Article on The Athletic

[stabbo]

EFL ‘frustrated’ by Wednesday’s stalling but want to deduct points this season

 

 

Fears are growing at the English Football League that its dispute with Sheffield Wednesday over the sale of their stadium will spill over into the close-season, raising the possibility of legal action from clubs relegated from the Championship in May.

The South Yorkshire club are facing severe punishment after being charged with an aggravated breach of the league’s financial fair play rules in December, with owner Dejphon Chansiri and two former directors also in danger of receiving bans.

Several Championship clubs have told The Athleticthey believe Wednesday should receive the full 21-point deduction available to the EFL under its “profitability and sustainability” (P&S) regulations, and it is understood that some senior EFL figures are minded to agree.

Wednesday are 15th in the table on 48 points, nine above Charlton Athletic in 22nd on 39 points, 13 ahead of Luton Town and 14 better off than Barnsley at the foot of the table. If the sanction was to come now, anything greater than nine points would put Garry Monk’s side in the relegation zone with nine games to go, a dire predicament for a team that was third at Christmas but have won only one of their last 10 league fixtures.

It is understood the EFL’s new leadership is desperate to resolve the case well before the end of this season so any punishment is applied in this campaign and not held over until 2020-21. The rationale is that a points deduction in August is not as punitive as one in March or, to put it another way, justice delayed is justice denied.

But the actual P&S case, which will be heard by an independent panel, has not even started yet as the club’s lawyers — led by Nick De Marco QC, the barrister who fought the EFL for four years over Queens Park Rangers’ breach of the league’s spending rules in 2014 — have vigorously contested the basis of the charge, forcing the EFL to defend its stance in two arbitration hearings.

Sources have told The Athletic the EFL is “frustrated” by Wednesday’s stalling tactics but is pressing on with a “revised timetable” that could still see the matter concluded before the last round of Championship fixtures on Saturday, May 2.

A source close to Wednesday’s camp has said the case’s timing “is more sensitive and controversial than any other detail”.

That sensitivity cannot be understated as the other clubs fighting relegation are watching closely. Among those threatened with the drop are Huddersfield Town, Hull City, Middlesbrough and Stoke City, four teams with recent Premier League experience and owners who have robust views on the EFL’s spending regulations, while the sides currently in the relegation places, Charlton, Luton and Barnsley, have all operated with relatively small budgets in order to comply with the rules.

Wednesday’s alleged misconduct is related to how and when the club sold their Hillsborough home to Chansiri, as well as the valuation of that transaction, with the league suggesting the Thai businessman, former chief executive Katrien Meire and finance director John Redgate misled them.

The club’s finances have been under the microscope since last summer when they pushed their usual year-end back from May 31 to July 31, delaying the publication of their accounts for the 2017-18 season.

That was the season Chansiri had hoped his team would return to the Premier League for the first time since 2000 but a 15th-place finish was a disappointing return on the huge investment he made in coaches and players.

But it also meant Wednesday were set to overshoot the league’s spending limits. Under the P&S regulations introduced in 2016, losses at Championship clubs are capped at £39 million over a rolling three-year period.

Wednesday lost nearly £10 million in 2015-16 (when they lost 1-0 in the Championship play-off final to Hull), just over £20 million in 2016-17 (when they again made the play-offs) and were heading for a pre-tax loss of around £35 million in 2017-18 until they — like Aston Villa, Birmingham City, Derby County and Reading — took advantage of a loophole that allows owners to sell their stadiums or training grounds to themselves to bank a one-off profit.

Wednesday did this by selling their ground to Chansiri for £60 million, with an official profit on the transaction of £38 million.

According to their accounts, which were signed off by the owner on June 20 last year and filed a day later, this turned an operating loss into a pre-tax profit of £2.6 million. Once deductions were made for infrastructure improvements and money spent on the academy, their three-year P&S loss was £19 million — £20 million inside the limit.

The actual sale of Hillsborough was mentioned on the penultimate page of the accounts, where it is suggested the £60 million will be paid in eight annual instalments of £7.5 million. There are no clues, though, as to how much rent the club will pay Chansiri’s stadium ownership vehicle Sheffield 3 Ltd — a key consideration in the ground’s valuation.

But the real issues relate to the timing of the sale. According to documents at Companies House and the Land Registry, Sheffield 3 was incorporated on June 21, the same day the accounts were filed, and the stadium sale went through a week later.

This, though, is a year after Wednesday have accounted for the sale, which suggests it should be too late to count against their operating losses for 2017-18. Without the sale, Wednesday would have lost more than £57 million between 2016 and 2018 — £18 million over the limit.

Birmingham got a nine-point penalty last season for incurring losses of nearly £49 million over three seasons — £10 million over the limit. Since then, however, the EFL has told its clubs that points will be deducted on a sliding scale, from three points for a breach of less than £2 million to 12 points if it is more than £15 million. A further nine points can be taken away if the panel agrees the breach involved deception or the club failed to cooperate. 

Derby were the first club to spot the stadium-sale loophole in 2017 and transformed a huge annual loss into a £40 million profit when owner Mel Morris bought Pride Park for £80 million. Since then, Villa’s owners have bought Villa Park for nearly £57 million, Reading’s owners have purchased the Madejski Stadium for just under £27 million and St Andrew’s was sold to a company linked to Birmingham’s owners for £23 million. 

Wednesday have said they will “vigorously defend” themselves when the matter goes before a panel and it is understood their defence will be based on the claim the EFL was aware of what they were doing and effectively sanctioned it.

