Derby charged by EFL for breaching spending rules

Derby sold Pride Park to owner Mel Morris and then leased the stadium back

Derby County have been charged by the English Football League for a breach of spending rules and now face a possible points deduction.

The charge relates to losses in the three years up to June 2018, despite the £80m sale of their stadium to owner Mel Morris, which saw a pre-tax profit of £14.6m in their 2017-18 accounts.

Spending rules allow Championship clubs to lose £39m over a three-year period.

The club has been referred to an Independent Disciplinary Commission.

In March 2019, Birmingham City were deducted nine points by the EFL for a similar charge of breaching profitability and sustainability rules.

The Rams are 17th in the Championship and 10 points above the relegation zone.

In the 2017-18 season, which covers the 12 months between 1 July 2017 and 30 June 2018, Derby recorded a pre-tax profit for the first time in 10 years.

In the three years under review by the EFL, the club recorded combined pre-tax losses of just over £8m.

And while that appears well below the £39m of allowable losses set out in league rules, the sale of its Pride Park home which allowed them to turn the profit in an attempt to meet financial regulations has come under scrutiny.

The Rams have leased back the ground, which was said to have been independently valued at £80m despite it being on the club’s books as an asset worth £41m, from a company owned by Morris.

Just months after the stadium arrangement was announced in April, the club signed England all-time record goal scorer Wayne Rooney on a player-coach deal.

By selling the ground to Morris, the Rams set a trend which has been followed by Sheffield Wednesday, Aston Villa, Reading and Birmingham City.

Unlike Sheffield Wednesday, who were been charged with misconduct for the sale of their ground, the charge against Derby does not specifically reference how the Pride Park agreement applies to the rules.

The independent commission appointed to the case will hear from both Derby and the EFL, although a date for the hearing not been announced.

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