The Fall of Derby County
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- čas přidán 28. 05. 2024
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Derby County finished in 23rd place in the 21/22 season as a result of their 21-point deduction.
So the historic club has been relegated from the Championship.
But how did Derby get to this state?
What is amortisation?
What's next for Wayne Rooney's side?
Joe Devine and JJ Bull are joined by Elias Burke, Derby County Reporter for the Athletic, to answer these questions and more.
To read more from Elias, visit theathletic.com/author/elias-...
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Gareth Copley / Staff / Getty Images Sport via Getty Images
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#DerbyCounty #WayneRooney #DCFC - Sport
Jesus christ, Joe Devine is at the board
a m o r t i s a t i o n ✨
@@TheAthleticFC 😱
The end is nigh!
These are truly the end times.
Why did they let this happen?
Rooney and his coaches have done an impressive job creating a system with such a small squad pool. He looks like he has potentail to have a solid management career ahead of him
He’s done well, especially after a pretty terrible first season, they would have finished just below mid table without the deduction right?
he certainly couldn't have had a better manager to learn the job from in his early years.
Wayne Rooney is the fuckin man
Im glad my favourite player is now starting off ok as a manager.
Think his english needs more work
@Martin D he didn't relegate them in his second season? Player outgoings, the points deduction and injuries did. Rooney was poor in his first season but his second season was a good job. He hasn't had the players for a mid table squad but they would have finished near there without the deductions
Interesting update, but once again the graphs are ludicrous. Make net spend a separate line, not part of the stacked columns.
One thing that needs to pointed out. Derby were put into administration voluntarily, normally when a club goes into administration it's because to owner has run out of money. In Derby's case it was that Mel Morris did not want to pay HMRC. During the COVID outbreak clubs were allowed to postpone payments to HMRC, but the money had to be paid eventually. Morris put the club into administration, when it came time to pay the money.
Another good example also was the many smaller creditors (local businesses) such as the St Johns Ambulance who were owed £8000 which fans have kindly raised to pay off. Mel wasn't really a fan of the club otherwise he wouldn't have placed the club in such a dire situation. He, like many other football club owners were only there for the ego trip and the good times and it was pretty evident early on he had no patience to let the club naturally build itself up which it had done slowly after being relegated in 2007.
Be wary because your club could be next!
alex’s sacking has really opened the door for joe’s new role as the tifo accounting analyst to take centre stage
Wait Alex got sacked, noooooooo
@@franalytics5995 in a violent, degrading fashion
@@cabhan really what happened
@@franalytics5995 misconduct
@@reeko3282 so Alex was accused of misconduct then he was sacked
You should get the HITC sevens guy on to talk about hull or just football in general.
Alfie would just add more subtle silliness to Tifo, and Joe Devine is a very serious man
The amortisation aspect is quite interesting, I didn’t know about this in context to football.
In regards to the regular accounting/investment analysis world, most firms actually prefer to depreciate their assets not via the straight line method but rather the double depreciating method. Where by you front load most of the losses in the early years, and that tails off in the final years, until you eventually reach the year that it would be written off fully over the straight like method. This is because “losses” are really not a bad thing per say in context to corporate accounting, they allow you to offset profitability as they are essentially tax deductible (because the more you lose money, the less you pay in corporation tax to the government).
Derby instead have chosen to kind of do the reverse, something like a ‘half depreciating method’ (again it’s not regular practice at all, even outside of football). The only reason you would do this would be to inflate the book value of your firm (in this case football club), as you will have a higher asset value than you would under a straight line method. I’m not entirely sure why having a higher book value, and lower losses would necessarily benefit a firm/football club (unless you where planning to sell it, obviously in your yearly financial statements the depreciation method is outlined clearly by the external accounts who are responsible for the accounts, so you really can’t hoodwink any potential investors because it would be something taken into account during due diligence of the purchase. Where analysts would likely simply re calculate the amortisation using the straight line method anyway!!).
I imagine the only reason they used this unique amortisation approach was to actually increase profitability, to allow them to spend more based on some FFP rule that you can only net spend a multiple of your profits etc.
In any case this was extremely stupid, and to any financial analyst something that would be immediately obvious within about 5 minutes of looking at the financial statement. Whoever their accountants where should be taking some flack for this, as if it was deliberate manipulation then they should also be held responsible!!!
