English football has the sort of regulations that Scottish football needs. That’s the accepted wisdom, and it works in almost every part of the structure except one bit; the EFL Championship.
English FFP rules are a mess, but better their mess than our absence of regulations.
Because in most ways they work, just not in that odd league which is a hybrid of football’s meritocracy and the lunacy of the top flight. They have amongst the harshest penalties anywhere, but the spending constraints are not strong enough.
Since they were introduced, a rash of sanction have been handed down by the league authorities, most notably the points deductions slapped on Sheffield Wednesday, Birmingham and Derby County. Today the news broke that on top of their current, running twelve point penalty, Derby has been slammed with another sanction, this time for nine points.
This virtually guarantees that they will be relegated into England’s third tier. They currently sit bottom of the league on minus three points which is now fourteen shy of the next bottom team and eighteen from the safe zone. They have no chance of turning that around.
The case of Derby may seem extreme, but it’s a reaction to an extreme problem.
They were deducted the standard twelve points for entering administration, but they were also under investigation for “accounting irregularities” in their 2016, 2017 and 2018 accounts. On top of these sort of issues, clubs are docked points for breaching EFL spending regulations, with Birmingham having suffered a nine point penalty in 2019.
The rules allow accumulated losses of £15 million over a three year period, unless losses are covered by the directors in equity swaps. Under those conditions, losses are allowed grow up to £39 million. Beyond that point, clubs are in trouble and Derby already were when, in the club’s 2017-18 accounts a loss of £25 million was turned into a “pre-tax profit” of £14.6 million after the sale of their stadium to the club’s owner. The league was all over that obvious scam.
Now, with them already reeling from one serious sanction the penalty for trying to game the system has hit them like a sledgehammer.
In the end, it was all for nothing anyway as their efforts to live beyond their means ended disastrously. Instead of fighting for a place in the top flight, they will have to claw their way up from League One financially crippled and reeling from the shame.
The problem is that figure on what clubs are allowed to spend over and above earnings; it is ridiculous and exists because almost every team challenging near the top of the Championship spends more than it earns and many depend on director financing.
It is a number these clubs agreed on to let them continue behaving insanely.
Most are owned by billionaire owners who bought the clubs looking to get them to the EPL and then turn a big profit. When it doesn’t come, a lot of them walk.
In 2020, Sheffield Wednesday were penalised with a twelve point deduction for a similar scam to the one Derby pulled in selling their ground.
The deduction was applied to the following season instead of the 2019-2020 campaign, which would have relegated them.
They appealed the decision, got it reduced to six but still dropped out of the league and into League One anyway, another symptom of the mess the game down there is in.
In July 2020, Wigan entered administration, suffered the standard penalty and almost went out of business. Their story is a horror show.
They were bought by a consortium in 2017, whose owners hoped to reach the EPL in short order. Within a year they realised they were simply plugging holes on a sinking ship and sold it to a Hong Kong based businessman called Au Yeung; he bought the club and within a week – yes a week – put it into administration.
The global health emergency hit English football like a sledgehammer. The EPL organised a “bail out” package which averted total disaster, but nobody believes that it did more than buy the game down there some time. The whole structure of English football has been skewed by the wealth of a handful of teams at the very top … and insanity rampages through it.
in Scotland the £39 million in allowed losses just so long as they were covered by the directors would be a sugar-daddy’s dream scenario; you could win a title on that if you had the cash to carry the debts … Ibrox did exactly that.
But it’s not difficult to see other reasons why it’s also a recipe for disaster. Right now, you could buy a Scottish club, spend enormous sums of money on it in the pursuit of glory and then, when you got bored, walk away and leave it to collapse on itself.
Our lax regulations would then allow its owners to sell it to some other unscrupulous bunch to asset strip and NewCo back into the league. Once that had become established as the norm, sponsors and advertisers would flee. Banks and other lending agencies would just flat-out refuse to do business with our clubs under those circumstances.
“Limiting” the scale of the damage they could do to £39 million – losses of £13 million per season – would leave any club outside the top two absolutely devastated and in the grubber.
But whilst those levels of restrictions would not really protect our game from overzealous owners, the English leagues have at least attempted to grapple with this problem.
The one thing we’ve done right is that our penalties for entering administration are more severe; the standard penalty is fifteen points, not twelve, with a second offence carrying a whopping twenty five point sanction which would probably relegate most clubs.
But in terms of offering real protections, this is so limited as to be nearly irrelevant. Scottish football does not suffer from the madness to the same extent as clubs in England but the list of sides here which have gone into administration in the past few decades is absurdly long. We’ve lost clubs too; Airdrie is no more, which swallowed Clydebank. Gretna died. Rangers died. Hearts missed it by a hair. Motherwell danced with death but got out of it alive.
If Ibrox’s club enters administration again the tailspin could easily take other clubs with them. Even the collapse of the cinch deal – which Ibrox is precipitating – risks something on that order. Our game needs to stop this kind of nonsense from happening.
English football has shown us both how to do it and how not to. The punishments and sanctions are real, but the English Championship permits clubs to lose funny money before they kick in. There is a middle ground in those regulations which Scottish clubs, in the main, could live with. The question is, what are Celtic waiting for to make it happen?
Because we are the only club who can lead this charge.