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Derby County and Sheffield Wednesday - What is happening?

The EFL are in the process of investigating Derby County and Sheffield Wednesday for breaches in FFP. We already have a precedent for what could happen in Birmingham being docked 9 points last season. I have done a bit of research on this and this is what I have found out. 

Firstly Derby County:

Derby have been charged and are disputing that charge (Birmingham accepted it). The charge seems to stem from the sale of the ground to the owner. But it is not the sale where they have potentially fallen foul, but the price they paid. Derby say they got the ground value, but the EFL are of the belief that the price was massively over inflated. Possibly by up to £20m. What the EFL did with Birmingham is what they are doing with Derby and intend to do with Sheffield Wednesday. That is to get the issue investigated and punishment set by an independent body. In the case of Derby, that body is currently  in the process of investigating the charge.That the EFL have gone this far suggests they think they have a strong case.

Now Sheffield Wednesday:

The EFL charged Sheffield Wednesday but for creative accounting. Like Derby, they sold their ground to themselves. The EFL are not questioning the price for the sale but creative accounting which attributed the sale to the wrong tax year to allow Wednesday to meet the FFP conditions (which is assessed over a three year period). The EFL see this as a cynical manipulation but Wednesday have strongly denied it. Now from what I can gather, Wednesday's position is not so much that they didn't do what they did, but that they believe or are stating the EFL gave them position to do so. The have sued the EFL and until that is resolved, they cannot move onto the independent body stage. The stage to deal with the Sheffield defence is being referred to as arbitration. That is taking place and is expected to be completed this week. The EFL want this sorted a.s.a.p.

Reports from some Sheffield sources suggest Wednesday have lost this stage although this is yet to be officially confirmed by the club or EFL. If that is the case, they will move onto the final stage which is where Derby are now.

Additional info:

What we know from the EFL is that both clubs face severe punishment if found guilty. They can fine heavily, dock up to 21 points aor even remove the clubs from the league. 

Taking Birmingham as an example, they were docked 9 points. This in itself should tells us that if found guilty, points will be deducted. What is different is that Birmingham accepted their guilt and punishment and as a result, the punishment was not as harsh as it could have been. This was almost certainly tactical from them as they had gathered enough points that a 9 points deduction was not likely to send them down. 

Both Derby and Wednesday have fought the league all they way. Wednesday have taken legal action against the EFL. This suggests that if one of them or both are found guilty, they will face a deduction higher than 9 points as that is what Birmingham received.

We should be hearing the Derby outcome soon as the independent process is underway and Wednesday will move onto this process if they do not win the arbitration. What the league has to be weary of is potential action from other clubs. Steve Gibson at Boro has been very vocal as they missed out on the play-offs last season by one point and two clubs, Aston Villa and Derby are accused of cheating. (The Premier league are investigating Villa). There are a number of Championship clubs pushing for Derby and Wednesday to be punished.

You would think the league will want to announce the punishments (if they are found guilty) together. This is because if Derby are deducted say 12 points, they will be below Wednesday which could be an issue if Wednesday are able to drag the process out. The EFL have stated that they are very keen for the process to be completed quickly. Initially, before Wednesday took legal action, they wanted it done by the end of February.

Birmingham were charged and docked points in March last season.

Hope this is informative. Please correct any inaccuracies or add anything I might have missed.
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Comments

  • So Birmingham arent set to be docked any further points themselves?
  • Yes, they could too. I think they have been charged with a breach of the business plan agreed with the EFL after the points deduction last year. But I haven't been able to find so much on this. Possibly because the charge took place later and it is not at such an advanced stage. But I am not sure. It could be an issue, as you can't deduct points from Wednesday or County which could send them down without addressing Birmingham.
  • I read somewhere there was still a possibility of a further point deduction for Birmingham.
  • They have been charged, yes
  • Owls Talk is suggesting the arbitration hearing - of which there is no appeal - has been sorted and the result will be released this week.