It's exactly that regarding their reasons for amortising in this way - FFP rules allow total losses of £39m over a rolling three year period before a club is in breach. If you amortise the way Derby did it, you can almost pick and choose when you want to take those losses.
In fairness (And I am a Derby fan so this may be biased) there is some logic to it for a football club - For a £10m player on a 5 year contract, is writing off £2m of his value after the first year a truly accurate way of valuing him or is it more accurate to say that he might still be worth £9.5m? Or maybe he's even increased in value? Requiring clubs to amortise players in a straight line is flawed imo, although that doesn't mean it's ok to breach the rules when every other club is keeping in line. I think it does warrant a discussion.
A few things I would add. That at the time of Derby's breach the EFL rules did not state that the straight line amortisation method had to be used. I think Derby thought they had found a loophole and thought if you can't beat them join them seeing as the EFLs usual response to clubs exploiting a loophole in the rules was to not pubish the club and just close the loophole.
Derby submitted 3 years of accounts to the EFL using their individual amortisation method. The EFL did not raise any issue with any of those accounts. It was only when a journalist specialising in football finances pointed out to the EFL how we were amortising player values that they took issue.
That is one of the main areas where I think Derby have a case to say they were treated unfairly. I think the first breach is punishable. But after that when those accounts were submitted and there was no complaint from the EFL I think punishments for season 2 and 3 are unfair. Because that feels like the EFL punishing Derby for their error. If the EFL had actually scrutinised the submitted accounts at the time and raised an issue with the amortisation method. Derby would have had chance to take remedying action. E.G. redo the accounts using the straight line method. Sell a player or two. Etc. That seems unfair to me.
Tge EFL as an organisation will never, ever, ever admit that they are culpable in any way. That they are capable of making mistakes. When it was pointed out to the EFL that they should have raised an issue with the accounts after the first submission. There response was it is not up to them to check accounts. And clubs should just essentially self-police. Which raises the question of why even get clubs to submit accounts then if you're not going to check them? And the idea of asking clubs to mark their own homework seems flawed to me. If an organisation is going to insist on adherence to a strict accounting framework with severe punishments for breaches then it is incumbent on that organisation to meticulously scrutinise the members submitted accounts to ensure compliance.
A responsibility the EFL seem to shirk.
Great comment by the way, been a while since I studied accounting so it's nice to have a refresh.
On the football side, it's understandable that player values wouldn't follow usual accounting principles for amortisation, as the asset worth is generally more volatile over time. However, it seems as though Derby felt they could spend big, offset the depreciation for a later date and within that first 1-3 years get promoted to the Premier league where the finances received would almost cover the problem and they'd be flush with cash. They took a big risk and it didn't pay off, the championship is so hard to predict and investment doesn't always mean success.
If you look at some transfers though usually the value of a player goes up after a transfer and then gets close to the transfer fee near the end. It’s kind of an arbitrary thing in football so maybe linear depreciation makes sense but look at players like - ings (30m), Tielemans this year (30m) and Varane (50m) in some cases the final year fee is comparable to the initial fee due to inflation.
@@danw1086 Having read your additional comments I’d be spitting feathers as a Derby fan. So often the organisation at the top of the foodchain like the EFL in this case can just wash their hands of the consequences of their own incompetence because the issue is complicated / boring, and they have no oversight from above them. I can well imagine that being CEO / MD of a C’ship or L1 club is one of the most stressful jobs, trying to balance all these variables. As with most stuff in football I’m sure no-one’s blameless, but it’s not a level playing field either. Hope you bounce straight back
Need to see a fall of Sunderland some time. I know we have sort of bounced back this year, but my god our fall was epic and storied
@@barrychopsticks It is when you look at the sheer levels of wastage and incompetence, over many, many years. Every time we thought we had hit rock bottom we went lower
@@barrychopsticks the documentary shows our fall from the champ to league one. It doesn't go into detail as to why we ended up in the Championship in the first place. Also the doldrums years after failing in the league 1 playoff finals.
They had a Netflix special but they didn’t ever end up in administration. Also a much bigger club than Derby and have ownership now that seems really good.
