Blackpool Supporters' Trust column: Derby County's Premier League dream has turned into a nightmare
At the time of writing, life looks pretty encouraging for Pool fans everywhere.
We’ve just taken six points from nine and look as though we are finding our Championship feet.
It seems timely then, to focus on the plight of fans at a fellow Championship club, who look as though they are having the rug pulled out from under theirs.
We are, of course, alluding to Derby County, after owner Mel Morris chose to put them into administration.
In truth, they have been making negative headlines for months due to their protracted row with the EFL about financial irregularities.
These centred on the way the club depreciates assets and their ability to stay within Financial Fair Play rules (FFP).
The situation is very serious. Administration carries a default penalty of 12 points and it is difficult to see Derby succeeding in arguing that they should escape this because of the impact of Covid. That line of argument has failed before.
There is every likelihood that the financial irregularities will attract a further penalty. At the weekend, Mr Morris was making hopeful noises about this being “just” another four points. Many think the penalty is more likely to be nine or even another 12.
Such a penalty will almost certainly lead to Derby being relegated. The squad may have to acquire around 70 points on the field just to survive, and as they will continue to be under a transfer embargo, their prospects look bleak.
The squad is small and made up of a mixture of promising kids and veterans, who are heroically over-performing at the moment.
Whether they can withstand the attrition that comes with a long season is open to doubt.
The consequences of being in the hands of an administrator and heading for League One are potentially grim.
The administrator’s primary job is to secure maximum value for the club’s assets in order to satisfy creditors, not to run the club like a fan would.
Ordinarily that would mean selling the best players, though Derby can’t even do that until the next transfer window in January. Trading from day to day in the meantime is going to be a challenge.
The real value of the current squad must be limited but Derby appear to have few other assets to sell.
It is unclear whether the stadium is subject to administration, as Mr Morris sold it and it is mortgaged to an American company.
The training ground is also subject to a loan and there isn’t much else. The club is thought to owe around £26m to HMRC and Mr Morris has previously suggested that he was supporting it to the tune of around £1.5m a month.
There have to be real doubts therefore as to whether the administrator can keep the club afloat as a going concern without a buyer - and the value of the club to prospective new owners is getting smaller every day.
You may by now be wondering how it came to this. Mr Morris has a track record as an extremely wealthy and successful businessman, so how has this club reached a position whereby in the last year for which figures are available it was spending 151 per cent of its revenue. That’s not good business practice.
The answer appears to be that Mr Morris gambled on spending big and getting into the Premier League.
He may have done so but for a play-off final defeat and this article could well have been written about Aston Villa instead - but he didn’t and now chickens are coming home to roost.
In fairness to Mr Morris, he is not alone in spending money his club does not have, or mortgaging its future.
Sheffield Wednesday got punished for financial transgressions and paid for them with a relegation they would otherwise have avoided.
Birmingham and Reading have both been hit with sanctions recently and are in delicate financial positions as a result.
Around 80 per cent of the clubs in the Championship spend more money on wages alone than they take in. It is, to coin a phrase, the economics of the madhouse.
That it happens says much about the way TV revenue is distributed between the leagues. When a club who finishes bottom of the EPL is rewarded with over £120m (plus parachute payments), while the likes of Stevenage and Walsall get around £400k, you can understand why some club owners are dazzled by the size of the prize and behave accordingly.
Does this matter to Blackpool? After all, effectively reducing the number of relegation spots to two might be very helpful to a newly promoted team but we would argue that it is wholly unsatisfactory for two reasons :
Firstly, it makes a mockery of “competition integrity”. The League should be decided on the field of play, not in an EFL tribunal; and secondly, the current rush to the bottom in terms of financial management puts enormous pressure on those club owners who choose to run their clubs prudently.
The way the game is structured in England offers very little in the way of reward for clubs who husband their resources carefully and try to build a sustainable business based upon good recruitment and developing young talent.
There is therefore an awful lot at stake in terms of Tracey Crouch’s fan-led review of the game. She is due to publish her final recommendations in late October.
The pressure will then be on the government and others to deliver real, lasting change that encourages club owners to treat the clubs they own with the veneration they deserve.
Much of the media attention on Derby centres on Mr Morris and on Wayne Rooney, but the real losers are likely to be the supporters, the unsecured creditors and back-office staff at the club who face the prospect of being unemployed for Christmas.
It shouldn’t be like this, and for BST the fight goes on to ensure that we get something far, far better.
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