Sheffield Wednesday charged by the EFL

[Friendsoffulham]

Sheffield Wednesday charged by the EFL with Misconduct and breach of its financial rules over a sale of the Hillsborough stadium which the club included in its accounting. Investigation was launched earlier this year.

[Burt]

More from our friends at the BBC:

https://www.bbc.com/sport/football/50418776

Sheffield Wednesday have been charged with misconduct by the English Football League after selling their Hillsborough stadium to owner Dejphon Chansiri to try to avoid breaking spending rules.

The Owls sold their ground for about £60m, helping them record a pre-tax profit of £2.5m for 2017-18.

The charges relate to "how and when" it was sold and its inclusion in the 2018 accounts when it was sold a year later.

Championship side Wednesday say they will "vigorously defend" the charges.

After a reviewing a "large number of documents" relating to the sale, the EFL said there was "sufficient evidence to justify issuing" the charges, which are to be considered by an independent disciplinary commission.

If found guilty, Wednesday face "any sanction" under EFL regulation 92.2, which range from a reprimand to a points deduction, financial penalty or possible expulsion from the league.

Why sell the stadium to club's owner?
Without the sale of the ground, Wednesday would have posted a pre-tax loss of £35.4m for the financial year covering the 2017-18 campaign.

That loss would have followed on from deficits of £9.8m and £20.8m in the previous two seasons.

Under the EFL's profitability and sustainability rules (previously known as financial fair play), Championship clubs are only allowed to lose £39m over three years.

So to avoid a heavy points deduction (for which the maximum penalty is 21) a substantial amount of money needed to be generated.

The Owls were not the first to sell their stadium in an effort to make a profit in recent seasons, Derby County, Aston Villa and Reading having also been scrutinised for similar transactions.

Recent history of financial stress for Owls
Wednesday owner Chansiri, who bought the club in 2015, said he was putting the club up for sale in December 2018. He admitted at the time that the club broke spending rules by "eight figures".

They spent the summer of 2018 under a transfer embargo and Chansiri warned that he expected to face a similar sanction in March if "problems" could not be "solved" by the time they submitted their accounts.

Last season, Birmingham City were deducted nine points by the EFL for breaching profitability and sustainability rules.

'Timing of sale would be cause for concern' - Analysis
Football finance expert Kieran Maguire, speaking to BBC Radio Sheffield

By itself, what Sheffield Wednesday have done is not actually a problem - it is compliant with EFL rules.

First of all, the timing of the sale appears curious. Sheffield Wednesday's accounts were until 31 July 2018 and there was no reference of ownership by the new company until around 12 months later with the land registry.

The timing issue does concern the EFL. They might be concerned that the transaction was accelerated into the 2018 accounts, which would give them cause for concern.

The next unusual thing was that normally, if you sell a property, you get the proceeds from the buyer straight away but, according to Wednesday's accounts, it's going to take a period of eight years for the full payment to be made.

The one final issue is the valuation of the stadium itself. Given that Reading sold their stadium for £27m and West Ham sold theirs for £40m, it does seem unusual for Sheffield Wednesday's stadium to be sold for £60m. The geographical location would suggest that it's not in a property area which is significantly higher than London or the home counties.

Wednesday will have to simply provide evidence that the transaction was undertaken at arm's length, at market prices, with a report by a surveyor and also evidence that the transaction had gone through - in the form perhaps of stamp duty being paid at the initial date of the transaction.

Provided they can generate that evidence then I think they would be able to mount a strong defence.

[One Martin Thomas]

Ohhhhh !!!!!!! Now go and get Derby

[Sgt Fulham]

Nice points deduction please

[Statto]

FFP just continues to smack of amateurism, opacity, inconsistency and incompetence

The whole idea that a club can sell their ground to another entity controlled by their chairman and treat the proceeds as revenue under FFP is ridiculous in itself. It just creates a massive loophole that clubs can use to circumvent FFP, and by incentivising them to sell their homes, it does that in a way that completely undermines FFP's intention of protecting clubs' long-term sustainability

And the issue here is, according to reports, that Land Registry documents show the transfer happening at a different date to the accounts. FFS, who cares? It's not at all unusual, or a particularly complex concept, for ownership and cash to be transferred and/or accounted for at different times. 

