NFFC Financial Talk

[MacAwoniyi Cheese]

The application of standard accounting practice (allowing income to be recognised in a period when it is reasonably foreseeable but has not yet crystallised) is more than just mitigation.

The only argument is whether the income (brennan) meets the standard for inclusion, not whether the PL unilaterally decide they don’t like it.

Some interesting points...

I have an amendment though, after my own research last night, I have discovered that the Premier League use IFRS (International Financial Reporting Standards) See here Deloitte link not GAAP.

Within the IFRS, there is IAS 10 Events After the Reporting Period Boring detailed link here and here (The link Kieran Maguire cited)

So, in a nutshell:

1) The Premier League accepts IFRS Standards for preparation of accounts Link here Link where it references using IFRS standards.

2) IFRS Standards states... "the sale of inventories after the end of the reporting period may give evidence about their selling price at the end of the reporting period for the purpose of assessing impairment at that date.
Impairment in accountancy parlance is 'less than book price' or 'an impaired asset has a current market value that is less than the value listed on the balance sheet'.

3) Forest then may have a case for defending the decision of not selling Brennan for £30m as it would be an impaired asset, that being below the market value of £50m. This would then, in turn potentially be an 'event after the reporting period'.

This is all my own conjecture, so take with as much salt as needed; however, to my fairly mid-level accounting knowledge, it does have some credence.

My point was that yes this might be a legit accounting practise however it's not something that's been used in football that I'm aware of. Therefore, we'd be doing something no other club has done. You're telling me no other club has considered this argument in the history of football?

It is relatively recently that the account submitting dates have changed, maybe no other clubs have needed to look at this? 
Similarly to Chelsea and, to a lesser extent us, being creative with the amortisation rules and using a loophole which has now been closed.

Somebody has to be first, and many legal rulings are based upon precedent.

[Salvatore Matrecano]

What is the same as Derby and every other club that has been deducted points previously, is that most fans are utterly convinced of their own club’s innocence.

Most fans think with their hearts though Sal, it's what fans do.

Yes I get that Sniffer but want people to think with their heads not their hearts sometimes.

If the worst happens I’m sure EM will go for the jugular and that’s fine. I just prefer our fans not to put themselves open to ridicule with protests and shows of indignation that we have seen and let’s be honest, laughed at from other clubs.

[wassy04]

The application of standard accounting practice (allowing income to be recognised in a period when it is reasonably foreseeable but has not yet crystallised) is more than just mitigation.

The only argument is whether the income (brennan) meets the standard for inclusion, not whether the PL unilaterally decide they don’t like it.

Some interesting points...

I have an amendment though, after my own research last night, I have discovered that the Premier League use IFRS (International Financial Reporting Standards) See here Deloitte link not GAAP.

Within the IFRS, there is IAS 10 Events After the Reporting Period Boring detailed link here and here (The link Kieran Maguire cited)

So, in a nutshell:

1) The Premier League accepts IFRS Standards for preparation of accounts Link here Link where it references using IFRS standards.

2) IFRS Standards states... "the sale of inventories after the end of the reporting period may give evidence about their selling price at the end of the reporting period for the purpose of assessing impairment at that date.
Impairment in accountancy parlance is 'less than book price' or 'an impaired asset has a current market value that is less than the value listed on the balance sheet'.

3) Forest then may have a case for defending the decision of not selling Brennan for £30m as it would be an impaired asset, that being below the market value of £50m. This would then, in turn potentially be an 'event after the reporting period'.

This is all my own conjecture, so take with as much salt as needed; however, to my fairly mid-level accounting knowledge, it does have some credence.

My point was that yes this might be a legit accounting practise however it's not something that's been used in football that I'm aware of. Therefore, we'd be doing something no other club has done. You're telling me no other club has considered this argument in the history of football?

It is relatively recently that the account submitting dates have changed, maybe no other clubs have needed to look at this? 
Similarly to Chelsea and, to a lesser extent us, being creative with the amortisation rules and using a loophole which has now been closed.

Somebody has to be first, and many legal rulings are based upon precedent.

That's true, it's not impossible.

[Paplane]

The application of standard accounting practice (allowing income to be recognised in a period when it is reasonably foreseeable but has not yet crystallised) is more than just mitigation.

The only argument is whether the income (brennan) meets the standard for inclusion, not whether the PL unilaterally decide they don’t like it.

There's two points to this, firstly, if its not established practise for football clubs to do this as the precedent is long set that this isn't deemed acceptable to be included in accounts as you could easily argue it's not necessarily forseeable as there's no proof at the 30th June that we are intending to sell. In fact we also benefit from Brennan playing a few games which is hardly in the so called "Spriit of P&S".

Secondly, even if it is acceptable to include it in our accounts that's not what decides P&S, its the separate calcs and allowances like infrastracture. Our accounts will show a much higher loss than we're included for P&S. These rules have already been determined, so whether we legally include it in our accounts or not, if it's not allowable in those rules they can just add it back in.

