Sheff Wed and the EFL
#1
Facing a 21 deduction, at best, according to the Athletic. 

Sheffield Wednesday’s defence against a misconduct charge over the sale of Hillsborough will be based around the belief that it was approved by the EFL and that the league was aware of the terms and the timing of the deal, The Athletic understands.
The Championship club are facing a severe punishment after being charged with an aggravated breach of the EFL’s spending rules, with Thai owner Dejphon Chansiri and two former directors also in danger of receiving lengthy bans.
A 21-point deduction is considered the likely outcome among some clubs, though others within the game believe that the EFL could even push for Wednesday to face automatic relegation from the Championship and a points deduction from the start of next season.
Wednesday are ninth in the Championship at present on 29 points, two points off the play-offs. A 21-point deduction would drop them to the bottom of the table, four points behind Barnsley and eight points from safety.
Birmingham City were deducted nine points by the EFL last season for breaching profit and sustainability rules but did not face a misconduct charge. Championship rivals Derby County, Reading and also Aston Villa, who were promoted to the Premier League at the end of last season, have previously sold their grounds to their owners. The Athletic understands that Derby’s stadium sale is being closely examined by the EFL and that developments in that case are likely this week or next.
Wednesday’s alleged misconduct is related to how, for how much and when the Championship club sold their Hillsborough stadium to Chansiri, the owner, in an attempt to avoid breaking the rules, with the league suggesting Chansiri, former chief executive Katrien Meire and finance director John Redgate misled them.
The South Yorkshire side have been under intense scrutiny since this summer when they pushed their usual financial year-end back from May 31 to July 31, delaying the publication of their accounts for the 2017-18 season.
That was the season Chansiri had hoped his team would reach the Premier League but a 15th-place finish was a poor return on the heavy investment he has made in managers, players and wages.
But, more significantly, it also meant Wednesday were set to massively overshoot the league’s spending limits. Under profitability and sustainability rules introduced in 2016, losses at Championship clubs are capped at £39 million over a rolling three-year period.
Wednesday lost nearly £10 million in 2015-16, just over £20 million in 2016-17 and were heading for a pre-tax loss of around £35 million in 2017-18 until they — like Aston Villa, Derby and Reading — took advantage of a loophole that allows club owners to sell their stadiums or training grounds to themselves to bank a one-off profit that can be used to offset losses elsewhere.
Wednesday did this by selling their ground to Chansiri for £60 million, with an official profit on the transaction of £38 million.
According to their accounts, which were signed off by the owner on June 20 of this year and filed a day later, this turned their operating loss for 2017—18 into a pre-tax profit of £2.6 million. Once deductions were made for depreciating assets and money spent on the academy, a P&S loss for the three-year period of £19 million — £20 million inside the limit.
The actual sale of Hillsborough, however, is only mentioned in passing on the penultimate page of the accounts, where it is also suggested the £60 million will be paid in eight annual instalments of £7.5 million. There are no clues, though, as to how much rent the club will pay Chansiri’s stadium ownership vehicle Sheffield 3 Ltd, which should be a key consideration in the ground’s valuation.
But the real issue for Wednesday relates to the timing of the sale.
According to documents at Companies House and the Land Registry, Sheffield 3 was incorporated on June 21, the same day the 2017—18 accounts were filed, and the stadium sale went through a week later.
This, however, is a year after Wednesday have accounted for the sale in their books and therefore too late to count against their operating losses for 2017-18.
Without Hillsborough’s sale, Wednesday would have lost more than £57 million between 2016-18, £18 million over the limit.
Wednesday have said they will “vigorously defend” themselves when the matter goes before the panel and it is understood their defence will be based on the claim that the EFL was aware of what the club was doing and effectively sanctioned it.
The Athletic has been told that the club warned the former EFL chief executive Shaun Harvey about their profit and sustainability problems and told the league that they intended to fix them by selling the stadium. Several weeks of talks about Hillsborough’s valuation followed but the figure of £60 million was eventually approved by the league.
The agreement came after deadline for the financial year but the club will argue that this is something they did following consultation with the EFL in the summer of 2018.
An EFL spokesman said: “As a result of the disciplinary proceedings announced last month, it would clearly be inappropriate to provide specific comment on matters linked to our comprehensive investigation other than to reiterate that, following the review of a large number of documents provided by the club — some of those seen for the first time —  evidence came to light to justify multiple charges of misconduct.”
Wednesday said in a statement: “The club maintains that it consulted with the relevant executive officers of the EFL in connection with the stadium transaction and that it acted in good faith.