@@beani24329 our ownership (Sunderland) is a complete mess still. There was another saga this week with some of our shareholders allegedly trying to hawk their 39% to a group of NFT dodgies
🎵I remember where they used to build the boats🎵
Ouch, the accounting part was a little off. Amortization is done to keep clubs from incurring the cost of a transfer all at once and hitting financial fair play. The cost of a transfer is spread out over the life of the first contract. So that 7 mil deal for a 5 year player on the amortization line comes in and causes the club to incur 1.4 mil of expenses for that players transfer every year for 5 years to help with financial fair play. What Derby County were doing was putting in something called a salvage cost to their players. Basically saying that at the end of the players contract, we could sell him for 2 million (or something like that). So they would amortize 5 million of the contract instead of the 7 million. So instead of incurring 1.4 mil of expenses every year, they would just incur 1 mil
Finally, a video I can send to my friends rather than horribly stumble my way through explaining ✨ A M O R T I S A T I O N ✨
Joe looking around when JJ started talking about Aberdeen made me laugh
Great video, love this format. Regarding the transfer section just wanted to thank you for adjusting that, as somebody who is colourblond and hard of sight generally it was much easier to follow and see which players were transferred compared to other similar videos (think I left a comment on maybe the Norwich or Everton video).
Looks like Joe's lost weight, truly living up to his name.
Creep
@@reeko3282 I don't mean anything weird by it, just recognising a healthy/positive change.
Great video. Rooney was always my favorite player, but I honestly didn't anticipate him to be a good manager. He really has impressed me with his commitment to Derby though; he's getting some of the toughest experience and he knows it's too early to go for a job in the prem. I think he's got a great managerial career ahead of him
Amortisation is something that most football fans have no idea about (and no interest in) but if they familiarised themselves with it, it'd make football finance make a lot more sense. It'd stop fan channels and the occasional gobshite like rio ferdinand questioning why united kept giving new contracts to garbage like Jones and Mata. It was to bump up the clubs asset value and artificially conceal losses accruing on players. It also explains why united gave Bruno a new deal despite him being utterly useless for the past 6 months or so
Rooney really impressed me this season. We (Birmingham) played them early doors and they looked fragile but a couple months later he had really turned them into a good team, definitely a good manager and smart not to jump ship and continue the learning stage of his management career.
I hope Derby gets its act together.The supporters deserve better.Go Rams!
The loss of player value is really weird in terms of actual assets though. championship teams rely on selling players for a profit which makes no sense if their players go down the minute they’re signed. Also under some logic the value of a player goes significantly above cost at the beginning of a contract (if I buy Bowen from Hull hes not going to get sold straight away for the fee West Ham paid ever). Or look at Tielemans and Varane for comparable fees in the last years of contracts.
It’s very bizarre.
Very informative
Please could we have a wolves sensible transfers video? They seem to be at a crossroads between midtable and fighting for Europe
Wow I never thought amortisation could be so interesting and fun to learn thanks Mr Devine
Really liked the guest
Spoke clearly and eloquently
HMRC= Her Majesty's Revenue and Customs, Joe.
_Not_ Her Majesty's Royal Customs
I wouldn’t be shocked if Villa and Everton have done something similar with their amortisation profile given their big spending in recent years.
Clubs like Everton always seem to get away with it financially & they think they have a devine right to not get relegated as well.
if we beat villa in the play off final, they would likely be in the same position as us (derby) right now
ikr? especially Everton ... they spend half a billion since 2016
Good video but forgot to mention the EFL initially signed off the accounts!!
This is why FFP shouldn't be a thing.
If the issue was club financial stability, then there wouldn't be spending limits, only debt limits.
By putting in spending (adjusted for the ammortisation and everything else associated with FFP) limits, all it does it cement the position of the big clubs as being the only ones able to spend big money and therefore attract the best players.
If it was a debt limit and the chairman/owner/whoever could put in as much money as they desired as long as they don't put their club into debt. Then you'd achieve the same stability without the clear unfairness.
This is super corrupt.
but then you'd basically allow people like Abramovich to bastardise the wealth system like he did with Chelsea where you have stupid money being paid simply because he'll sign off any debts whilst amassing a stupidly big squad full of players that get lost in the system.
I see the current evil as less of an evil than the suggested evil
🎵 Joe is at the board, at the board
Joeeeee is at the board!