Based on the facts known so far, I will be astounded if Wednesday are deducted points, or sanctioned at all
 

[The Rational Fan]

FFP just continues to smack of amateurism, opacity, inconsistency and incompetence.

The whole idea that a club can sell their ground to another entity controlled by their chairman and treat the proceeds as revenue under FFP is ridiculous in itself. It just creates a massive loophole that clubs can use to circumvent FFP, and by incentivising them to sell their homes, it does that in a way that completely undermines FFP's intention of protecting clubs' long-term sustainability

And the issue here is, according to reports, that Land Registry documents show the transfer happening at a different date to the accounts. FFS, who cares? It's not at all unusual, or a particularly complex concept, for ownership and cash to be transferred and/or accounted for at different times. 

Based on the facts known so far, I will be astounded if Wednesday are deducted points, or sanctioned at all

You are incorrect, "Financial Fair Play" is a professional, consistent and competent framework that ensures that "clubs with large revenues" compete fairly  with "clubs with small revenues". The definition of fair, according to the large clubs, is the clubs with large revenue must be able to both a) make a profit and b) spend more money on players than small revenue clubs.

In psychological, when trying to judge a persons (or organizations) true motivations, one theory is to judge a person's motivations by their actions and not by their stated motivations (ie the bullpoo that they say motivates them).

FFP is all about stopping small clubs spending too much on players, rather than being about protecting the fans of small clubs. As FFP is only about protecting "Big Clubs", preventing small clubs from selling their grounds and keeping their clubs sustainable is not something FFP needs to address.

[Twig]

FFP just continues to smack of amateurism, opacity, inconsistency and incompetence

The whole idea that a club can sell their ground to another entity controlled by their chairman and treat the proceeds as revenue under FFP is ridiculous in itself. It just creates a massive loophole that clubs can use to circumvent FFP, and by incentivising them to sell their homes, it does that in a way that completely undermines FFP's intention of protecting clubs' long-term sustainability

And the issue here is, according to reports, that Land Registry documents show the transfer happening at a different date to the accounts. FFS, who cares? It's not at all unusual, or a particularly complex concept, for ownership and cash to be transferred and/or accounted for at different times. 

Based on the facts known so far, I will be astounded if Wednesday are deducted points, or sanctioned at all
 

Tend to agree with the first point but not the second. It's not just the timing of the land registry filing vs the inclusion in the 17/18 accounts.  They haven't been (and won't be) paid yet and the valuation is ludicrous. Obviously a fiddle to avoid FFP sanction.

[BigbadBillyMcKinley]

When the EFL fine a club for not making enough money, does that fine have to be included in the next years financial review?
And then, if it is and the club loses more money, do the EFL the fine them again? Thus creating a sort of financial vacuum and vicious cycle of money losing.

[Statto]

It's not just the timing of the land registry filing vs the inclusion in the 17/18 accounts.  They haven't been (and won't be) paid yet and the valuation is ludicrous. Obviously a fiddle to avoid FFP sanction.

But as to the timing, whilst I'm not an accountant, my understanding is that, for example, when a club sells a player and the fee is payable over several years, that's accounted for immediately. I'm sure there are lots of similar examples, in football and more generally.

If it's the amount that's being challenged, fine. But only the BBC report seems to suggest that and none of thd other press coverage I've read. I've very little confidence in BBC football journalism; they're well out of the loop these days. The EFL statement says "The charges are in respect of a number of allegations regarding the process of how and when the stadium was sold and the inclusion of the profits in the 2017/18 accounts." To me that seems to focus on timing and that's what most of the press reports are saying.

[toshes mate]

I believe this is one of those areas where the EFL, which is run by the owners of EFL clubs, see their own sets of rules run to the very margins of the 'fairness for everyone' implied in regulations, such as FFP.  Those margins of the regulations are being stretched to the limits of sensibility and beyond, as we saw with Bury, and now would seem an appropriate time or the EFL to change their structure so that the rule book writing and implementation is controlled independently of the owners. 