    They are very concerned as they believe they may get a 12 point deduction, with a further 9 points (possibly suspended) for 'aggravated' circumstances.
  • edited February 26
    What I think the issue with Birmingham is that they agreed with the EFL to sell off assets in January 2019 (players to X value) which they didn't. Birmingham say they did not sell players because the bids they received were not realistic in relation to their value.

    They have a point in that Che Admas was sold to Southampton for significantly more than was offered in January. Clubs knew that Birmingham had to sell players and tried to nick their players off them because of this. But Birmingham agreed with the EFL that they would sell. 

    Birmingham were, at the time, operating under a restriction on making new signings. They did not know at that time how many points they would be docked (It happened in March). So by selling key players on the cheap and not being able to replace them, they might have made relegation far more likely. In their case you can understand why they are contesting the charge, but they have been charged all the same. 

  • edited February 26
    I think it is serious though as the EFL have shown already that they are not afraid to dock points. Having said that, they docked Birmingham 9 points in March when it was clear Birmingham would probably not be sent down by that punishment. If found guilty, the precedent has been set and because the 9 points Birmingham got were lower because they co-operated, you have to expect a minimum of 12 points for non co-operating clubs if found guilty.

    Plus if the clubs win it makes the EFL look like idiots. With all the money involved, they have to sure of the ground which makes me think at least one club is going to be deducted points. Each case is a little different. Thinking about Birmingham, whilst I have sympathy for them, if you look at it as a matter of fact. Birmingham agreed to do something which they didn't and the fact they have been charged, maybe they are just as likely to get points deducted. But how many is less easy to predict. 
  • This season the league is so tight that very few points deductions are likely to be "meaningless", 9 points deducted from Wednesday or Derby now would put them just above the bottom 3, while 12 points would put them in the bottom 3, and right in the heart of the relegation battle. Wednesday are struggling, but even Derby have no win in 4, survival for them wouldn't be guaranteed
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  • What is intresting is they currently all have the same number of points.  And are all exactly 11 points from the last play off place, and the last relegation place.

    If they get a 9-12 point deduction they would be in a relegation scrap with 9 other teams.  But they would also have no chance at the playoffs.

    Now here is the twist, if Man City are in breach of thier contracts with thier own players for getting band from the champions league.  Would these players not have an argument that the business practises of thier employer removed any chance of promotion?  However unlikely it would be?

    So not only could Birmingham loose out on a windful for Bellingham, which would ironically solve all thier problems, but it would change the whole championship economy during the summer. 
  • I think that having set a precedent last year by docking 9 pointsc from Birmingham  that the EFL will do the same with both Derby & Sheff Wed. Even though they might have slightly different issues I think the EFL will want both clubs to feel that the punishment is in line with the previous one & so not leading to any further arbitration or appeals if one if the clubs feel that they are being dealt with harshly or differently. Just my opinion mind 

    As for Birmingham. If they had agreed a certain punishment (sale of players in Jan) but then didnt comply then that deserves further punishment. The fact they couldn't get the price/value they thought the players were worth is just tough. Take the medicine or accept the consequences. However, I dont think it will lead to a big points deduction if any at all. Probably just a huge fine, ie something akin to what they should have brought in if they sold the players in Jan. 
  • edited February 26
    i would agree with Chris from Sidcup, had it not been for last season. They set a precedent in terms of punishment. We may think they will bottle it due to the threat of litigation but they don't just have that threat from the teams in question. The clubs that feel they have been disadvantaged by the cheating clubs are putting a lot of pressure on the EFL I understand. I don't know how many, but I think it is a few from what I have read. 

    I think there is a lot of pressure to do at least one of the clubs. I suspect Wednesday are most likely as they seem to be admitting they did the creative accounting but the EFL told them they were happy for them to do it. I doubt that is the case or there would be no charge. I am just speculating here, but lets suppose Wednesday had a crap CEO who misunderstood the position at the time! Probably the first thing they would do is push them off the cliff and this might suggest they are up shit creek without the proverbial paddle.

