Has Derby’s Complex Game of Cat and Mouse with the EFL Finally Caught up with Them?

There has been a growing feeling over the last two seasons that all is not quite as it seems at Pride Park in terms of adhering to financial fair play rules. It’s no secret that clubs have begun getting a lot more creative as they search for ways to avoid any punishment in a bid to make sure their accounts stack up. But in Derby County’s case, even the layman could see that there were obvious issues with their submitted financials.

Suspicion Begins to Grow

The alarm was initially raised back in 2018 when Derby valued their rather modest home ground, Pride Park, at an astonishing £81m. This was done so that the club could sell the ground to owner Mel Morris which supposedly earned Derby a profit of £39.9m, reversing an upcoming annual loss of £25.3m into a pre-tax profit of £14.6m. This was all done on the 28th of June 2018, 48 hours before the conclusion of a club’s financial accounts for the year.

Derby County Football Club was established on this day in 1️⃣8️⃣8️⃣4️⃣ 🎉

Through the highs and lows, we thank you for your unconditional support over our 137 year history.

⚫️ We Are Derby ⚪️#DCFC pic.twitter.com/IFjfK63jCj

— Derby County (@dcfcofficial) May 13, 2021

Had this sale not been recorded in Derby’s accounts, the club would have severely broken FFP rules and most likely been handed a points deduction. Footballpink.net expertly delves a bit deeper into the exact ins and outs of FFP here which explains why the powers that be began turning the spotlight onto the East Midlands club.

Naturally, this eventually prompted the EFL to launch an investigation into Derby’s valuation. There would be further problems for the Rams as well given that the chairman from other Championship clubs were threatening to privately take Derby to court. At the time, Middlesbrough chairman Steve Gibson was the most vocal about what he thought was foul play by Derby which stirred the EFL bosses into action.

Despite a lengthy investigation, the Rams were cleared of any wrongdoing in August 2020 by an independent disciplinary commission. Unsatisfied with this ruling, the EFL confirmed it would appeal the dismissal of a charge over how the Rams measured the value of players, in other words, they wanted Derby’s amortization of intangible assets to be scrutinized under appeal. Interestingly, the EFL decided to accept the commission’s verdict that Derby did not break any rules regarding the sale of their stadium. But it was this development that sparked the investigation into the club which eventually led to the spotlight being focused on Derby’s evaluation of players.

The EFL Finally Catch Derby in the Act

The EFL managed to win their case on appeal after another independent commission found that Derby had indeed broken FFP rules with regards to player evaluation. This now means that despite a dodging relegation to League One on the final day of the season, the Rams could in fact be hit with a points sanction that could still see them relegated to the third tier of English football. This development could pose significant problems as far as change of ownership goes with Morris desperate to sell up.

Indeed, given the predicament that the club finds itself in, such uncertainty around the Rams’ future must be playing a part in putting off prospective buyers, it would be naive to think otherwise. Alarmingly, the buyers who have come forward over the last year to buy Derby haven’t been able to pass the EFL’s Owners’ and Directors’ Test. Regrettably for the Rams, it is a case of attracting the wrong sort of company when a club finds itself on its knees.

Derby’s potential new owner, Erik Alonso, has been asked by the EFL to prove that he has the funds to run a football club.

This morning he tweeted a video of a very fancy house.

Only issue is it looks VERY similar to a very fancy house on Tik Tok. pic.twitter.com/k8J71oWlXf

— The Second Tier (@secondtierpod) May 11, 2021

One of those prospective buyers was Sheikh Khaled, the brother of Manchester City owner Sheikh Mansour, who failed in his bid to buy Liverpool, and more recently Newcastle. It’s hard to pinpoint exactly why Sheikh Kaled is finding it so difficult to get a foothold in English football but it’s easy to understand why the Abu Dhabi businessman is so keen on purchasing a club in the United Kingdom.

Football, after all, according to arabianbetting.com, is one of the most popular sports in the Arabic world. Indeed, one just has to look at all the Arab bookies who are now safely accepting bets on major European football leagues to understand the growing passion for the game in that part of the world. In reality, the interest is greater than it has ever been in the Middle East and acquiring a football club in England is a particularly savvy move as far as long term investment goes.

The problem for Derby, however, is that a lucrative Middle Eastern takeover is not forthcoming. In fact, there is a greater chance of being retrospectively relegated to League One than anything else. During these situations of financial calamity, there are cautionary tales in football that tell us there is no magic wand to wave that will see a network of financial troubles go away.

Indeed, Derby County now looks set for a hefty punishment two years after Mel Morris valued Pride Park at £81m. The powers that be have deemed Derby’s creative accounting to have broken FFP laws and all it seems a certainty that the book will be thrown with gusto at Morris.