EFL Response to RamsTrust Questions

The EFL has responded to questions fielded by RamsTrust members. These questions were asked before Derby’s second points deduction, however the meeting was after the aforementioned points deduction.

  1. In our last meeting, you said the EFL would try to help to save Derby
    County. What have you done to help?

    Working to the principle that all EFL member Clubs are responsible for their
    own individual decisions in respect of their finances and operations, the EFL
    has worked with Derby County throughout the relevant stages and processes
    involved since the original charge, judgment in 2020, the appeal and
    subsequent sanctioning hearing and sporting sanction appeal. The League has
    sought to work with the Club, and recently its Administrators, regarding funding
    requirements, while simultaneously taking steps to agree to a suspension of the
    notice of withdrawal of membership. In effect, the EFL has attempted to give
    Club the best opportunity to move forward positively and to continue as a member
    of the League. Based on the recent agreed decision, the Club’s administrators
    now have increased certainty when communicating with any potential new
    purchasers.

  2. It is reported that the EFL is going to punish Derby County with a further
    9-point deduction. Why so many when, after appeal, Sheffield Wednesday
    were only deducted 6 points, despite falsely entering the sale of their
    stadium into the wrong financial year?


    All Championship Clubs are subject to the same reporting requirements in
    respect of P&S, however there is often a range of differences between cases
    in respect of specific breaches. For example, a Club may breach one or more
    seasons’ reporting periods and by varying amounts. In respect of Derby, the
    Club has accepted that it breached in three of the four reporting periods. In
    essence there are always differences between cases, and these decisions are
    therefore independently ratified, ultimately providing a consistent and fair
    process for all parties.

  3. Can the EFL confirm why a further nine-point deduction is in order, as we
    have been told that any P&S breach which was ‘masked’ through the
    alternative amortisation method would have equated to a four-point
    deduction on the sliding scale? There is clearly a massive difference in
    opinion there, which would in normal times have led to yet another
    Independent Panel being asked to rule?


    The League is limited to what additional information it can provide relating to
    the agreed decision, however ultimately the decision was subject to ratification
    by an Independent Chair and, based on all evidence submitted, the nine-point
    penalty has been considered to be an appropriate outcome for all parties, based
    on multiple breaches identified.

  4. Why didn’t the EFL specify a straight-line amortisation method if that is
    what it was looking for? The alternative approach to amortisation still

    accounts for all the costs albeit in future periods. The charge relating to
    amortisation appears to be an ‘error’ rather than a deliberate failure – and
    this directly led to subsequent FFP failings. DCFC certainly hasn’t done
    anything to misstate or incorrectly designate costs or revenue to the
    wrong line which would be the kind of red flag that a points penalty is
    there to deal with.


    As was stated in previous judgments, the EFL had put forward its view that the
    Club had breached the Profit & Sustainability (P&S) rules regarding the
    amortisation of player registrations. Following the completion of the
    independent judicial process that charge was upheld and the Club had to
    resubmit its accounts prepared using a compliant form of amortisation in
    accordance with accounting standard FRS102. It is the responsibility of all
    member Clubs to adhere to the correct procedures relating to the finalisation
    and auditing of its Club accounts. That said, this matter may form the basis of
    future discussion with Clubs, to determine if further regulatory requirements are
    needed in relation to establishing clarity in respect of amortisation methods.

  5. Why did it take the EFL several years to make the charge regarding the
    amortisation method? Is there any provision in the EFL rules to reopen
    accounts once they have been audited and signed off by all parties?


    For clarity, Clubs themselves sign-off their accounts, and their auditors check,
    audit and sign-off, before they are then submitted to the EFL. The original
    Disciplinary judgement clarifies why the EFL took the decision it did in respect
    of the Club’s accounts and this was accepted by the Commission. In relation to
    the actual accounts submitted, based on the nature of the breaches, the impact
    became clearer over a period of time, and subsequently the Independent
    Commission then accepted that the EFL was within its rights to raise the matter,
    based on the findings established.