At present we see pedantry where there should be instant and obvious clarity and whilst there is always welcome room for creative accountancy to keep clubs afloat, there should be no room and no necessity for any clubs to cheat the system by leaving lawyers to clear up the messes and seemingly avoid scandal.  I really dislike this age when messengers are criticised and sometimes ostracised for finding suspicious activity, when the focus should be on why the rules are so easily malleable and/or unclear as to meaning and usage.

Are the real culprits those who made the fair play rules up and made them just ambiguous enough for the craftier clubs to find a new meaning for the word 'fair'?  Meanings should not be negotiable.   

[Spirit of 2000]

FFP just continues to smack of amateurism, opacity, inconsistency and incompetence.

The whole idea that a club can sell their ground to another entity controlled by their chairman and treat the proceeds as revenue under FFP is ridiculous in itself. It just creates a massive loophole that clubs can use to circumvent FFP, and by incentivising them to sell their homes, it does that in a way that completely undermines FFP's intention of protecting clubs' long-term sustainability

And the issue here is, according to reports, that Land Registry documents show the transfer happening at a different date to the accounts. FFS, who cares? It's not at all unusual, or a particularly complex concept, for ownership and cash to be transferred and/or accounted for at different times. 

Based on the facts known so far, I will be astounded if Wednesday are deducted points, or sanctioned at all

You are incorrect, "Financial Fair Play" is a professional, consistent and competent framework that ensures that "clubs with large revenues" compete fairly  with "clubs with small revenues". The definition of fair, according to the large clubs, is the clubs with large revenue must be able to both a) make a profit and b) spend more money on players than small revenue clubs.

In psychological, when trying to judge a persons (or organizations) true motivations, one theory is to judge a person's motivations by their actions and not by their stated motivations (ie the bullpoo that they say motivates them).

FFP is all about stopping small clubs spending too much on players, rather than being about protecting the fans of small clubs. As FFP is only about protecting "Big Clubs", preventing small clubs from selling their grounds and keeping their clubs sustainable is not something FFP needs to address.

Exactly - God forbid a Jack Walker / Blackburn rovers winning the premiership again. Ditto who wants to see an Al Fayed & Keegan (then Tigana)  lead Fulham blitzing through the 3rd and 2nd tiers to go onto a long and at times successful top tier spell - the longest at that level in the clubs history. Not going to happen under FFP. Keep Liverpool, Man U, Man City, Arsenal, Spurs, Chelsea etc etc at the top and there they stay with little to challenge the status quo.

[MJG]

I like the idea of FFP and do think something is required, although since its launch its now turned into a patchwork of rules. Its needs a review to reset its rules.

On the ablity of an invester to back a club there needs to be provision for overspending but exactly how that works its up for discussion.

We are lucky we went from one big investor to another.....but at £200M plus debt/investment we would be in trouble if someone didnt come along.

[bill taylors apprentice]

I don't understand all the financial ramifications involved with FFP but surely the aim should be to ensure clubs do not incur debts that threaten their existence and undermine the integrity of the league?

But if a wealthy benefactor wants to spend his money on a clubs team as well as the infrastructure why shouldn't he be able to do so?

I'm sure the likes of MAF didn't just write a cheque every time a purchase was made and some kind of advantageous money moving scheme was in play but if genuine backers can show the money exists then why not allow them to spend it?

The problem for me is the governing bodies inability to manage this issue correctly and therefore we have this system that limits small and medium sized clubs from challenging the elite few

[SuffolkWhite]

I think your right Bill, If Khan or any owner wants to splash the cash themselves at no financial cost to the Club then what's the problem? I can see that selling a football ground to gain money to spend on the team could be dangerous as it may be sold on to pay debts at some point!?

[MJG]

I don't understand all the financial ramifications involved with FFP but surely the aim should be to ensure clubs do not incur debts that threaten their existence and undermine the integrity of the league?

But if a wealthy benefactor wants to spend his money on a clubs team as well as the infrastructure why shouldn't he be able to do so?

I'm sure the likes of MAF didn't just write a cheque every time a purchase was made and some kind of advantageous money moving scheme was in play but if genuine backers can show the money exists then why not allow them to spend it?

The problem for me is the governing bodies inability to manage this issue correctly and therefore we have this system that limits small and medium sized clubs from challenging the elite few

'infrastructure' such as ground and training facilities are not included in ffp spending rules.

