Sky Bet Championship clubs accused of selling grounds then renting them back to exploit FFP rules
Matt Hughes, Sports News Correspondent
May 17 2019, 12:01am, The Times
Derby recently revealed they had sold Pride Park to Morris, the club’s owner
The English Football League will review its financial fair play rules this summer after complaints from clubs in the Sky Bet Championship that their rivals are exploiting the system by selling off their grounds and leasing them back as a way of balancing the books.
Sheffield Wednesday and two other Championship clubs are believed to have followed the example of Derby County, who revealed last month that they sold Pride Park to the club’s owner Mel Morris for £80 million last year, enabling them to record a pre-tax profit of £14.6 million for the 2017-18 season. Aston Villa are understood to be considering selling Villa Park if they fail to win promotion to the Premier League in this month’s play-off final.
Under EFL profit and sustainability rules that prohibit clubs recording losses of more than £39 million over a three-year period, there is nothing to prevent such sale and lease-back schemes, which are an accepted method of solving cashflow problems in other industries. Many clubs consider it unethical, however, and the EFL board has agreed to review its regulations. It is understood that the subject will be on the agenda at the end-of-season meeting of Championship clubs in Portugal next month.
Several clubs have expressed anger that their Championship peers appear to be using creative accounting to bypass financial fair play (FFP) regulations that have resulted in Birmingham City being docked nine points and Queens Park Rangers fined £42 million for breaches in the past 12 months. Derby and Villa are understood to be two of the clubs most at risk of breaking the EFL’s £39 million loss cap and incurring sanctions if they are not promoted to the Premier League. Wednesday and Leeds United are also at risk.
The EFL introduced a set tariff for FFP breaches this season. A maximum of 12 points could be docked, although a further nine can be added if an aggravated breach is proven.
One owner of a Championship club told The Times: “According to the rules it’s not cheating, but we should change the way the rules are written. In this instance fair play doesn’t mean anything. It’s not ethically correct.”
The chief executive of another club added: “My owners are furious about this and demanding change. It’s not a level playing field at present as the rules are meaningless.”
Villa raised £4 million through the sale of a car park close to Villa Park last year and will look at selling the entire stadium as an option to raise funds if they are in breach of the EFL’s spending limits this summer. Wednesday’s situation is even more intriguing as they have yet to file accounts for the year ending July 2018. These were due on April 30.
Villa Park could be sold if the club fail to win promotion to the Premier League
The Times understands that the club have also failed to file accounts to the EFL which were due last December, which could lead to them being fined. A club spokesman said that any new arrangement regarding Hillsborough would be clear in their accounts, which they insisted would be published in the next few weeks.
“The long-term sustainability of all EFL clubs remains of paramount importance and we will continue to work with Championship clubs in respect of the rules at next month’s summer conference,” an EFL spokesman said. “Clubs have also been reminded of the stringent processes undertaken in reviewing financial submissions and that in the event any club is found to be in breach of the rules, they will be referred to an independent disciplinary commission.”