    In the case of Derby. How much is a football ground worth in that location? It is probably difficult to answer as it is the only ground in that location. That might be Derby's best defence, although I believe it is the massive scale of the discrepancy which caused the charge. 

    In terms of Birmingham. If they agreed to sell £x in assets in January 2019 and didn't they have gone back on what they promised. They have a defence, but the fact that they have been charged may suggest the EFL does not care about that. Seeing as there is a link to the original charge and points deduction, maybe the points deduction might be closer to 3 points. But who knows?
  • If found guilty, I think it is unlikely the clubs will be docked only 9 points. Birmingham co-operated and pleaded guilty because they had points in the bag and wanted to get the punishment mitigated. The EFL would have to send a message to other clubs that if you don't take the punishment in the right way, you will be docked more points, so I think 12 would be the minimum. 
  • i would agree with Chris from Sidcup, had it not been for last season. They set a precedent in terms of punishment. We may think they will bottle it due to the threat of litigation but they don't just have that threat from the teams in question. The clubs that feel they have been disadvantaged by the cheating clubs are putting a lot of pressure on the EFL I understand. I don't know how many, but I think it is a few from what I have read. 

    I think there is a lot of pressure to do at least one of the clubs. I suspect Wednesday are most likely as they seem to be admitting they did the creative accounting but the EFL told them they were happy for them to do it. I doubt that is the case or there would be no charge. I am just speculating here, but lets suppose Wednesday had a crap CEO who misunderstood the position at the time! Probably the first thing they would do is push them off the cliff and this might suggest they are up shit creek without the proverbial paddle.

    In the case of Derby. How much is a football ground worth in that location? It is probably difficult to answer as it is the only ground in that location. That might be Derby's best defence, although I believe it is the massive scale of the discrepancy which caused the charge. 

    In terms of Birmingham. If they agreed to sell £x in assets in January 2019 and didn't they have gone back on what they promised. They have a defence, but the fact that they have been charged may suggest the EFL does not care about that. Seeing as there is a link to the original charge and points deduction, maybe the points deduction might be closer to 3 points. But who knows?
    Pride Park is located in a dull retail park surrounded by "casual dining places", warehouses, car dealers, budget hotels etc, a typical location for many newer grounds (Wigan, Bolton, MKD spring to mind). Pleasant enough, but hardly a premium location like say Stamford Bridge or Craven Cottage
  • i would agree with Chris from Sidcup, had it not been for last season. They set a precedent in terms of punishment. We may think they will bottle it due to the threat of litigation but they don't just have that threat from the teams in question. The clubs that feel they have been disadvantaged by the cheating clubs are putting a lot of pressure on the EFL I understand. I don't know how many, but I think it is a few from what I have read. 

    I think there is a lot of pressure to do at least one of the clubs. I suspect Wednesday are most likely as they seem to be admitting they did the creative accounting but the EFL told them they were happy for them to do it. I doubt that is the case or there would be no charge. I am just speculating here, but lets suppose Wednesday had a crap CEO who misunderstood the position at the time! Probably the first thing they would do is push them off the cliff and this might suggest they are up shit creek without the proverbial paddle.

    In the case of Derby. How much is a football ground worth in that location? It is probably difficult to answer as it is the only ground in that location. That might be Derby's best defence, although I believe it is the massive scale of the discrepancy which caused the charge. 

    In terms of Birmingham. If they agreed to sell £x in assets in January 2019 and didn't they have gone back on what they promised. They have a defence, but the fact that they have been charged may suggest the EFL does not care about that. Seeing as there is a link to the original charge and points deduction, maybe the points deduction might be closer to 3 points. But who knows?
    How do you value a football ground?  It's almost impossible isn't it?  It's certainly impossible to do it consistently using anyone method. 

