The Derby County debacle – a possible Championship iceberg

DERBY COUNTY are going into administration, a disaster for the club, but handled properly, it should not be the end of the road for the Rams. Fans of the club will be devastated, especially if it means relegation, but they should have the chance to rebuild and come back a better-run footballing institution. The public admission that things had to change will come as a relief to many fans who suspected that Derby were reaching a fork in the road.

Words of sincere encouragement, perhaps, but there may be more Derby Countys out there as the chickens come home to roots in a division where wages have outstripped income at most clubs. 

Derby’s case is especially acute, though, as their last filed financials were for the 2017-18 season and, from the outside, there seems a lack of transparency about the club. The club has been under a transfer embargo and because of issues over their financial reporting, notably the practice of amortising intangible assets, they had to resubmit their accounts for 2015-16, 2016-17 and 2017-18.

Thje 2017-18 accounts showed a net profit of £ 14.6 million and revenues of just under £ 30 million, but at the same time, they revealed that Derby’s wages were £ 40.5 million, representing a wage-to-income ratio of 137%. In short, the club was paying out far too much money, and still couldn’t get back to the Premier League. A similar story has developed at a number of clubs in the Championship.

Derby County are, effectively, an upper second tier club, even though the city they represent has a population of 260,000 which is comparable to Newcastle, Wolverhampton and Southampton.  Since the start of the Premier era, they have spent just seven seasons in the top tier and their last campaign, in 2007-08, was an absolute calamity, one win in 38 games. Never mind that they won two league titles in the 1970s when they resided at the muddy old Baseball Ground, the club has won nothing of note since and even the arrival of a new stadium, which opened in 1997, hasn’t given Derby the status they craved.

The club tried to make headlines with the signing of Wayne Rooney and the subsequent appointment of the former England star as manager, but Derby are in decline on and off the field, although their results this season have been better than many people envisaged. 

This season, aside from the local clash with old rivals Forest, around 16,000 people have attended the club’s home games at Pride Park. Consider that before the pandemic, they were drawing more than 26,000 – that’s a drop of 10,000 per game, not only a financial blow, but also a downer from a motivational perspective. What could happen now is a mass demonstration of siege mentality and the return of missing fans as the club regroups to combat this major crisis. When clubs hit a brick wall, fans have a habit of rallying round.

Owner Mel Morris has been trying to unload the club but has seen two potential sales collapse, one to Bin Zayed of Aby Dhabi and another to Spanish businessman Erik Alonso. The club cannot be sold for 28 days owing to administration, but it is clear that the future depends on a change of ownership as much as more prudent financial management. In the club’s announcement of September 17, they insisted that their forecasts showed the emergence of a more sustainable financial position – hopefully, this will encourage any potential buyer.

As it stands, Derby will suffer a 12-point deduction when they enter administration. This will place them at the bottom of the Championship with a 10 point margin between themselves and safety. If the club’s position does not allow certain creditors to be paid within two years, they will incur another nine-point hit. Ironically, the club immediately above them will be Nottingham Forest. What would Brian Clough and Peter Taylor have to say about that?

Derby County will surely survive, but there will be some leaner times ahead before the club can reinvent itself. They may not be a petro-club or part of the pampered elite, but they have the potential to fare far better than they have over the past 30 years. Football fans all over the country should be hoping an acceptable solution is arrived at, for the Rams will probably not be the last club of size to stare into the abyss. As Gary Neville, the SKY pundit and Salford City co-owner, said: “This has got to stop”.

@GameofthePeople

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