of their best players and then will have to re-invent themselves meaning they are more likely to go backwards than forwards next season because they cant attract players to get to the next level.

As a business model they are great but as football club trying to achieve things or propel themselves to the next level and join the elite it wont ever happen.

 

[Blue peter]

It was £100 m in one financial year. Not spread across two financial years.

So basically Bill Kenwright and Denise Barrett Baxendale reneged on the Premier League's agreement

So seems like fans and shareholders aren't the only ones screwed over by them

I’m just baffled that we had agree to £100m (if correct) - we would have had to sell Richarlison, Pickford, and Gordon for that to have materialised. We are not exactly blessed with high market value players.

 

[Blue peter]

You're right about Brighton they are having a tremendous season and deservedly so, they also by the looks of it are a well run club but come the summer they will lose 3/4 of their best players and then will have to re-invent themselves meaning they are more likely to go backwards than forwards next season because they cant attract players to get to the next level.

As a business model they are great but as football club trying to achieve things or propel themselves to the next level and join the elite it wont ever happen.

There will always be highs and lows in a club’s development but it just shows what a well ran and capitalised club with a strategy can achieve

 

[Damo_1878]

I’m just baffled that we had agree to £100m (if correct) - we would have had to sell Richarlison, Pickford, and Gordon for that to have materialised. We are not exactly blessed with high market value players.

Because our losses were so high

 

[HalfTimeSayers]

Yes, it is a legal requirement but the club can elect to use any auditor they choose. Also, during the process of the creation of the audited accounts the auditors are in contact with the business and regularly seek clarification as to their interpretation. The two parties may have differing opinions and they negotiate a consensus and it is then accounted for and reported as agreed

Having audited a PL winning team (admittedly a long time ago) and spent the last 20 odd years having pretty high profile accounts that I am involved in producing pored over by auditors, believe me when I say if they disagree with your accounting treatment, they report it. Or they tell you outright that it’s a reportable item and thus you change your treatment. There is no agree to disagree. They win the argument. You can choose your auditors but they are no “help” at all regardless of the fact that they will claim they are there to help strengthen your processes and controls. It’s the company’s responsibility to produce accurate accounts. You are paying for them to test and scrutinise the accounts and rubber stamp them for the benefit of those who may read/interpret the accounts purely because you have to. Any guidance or advice consultancy is outside the scope of the audit, would be separately chargeable, and often you may choose a different firm altogether.

Obviously your auditors will be available for guidance on accounting treatment, but you don’t say “we want to bend these rules to the max so as to mislead the governing body of the sport/industry we are part of…what’s the best way of doing that?”

Audit firms do consultancy of course. But the statutory audit is not consultancy. It’s pretty much a war, you versus them. It’s not really I’m jesting, they are just doing a job you are obliged to have them do, but it feels that way.

 

[peteblue]

The Esk saying the likelihood is a points deduction if charged. A points deduction but maybe less than the 9 that Portsmouth got for going into administration.

I think the only thing we could maybe survive is a 5 point deduction - 10 points will sink us.

We will not get a points deduction this year. The PL are up to their necks in all of this and the legal challenges and ramifications would take years even if proven. The PL are covering their backs but many other clubs, Chelsea anyone, will not be happy for this to go forward either…..