  6. Does this mean further charges can be brought in future, or does this
    ‘clear the slate’ for Derby County?


    The agreed decision was reached to help the Club and its Administrators to
    move on positively and seek to establish new interested parties. The
    suspended three-point deduction will take effect if the Club does not comply
    with the terms of the budget as set out in the ‘Agreed Decision’ for the remainder
    of season 2021/22. In addition, as is the case with any exit from Administration,
    a number of financial requirements will be agreed with any new owner which
    will set out how the Club is required to financially operate over a set period of
    time, in order to ensure it continues to meet its obligations as a member of the
    League.

  7. Are you now going to reopen old accounts for all the other Clubs that
    have broken Financial Fair Play – even if they were promoted?


    There is currently no precedent of any Clubs having breached Financial Fair
    Play rules in the season they have been promoted. For example, over the full
    three-year rolling reporting period, Clubs can sell assets in order to comply with
    the relevant reporting thresholds. Therefore the League can only apply the rules
    as they are currently adopted and agreed, and in accordance with the reporting
    periods determined.

  8. The precedence issue: The only acceptable restatement would be based
    on trading (new contracts and signings) decisions made following the
    charge being bought in January 2020. As has been noted, trading
    decisions made 2015-19 would have been based on the auditor approved
    approach to amortisation and with reference to P&S headroom (rolling
    39m losses).


    All of these factors were considered in arriving at the decision.

  9. On the 12 point administration deduction, does the EFL feel Derby would
    have entered administration if the grounds were open for the last year and
    a half and covid hadn’t happened? It’s fair to say that the business model
    used has caused Derby to be affected more by covid, than a lot of other
    Clubs and whilst we accept that we have a lot of debt etc, this would have
    been serviceable if covid hadn’t happened and thus it’s unreasonable to
    use the 12 point deduction punishment in this case as per the EFLs own
    rules. Especially when you consider the restrictions embargos caused by
    the charges and the impact covid has had in the Club.


    The hearing process provided opportunity for these claims to be presented by
    the Club. The EFL is cognisant of the impact of COVID, however following the
    evidence presented the Club agreed its claim should be dismissed. The League
    is bound by confidentiality in respect of further details other than to clarify that
    a range of evidence was submitted as part of the hearing process, and
    ultimately the Club accepted the final outcome.

  10. If covid is not deemed to have had an impact on finances, presumably
    there will be multiple further charges against other Clubs for breaking FFP
    limits as accounts are published for last season?


    It is accepted that Clubs have suffered COVID-related losses, however this
    case determined that it was not the sole cause of insolvency. At the onset of
    the pandemic, the rules were adjusted to allow for COVID-related ‘add-backs’,
    which assisted with a number of areas of compliance regarding P&S
    submissions. This was taken into account in respect of Derby County’s
    compliance.

  11. The points penalty only penalises the Club and the fans – and not the
    owners who took the actions in question. Supporters did question the
    actions at the time and had no part in the decisions. How is this
    appropriate?


    The application of a points penalty for P&S breaches or entering Administration,
    acts as both an incentive for other member Clubs to comply with the
    regulations, and also balances the interest of all of the League’s Clubs and
    ensures a fair and sporting competition is maintained. Ultimately owners
    themselves stand to be significantly impacted by breaches of rules, and the
    regulations therefore seek to ensure fair competition and responsible
    administration by those running our member Clubs. Any Club subject to a
    charge, disciplinary hearing or sanction undeniably presents a challenging
    scenario, and the ongoing frustrations of supporters are clearly understood,
    however the League must pragmatically apply the rules as they are written, and
    Clubs themselves recognise that such sanctions exist to protect fair
    competition.

  12. Is a 21 point deduction the biggest ever given to a Club in a single
    season? Does the EFL not feel this destroys the integrity of the
    competition when the season is over in early November?


    The League stands by the process undertaken to date, and thereby the agreed
    decision in respect of Derby County. In reference to previous points deductions,
    Luton Town were deducted 30 points in 2008, which included 20 by the Football
    League for breaking rules on exiting administration and 10 by The Football
    Association for irregular matters involving player transfers. In essence, the rules
    regarding sanctions exist to protect the integrity of the competition and seek to
    incentivise Clubs to operate within the bounds of the regulations.

