SWFC Accounts 31 July 2018

[myHero]

I don't like raking up old ground, but there seems to be a lot of it going on even though on the face of it a 12 point deduction next season is better than most fans had hoped for.

 

So for the purpose of clarity to all, I think it will help if we remember the facts of the situation regarding the SWFC Ltd accounts for 31st of July 2018

https://www.swfc.co.uk/news/2019/july/annual-accounts-published_2018/

 

- Plan A was for Mr Chansiri, Paxman and Carlos to "Lump On" chasing promotion with an aging team of football mercenaries. That gamble failed within the three years they allowed themselves to succeed.

- Plan B was for Mr Chansiri and the self proclaimed "Lionel Messi of Footbal Law" to try and extricate us from the mess we were in after Plan A failed. They appear to have acheived a reasonably good result, based on our circumstances after the failure of Plan A.

- Mr Chansiri is the only Director and sole Shareholder, and one single Major Creditor of SWFC.

- Mr C signed off the accounts in June 2019.

- Before the verdict he was personally cleared of any wrong doing

 

 

- The Auditors signed off the accounts for the use of the company's members only (Mr Chansiri)

- The Auditor does not "accept or assume responsibility to anyone other than the company" (Mr Chansiri)

 

 

- The sale of the ground allowed us to record a profit in the accounts to July 2018.

- SWFC had lost £20m the year before on football mercenary and agent fees.

- No Tax was avoided, so there is no case to answer to HMRC

 

 

- The £60m sale of Hillsborough is clearly a vehicle for Mr Chansiri to "fund" the club

- SWFC are only a "going concern" because Mr Chansiri states his confidence in each years accounts that SWFC will have  "adequate resources to continue in operational existance for the forseable future".

 

 

The day Mr Chansiri does not sign off SWFC accounts as a "going concern" is the day SWFC go into administration, and get another 12 point deduction (As happend to Wigan recently) and head into footballing obscurity for another generation of fans. Thankfully, there is no sign of this happening

 

Another interesting point is you would expect the SWFC accounts for July 2019 to be availble soon based on last years reporting timetable. Maybe thats what the delay was for, and the independat panel have already seen our provisionaal accounts for that period.

 

Lets all move on for now: Yes its been a debacle, yes the decsion could get turned over in the next two weeks, but it probably won't. Its an independant pannel, and they have taken enough time to deliberate on the decision, so its unlikely they are going to admit they got it wrong. There also appears to have been a precendent set for our punishment with what happend with Birmingham, under Monk, two seasons ago.

 

I dont think its time for further recriminations over the EFL / self imposed debacle that has been the last three years.

 

Lets see where we are at the close of the transfer window, as that is going to give us a reasonable judgement of where Chasiri is taking us next.

 

We all want whats best for SWFC, and recruiting the right type of player with the right mentality is what is going to bring us success. Lets see who they bring in.

 

[McRightSide]

What I’m mainly interested in is how the ground sale shows up now.

 

I assume that what’s essentially happened is that the transaction date has been rejected, therefore it’s been removed from consideration for that year and the relevant penalty applied.

 

If so, then surely it will appear again in the latest version and therefore plays a bigger role in future years - incl the year of the Bruce compo, Joao sale and high earner clear out.

 

That must surely be in the clubs mind when it comes to the appeal. Given that we avoided relegation with the punishment I can only now imagine that the appeal would be to reduce the -12 rather than to actually overhaul to total verdict. 
 

As painful as a -12 start would be it actually could put us in a more favourable financial position (in P&S terms) than the original attempted sale date of the stadium.

 

So...I can imagine an appeal isn’t a given. Either way I would run it right up to the 14th day to bring it as close as possible to the new season to reduce chance of a re-do of the timing of the punishment 

 

If the possibility of a -12 this season could come from appeal then I would accept the verdict and the favourable financial position this affords us and crack on with signing some decent players

[myHero]

1 minute ago, McRightSide said:

What I’m mainly interested in is how the ground sale shows up now.

 

I assume that what’s essentially happened is that the transaction date has been rejected, therefore it’s been removed from consideration for that year and the relevant penalty applied.

 

If so, then surely it will appear again in the latest version and therefore plays a bigger role in future years - incl the year of the Bruce compo, Joao sale and high earner clear out.

 

That must surely be in the clubs mind when it comes to the appeal. Given that we avoided relegation with the punishment I can only now imagine that the appeal would be to reduce the -12 rather than to actually overhaul to total verdict. 
 

As painful as a -12 start would be it actually could put us in a more favourable financial position (in P&S terms) than the original attempted sale date of the stadium.

 

So...I can imagine an appeal isn’t a given. Either way I would run it right up to the 14th day to bring it as close as possible to the new season to reduce chance of a re-do of the timing of the punishment 

 

If the possibility of a -12 this season could come from appeal then I would accept the verdict and the favourable financial position this affords us and crack on with signing some decent players

The accounts are published for the Shareholders. They have been filed at Companies House, over a year ago now. The EFL and its Independant pannel are not an accounting body. They dispute our accounts in relation to their rules.