    How much is Old Trafford worth?  100s of millions if Manchester United play there, nothing if they don't?  The land value, although a massive plot, is almost certainly worth less than Craven Cottage that's about 1/4 ot the size.   A modern football stadium over about 15-20k capacity has no other real practical use.  Unless you could attract and NFL franchise to Derby or Sheffield? 

    So the only reason anyone would buy Pride Park or Hillsborough at anything like a "market rate" would be to rent it back to the club.  So I can't see how you can actually value it subjectively. 


  • I think that is the problem with the Derby charge. A ground is worth what buyers are prepared to pay for it. I think the EFL received advice from experts as to what the value might be and it was significantly less than what Derby paid (£60m). Now if the price paid, conveniently resolves the FFP issue it looks very suspicious. I understand the discrepancy is at least £20m which is probably why the EFL charged Derby but it might be the most complex of the three.
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  • .........And if that approach fails,  just reduce the number of chips per customer!
  • E_cafc said:
    .........And if that approach fails,  just reduce the number of chips per customer!
    Don't let the Youth teams eat in the canteen, take away their bottled water and make them bring their own sandwiches.

    And don't forget to borrow money from yourself and charge the club interest!
  • Cafc43v3r said:
    i would agree with Chris from Sidcup, had it not been for last season. They set a precedent in terms of punishment. We may think they will bottle it due to the threat of litigation but they don't just have that threat from the teams in question. The clubs that feel they have been disadvantaged by the cheating clubs are putting a lot of pressure on the EFL I understand. I don't know how many, but I think it is a few from what I have read. 

    I think there is a lot of pressure to do at least one of the clubs. I suspect Wednesday are most likely as they seem to be admitting they did the creative accounting but the EFL told them they were happy for them to do it. I doubt that is the case or there would be no charge. I am just speculating here, but lets suppose Wednesday had a crap CEO who misunderstood the position at the time! Probably the first thing they would do is push them off the cliff and this might suggest they are up shit creek without the proverbial paddle.

    In the case of Derby. How much is a football ground worth in that location? It is probably difficult to answer as it is the only ground in that location. That might be Derby's best defence, although I believe it is the massive scale of the discrepancy which caused the charge. 

    In terms of Birmingham. If they agreed to sell £x in assets in January 2019 and didn't they have gone back on what they promised. They have a defence, but the fact that they have been charged may suggest the EFL does not care about that. Seeing as there is a link to the original charge and points deduction, maybe the points deduction might be closer to 3 points. But who knows?
    How do you value a football ground?  It's almost impossible isn't it?  It's certainly impossible to do it consistently using anyone method. 

    How much is Old Trafford worth?  100s of millions if Manchester United play there, nothing if they don't?  The land value, although a massive plot, is almost certainly worth less than Craven Cottage that's about 1/4 ot the size.   A modern football stadium over about 15-20k capacity has no other real practical use.  Unless you could attract and NFL franchise to Derby or Sheffield? 

    So the only reason anyone would buy Pride Park or Hillsborough at anything like a "market rate" would be to rent it back to the club.  So I can't see how you can actually value it subjectively. 


    How do you value a football ground? Simple answer really, ask Napa
  • edited February 26
    This is a massive can of worms.  By taking retrospective and late action on imprecise rules, the EFL are opening themselves up to massive legal issues from clubs denied the Premiership due to cheating.  

    Such action may lead the EFL into liquidation and a replacement organisation formed. Can only be good for football.
  • If cooperation gets you a 9 point penalty, failure to cooperate should be double in my opinion
  • Deduct 

    12 points from Birmingham,
    20 points from Derby for a spurious dispute
    and
    20 points from Sheffield for tax evasion and fraudulent activity towards the EFL. 
  • I read somewhere that the issue with the value of pride park is Derby valued the stadium on its books as worth £40m, but then Mel Morris got it "independently" valued at £80m so thats what he purchased it for
  • I wonder if SWFC new 20 year season ticket plan is anything to do with raising some money fast to negate this?
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