Derby are said to be on the market for just £1 | Page 2 | Vital Football

Derby are said to be on the market for just £1

Hang on a minute, if they've recorded an annual profit of £14m AFTER putting in £80m in a mythical stadium sale, wouldn't that mean they've actually lost £66,000,000?

Or is there some sort of accounting wizardry going on?

The profit on the stadium is £80 million LESS the value of the stadium on the books. It's not all profit, unless the book value is zero !
 
The Rams have leased back the ground, which was independently valued but on the club's books as an asset worth £41m, from a company owned by Morris.

Looks like they made £39m on it !
 
For the transaction to be included in the latest accounts he must have completed the deal a while ago.

How can an asset valued at 41m be moved from one holding Company to another for 80m?

Surely the 41m figure must have been representative of the income it generates; if so what multiple have they used to get to 80m?

It looks highly inflated

41 million is the book value. This could simply be cost less depreciation and doesn't necessarily reflect the value. Says they had the site valued, so presumably a legitimate valuer came up with the £80 million.
 
41 million is the book value. This could simply be cost less depreciation and doesn't necessarily reflect the value. Says they had the site valued, so presumably a legitimate valuer came up with the £80 million.

The way I read it was that the 41m was the value of the asset when the accounts were compiled.

As the asset generates income, the value of the income would be taken into account when the asset was sold.

Assuming the value of the income is calculated on a multiple of two or three times income, which I understand (probably erroneously) is the going rate, that would mean expected income going forwards is between 19 and 13m per annum.

That seems overly optimistic to me.......unless he intends saddling the club with a sizable rent

It could be that my interpretation of how these things work is wrong
 
The way I read it was that the 41m was the value of the asset when the accounts were compiled.

As the asset generates income, the value of the income would be taken into account when the asset was sold.

Assuming the value of the income is calculated on a multiple of two or three times income, which I understand (probably erroneously) is the going rate, that would mean expected income going forwards is between 19 and 13m per annum.

That seems overly optimistic to me.......unless he intends saddling the club with a sizable rent

It could be that my interpretation of how these things work is wrong

Don't really see what income generation has got to do with it. Unless football accounts are different to industry, you simply buy an asset and write it down over so many years. A car bought for £20k and depreciated over 4 years (straight line basis) would be on the books at £10k after two years. If it was sold after 2 years for £6k, you would have £6k in cash, but a book loss of £4K

A stadium (land and buildings) can simply be written down over so many years, though you do have the option of a proper valuation if you want.

The Rams have leased back the ground, which was independently valued but on the club's books as an asset worth £41m, from a company owned by Morris. (From the BBC)
 
Don't really see what income generation has got to do with it. Unless football accounts are different to industry, you simply buy an asset and write it down over so many years. A car bought for £20k and depreciated over 4 years (straight line basis) would be on the books at £10k after two years. If it was sold after 2 years for £6k, you would have £6k in cash, but a book loss of £4K

A stadium (land and buildings) can simply be written down over so many years, though you do have the option of a proper valuation if you want.

The Rams have leased back the ground, which was independently valued but on the club's books as an asset worth £41m, from a company owned by Morris. (From the BBC)


Not all assets depreciate in value; some appreciate in value, Buy to let properties and Commercial Real Estate for example.

If you have an asset that generates income, a shop for example, an amount is allocated for the amount of income earned, and classed as Good will; this would then be added to the asset worth, the total of which is the sale price.

Occasionally, the amount of Good will is over stated at the time of the sale, and the purchaser ends up declaring an impairment further down the line - I think it is called amortisation.

If the Ground was valued at 41m in the latest accounts, a figure you would have to conclude was correct, how do you suddenly get to 80m on asset value alone, less than 12 months later?

Some other factor must have been included in the sale price and my guess is rental income; if that is correct, the expected income must be at the higher end of the scale.
 
I have to admit this should go against the FFP rules. I appreciate the stadium is an asset in a similar fashion to a player, but this does stink of finding a loophole to avoid FFP for what could be another three years plus. Perhaps in three years time they then sell their training ground (if they own it) to one of Mels company's, which could mean they avoid FFP whilst having an inflated wage and fee bill for over 6 years. The club might available at a very low fee, but if you want the stadium it will cost £60m!
Perhaps Marinakis can buy our training ground for £500m so we can buy loads of players over the summer so we can get promoted. When we are in the prem and if he wants to sell, the club is £10m but the training ground is £600m. You cannot buy the club without the training ground is the deal!
 