  13. Does the EFL think it has made any errors in dealing with Derby County
    in recent years?


    The decisions taken in relation to Derby County throughout have been done so
    in accordance with the regulations. The League will always attempt to conclude
    any such matters quickly but very often such cases become very complex and
    subject to legal influence. That said, the outcome has shown the EFL was
    correct to take the action it did, and we stand by the decisions taken.

  14. Does the EFL feel it has been fully consistent over time in applying the
    rules generally and that all members are aligned with the EFL approach?


    The League has applied its rules consistently and fairly at all times. In cases
    which are determined by an Independent Disciplinary Commission, however,
    the final decisions are not made by the EFL but by those appointed to oversee
    the process. As previously outlined the League has a responsibility to uphold
    its rules for the benefit of all member Clubs, and there are opportunities for the
    EFL and Clubs to learn, discuss and develop its regulations accordingly.

  15. If Derby County goes into liquidation because nobody is prepared to take
    on a Club guaranteed to be relegated, will the EFL feel that it has served
    the best interests of its members? Has this policy worked with previous
    Clubs in the same position?


    The EFL believes all its members have an obligation to meet the regulatory
    requirements at all times. The League’s objective is to work with its Clubs in
    accordance with those rules, however ultimately Clubs themselves are
    responsible for their ongoing management and operational activities.

  16. On the subject of squad size, the EFL states that the restrictions are there
    to prevent the Club from overspending. However, this doesn’t explain why
    it doesn’t allow the Club to make full use of the young players it has, which
    they are already paying. At the moment, several of those promising young
    players are denied an opportunity to play in the first team, despite that
    being a clear pathway to more sustainable football. Eiran Cashin and Liam
    Thompson are the two to use as an example. Wayne Rooney is on record
    as saying both would’ve played this season under normal circumstances,
    but playing either of them, even for just one minute, would have made
    them a player of professional standing and meant one less free agent he
    could sign. Effectively, the current embargo terms are blocking the
    pathway to the first team of young professional players who haven’t yet
    made a senior appearance. Is that really what the EFL wants?


    Derby County is bound by the agreed decision which, in relation to its playing
    squad, applies in respect of the 2021/22 season. Ultimately the Administrator
    will manage the current playing staff requirements and while the League cannot
    provide additional details on squad matters, the Club understands the
    parameters of the business plan as part of the agreed decision, and is aware
    of the options available in respect of determining players eligible for selection.
    It is therefore at the discretion of the Club to provide any further details on its
    playing squad.

  17. The EFL responses to our questions talk a lot about the unsuitability of
    the current rules, particularly parachute and solidarity payments. It also
    refers to wanting to move away from the benefactor model. Yet at the
    same time it appears to show no flexibility in applying the rules from the
    governance model that it considers to be broken. The areas raised a
    distinctly different.


    The EFL has argued that football’s financial model requires a reset, and awaits
    the outcome of the Fan Led Review on this particular issue. However, the fact
    we have made that argument does not absolve Clubs of the obligation to
    comply with the Regulations that they agreed to adopt as part of measures
    aimed at improving their financial performance or absolve the league of
    responsibility to enforce those regulations. Clearly, regulations evolve over time
    and again, we will continue to appraise the rules in place to determine whether
    they continue to be appropriate. There is recent evidence to suggest that the
    League and its members are open to changes to the regulatory framework and
    there are a number of discussions ongoing in this respect.

  18. Does the EFL anticipate any significant changes as a result of the fan-led review?

    The EFL will await the findings and advise in due course.

  19. How can we work to turn this situation into a more positive example that
    demonstrates that the EFL can act with compassion to help save and turn
    around a founder member with a rich history and large, passionate
    fanbase? Surely this would then provide a better example for change, by
    proving that it can work with understanding on both sides?


    As is evidenced throughout the history of the game, The League and its
    Clubs will continue to learn and adapt to circumstances arising. Ultimately the
    League’s approach is to support its member Clubs, and it will collectively
    continue to review and amend its regulations where appropriate, to ensure they
    remain fair, advocate strong competition both for the overall development of the
    League, and ultimately the betterment of the game as a whole.