[Spirit of 2000]

If & when Leeds United are promoted they will survive given decent management and become one of the elite again, they are exactly the sort of club the premiership want.

Bournemouth on the other hand will struggle badly if they are relegated and would have a very small window to go back up before they implode and have to sell any player of any real worth, the EPL don't really want teams like Bournemouth (or Fulham) - they certainly don't want another crazy gang Wimbledon scenario crashing their party. FFP is great at trying to filter the desirables & undesirables over a period of time.

[toshes mate]

"Financial Fair Play" is a professional, consistent and competent framework that ensures that "clubs with large revenues" compete fairly  with "clubs with small revenues". The definition of fair, according to the large clubs, is the clubs with large revenue must be able to both a) make a profit and b) spend more money on players than small revenue clubs.

In psychological, when trying to judge a persons (or organizations) true motivations, one theory is to judge a person's motivations by their actions and not by their stated motivations (ie the bullpoo that they say motivates them).

FFP is all about stopping small clubs spending too much on players, rather than being about protecting the fans of small clubs. As FFP is only about protecting "Big Clubs", preventing small clubs from selling their grounds and keeping their clubs sustainable is not something FFP needs to address.

It's hard to disagree with any of this, because FFP is a protection racket designed by big fish who do not want to lose their ability to swallow up all the minnows rather than be exposed to a less certain environment where the hunter can become the hunted. 

My own feeling about FFP is to question why it exists, and why the EFL believes it is better having these rules rather than having nothing or something else.  I suspect the answer is in the kidology, the bluffing and the deception, that somehow these financial rules are fairer than the case of having a multi-billionaire come along and build a huger club than the one already ruling the roost in any particular location and slowly but surely upsetting an existing monopoly or pecking order.  In other words is FFP anti-competition rather than pro-competition?  A huge shake-up of the EFL with greater democratic influence from smaller clubs might provide a better way of keeping football both honest and competitive in the strict sense of word.   
   

[Statto]

I don't understand all the financial ramifications involved with FFP but surely the aim should be to ensure clubs do not incur debts that threaten their existence and undermine the integrity of the league?

But if a wealthy benefactor wants to spend his money on a clubs team as well as the infrastructure why shouldn't he be able to do so?

I'm sure the likes of MAF didn't just write a cheque every time a purchase was made and some kind of advantageous money moving scheme was in play but if genuine backers can show the money exists then why not allow them to spend it?

The problem for me is the governing bodies inability to manage this issue correctly and therefore we have this system that limits small and medium sized clubs from challenging the elite few

Indeed

I'm no expert but I'm sure it wouldn't be hard to improve greatly on the current system

There are precedents to look at, like the capital and liquidity requirements for banks, put together by far cleverer people than the EFL will even attract into their workforce

Or why not make it a working capital requirement rather than limiting losses? Ie every club has to have an auditor certify every year that they've enough money to keep their business going for the next 5yrs, taking into account their wage bill etc

Then the other big issue for me is transparency. All the details right down to the accounting standards etc should be published.

[BigbadBillyMcKinley]

And, as if by magic......

https://www.google.com/amp/s/www.thesun.co.uk/sport/football/10348318/man-city-avoid-champions-league-ban-financial-fair-play-uefa/amp/

[bill taylors apprentice]

I don't understand all the financial ramifications involved with FFP but surely the aim should be to ensure clubs do not incur debts that threaten their existence and undermine the integrity of the league?

But if a wealthy benefactor wants to spend his money on a clubs team as well as the infrastructure why shouldn't he be able to do so?

I'm sure the likes of MAF didn't just write a cheque every time a purchase was made and some kind of advantageous money moving scheme was in play but if genuine backers can show the money exists then why not allow them to spend it?

The problem for me is the governing bodies inability to manage this issue correctly and therefore we have this system that limits small and medium sized clubs from challenging the elite few

'infrastructure' such as ground and training facilities are not included in ffp spending rules.

I do understand that but just wanted to say, while there must be many ways of financing capital spending, if the monies there to maintain or improve the fixed assets then why not the team?
Within sensible limits of course.