 

Maybe you are right, in EFL terms we have just recorded a massive profit in the 2017-2019 season. Lets see when SWFC publish the accounts for July 2019, you would hope soon.

 

I think you would have to adjust these accounts to see the EFL profit or loss for that season though. I would be surprised if  the July 2018 accounts are restated at Companies House.

[McRightSide]

1 minute ago, Ozymandias Owl said:

The accounts are published for the Shareholders. They have been filed at Companies House, over a year ago now. The EFL and its Independant pannel are not an accounting body. They dispute our accounts in relation to their rules.

 

Maybe you are right, in EFL terms we have just recorded a massive profit in the 2017-2019 season. Lets see when SWFC publish the accounts for July 2019, you would hope soon.

 

I think you would have to adjust these accounts to see the EFL profit or loss for that season though. I would be surprised if  the July 2018 accounts are restated at Companies House.

Yes sure...but what I mean is - surely if the transaction is accepted in general, but not accepted in those accounts (in P&S terms) then it has to be considered and accepted in these ones.

 

It would be insane to let a guy spend 60m and say no, sorry...doesn’t count 

[Brad_owl]

As above, the stadium sale now being moved into the following years accounts now might move us forward faster financially. If we can stay up next year then we could have a good financial platform for a good push. 

 

So by a complete turn of fate this could work to our advantage IF we can stay up. 

 

The disadvantage is it does nothing to help player recruitment.

 

[Guest mkowl]

3 minutes ago, McRightSide said:

Yes sure...but what I mean is - surely if the transaction is accepted in general, but not accepted in those accounts (in P&S terms) then it has to be considered and accepted in these ones.

 

It would be insane to let a guy spend 60m and say no, sorry...doesn’t count 

Certainly my issue with this. 

 

I am used to dealing with HMRC and the first rule is that the accounts as prepared under UK GAAP is the starting point. Enshrined in tax law

 

There are then adjustments which we all understand to do but HMRC will struggle to override the start line.

 

The panel seems to have done this and for now does not sit comfortably

[Guest]

3 minutes ago, mkowl said:

Certainly my issue with this. 

 

I am used to dealing with HMRC and the first rule is that the accounts as prepared under UK GAAP is the starting point. Enshrined in tax law

 

There are then adjustments which we all understand to do but HMRC will struggle to override the start line.

 

The panel seems to have done this and for now does not sit comfortably

 

But do we know if those accounts are under review elsewhere? For all we know they might be? 

 

Edited August 1, 2020 by Guest

[Guest]

7 minutes ago, Brad_owl said:

As above, the stadium sale now being moved into the following years accounts now might move us forward faster financially. If we can stay up next year then we could have a good financial platform for a good push. 

 

So by a complete turn of fate this could work to our advantage IF we can stay up. 

 

The disadvantage is it does nothing to help player recruitment.

 

 

Yep, that's my understanding, that the EFL have registered us as breaching in the 3 years to 2017-18 because the stadium sale is not attributable to that period, not that the stadium sale itself was not allowed.

 

As you say, this would then surely make the stadium sale allowable in 2018-19, which depending on whether other expenses such as salaries are significantly more or less than in 2017-18, would potentially leave us with a small profit in 2018-19.

 

However, we lost around £20M in 2016-17 and £35M in 2017-18. Not all of this will be relevant to P&S as some losses are allowed which are outside the scope of P&S but most will be. 

Lets say we lost £15M in P&S terms in 2017 and £25-30M in 2018 - that still puts us over in the 3 years to 2018-19 unless we made a profit of £5-10M or more in the upcoming accounts - so hardly a good financial platform to work from in relation to the 3-year rolling accounts rules of P&S.

 

 

 

[Guest mkowl]

19 minutes ago, hirstyboywonder said:

 

But do we know if those accounts are under review elsewhere? For all we know they might be? 

 

Could be who knows - that would not be public domain though unless it went to a tax tribunal

[Plonk]

MK. You are the voice of accountancy reason. Any idea what happens with the sale now?

[Guest]

2 minutes ago, mkowl said:

Could be who knows - that would not be public domain though unless it went to a tax tribunal

 

I know it wouldn't be in the public domain mate which is why I said for all we know, nobody knows either way on this do they. I suppose what you are saying is the EFL shouldn't know whether this is the case either so it is not something they could refer to?

In reality I would imagine the tax authorities wouldn't be likely to contest this specifically as it has been signed off by audited accountants and this specific point would not affect any tax treatment anyway?

[Guest mkowl]

1 hour ago, Plonk said:

MK. You are the voice of accountancy reason. Any idea what happens with the sale now?

