Derby’s battle for Championship survival will be about money, not just points

Derby County

By Paul Nicholson

May 7 – The English Championship finishes its season tomorrow with focus not on promotion but on the relegation battle between two of England’s former club giants turned financial horror stories.

Sheffield Wednesday who were deducted six points for breaching EFL profitability and sustainability regulations this season, face Derby County who have spiralled downwards and out of control both financially and in terms of performance.

Wednesday, under new ownership this season, have to be beat Derby (who are desperate for a new owner) to leapfrog out of the relegation zone. A draw would be enough to keep Derby up if Rotherham fail to win their final fixture.

While the end of season battle is nerve-wracking enough for fans and club manager Wayne Rooney, for Derby the season’s woes won’t end with the final match. Having, at various times, briefly challenged for promotion to the Premier League under the ownership of Mel Morris since 2015, the last two seasons have been financially disastrous.

Morris is keen to move his ownership of the club on to someone or somewhere else, and has claimed he first had a deal with UAE investors, and more recently with unknown and self-styled Spanish sporting entrepreneur Erik Alonso.

The flamboyant Alonso (a cousin of former player Xabi Alonso), and whose profile seems to be primarily based on his social media rather than any tangible evidence of on-going sports business operations, is understood to have agreed a deal with Morris through his No Limit Sports vehicle.

Alonso has promised up to £150 million of funding for the club but the source of that finance is unclear. Not least to the English Football League (EFL) who as part of their ownership tests have asked for proof of funds. At the same time rumours have surfaced that Alonso – who earlier this year reportedly made a £20 million offer to buyout Sheffield Wednesday’s new owners – has had his accounts frozen.

The EFL is locked in what has become a never-ending fight to help its clubs find financial stability and sustainability, often in the face of its richer club owners who borrow and spend irresponsibly.

Derby’s Morris is one owner the EFL has a problem with. Derby won a case brought against it by the EFL after Morris sold the stadium to himself for a reported £80 million in a bid to get around the EFL’s financial sustainability rules. The EFL appealed the decision (despite Derby having a member on its board) and if they win the appeal would likely sanction Derby with a points deduction. Ironically Derby’s opponents this weekend, Sheffield Wednesday, were given their points deduction this season over a very similar infringement.

But Morris’s financial problems didn’t begin with the global pandemic. When he took control the club was in reasonable financial health, meeting all its obligations and with just a £15 million mortgage secured against the stadium.

Since then Morris has racked up £15 million of high interest loans and is committed to operating losses of about £30 million for this season and next. He has burned through eight managers in six years and outstanding litigation with previous club captain Richard Keogh. The club has routinely failed to meet wages and has debt owing to the HMRC (the UK government’s tax collectors) of £15 million.

Morris is reportedly prepared to hand over the club to any buyer who will cover his losses of about £45 million. Alonso was his latest hope but looks likely to disappear from the scene as fast as he arrived on it.

The EFL and Derby fans will be hoping for a more credible and sober owner for a club that was one of the 12 founder members of the Football League in 1888.

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