“The club has in its possession numerous emails, letters and other documents in which the EFL gave authorisation to the transaction, and on which authorisation the club understood it could rely. That authorisation gave rise in law to a legitimate expectation that the transaction would be accepted by the EFL, which is binding on the EFL.
“The EFL is acting in breach of that binding legitimate expectation by retrospectively treating as misconduct that which it had itself previously authorised, and this makes the charges themselves unlawful. The club is accordingly bringing its own claim against the EFL to establish that it is acting unlawfully, as well as standing ready, if necessary, to vigorously defend the charges.”
Harvey stood down as chief executive at end of the last season and the league is still looking for a replacement, but it is understood that new chairman Rick Parry is determined to be much tougher with overspending clubs than Harvey was prepared to be, which means more charges could be imminent.
The league has warned clubs that aggravated breaches of the rules will bring a further nine-point penalty, which is the sanction Wednesday face when the case goes before an independent panel. Chansiri, Meire and Redgate have also been personally charged.
Meire, the former Charlton Athletic chief executive, quit her job at Wednesday in February, after just 13 months in the role, and is now working for Club Brugge in her native Belgium. Redgate stepped down from the board in February 2018 but has stayed on as finance director.
These two, with Chansiri, are the only directors listed in annual accounts for 2017-18, although Chansiri is the only one to sign the report.
Birmingham were docked nine points last season for incurring losses of nearly £49 million over three seasons — £10 million over the limit. Since then, however, the EFL has told the clubs that points will be deducted on a sliding scale from three points for a breach of less than £2 million, to 12 points if it is more than £15 million.
“Profits on the disposal of tangible fixed assets” had been specifically banned under the EFL’s version of “financial fair play” but, in order to bring its rulebook in line with the Premier League’s, those regulations were replaced, but without that clause, by the “P&S” rules in 2016.
Derby were the first club to spot the change in 2017 and they transformed a huge annual operating loss into a £40 million profit when owner Mel Morris bought Pride Park for £80 million.
Since then, Aston Villa’s owners have bought Villa Park for nearly £57 million and Reading’s owners have purchased the Madejski Stadium for just under £27 million, with both transactions wiping out what would have been P&S breaches.
Wednesday’s fate will be decided by an independent panel that is yet to be appointed. In the meantime, Wednesday manager Garry Monk will have to operate under a cloud of extreme uncertainty for the second straight season, as he was in charge of Birmingham when their play-off push was derailed by a points deduction.
The former Wednesday player turned pundit David Prutton is worried the league may try to make an example of the club.
“The EFL have got to show they are not all the things they got accused of being before — indecisive, incoherent, being a bit willy-nilly when it comes to fines or bans,” he told The Athletic.
“It might just be bad timing if they do decide to make Wednesday the sacrificial lamb to show what happens if you do this kind of thing. The legislation is there for a reason and needs to be implemented when something like this happens.
“The fans are the ones that are going to bear the brunt of this emotionally, and whatever is going to happen needs to happen very quickly. If that is the gut-punch of docked points, then that needs addressing sooner rather than later.
“The fans won’t want that looming for the rest of the season, so they will want the bad news now. After that it will be about adjusting the aims and expectations for the season, because Wednesday fans will be there through thick and thin, and Wednesday are too big of an institution to go belly up, I truly believe that.”
Were Chansiri to be banned it would create a power vacuum at the top of the club. The Thai owner is understood to have considerable control over the decision-making at a club where there is no chief executive.
“The only silver lining that I can see is that they are going for Chansiri rather than the club and it might force him to sell it,” says Steve Walmsley from the Wednesday fanzine War of the Monster Trucks.
“If they are going to charge him personally then they might not be so harsh on the club. So long as the deduction is not more than 15 points. We would need to get 65 points this season to avoid relegation — on the basis of their results so far they could do it.
“But the owner’s credibility with the EFL, the rest of the clubs and the fans is damaged. I think he either needs to sell the club or take a step back and the charge might make him do that.”
(Photo: Athena Pictures/Getty Images)
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#2
Don't know why these don't post on the front page.
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#3
Interesting. It seems to be that if you'd notified the League, telling them you are going to sell the stadium, then it's ok. Villa pre agreed this at some point, looks like Wednesday and Derby didn't.
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#4
As the Seals have escaped into the PL, punishment on others is plain and simply victimisation.
Its just WRONG - it has to be all or nothing. Promotion cannot be a get out clause.
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#5
(12-04-2019, 07:32 PM)Remi_Moses Wrote: As the Seals have escaped into the PL, punishment on others is plain and simply victimisation.
Its just WRONG - it has to be all or nothing. Promotion cannot be a get out clause.

