BREAKING NEWS!! EFL -12 Points - Full Written Explanation Thread

[Sambo89]

So if Wednesday won the appeal in autumn, we would start the season on -12 and get them reinstated mid season?

[Emerson Thome]

1 hour ago, Jimbob1867 said:

FFS.  Posted this in the wrong thread again.  Anyway here it is:

 

These posts are pretty long but for those wanting to fully understand the judgment hopefully it’s worth the time.
 

So I’ve had chance to read the judgment fully and reflect on what I said above where I had just flicked through it.  

Anyway, conclusion is: exactly what I said above. Absolute poo show. 
 

A few points to clarify/raise:

 

- it wasn’t the case as I said in the previous post that the auditors signed off the accounts on the basis of the Instructed Assumption ie that there was a binding contract (the heads of terms) in place on 15 July. They signed it off based on their understanding that there was a binding contract but without enquiring as to whether actually such a thing existed. This reflects badly on them. It’s not the case they said - “Wednesday, here’s your accounts which are fine as long as you have that contract”. They just made vague enquiries about the contract without checking it existed and signed off the accounts which it appears made no reference to them being subject to the contract being in place. 
 

The Instructed Assumption appears to be something given to John Pryor, the audit expert. Basically, it seems he was told for the purpose of giving his expert evidence: “if you assume the Instructed Assumption is correct [ie there was a binding heads of terms dated 15 July in place] what would your view be on whether Wednesday breached the rules? He concluded no they wouldn’t - but the evidence then went on to show we didn’t have such a contract (it was probably not binding due to uncertainty about the price and it was signed on 15 August and backdated to 15 July which you can’t do). 
 

- I’m struggling to understand and accepting the total fizzing apathy and tardiness demonstrated by the club in sorting this out. As early as 25 April we told the EFL we were planning a sale by financial year end (which was 31 May at the time and which we extended twice by a month each time, presumably to buy us time to sort out the sale) yet we failed to deal with it. For instance, at the time when our financial year end was 30 June (by when the sale had to be agreed) and hadn’t yet being extended to 31 July, para 31 notes: “not much happened as between the Club and the EFL during June”. 

 

- also the fact we appeared to take NO legal advice on such a crucial issue is mind boggling. From para 66: “neither the Club nor the auditors took any informed legal advice about how an agreement for sale of the stadium to DC that was legally binding and effective before 31 July 2018 could be fashioned (if it were legally possible) after 31 July 2018”. [Free legal tip of the day - it can’t.]. The QCs we employed came up with some arguments to the contrary of which the panel said in para 67: “While the Commission cannot say...that the arguments are completely untenable...they are sufficiently remote from main-stream property law thinking as to not have reflected the advice the Club...would probably have received...at the time...”. 
 

- there is some legal chicanery from our high flying QCs about how, if the auditors shouldn’t have signed off on the accounts because there was no binding contract re the ground sale, meaning they were not in accordance with financial reporting standards, then those accounts should not be classed as Annual Accounts and therefore the EFL can’t bring disciplinary action until we have Annual Accounts . Nice try. Not having a go at counsel - they were just playing the hand they were dealt but it just shows the cards were covered in something icky and smelly. 
 

- I have to say I think the panel comes out with a great deal of credit from this. Their judgment is very balanced, detailed and they seem unswayed by some of the more dramatic actions on both sides. I actually think they gave us a bit of a pass on charge 2. It’s clear we backdated a contract which you simply cannot do, but then I guess we didn’t conceal it so looking at the charge the EFL brought technically we are not guilty. It hardly hides how poor our conduct was though. 
 

- a controversial point to end on - setting aside the reason why the EFL decided to revisit this 10 months after the event, at the time we were considering the sale they appear to have been helpful. They basically told us what was required and never made any noises along the lines of the sale of the ground itself being problematic. They merely specified perfectly reasonable requirements to put in place to show the sale occurred in 17/18 financial year. Quite simply we failed to do that. 
 

- the only ground for appeal I can see is that we argue 12 points is too many and seek a reduction. I can’t see any basis on which the deduction would be completely overturned. To seek a reduction we would have to argue that the fact the guidance was not in force at the time of the offence, ie which set out how many points are deducted depending on how far over the FFP limit you are (£15m or more for 12 points; we were at £18m) means we should get less. Unless there are other similar cases with materially lower deductions I can’t see how we have a chance. I’m not aware there are any.
 