It is still a sale that has to be put through the accounts. But got to remember the EFL panel has zero authority in the real world in making us change the figures already filed

 

But on the presumption we will do so, its a prior year adjustment to the 2018 figures and the transaction would then be shown in 2019 in exactly the same way. So you take it out of one year 2018 

 

Cr Debtors

Dr Fixed assets

Dr Profit on sale 

 

Then do the flip to put it back in 2019

 

Take about 10 minutes 

 

 

 

 

 

 

 

[myHero]

2 hours ago, mkowl said:

Could be who knows - that would not be public domain though unless it went to a tax tribunal

 

Why would the HMRC want to investigate Mr Chansiri for reporting a profit on sale of an Asset a year too early? Its not like he's paid the money for the sale of the stadium into Harry Rednapp's dog's bank account... I can't rememeber the faux outrage when Madaric was dragging SWFCs name through the courts by asociation then.

 

[myHero]

2 hours ago, Brad_owl said:

As above, the stadium sale now being moved into the following years accounts now might move us forward faster financially. If we can stay up next year then we could have a good financial platform for a good push. 

 

So by a complete turn of fate this could work to our advantage IF we can stay up. 

 

The disadvantage is it does nothing to help player recruitment.

 

Potentially it has helped recruitment. It will help sort the wheat from the chaff.

 

We dont want players who dont fancy the fight. The Playoffs are still well within our reach, if we perform well enough. We have regularly had spell where our players have gone missing for four games (Twelve points) in the past, and still been in play off contention.

[Guest mkowl]

Just now, Ozymandias Owl said:

 

Why would the HMRC want to investigate Mr Chansiri for reporting a profit on sale of an Asset a year too early? Its not like he's paid the money for the sale of the stadium into Harry Rednapp's dog's bank account... I can't rememeber the faux outrage when Madaric was dragging SWFCs name through the courts by asociation then.

 

HMRC work on risk led basis - the fact that something is brought to their intention and it is a material adjustment - potentially - then it raises the prospect of other potential errors or systematic errors within the compilation of the accounts 

 

So in itself probably not but they might be interested in the web of companies, the HK holding company, let's have an analysis of consultancy and agents fees, let's check tax residency, you know what lets review PAYE and VAT at the same time.

 

 

[myHero]

2 hours ago, McRightSide said:

Yes sure...but what I mean is - surely if the transaction is accepted in general, but not accepted in those accounts (in P&S terms) then it has to be considered and accepted in these ones.

 

It would be insane to let a guy spend 60m and say no, sorry...doesn’t count 

 

I think you are right. There is no mention they don't think Hillsborough is worth £60m, just that its in the wrong years accounts as far as their rules are concerned. Three cheers to the Lionel Messi of sports law!!!

 

https://www.efl.com/news/2020/july/efl-statement-sheffield-wednesday-verdict/

 

Bottom line is, I suspect the £38m profit on sale of Hillsborough, less this years losses, are sat in the SWFC bank account...

 

[myHero]

3 minutes ago, mkowl said:

HMRC work on risk led basis - the fact that something is brought to their intention and it is a material adjustment - potentially - then it raises the prospect of other potential errors or systematic errors within the compilation of the accounts 

 

So in itself probably not but they might be interested in the web of companies, the HK holding company, let's have an analysis of consultancy and agents fees, let's check tax residency, you know what lets review PAYE and VAT at the same time.

 

 

That all sounds reasonable. Lets not assume Mr Chansiri has anything to hide though. He's been quite open (brazen) about the sale of Hillsborough, he's not hidden anything, not avoided any tax. If there is tax to pay, it would have been paid early.

[Guest mkowl]

4 minutes ago, Ozymandias Owl said:

That all sounds reasonable. Lets not assume Mr Chansiri has anything to hide though. He's been quite open (brazen) about the sale of Hillsborough, he's not hidden anything, not avoided any tax. If there is tax to pay, it would have been paid early.

When it comes to football clubs they are much more interested in the payments out to people that's for sure 

[Miffed]

11 minutes ago, Ozymandias Owl said:

 

I think you are right. There is no mention they don't think Hillsborough is worth £60m, just that its in the wrong years accounts as far as their rules are concerned. Three cheers to the Lionel Messi of sports law!!!

 

https://www.efl.com/news/2020/july/efl-statement-sheffield-wednesday-verdict/

 

Bottom line is, I suspect the £38m profit on sale of Hillsborough, less this years losses, are sat in the SWFC bank account...

 

Meaning in a couple of seasons Chansiri might have the option of all or bust for promotion again but this time using the stadium money. 

Edited August 1, 2020 by Miffed

[Guest mkowl]

10 minutes ago, Ozymandias Owl said:

 

I think you are right. There is no mention they don't think Hillsborough is worth £60m, just that its in the wrong years accounts as far as their rules are concerned. Three cheers to the Lionel Messi of sports law!!!

 

https://www.efl.com/news/2020/july/efl-statement-sheffield-wednesday-verdict/

 

Bottom line is, I suspect the £38m profit on sale of Hillsborough, less this years losses, are sat in the SWFC bank account...

 

Well it was going to be paid in 8 annual instalments of 7.5m - so it may be in a bank account just not ours