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

Can Benfica ever join the elite?

BENFICA are to Portugal what Real Madrid and Juventus are to Spain and Italy. In other words, wherever you go in the country, fans of the club can be found, from Algarve villages to the biggest towns and cities.

And across Europe, wherever there are Portuguese people, the chances are they will be Benfica fans, hence the club has developed into a more global institution than some of its rivals. For example, when Benfica won the Primeira Liga title in 2018, London was awash with fans of As Águias celebrating their latest triumph.

Outside the top dozen clubs, Benfica rank among the best of a second tier, a great name from the early years of pan-European club competition, one that excited fans right across the continent and gave the world some magnificent players, such as the brilliant Eusébio.

Benfica still manage to hold their own in Europe and are regular UEFA Champions league participants (15 times since 1992-93) and have reached two Europa League finals in the past eight years. Domestically, Benfica, Porto and, to a lesser extent, Sporting, dominate Portuguese football. In fact, of the 85 league titles, 37 have been won by Benfica, 28 by Porto and 18 have gone to Sporting. Only twice, in 1946 (Belenenses) and 2001 (Boavista) has the trophy been lifted by any other contender. This lack of strength in depth has undoubtedly hampered Portuguese football, but the country’s top clubs have gained a strong reputation as “talent factories” and have earned considerable sums of money from player trading. Indeed, CIES Football Observatory, in April 2020, revealed that Benfica are the number two club in the world for providing a “stepping stone” for players. Only Ajax have a better record in bringing top talent through. Sporting (5th) and Porto (8th) have also excelled at player development.

In some ways, Portuguese clubs have carved a niche for themselves in providing a market that can be tapped into by the clubs from the “big five” leagues, Spain, England, Germany, Italy and France. With Benfica and Porto, in particular, able to benefit from regular Champions League football, these clubs fill a gap between the very top clubs and the regular Europa League participants. Benfica may not be Real Madrid, but the combination of the club’s heritage, its role as a player nursery and UEFA money places them in a decent position in European football’s hierarchy.

If a European Super League ever becomes reality, there will be some people outside of Lisbon that will call for Benfica to be included. Their two European Cups, in 1961 and 1962, may have been a long time ago, but they are still a huge football institution. The dilemma for Benfica and a number of clubs who have been pushed to the  sidelines by contemporary corporate football, is how to join that elite band or find other ways to grow. Benfica are a well-known global name, thanks to the Portuguese diaspora, the legend of Eusébio and the club’s European heritage, which is substantial. Can Benfica make the leap from top of the second tier of the European game? And if so, what is it going to take? Is Portugal too small a market to allow that to happen without a big foreign investor transforming the club into a southern European Paris Saint-Germain? Whatever the future brings, Benfica will remain one of the grand names of world football.

To see the full State of Play report, click State of Play Benfica