For me, this all sounds very Derby, if that's the argument. Oh we're clever, we've found a loophole to get away with spending more, sounds very familiar to me. All this talk of financial standards is very similar to their arguments on the amortisation which eventually was deemed not to apply to football. 

If you're desperate to argue about the spirit of P&S, essentially selling a player in June to cover for the loss we've already made for the season gone is hardly in the spirit of it is it? We're essentially benefitting twice as we get the sale and we also got the full year of Brennan. To be in the spirit of it we should've had to sell him in January. This is irrelevant anyway but just wanted to put it out there.

All good points Wassy, well made.

But re Derby's method of amortisation, iirc they changed their accounting procedure from the 'football norm' method to their own method (of assuming the player having an intrinsic value at the end of their contract) to conceal their losses and to extend their player purchasing capability. So I don't think it was the legitimacy of their actual accounting method that was at the crux of the scrutiny, more why they had changed their method to suit their then financial situation and legal argument. Basically, they were found to be gaming the system. That was in the light of the knowledge that they had got away with overpaying on their stadium sale to themselves, which the whole world knew was as dodgy as f**k, but found to be permissible. DeMarco was their guy too.

[wassy04]

The application of standard accounting practice (allowing income to be recognised in a period when it is reasonably foreseeable but has not yet crystallised) is more than just mitigation.

The only argument is whether the income (brennan) meets the standard for inclusion, not whether the PL unilaterally decide they don’t like it.

There's two points to this, firstly, if its not established practise for football clubs to do this as the precedent is long set that this isn't deemed acceptable to be included in accounts as you could easily argue it's not necessarily forseeable as there's no proof at the 30th June that we are intending to sell. In fact we also benefit from Brennan playing a few games which is hardly in the so called "Spriit of P&S".

Secondly, even if it is acceptable to include it in our accounts that's not what decides P&S, its the separate calcs and allowances like infrastracture. Our accounts will show a much higher loss than we're included for P&S. These rules have already been determined, so whether we legally include it in our accounts or not, if it's not allowable in those rules they can just add it back in.

For me, this all sounds very Derby, if that's the argument. Oh we're clever, we've found a loophole to get away with spending more, sounds very familiar to me. All this talk of financial standards is very similar to their arguments on the amortisation which eventually was deemed not to apply to football. 

If you're desperate to argue about the spirit of P&S, essentially selling a player in June to cover for the loss we've already made for the season gone is hardly in the spirit of it is it? We're essentially benefitting twice as we get the sale and we also got the full year of Brennan. To be in the spirit of it we should've had to sell him in January. This is irrelevant anyway but just wanted to put it out there.

All good points Wassy, well made.

But re Derby's method of amortisation, iirc they changed their accounting procedure from the 'football norm' method to their own method (of assuming the player having an intrinsic value at the end of their contract) to conceal their losses and to extend their player purchasing capability. So I don't think it was the legitimacy of their actual accounting method that was at the crux of the scrutiny, more why they had changed their method to suit their then financial situation and legal argument. Basically, they were found to be gaming the system. That was in the light of the knowledge that they had got away with overpaying on their stadium sale to themselves, which the whole world knew was as dodgy as f**k, but found to be permissible. DeMarco was their guy too.

Isn't that what we're allegedly trying to do? Go against the football norm by claiming a sale outside of the accounting period? I'm not saying its as egregious or as dodgy as their's but the principle of challenging standard precedent is the same.

Fwiw, Derby also successfully found stadium sale loophole and they let them do that, which I found bizarre so there is evidence that these things sometimes do get accepted until a clarification is made in the rules.

[Paplane]

The application of standard accounting practice (allowing income to be recognised in a period when it is reasonably foreseeable but has not yet crystallised) is more than just mitigation.

The only argument is whether the income (brennan) meets the standard for inclusion, not whether the PL unilaterally decide they don’t like it.

There's two points to this, firstly, if its not established practise for football clubs to do this as the precedent is long set that this isn't deemed acceptable to be included in accounts as you could easily argue it's not necessarily forseeable as there's no proof at the 30th June that we are intending to sell. In fact we also benefit from Brennan playing a few games which is hardly in the so called "Spriit of P&S".

Secondly, even if it is acceptable to include it in our accounts that's not what decides P&S, its the separate calcs and allowances like infrastracture. Our accounts will show a much higher loss than we're included for P&S. These rules have already been determined, so whether we legally include it in our accounts or not, if it's not allowable in those rules they can just add it back in.

For me, this all sounds very Derby, if that's the argument. Oh we're clever, we've found a loophole to get away with spending more, sounds very familiar to me. All this talk of financial standards is very similar to their arguments on the amortisation which eventually was deemed not to apply to football. 

