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What is Going on at Derby County? Will Derby Exit Administration or Face Being Liquidated?


#DerbyCounty #dcfc #EFL #PremierLeague Soccernomics The Rounds Episode 32: Derby County Situation Explained What is Going on at Derby County? Will Derby Exit Administration or Face Being Liquidated? Derby County have recently received a lifeline Birmingham game could’ve been the last of the season as their administrators Quantuma had a deadline of 1 February to prove funds to last the rest of the season extended another month When did derby enter administration? 18th September at the start of the season Why did they enter administration? Mel Morris was a lifelong Derby County fan, and had ambitions of making Derby County a Premier League club, so what he did was invest heavily in the transfer market over a few years on players with high wages, in a gamble to achieve promotion. This promotion never came, and given that the incoming players weren’t balanced by out comings, their costs were increasing, this caused Derby issues. With not very much revenue, but mounting costs, and a lack of success in terms of reaching the premier league, with mounting debts as well in a further attempt to reach the premier league, Derby’s financial issues were becoming prominent. Not just that, but there were also concerns with breaking FFP rules. What Morris did, wasn’t offload the expensive players to free up the financial strain on the club and spend within it’s means, which is what he should’ve done, instead, he threw more money at the problem, and to cover up the FFP concerns, he used creative accounting methods to recognize costs in a way that would favor the club’s spending habits. This being using a method called the expected recoverable values ​​method which meant that derby wouldn’t amortise the cost of a player they signed with a straight line method over the length of his contract, like all the other 91 league clubs do, instead only recognizing the depreciation of the players value towards his final years on his contract, as this is when he is apparently not worth the same as he was when he was originally purchased, ie in his first years at the club, he would still be worth the same as when the club purchased him. There is logic to the thought process, but albeit incorrect, unfair and just downright cheeky. Morris also manipulated the books to fit FFP rules, by selling the club’s stadium Pride Park, to himself, before leasing the stadium back to the club through a third party company Morris setup himself. He purchased the stadium for 80m, which was actually valued by the club at 41m, in which the 39m difference was recognized as a profit of the club, taking the club from a loss of 22.6m to actually a 14.6m profit for the year. All very cunning methods of accounting, however, the continued spending and lack of premier league football lead to Mel Morris running out of money to continue the clubs operations and thus sending the club into administration. What has happened so far? Since the club entered administration, the rules are that the club receives a 12 point deduction, which they received at the start of the season, and have since picked up another 9 point deduction totalling 21 points which would naturally be enough for a club to get relegated, but somehow under Wayne Rooney, the rams are not down and out just yet. Which would be an absolute miracle if they pull off this escape from relegation. The potential buyers included Chris Kirchner who submitted 2 bids but ultimately walked away from the deal as he and Quantuma failed to reach a suitable agreement. The Binnie family who founded the investment firm Carlisle Capital submitted a 28m bid for the club. But there is also a consortium headed by former Derby chairman Andy Appleby and former Wolves CEO Jez Moxey remaining in the mix, along with the final potential buyer, the controversial former owner of Newcastle United, Mike Ashley. Unfortunately for Derby County although there are numerous potential buyers, they are not willing to make a bid for the club until the threats of legal battles are dropped. Middlesbrough are threatening to sue Derby County over breaking FFP rules in the 18/19 season that saw Derby pip them to 6th place and the final play off spot that couldve seen them promoted to the Premier League. Another club, Wycombe Wanderers are also threatening to sue Derby as they feel that Derby should have received a points deduction towards the end of the 20/21 season, which would have seen derby relegated and wycombe survive. Non the less these threats exists, but because Derby are in administration, no legal charges can be put on to the club until they have exited, as part of what is called a statutory moratorium. The problem is, that the only viable way now for Derby to exit administration and avoid liquidation is if a suitable buyer comes in and bails them out. Why is this a problem? Quantuma have returned to MSD Holdings taking a 5m loan to keep the club afloat Overall Derby owes about 60m to non footballing creditors

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