Derby charged by Football League with breaching financial fair play rules | Football

The English Football League has charged Derby County with breaching the financial regulations of the Championship following a review of the controversial sale of Pride Park to the club’s owner, Mel Morris.

Breaches of the regulations can carry heavy penalties; last March Birmingham were docked nine points for exceeding the permitted levels of losses over the three-year period ending in 2017-18. Derby are 17th in the Championship, 10 points above the relegation zone.

Morris bought Derby’s stadium via a newly formed company, Gellaw Newco 202 Limited, for £81.1m according to Land Registry records, on 28 June 2018, two days before the 30 June year end for the club’s 2017-18 financial accounts.

The published accounts, which are not precisely the same figures the clubs file to the EFL, noted that sales of £81.1m had been made to “companies under common ownership” with the club. The sale of the stadium was apparently recorded as a profit of £39.9m presumably during the 2017-18 financial year, which reversed a loss of £25.3m into a pre-tax profit of £14.6m.

The EFL’s “profitability and sustainability” rules, introduced for the 2011-12 season, seek to address the financial challenges of the Championship, which are seriously loss-making for many clubs, by limiting the losses which can be made, currently to £39m over a three-year period if they are covered by an owner.

Derby recorded losses of approximately £8m the previous year, 2016-17, and £14.7m the year before that, so without the stadium sale two days before the 2017-18 year end, they could have made total published losses of £48m.

In a statement, the EFL said: “Following a review of Derby County’s profitability and sustainability submissions, the EFL has charged the club for recording losses in excess of the permitted amounts provided for in EFL regulations for the three-year period ending 30 June 2018.

“The club will now be referred to an independent disciplinary commission, which will hear representations from both the EFL and Derby County.”

The sale of the Pride Park stadium has been deeply resented by some other clubs, who argue that they are keeping their playing squad within limits in order to comply with the financial regulations.

Middlesbrough’s owner, Steve Gibson, has been particularly aggrieved, after his club missed out on a play-off place by one point behind Derby last season, and he is understood to have sued the league over the stadium sale.

The EFL undertook a review of the Derby submissions and the value of the stadium sale after the vehement objections to it, and the decision to charge the club follows that review.

In November the EFL charged Sheffield Wednesday with disciplinary offences relating to the sale of Hillsborough for £60m to a company owned by the club’s owner, Dejphon Chansiri, but those charges relate to alleged misconduct, not merely the valuation of the stadium. Wednesday said the charges would be “vigorously defended” and have issued a claim of their own against the EFL, which the league has rejected.

Derby said in a statement in September that they “adhered to the profit and sustainability rules” over the sale of Pride Park. “The stadium was subject to an independent professional valuation before sale, nearly 18 months ago, and the EFL indicated in writing that the arrangement was in accordance with its rules and regulations,” the club said. “The EFL cannot now, long after approving the arrangements, suggest Derby County breached the rules.”