Na na na na na 🎵
As i understand Derby were not found guilty of the amortisation issue
The case was won and then appealed by the EFL and was ongoing when they entered administration
The administrators then accepted a 9 point penalty instead of the cost of fighting it
Probably in hindsight not a wise move
A question for Tifo... Whose role is it within large football clubs to ensure the happiness/ well-being of players? I saw a short clip of... Alphonso Davies, I think- bemoaning the boredom of being a football player, having a lot of aimless spare time. When you're not training/ with the squad, if you're a young person living in a city you didn't grow up in (he mentioned only having a handful of friends who were generally preoccupied with their own lives), it might be difficult to make your off-the-pitch world fulfilling in and around football, especially if the local language and culture is vastly different to your own. So, how do clubs look to ameliorate this?
Great video, the only thing is it would have been interesting to hear about who some of the prospective owners are.
Poor Wayne - outplayed by amortisation.
“I do” “I Don’t” 😂
Elias has elite music taste
The music on this video is class
the amount of players who had amazing seasons at their clubs like butterfield, blackman and came to us and did nout. I do think blackman should have got more chances tho.
Wayne Rooney turning into a broken down Sean Dyche in 18 months was quite the evolution, love to see it.
Joe Devine, the embodiment of David Brent.
Was Elias's Tom Misch t-shirt the inspiration behind the backing music? A very cheeky Easter egg if so 🥚🥚
My favourite part of JJs analysis is the occasional outbursts of “This is bad/good!”
Couldn't have happened to a better club. Championship is becoming a 2nd PL with the sums of money needed to compete. My team, Rotherham, have a sustainable model and we find it difficult to stay up without having to spend past our means. We might yo-yo every season but I know I'll have a club to support in 10 years time. Ultimately, it's the fans that suffer when a team is in a dire financial situation.
I'd say the tactics are a little bit different
Here for the LOLZ ⭐️🌳⭐️
Talking about net transfer spend without looking at the income from league, TV and ticket sales or the expenses of wages in particular does not really show how they got into admin.
Very entertaining and knowledgeable video. More details on some of the disastrous signings would have added to the entertainment/misery - notably Jacob Butterfield. So much money wasted on so much garbage. Well, we only have five players now.
How does Derby owe the full transfer fee for Bielik still to arsenal when he was sold like 4 seasons ago.
Elias Burke gets major points for the Tom Misch merch
shoutout to the tom misch shirt
He is JJ Bull the Bullet thank you very much.
One positive is we now have Elias working on Albion instead 😉
Nice UNIQLO shirt there JJ, nearly bought the same one but now I'm definitely not going to
without the music, this doesn't work.
‘Revenue and customs’
I'm sorry to be that guy but it's Her Majesty's Revenue & Customs, not Royal Customs
Came looking for this comment
@@mattg5878 why are we compulsive dickheads, squirrel?
Her Majesty's Revenue and Customs
whats Elias opinion on raccoons?
tom misch woooop!
You have not addressed the real problems for example, Stephen Pierce the director of finace at derby was also a director on the efl board at the same time and said that he had run the method past the EFL and they passed it. The only other real director was the owner Mel Morris and somewhere in the history og Derby whien Derby last got promoted they sacked the current seo who happens to be resident now at the efl. Somehow there must have been a deception which l would suggest runs deeper. So my point is quite simply neither the Derby director or the ceo of the efl should have had a say in the outcome because if they did it would been a conflict of interest and their evidence tainted in law.
So Derby are essentially making NBA type backloaded contrancts with their players where as other football clubs offer a flat salary for the duration of the contract and this has caused a massive wage bill for Derby?
Can’t Rooney just buy the club??
Owner, manager, player. Triple threat
You forget to mention that in the 20/21 season Derby finished fourth bottom missing relegation by one point. Then Derby deliberately withheld financial information because they knew that they would get a point deduction, which would result in them getting relegated. If they had shown the financial records and taken the points deduction then Wycombe would have stayed in the championship which is a big thing for a club that size.
Thats not correct. Sheff Weds and Derby had disciplinary hearings about their stadium sales at around the same time (a couple of months into the 20/21 season). Weds hearing was about 6 weeks ahead of Derby's. The EFL requested of the tribunal that Sheff Weds punishment be applied in that season. They were in the bottom 3 at the time and the EFL wanted them relegated.
The EFL requested of the tribunal that Derby's punishment be applied in the 21/22 season. Because we were mid-table at the time of the first hearing and a points deduction was unlikely to relegate us.
However, Derby won the first hearing. The tribunal with a sitting accountancy expert ruled that the stadium sale did not break the rules and that Derby's amortisation method although unusual was a legitimate method.
