RamsTrust representatives met with the EFL Executive Committee on Tuesday 28th September 2021.
Attendees: John Nagle, Mark Rowan, Trevor Birch, Nick Craig (EFL), Ashley Brown (FSA), Jim Wheeler, Paul Harris, Hilary Leam, Fred Motson, Jon Perkins (RT)
The EFL are eager to work with the trust and the administrators as we work towards ensuring a sustainable future for Derby County FC. Trevor Birch opened by highlighting that the current situation is a case study in clubs running the ‘benefactor model’ and then ceasing to fund the club. This is a key issue the EFL has identified and are looking at further changes to enforce club owners to provide a ‘bond’ or secure funding to guarantee clubs going forward. This will ensure that in future when owners run clubs unsustainably, they will lose out rather than the teams and the fans. The current Fan Led review with Tracey Crouch was also touched on in terms of expected changes to the game – it was highlighted that the existing financial model and disparities in club distributions between Premier League and the EFL encourages Championship club owners to gamble with the future of their clubs.
Although negotiations are continuing regarding potential further penalties for breaching EFL rules, the EFL responded to some of the issues previously raised by Mel Morris (and again in his recent interview). They advised that relevant detail would be published from the original disciplinary hearing and in the subsequent appeal – although, at 122 pages and a further 56 pages, they do accept that many supporters will have only seen summary points. They reiterated that the club has been found to have not followed FRS102 accounting policy in relation to amortisation policy – and this necessitates further reviews on whether the club has breached Profit and Sustainability (P&S) rules over multiple years. The club was always aware that this would be reviewed if the EFL was successful in the first proceedings. The EFL stressed that all rules had been set and agreed by all member clubs, and therefore had to be applied for the integrity of the competition. (The EFL did accept that some regulations are not effective and – as per Rick Parry’s recent comments – are looking to review them going forward, although some will also require the agreement of the Premier League)
RamsTrust highlighted that this is, in effect, ‘double jeopardy’ as the club has already been penalised for financial mismanagement and is threatened with further punishment for the same thing. The EFL disagreed. The sanction under P&S rules were determined under those rules and sanctions for insolvency were separate. The EFL acknowledged this would likely form part of ongoing discussions with the administrators as the administrators and the club need clarity in the total punishment so that potential investors know exactly what they are buying and can pitch accordingly – and further delays will affect this process and potentially the future of the club.
In response to a RamsTrust question, the EFL clarified that the additional 3-point penalty for wage defaults would only be applied in the event of a default – so if any staff agreed to a wage deferral voluntarily the club would not be penalised.
In regard to the current block on Under 23 players being used in the first team squad, the squad structure was for the club to determine in accordance with the embargo policy. If gaps in the first team were available the club could apply to promote players to the first team and it would be considered.
The EFL agreed to work with the administrators to expedite the process to review potential new owners to ensure the process is not delayed unduly. There are 2 phases to the Owners’ & Directors’ Test and the EFL are happy to help the administrators to identify owners who would fail these tests quickly to avoid delays.
The EFL wants to keep the communication lines open with the trust and with all stakeholders throughout the administration process – and will encourage prospective new owners to speak to and work with the trust in the best interests of the club.
RamsTrust were invited to submit questions to the EFL with the answers being made available for publishing on their website to try and explain further detail of some of the areas discussed in the meeting. The EFL are in receipt of these and have advised they will respond in due course.