The Athletic has been told the club warned then-EFL chief executive Shaun Harvey about their P&S crunch and that they intended to fix it by selling the stadium. Several weeks of talks about Hillsborough’s valuation followed but the figure of £60 million was said to have been approved by the league.

This agreement came after the deadline for the financial year but the club will argue this followed consultation with the EFL in the summer of 2018.

The EFL declined to comment on the delays to the case but has previously said the charges followed a “comprehensive investigation”.

The club have not responded to request for comment on their legal tactics but have previously said they consider the charges to be “unlawful” and will therefore bring their own claim against the EFL.

Founder members of the Premier League and England’s third oldest professional club, Wednesday have won four top-flight titles in their history, as well as three FA Cups and a League Cup, their most recent trophy in 1991. But they have also been relegated to the third tier twice since 2000, spending a total of four seasons below the Championship.

Relegation this season, however, would be particularly alarming for their still large fanbase, as it would raise immediate questions about Chansiri’s willingness to bankroll the club, particularly if he is banned from any direct involvement, with the added complexity of who owns Hillsborough.

The future of Monk, the club’s 14th manager since 2000, would also immediately come under doubt, as well as the eight senior players out of contract at the end of the season, including top scorer Steven Fletcher and highly-rated defender Morgan Fox.

[BRUCE LEE]

So

10 year season ticket anyone?

Edited March 10, 2020 by BRUCE LEE

[ReadingOwl]

I’m waiting for Andy Hinchcliffe’s take on this.

[DJMortimer]

We're becoming one of those grubby clubs that I was always glad we weren't. Pushing the rules to their limits, being unco-operative, not holding ourselves to a higher standard. What a shameful episode in the club's history that at the moment looks likely to result in relegation.

 

Incompetence of the most heinous kind.

[S36 OWL]

What a shambles 

 

Thanks DC 

[Mr. Chow]

Loving the little tin pot clubs coming together to knock us down, who’s next in the queue after us? 

[WalthamOwl]

What an absolute mess this club is. Embarrassing. Imagine if we got a 21 point deduction! If it happens I hope DC is locked up! 

Edited March 10, 2020 by WalthamOwl

[Guest Kameron]

A unique opportunity is to be offered  to supporters willing to purchase a 10 year season ticket.  The first 3 seasons will enable supporters to enjoy the very best of league 1 football, upon expiry supporters will be invited to reclaim the costs of the final 7 years,  details of the administrators  will be named in due course.

Edited March 10, 2020 by Kameron

[cowl]

I'm not sure I'd agree that “justice delayed is justice denied”, should we get a 21 point deduction to start next season with.

 

I'd rather we get relegated this season and then at least we know where we stand for next season rather than have another season spoiled.

[striker]

Still think we have a good chance of winning arbitration. EFL leaking comments sounds like they're losing to me.

 

If they had a strong enough case, arbitration would have been concluded by now.

 

[WalthamOwl]

2 minutes ago, striker said:

Still think we have a good chance of winning arbitration. EFL leaking comments sounds like they're losing to me.

 

If they had a strong enough case, arbitration would have been concluded by now.

 

I really hope you are right. 

[0114]

I’m not hopeful. I just hope it’s concluded soon. 

[Lucas Joao's Tooth]

Take the punishment now and risk being relegated 

 

OR

 

Drag it into a new season with the possibility of starting with -21 points.

 

We are playing with fire and its a absolute shambles, personally i rather see us take the punishment and risk being relegated it would give us a chance to rebuild if we did go down than start next season on a points deduction struggling to attract players to sign then inevitably getting relegated anyway unless a miracle happens.

We must be very confident of either a minor punishment or none at all, or we are just plain stupid, probably the latter. 

Edited March 10, 2020 by Lucas Joao's Tooth

[Rhubarb n Custard]

7 minutes ago, striker said:

Still think we have a good chance of winning arbitration. EFL leaking comments sounds like they're losing to me.

 

If they had a strong enough case, arbitration would have been concluded by now.

 

That may well be the case but what a grubby mess DC has created bringing total shame on this historic club. 

Just go DC, sell up and go. 

[Morepork]

Only part way through reading it.

 

Firstly, what an indefensible mess. Regardless of the ultimate outcome.

 

Re: The "justice delayed is justice denied" statement. I totally agree and on that basis believe that in the interest of fairness any deduction should be backdated to last season when the offence occurred.........

[Guest]

9 minutes ago, striker said:

Still think we have a good chance of winning arbitration. EFL leaking comments sounds like they're losing to me.

 

If they had a strong enough case, arbitration would have been concluded by now.

 

Thank you for that detailed insight Atticus Finch

[ReadingOwl]

2 minutes ago, Grandad said:

 

Thank you for that detailed insight Atticus Finch

A bit cerebral for you, that Nigel.

 

* Wasted on here.

 

[Guest]

1 minute ago, ReadingOwl said:

A bit cerebral for you, that Nigel.

 

* Wasted on here.

 

I'm out of practice

[Morepork]

" Charlton, Luton and Barnsley, have all operated with relatively small budgets in order to comply with the rules."

 

Or they are just broke. Seemingly its much easier to operate within the rules if you don't have the means to do anything else. Not a defense of our actions but a criticism of a system that clearly stifles competition and apparently results in clubs doing dumb sh!t like selling their own ground.......

 

 

[Anthndav]

Nightmare scenario: our form relegates us and the EDL deduct 21 points next season.