As mentioned before, all of this smacks of there being no control or management of the club. It’s the clearest indication yet of the underlying problems many on here have suspected for some time. 

Right I’m all EFL’d out. We signed any strikers yet?

 

There's some good points in here, and I agree with the general point that this doesn't reflect well on the people running the club.

 

But you seem to have missed the point that it was the EFL (old management) egging us on to backdate the contracts. The only reason SWFC tried to backdate the contracts was as a result of the meeting in August with the EFL and the emails sent after that in August. Basically until that meeting we thought we had missed that loophole and it was too late, but the EFL then gave us assurances we could do it if we made the paperwork fit.

 

That's why the Charge 2 was laughed out of court - because the EFL then turned round a year later and tried to investigate us for doing something they themselves had suggested we do (they - deliberately it seems - didn't keep any official notes of the meeting, but this can clearly be inferred from the emails and context). That explains why Chansiri and co did this in such a guileless way, they weren't trying to fool the EFL, the EFL already knew.

 

[Guest mkowl]

7 minutes ago, Wakefield owl said:

It’s fairly clear that the panel are staggered by the level of incompetence shown by both parties.

Not the only ones

[Guest Grandad]

2 minutes ago, Emerson Thome said:

 

There's some good points in here, and I agree with the general point that this doesn't reflect well on the people running the club.

 

But you seem to have missed the point that it was the EFL (old management) egging us on to backdate the contracts. The only reason SWFC tried to backdate the contracts was as a result of the meeting in August with the EFL and the emails sent after that in August. Basically until that meeting we thought we had missed that loophole and it was too late, but the EFL then gave us assurances we could do it if we made the paperwork fit.

 

That's why the Charge 2 was laughed out of court - because the EFL then turned round a year later and tried to investigate us for doing something they themselves had suggested we do (they - deliberately it seems - didn't keep any official notes of the meeting, but this can clearly be inferred from the emails and context). That explains why Chansiri and co did this in such a guileless way, they weren't trying to fool the EFL, the EFL already knew.

 

You're literally making it up as you go along

[Emerson Thome]

8 minutes ago, Sambo89 said:

So if Wednesday won the appeal in autumn, we would start the season on -12 and get them reinstated mid season?

 

If it got downgraded to -6, the EFL would probably file a case arguing the 6 points given back should be added to the 2019-20 season total and keep -12 for this year as that would mean there was less danger of us getting promoted.

[Guest mkowl]

Will Gibson have a pop at the EFL if he realises they were trying to help clubs circumvent the rules.

 

I still don't get the delay between the August exchanges with the EFL and the deal being put together to "sell" the stadium.

 

Anyway I referred my brother in law (an auditor) to para 51 the Heads of Term. He was stunned to say the least 

[dr. benway]

14 minutes ago, Wakefield owl said:

It’s fairly clear that the panel are staggered by the level of incompetence shown by both parties.

They’ve not been involved with us that long so it’s understandable

 

 

[Animis]

7 minutes ago, mkowl said:

Will Gibson have a pop at the EFL if he realises they were trying to help clubs circumvent the rules.

 

I still don't get the delay between the August exchanges with the EFL and the deal being put together to "sell" the stadium.

 

Anyway I referred my brother in law (an auditor) to para 51 the Heads of Term. He was stunned to say the least 

 

What I can't understand is why we didn't have a plan up until the end of July/August 18 when it was clear for probably 6-9 months that we would breach P&S. 

 

In the end, we may have thought we were going to be fined in August 18, and thought we'll give the ground sale a whirl but weren't convinced or had the cash to do it. That may explain the crappy HoTs; the last minute discussions as an option, and the delay till May 19 when the 'sale' was actually announced. I may be wrong, but it seems that a point deduction scale wasn't formally adopted by the EFL until the Birmingham City case findings in March 19, and maybe SWFC were spurred into action?

[wellbeaten-the-owl]

17 minutes ago, Emerson Thome said:

 

There's some good points in here, and I agree with the general point that this doesn't reflect well on the people running the club.