If you're desperate to argue about the spirit of P&S, essentially selling a player in June to cover for the loss we've already made for the season gone is hardly in the spirit of it is it? We're essentially benefitting twice as we get the sale and we also got the full year of Brennan. To be in the spirit of it we should've had to sell him in January. This is irrelevant anyway but just wanted to put it out there.

All good points Wassy, well made.

But re Derby's method of amortisation, iirc they changed their accounting procedure from the 'football norm' method to their own method (of assuming the player having an intrinsic value at the end of their contract) to conceal their losses and to extend their player purchasing capability. So I don't think it was the legitimacy of their actual accounting method that was at the crux of the scrutiny, more why they had changed their method to suit their then financial situation and legal argument. Basically, they were found to be gaming the system. That was in the light of the knowledge that they had got away with overpaying on their stadium sale to themselves, which the whole world knew was as dodgy as f**k, but found to be permissible. DeMarco was their guy too.

Isn't that what we're allegedly trying to do? Go against the football norm by claiming a sale outside of the accounting period? I'm not saying its as egregious or as dodgy as their's but the principle of challenging standard precedent is the same.

Fwiw, Derby also successfully found stadium sale loophole and they let them do that, which I found bizarre so there is evidence that these things sometimes do get accepted until a clarification is made in the rules.

Yep, we're trying the same, or that's what it looks like from the outside looking in. Imo the details will make or break this accounting principle we're arguing. What was said at the time, how much transparency there was about BJ's sale etc etc. If we've been transparent and open as to our intentions to sell, and the sale has been booked in in line with an accepted accounting principle then I can see the panel accepting the argument. If we've thrown this in at the last minute as some kind of smart argument then I reckon they're going to throw it out. We have a track record of selling our best players to comply with ffp. Completely different to the sheep who had a track record of being slippery, secretive, and dodgy.

[Sniffer Dog (Admin)]

How much evidence do we need that the so called know all journos and pundits actually know nothing at all.

Last week they were all saying that Everton will find out if they are getting points back or not - Nobody heard anything.

This week they were saying that Forest will learn the date of their hearing - We haven't heard anything and it's Friday tomorrow.

They know nothing and everything they say is purely guess work. I suppose that if you sling enough shit though then eventually something will stick and they will say I told you so.

[Widdow]

How much evidence do we need that the so called know all journos and pundits actually know nothing at all.

Last week they were all saying that Everton will find out if they are getting points back or not - Nobody heard anything.

This week they were saying that Forest will learn the date of their hearing - We haven't heard anything and it's Friday tomorrow.

They know nothing and everything they say is purely guess work. I suppose that if you sling enough S**t though then eventually something will stick and they will say I told you so.

I agree, and we are in the same camp as the journos and pundits of this world, and none of us actually know nothing at all.

We have our hopes, guesses, opinions, offer conjecture, debate, fairy tales or have our heads in the sand.

It will all come out in the wash and we can only wait for the results, and no doubt the subsequent appeal.

Its just simply not a great position to be in, and that's disappointing!

[willdared]

Agree widdow, I've said previous punishment to fit the crime and a points deduction seems ridiculous and far to excessive.

What gets me is they are looking to change the rules because the existing ones are no good. Why go to the extreme sanctions if this is around the corner

[Simon]

The closer this gets to a decision the more concerned I get (human Nature?)

Heart says that common sense should be applied which would see us at worst have a suspended points deduction (neatly applies sanctions but allows tolerance taking into account change in rules in the summer)

Head says we appear to be disliked in all quarters as a club at present and have a target on our backs for our perceived excessive recruitment since promotion - likely points deduction applied this year.

There seems to be a delay announcing the result of Evertons appeal too ....

Arrgggh.

[Shawoddyred]

I'm thinking that all the commentary and news articles about everyone expecting a points reduction might actually be them trying to influence the decision in some way. The more people that say they 'expect' it, means any outburst by us seems more excessive if it were to happen, paint us as the bad guys, everyone can kick us while we're down etc and might make the 'independent panel' happier to be stricter because they are aware that everyone is saying a points deduction is coming.

Hopefully not, just a theory of mine.

[pennhillred]

I'm thinking that all the commentary and news articles about everyone expecting a points reduction might actually be them trying to influence the decision in some way. The more people that say they 'expect' it, means any outburst by us seems more excessive if it were to happen, paint us as the bad guys, everyone can kick us while we're down etc and might make the 'independent panel' happier to be stricter because they are aware that everyone is saying a points deduction is coming.

Hopefully not, just a theory of mine.

Was thinking exactly the same the other day!

How can the 'Exclusive' i News article the other day, "Forest 'will suffer points deduction' over FFP breach', all based on the opinion of rival chief executives not be seen as trying to influence the result of the review?

Hopefully the panel aren't influenced by the articles and the foregone conclusion-ness of the recent discussion around us.