Derby County directors make ‘tough decision’ to apply to go into administration

Pride Park, home of Derby County
Pride Park, home of Derby County

The football club, managed by Wayne Rooney, will face a mandatory points deduction as a result

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Derby have applied to enter administration, the club announced on Friday night.

The Sky Bet Championship club issued a statement which claimed the club’s directors “had no choice but to make the tough decision” to file notice to appoint administrators.

The Rams said the move was due to “a number of developments”, including a failure to identify new owners and the continuing impact of Covid-19 on revenue streams.

The statement read: “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.

Derby County manager Wayne Rooney reacts after the final whistle during the Sky Bet Championship match at The Hawthorns, West Bromwich.
Derby County manager Wayne Rooney reacts after the final whistle during the Sky Bet Championship match at The Hawthorns, West Bromwich.

“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.”

Derby are set to face a mandatory points deduction as a result of the move. The club are already facing separate points penalties for prior breaches of Financial Fair Play rules.

The 12-point penalty for going into administration is mandatory, and will be applied once the club has officially entered administration.

However the club could conceivably appeal citing extenuating circumstances, given their insistence that their plight has been a direct result of the unprecedented Covid climate.

The statement continued: “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.”

The club’s statement continued: “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.”

EFL regulations state a prospective appeal against a mandatory 12-point penalty will only be heard under circumstances of ‘Force Majeure’.

The regulations state: “It is intended that this appeals process should be limited to circumstances which are deemed unforeseeable and unavoidable.”

The development is the latest setback for the Rams, who remain subject to a transfer embargo after breaking the EFL’s financial rules.

A fifth regulation that Derby have failed to comply with – default in paying transfer fee instalments – was added to the current list on the EFL website’s embargo reporting service two weeks ago.

Derby escaped relegation from the Championship on the final day of last season after drawing 3-3 at Pride Park against Sheffield Wednesday.

The club then avoided a points deduction, which would have sent them down, when the EFL decided not to appeal against a decision to only fine the club for failing to comply with finance rules.

A Derby County branded corner flag.
A Derby County branded corner flag.

The EFL confirmed the prospect of the imminent points deduction, and contested the club’s claim that their financial woes had worsened due to the EFL’s decision to “preclude the club from drawing down circa £8.3 million of financial assistance” in respect of settling PAYE liabilities.

The EFL said in a statement: “With confirmation from Derby County Football Club that they have filed a notice of intention to appoint administrators, the EFL can tonight 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 time-frame and eligibility criteria which Derby County was unable to meet.”