 

But you seem to have missed the point that it was the EFL (old management) egging us on to backdate the contracts. The only reason SWFC tried to backdate the contracts was as a result of the meeting in August with the EFL and the emails sent after that in August. Basically until that meeting we thought we had missed that loophole and it was too late, but the EFL then gave us assurances we could do it if we made the paperwork fit.

 

That's why the Charge 2 was laughed out of court - because the EFL then turned round a year later and tried to investigate us for doing something they themselves had suggested we do (they - deliberately it seems - didn't keep any official notes of the meeting, but this can clearly be inferred from the emails and context). That explains why Chansiri and co did this in such a guileless way, they weren't trying to fool the EFL, the EFL already knew.

 

It's staggering that meetings between the clubs and the EFL don't have Minutes taken and each party agree a copy.

Complete lack of professionalism by the EFL

[Jimbob1867]

14 minutes ago, Emerson Thome said:

 

There's some good points in here, and I agree with the general point that this doesn't reflect well on the people running the club.

 

But you seem to have missed the point that it was the EFL (old management) egging us on to backdate the contracts. The only reason SWFC tried to backdate the contracts was as a result of the meeting in August with the EFL and the emails sent after that in August. Basically until that meeting we thought we had missed that loophole and it was too late, but the EFL then gave us assurances we could do it if we made the paperwork fit.

 

That's why the Charge 2 was laughed out of court - because the EFL then turned round a year later and tried to investigate us for doing something they themselves had suggested we do (they - deliberately it seems - didn't keep any official notes of the meeting, but this can clearly be inferred from the emails and context). That explains why Chansiri and co did this in such a guileless way, they weren't trying to fool the EFL, the EFL already knew.

 

Hmm don’t quite agree with this. They weren’t “egging us on” to backdate contracts. They were saying that if we could demonstrate in August there was a binding contract from July to sell the club then that would be enough for them. But we couldn’t show that ultimately because we were a bit rubbish. Charge 2 was dismissed partly because they didn’t investigate very well but partly because it was clear we did not deliberately mislead them because although we backdated the agreement we totally fessed up to it on many occasions. So that’s all totally fine

[wellbeaten-the-owl]

2 minutes ago, Animis said:

 

What I can't understand is why we didn't have a plan up until the end of July/August 18 when it was clear for probably 6-9 months that we would breach P&S. 

 

In the end, we may have thought we were going to be fined in August 18, and thought we'll give the ground sale a whirl but weren't convinced or had the cash to do it. That may explain the crappy HoTs; the last minute discussions as an option, and the delay till May 19 when the 'sale' was actually announced. I may be wrong, but it seems that a point deduction scale wasn't formally adopted by the EFL until the Birmingham City case findings in March 19, and maybe SWFC were spurred into action?

Sounded like stadium sale was the plan in may 2018 but club had difficulty getting a valuation and getting out of EFL what they would need to do around the transaction to comply. Hence initial extension to 30 June 2018 then due her to July 2018.  Didn't help club had no Idea what the potential punishment would be for breaching the requirements.

It's truly staggering that after 3 years of the p&s regulations being in place that there was no guidelines for what would happen if you breached i.e points deduction, fines etc

[Flat Owl]

4 hours ago, ChinaOwl said:

 

Aye, but my post wasn't meant to be serious.

 

I was just referring to a previous post talking about sending messages by carrier pigeons.

 

I know ...

[Emerson Thome]

31 minutes ago, Grandad said:

You're literally making it up as you go along

 

It's all there in black and white, mate. You can read it below if you like.

 

James Karren, the Financial Controller of the EFL literally even sent a letter (Annex 1 to the verdict) setting out to the club how they could exploit the loophole. If you don't think the EFL suggested the backdating in the meeting on 3rd August, why, when Katrien Meyer emailed them to follow up on the meeting on the Monday "As discussed...." with that Annex 1 attached did they not put her straight?

 

 

 

 

 

 

 

 

 

 

[Guest]

27 minutes ago, mkowl said:

Will Gibson have a pop at the EFL if he realises they were trying to help clubs circumvent the rules.

 

I still don't get the delay between the August exchanges with the EFL and the deal being put together to "sell" the stadium.

 

Anyway I referred my brother in law (an auditor) to para 51 the Heads of Term. He was stunned to say the least 

 

An auditor and an accountant in the family, bet Christmas is a barrel of laughs round yours! 

