Derby County FC

Derby County entering administration amid financial turmoil

Graeme Bailey
Derby County set for Championship struggle
Derby County set for Championship struggle / Tony Marshall/Getty Images

Championship side Derby County have confirmed that they are set to be put into administration.

The Rams have announced that their holding company is seeking to appoint administrators, blaming the COVID-19 pandemic for their current financial struggles, as well as a failed takeover.

This does mean that Derby - currently managed by England and Manchester United legend Wayne Rooney - will likely face a nine-point deduction from the EFL, which would leave them bottom of the table on minus two points.

The statement from the club read: "Derby County Football Club today announced that the Club, the ultimate holding company of the group, and all of the subsidiary companies have filed notices of intention to appoint administrators.

"This action was made necessary by a number of developments. Last week, it became clear that the process which has been underway to identify a purchaser for the Club likely would not be productive over the near term, despite the number of negotiations with credible parties."

The EFL responded with their own statement confirming that Derby would be hit with a 12-point penalty.

"With confirmation from Derby County Football Club that they have filed a notice of intention to appoint administrators, the EFL can confirm that the Club will be subject to an insolvency event under the terms of the EFL’s Regulations. As a result, the Club faces a 12-point deduction. 

"Once the EFL has received formal notification of the application, the deduction will be applied.
The EFL will in due course engage in discussions with the relevant parties with the aim of achieving a successful outcome for the long-term future for the Club.

"The League is disappointed with the comments made by the Club in respect of COVID lending facilities. The EFL entered into a debt raise to provide its Clubs with access to funds that would support them in dealing with the impact of COVID and, as with any loan, this was subject to a timeframe and eligibility criteria which Derby County was unable to meet."

The lengthy statement from the club stated that were left with 'no choice' but to make this decision, with the coronavirus pandemic resulting in a £20m 'hit' to their finances.

"Because the Covid-19 pandemic has had a severe impact on the revenues and profits of all of its businesses, the Club has been unable to service its day-to-day financial obligations. The directors had no choice but to make the tough decision to take this action and protect the Club.

"The irony is that the Club’s financial forecasts show the emergence of a financially sustainable picture. Absent the Covid-19 pandemic, we undoubtedly would have been able to trade through.

"However, the impact of COVID-19 pandemic and the unpredictability it has created represents too much of a strain. As the COVID-19 pandemic and lock down tightened their grip, the Club’s revenues and cash flow took a circa £20 million hit. This season, COVID-19 has continued to have a negative effect on the Club’s revenues.

"Unlike other sectors, football has been able to only marginally reduce its cost base with the majority of outgoings being associated with playing staff who obviously could not be furloughed. It is widely known that we had significantly reduced our wage bill, but the major benefit of these reductions were not going to take effect until this season."

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EFL not happy with Derby County / Michael Regan/Getty Images

The pointed official release also pointed the finger at the EFL and rival Championship sides, who challenged part of the club's sale in January 2020, that led the deal to subsequently collapse.

It continues: "A planned sale of the club and stadium that was due to close in January 2020 collapsed when the EFL was coerced into challenging the Stadium Sale transaction, a charge that would be dismissed some 9 months later. The ongoing litigation and charges in regard to the P&S regulations and the protracted timetable for this to reach a resolution, added further uncertainty and made negotiations challenging.

"These issues also led the EFL to preclude the Club from drawing down circa £8.3 million of financial assistance, as was made available to all other Championship clubs in respect of settling PAYE liabilities, further aggravating our cash flow and ability to meet our financial obligations.

"Even today, we await the EFL’s response in these matters. This response is important to the Club, its supporters and also to any prospective purchaser of the Club.

"We know this situation will raise concerns among our supporters. The Club respectfully asks that our supporters continue to show their support, especially to the playing staff under Wayne Rooney and our employees who have all been outstanding during these difficult times. This ongoing support in turn will be instrumental as we seek to find a new owner to take the Club forward."

The message concludes by urging the league to help the stricken club.

"We appeal to the EFL to now assist the Club and the Administrators in any way they can in the effort to find a purchaser.

"We cannot stress enough how devastating it is to be forced into this position. We all – the owner, the members of the board, and our staff – are true Derby County supporters. We will continue our work under the stewardship of the Administrators to help facilitate their process and their effort to find a purchaser.

"Once Administrators have been appointed in the coming days it will be customary for them to communicate with staff and supporters about timescales and processes to seek a purchaser and address creditor concerns."