Didn’t Leicester escape with the same threat hanging over them?
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#6
(12-04-2019, 07:42 PM)Derek Hardballs Wrote:
(12-04-2019, 07:32 PM)Remi_Moses Wrote: As the Seals have escaped into the PL, punishment on others is plain and simply victimisation.
Its just WRONG - it has to be all or nothing. Promotion cannot be a get out clause.

Didn’t Leicester escape with the same threat hanging over them?

Can't remember the details but Leicester seemed to operate completely over the fair play line. Didn't they stall a kick off to know which result would be more favourable as well?
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#7
Unfortunately it doesn't look like the Seals actually broke the rules as selling the ground is allowed. What appears wrong is the timing of the sale (and recognition of the profit) in Wednesday's case, and the valuation in Derby's. What we can hope for is relegation for the ******s when they won't have anything left to sell.
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#8
The law is the law - as the rules are the rules.
If you murder someone today it's murder if you murder someone last week that's not classed as OK then.
If you have moved house your not free. The word Timing - should be replaced with justified excuse.
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#9
(12-04-2019, 07:44 PM)Tom Joad Wrote:
(12-04-2019, 07:42 PM)Derek Hardballs Wrote:
(12-04-2019, 07:32 PM)Remi_Moses Wrote: As the Seals have escaped into the PL, punishment on others is plain and simply victimisation.
Its just WRONG - it has to be all or nothing. Promotion cannot be a get out clause.

Didn’t Leicester escape with the same threat hanging over them?

Can't remember the details but Leicester seemed to operate completely over the fair play line. Didn't they stall a kick off to know which result would be more favourable as well?

The rules were changed and tightened up after Leicester, so no longer relevant

(12-04-2019, 08:14 PM)Remi_Moses Wrote: The law is the law - as the rules are the rules.
If you murder someone today it's murder if you murder someone last week that's not classed as OK then.
If you have moved house your not free. The word Timing - should be replaced with justified excuse.

The real issue with Sheffield Wednesday is the timing. They claim that the stadium was sold in time to be included in the July 2018 accounts.  But the company which bought it was not incorporated until
June 2019, so the sale was nothing but a backdated scam. It is impossible to sell anything to a company which didn’t even exist!
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#10
(12-04-2019, 07:32 PM)Remi_Moses Wrote: As the Seals have escaped into the PL, punishment on others is plain and simply victimisation.
Its just WRONG - it has to be all or nothing. Promotion cannot be a get out clause.

We don’t know for certain that Villa actually breached the rules and we won’t know for sure until they file their 18/19 accounts in February.  They may well have done, and if they have then they will not have escaped.  After QPR and Bournemouth the Premier League and the EFL agreed to honour each other’s sanctions to prevent a repeat.
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