[WalthamOwl]

One of the experts answering questions for the star saying that the worry is if we get charged for aggravated offences we could end up with a bigger point deduction. May be a stupid question but how could we be charged for that if we weren’t in the original case? 

[Animis]

1 minute ago, wellbeaten-the-owl said:

Sounded like stadium sale was the plan in may 2018 but club had difficulty getting a valuation and getting out of EFL what they would need to do around the transaction to comply. Hence initial extension to 30 June 2018 then due her to July 2018.  Didn't help club had no Idea what the potential punishment would be for breaching the requirements.

It's truly staggering that after 3 years of the p&s regulations being in place that there was no guidelines for what would happen if you breached i.e points deduction, fines etc

 

The club could have turned around a formal and signed off valuation in a week. This would have given the club a true DRC valuation which would have been appendix to the HoTs if required. HoTs could have been complied in about two or three days by a lawyer. So everything could have been approved, signed off with the correct date - before 31st July.

 

Of course, if the suggestion is that the EFL gave the club different messages/signals then this may be some mitigation, but the club should have known what the legal process was at least, as this was controlled under UK financial regulations. What was the CEO and FD doing; seemingly sending emails to the EFL at the end of July saying, 'let us know if you can think of anything else that will help us'! Surely they could have done better than this - unless of course DC wasn't committing to a plan. If so, it's all his fault. 

[Emerson Thome]

11 minutes ago, Jimbob1867 said:

Hmm don’t quite agree with this. They weren’t “egging us on” to backdate contracts. They were saying that if we could demonstrate in August there was a binding contract from July to sell the club then that would be enough for them. But we couldn’t show that ultimately because we were a bit rubbish. Charge 2 was dismissed partly because they didn’t investigate very well but partly because it was clear we did not deliberately mislead them because although we backdated the agreement we totally fessed up to it on many occasions. So that’s all totally fine

 

They knew full well on August 3rd that we didn't have a binding contract from July. The panel have clearly established this in the verdict. Shaun Harvey then wrote on 5th August: "IT IS THE CLUBS CHALLENGE TO CREATE A CONTRACT THAT SATISFIES THEIR AUDITORS THAT IT CAN BE INCLUDED IN THEIR 2018 ACCOUNTS" (Capital from Harvey's message, my emphasis in bold).

[Jimbob1867]

38 minutes ago, Nero said:

Clearly not, its so amatuerish. There doesn't seem to have been an adult in the room.

Yeah KM at my gaffe would just be a junior lawyer. Don’t understand how the fizz she got into that position. Not having a go, fair play to the bullshit and bluster which may have got her there but dear god what the hell are we doing. Her best contribution in the whole affair was to announce to DC that he probably shouldn’t backdate a contract. About the only stand up thing she did as far as I can tell. But don’t get carried away with that moment of morality. It was overridden by some other emotions in the end: para 54 of the judgment: “on 15 August...[the heads of terms] was signed in the Club’s offices that day by DC on his own behalf and by KM on the Club’s behalf”.

[Jimbob1867]

10 minutes ago, Emerson Thome said:

 

They knew full well on August 3rd that we didn't have a binding contract from July. The panel have clearly established this in the verdict. Shaun Harvey then wrote on 5th August: "IT IS THE CLUBS CHALLENGE TO CREATE A CONTRACT THAT SATISFIES THEIR AUDITORS THAT IT CAN BE INCLUDED IN THEIR 2018 ACCOUNTS" (Capital from Harvey's message, my emphasis in bold).

Ok but we didn’t meet that challenge. It may have satisfied the auditors but being kind they were less than forensic about their investigations re the contract. We shouldn’t be relying on the EFL and some random auditors taking some half assed positions about whether or not what we’re doing is ok. Yes if the EFL has some rules that says come to us with xyz view and if we sign off on it then all is ok - but the rules don’t work like that. 

[Utah Owl]

12 hours ago, StudentOwl said:

We were basically a year late in actually getting the necessary paperwork completed from my interpretation of what I've read.

 

Again, to reiterate, it seems we tried to propose and arrange the stadium sale in the space of about six working days... despite having months to clock we were going to break P&S without an artificial cash injection like that. 

 

 

Contracts can be formed verbally without the need for being written down but no idea how this applies in respect of property contracts and EFL rules.