The EFL waited until the last possible moment to launch an appeal against the decision. So an appeals hearing had to be reconvened.
All of this takes time in normal circumstances. But this is during covid so it takes even longer.
The appeals hearing didnt happen until the end of June 21. The season had already finished. By this point Derby's form had absolutely nosedive and we had avoided relegation by 1 point. Now the EFL wanted the punishment applied in the 20/21 season. Even though that season had finished.
The appeals hearing (which had no accounting expert to discuss an alleged accounting breach) found Derby had breached by using a different amortisation method. They were fined £100k.
The club then were requested to resubmit 3 years of accounts using a straight line method of amortisation. This obviously takes some time. Derby complied with the time frame required of them to do so. By this point the 21/22 season had already started.
@@danw1086 thanks for the info
Not correct. Fact check yourself please
@@eenocat1 go back to your bonfire safety videos
Absolute bollocks!!!
woah how tall is joe devine? fella is MASSIVE
Interesting, but it does ignore the elephant in the room.
Mel Morris invested a lot of money, knowing that if Derby went up he’d have a much more valuable asset and would more than make his money back. It was not a selfless investment. Now everything has gone belly up, but he remains a ludicrously wealthy man (and continues to own the stadium!) whilst the club is in danger of going out of business.
Mel Morris saw Derby as a fair investment, and he’s still come out of it with a valuable asset. For Derby, his stewardship has been a disaster.
And Morris also comes out of the entire episode as a pretty spineless soul too - refusing to communicate directly with Rooney, pretending that the clubs suing Derby could sue him personally instead (that’s not how the law works - but if he was really that keen to make amends he could have just offered the clubs the money they were asking for).
Every commentary on Derby should be entirely damning of Mel Morris; this piece is far too generous to him.
Fly like Max Bird!!
me, a derby fan: *interesting*
Sideways Wayne Rooney looks like Mark Goldbridge
KIND OF
just show a picture of Mel Morris
JJ has been out in the sun
He's Scottish. We get a tan from looking in the fridge for too long.
sooo is being in debt only an issue for FFP rules if you're a small club? What about the crazy debt Barce has that no one seems to care about?
Being in debt is normal part of business, its part of the servicing of debt that is the problem, or owning it short term eg HMRC
poor rooney
I hope Derby can find a buyer as their fans have been put through so much it's unreal
I think putting Rooney in the thumbnail is pretty unfair
Why? He's literally the face of Derby County atm
@@liamcollett4537 he's not the reason they went down
Darby back in Championship the upcoming season.
Or Ramortisation, as I called it. What a mess Mel Morris made.
Elias looked nervous AF lol
Is Joe Devine a giant?
Couldn't happen to a better club....lol
TOM MISCH DRIP
Boards are often criticised for not spending bid, I think you can see why these critics are often wrong. Well run clubs live again to fight another day . Broke clubs sink through the leagues.
Jelly and ice cream when derby die
Putting Rooney on the thumbnail is a joke and is a clear agenda. He’s done literally everything he possibly can and took them within like 3 games of safety.
If Derby do not pay Arsenal for Bielik, can Arsenal 'repossess' the player?
I don't see why they would want to repossess a slow and cumbersome player who is always injured. Getting 10 million for him was genius on the part of Arsenal.
They'll Be Relegated All The Way Down To The National League
All Stephen Gibson’s fault remember hahahahaa. If only derby had a chairman like the greats steve Gibson
dawby
Terrible owner, terrible recruitment, terrible planning and terrible players is the result of Derby County getting relegated from the championship. You could say that if they weren't docked 21 points they would be safe but let's not forget they were on the verge of relegation last season. Derby County would have got relegated sooner or later due to how poorly the club is ran.
HMRC take massive haircuts if you're Vodaphone
🌈Amortisation🌈
Good god, Joe devine knows stuff??
oh my christ joe using the board what has this channel become
such bad explanation in this video, they need a new editor for financial matters
Devine is a lot bigger than I thought he was
Give Wycombe the money you denied them and be done with it
🐏🤍🖤
Derby fan here. It’s 100% cheating.
wtf is this presentation lmao
I think that Derby County are to remain in League One.
Just when you want to complete your takeover, along come three pesky bank holidays
First
Derby cooked the books and got what they deserved. Sorry for the fans but signing Rooney on 100k a week in the championship was just stupid