For the transaction to be included in the latest accounts he must have completed the deal a while ago.

How can an asset valued at 41m be moved from one holding Company to another for 80m?

Surely the 41m figure must have been representative of the income it generates; if so what multiple have they used to get to 80m?

It looks highly inflated

No idea - you (& Lienking) probably understand & can explain it better than most!

Wonder if they paid Stamp Duty?

From memory, when the original loan against PP was repaid, by Mel (or one of his companies) - there was some creative accounting around extra-ordinary income - or something like that.

Mel also 'personally' funded the purchase of George Thorne.

I'm also sure that with Sam Rush (think that's his name) - they adjusted income to reflect their court case.


- My understanding is that Mel wants to sell DCFC, but minus (some/all of) it's fixed assets - training ground, stadium etc and thereby retain income from the concessions outlets himself.

- It will be a nominal fee for the club, but with agreements regarding repayment of loans (presumably with the fixed asset's as Mel's security) & a further payment if they get promoted

- He is (& has been for around 2 years) looking for investors to come in & the figure I was told, was c £100m to help get them into the EPL.

- Mel said that he had put over £130m into the club since he arrived.

- They are losing around £3m per month currently, but that will fall - with quite a few players being out of contract this season. 40% of the wage bill is made up of players/staff no longer playing for/at Derby County!
 
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Not all assets depreciate in value; some appreciate in value, Buy to let properties and Commercial Real Estate for example.

If you have an asset that generates income, a shop for example, an amount is allocated for the amount of income earned, and classed as Good will; this would then be added to the asset worth, the total of which is the sale price.

Occasionally, the amount of Good will is over stated at the time of the sale, and the purchaser ends up declaring an impairment further down the line - I think it is called amortisation.

If the Ground was valued at 41m in the latest accounts, a figure you would have to conclude was correct, how do you suddenly get to 80m on asset value alone, less than 12 months later?

Some other factor must have been included in the sale price and my guess is rental income; if that is correct, the expected income must be at the higher end of the scale.

Only worked in industry, but we did have a retail shop on the site. Auditors insisted we wrote the site value off over 25 years. This meant for three years we had to depreciate the site value, despite the fact every three years the site had an actual valuation higher than the previous one. All assets we had were valued at cost less depreciation, except because we once used actual value the site had to be revalued every three years. Suppose it depends how companies do things, but income and goodwill never had anything to do with our asset sales.

Book value and actual value are not related. We would write a car down to £1 over 4 years, but they still sold for several thousand pounds.

I guess there are as many ways of doing accounts as there are companies though, and I don't pretend to know how DCFC treated their stadium valuation.
 
very clever from the Rams

It is for the past, but if they don't go up their future costs will increase, as they will now have to pay rent on the stadium they don't own, plus strange things have been known to happen to clubs who don't own their own grounds (Coventry in particular).
 
lmao prob the first time in what ten years? that i got a post to 2 pages :D

(off to go open an adense account and a slag off sheep shaggers website, was gonna say direby but if I can drag in other sheep shaggers then I can really expand those broad ppc's)
 
very clever from the Rams
or a very bad one and im more inclined to suggest a big risk strategy is 99% of the time a bad one.

downvaluing is fine if you never intend to sell. You can keep the low value asset. If you have a genuinely interested party they will still pay the market rate, irrespective of the paper value. So yes that looks clever.

However, actually several howevers, but one of them is that this is a debt, therefore accruing interest. If there is no asset value to sell when a debt man actually turns up youre kinda screwed?
 
It is for the past, but if they don't go up their future costs will increase, as they will now have to pay rent on the stadium they don't own, plus strange things have been known to happen to clubs who don't own their own grounds (Coventry in particular).

another 'however'. property markets can be volatile and theres a brexit thing happening that 'could' drop value of property as much as 20%. I mean thats conjecture but also totallly feasible with uk being almost totally reliant on foreign investment. right now is perhaps as bad a time as any to actually value something on property values. would you remortgage your home right now ?
 
As a general thing, how attractive is the prospect of owning a club without owning the ground etc?

Even for £1, I would guess the number of potential issues would put many investors off.

As someone above said, the potential for a Coventry situation shouldn’t be. Ignored.

Relating it back to Derby... Shame! ??