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
They are very concerned as they believe they may get a 12 point deduction, with a further 9 points (possibly suspended) for 'aggravated' circumstances.
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.
Which knowing Owls Talk will somehow still send Wednesday fans into meltdown.
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.
By this i mean stringing it out until they have a clearer idea of how many points they can deduct without actually relegating either side and causing all kinds of chaos.
Hopefully i'm wrong and we'll both sides on about 32 points by this time next week!
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.
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.
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 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.
The 'Square footage of stadium footprint mutliplied by a higher end estimate for equivalent residential space in Kensington/Mayfair equals far more than anyone is prepared/able to pay'
I thought we all knew that?
And don't forget to borrow money from yourself and charge the club interest!
Such action may lead the EFL into liquidation and a replacement organisation formed. Can only be good for football.
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.