Derby County administration Q&A: The debt, the mess, the timeline, the future

Rooney is the leader of every battle, and Ed Dawes, Derby County commentator at BBC Radio Derby, says that Rooney is that man.
Derby County, twice champions of England in the 1970s, Championship finalist in 2019 and 2014, the club of Roy McFarland and Dave Mackay have been placed into administration.

This news was confirmed by a brief statement on Wednesday from the club.

This decision results in an automatic 12-point deduction. Wayne Rooney's team is now at the bottom of the Championship, six points behind Nottingham Forest, who have moved up one place.

It was not surprising. Derby made the announcement late Friday night that they intended to do this, even though Rooney wasn't aware at that time.

In truth, even though the timing of the initial statement was shocking, anyone who has any knowledge of Rams finances knows that this possibility exists. This will undoubtedly lead to redundancies, and people in the area not receiving the money they owe.

How did Derby get to this point?

Mel Morris was the first person to get involved in Derby in May 2014. He bought a 22% stake.

Morris, a local businessman, became the sole owner in September 2015. He pledged to "steer the club into a sustainable place in the Premier League".

After losing the Championship play-off final in 2014 to QPR, Derby agreed to a 42m settlement from the Football League. QPR had broken Financial Fair Play rules.

Morris knew by that point that it would be costly to get to the Premier League.

Derby lost 14.7 million in 2016 and 7.9m 2017 respectively. They were also on the verge of further losses in 2018. This would have violated the EFL’s profit and sustainability rules, which allow a cumulative 39m loss over three years. The club confirmed that Morris had purchased Pride Park stadium for 80m.

After a review of the sale, Derby was charged by EFL with financial breaches up until 2018.

It wouldn't have been a problem if Derby had beaten Aston Villa at the 2019 Championship play off final. It is possible that the Premier League clubs would not have been charged because the EFL can't enforce financial violations against them.

They lost. Frank Lampard was fired, Phillip Cocu became his manager, and Rooney was signed as a player.

It is unknown how much loss was sustained beyond 2018, as accounts have not been published due to an agreement between Derbyshire and HMRC, which allowed them to be kept back until the EFL case was resolved.

All parties accept that they could result in further losses.

Is there a further punishment for Derby

After a lengthy case in which Derby were initially cleared but then fined 100,000 by the EFL and ordered to file their accounts again, it was ruled that Derby had used an illegal method of valuing players, amortisation.

Morris insists that this decision is flawed but has now accepted it.

The accounts have to be submitted again as Derby and EFL are in negotiations for a settlement that will cover all outstanding accounts up to the summer 2021.

It is understood that a nine-point deduction was agreed upon, with a third-point deduction being suspended for a period two years. Derby must also adhere to a business plan.

The validity of this settlement is unknown as administrators are unlikely to accept it. Any new owner would need to submit theirs to the EFL as part their purchase.

Why has Derby not been sold?

Morris stated that he intended to sell the club in 2019.

Derby announced in August 2020 that they had taken a loan from MSD Holdings UK Ltd., an American billionaire Michael Dell who also owns interests in Premier League clubs Burnley & Southampton.

Henry Gabay, a Swiss financier, made a large payment to Derby as a loan. He intends to complete a formal purchase of Derby at some point in 2020.

After the EFL took its charge, the consortium started to doubt itself. The consortium retreated completely after the EFL brought its charge. The loan was then repaid.

Derby confirmed that Morris had agreed to sell the club twice more after that.

In November 2020, a deal with Derventio Holdings was reached. Derventio Holdings was an Abu Dhabi-based BZI company that was owned by Sheikh Khaled, a cousin to Sheikh Mansour, was established.

Erik Alonso, who was previously working with Dejphon Chansiri, reached an agreement in April 2021.

Both times, proof of funds wasn't established at a sufficient level to satisfy directors and owners of EFL. The deals were therefore abandoned.

Morris was talking to potential buyers, but realized there was no immediate sale.

He felt that he could not lose 200m of his own money at Derby and decided to take the club to administration.

What does administration mean?

Derby's debts are estimated to be between 50m and 70m. This includes the outstanding Arsenal amount for Polish defender Krystian Brylik. They signed a 10-million deal in 2019

HMRC also owes them more than 20 million. They also lose about 1.5m per month. This week is the due date for player wages, which are the largest outgoings at any club.

According to a source familiar with the administrative process, the administrator's first task will be to figure out how to pay salaries. Players can walk away if they don't get paid within 28 days. A three-point deduction can be made if wages are not paid on time, but this can be suspended.

Wigan, an EFL club in the UK, was able to raise funds through selling players. Derby's problem? The transfer window doesn't open for three more months. They could theoretically sell players and request payment immediately, but they wouldn't be able to register or play for any other player.

The administrators will then need to present the financial picture to potential buyers. They will talk to their supporters, the local council, and the EFL. They will also try to cut down on expenditures wherever possible, which is crucial. This could lead to redundancies or the cancellation of agreements with other companies.

The club will be subject to a 15-point deduction if they fail to pay 25% of non-football creditors' money.

Derby were already subject to a transfer embargo which severely limited Rooney's ability last summer to bring in new players. Even if they sold players in January they could not replace them with players on shorter-term contracts.

What about Rooney?

There are significant compensation payments for Phillip Cocu, former manager, and Richard Keogh, defender.

Cocu was fired in November 2020. An estimated 4m payout was due. Derby was also affected by the dismissal of Keogh for misconduct. Derby won an appeal against this decision in May.

Rooney is another option.

While 32Red is the majority of Morris' wages, he said that the club was paying Rooney a "competitive salary" in a recent BBC interview.

Rooney is a former England captain, and he holds the record for scoring most goals in England. It is therefore assumed that his wages are high.

At the weekend, the 35-year old said that he did not intend to leave. His contract will continue until the summer 2023.

What does Derby's future look like?

BBC Sport spoke to Rob Couhig of Wycombe, who was relegated last season to League One but would have stayed up if Derby had been deducted points, and gave a grim assessment of the situation.

He said, "People say someone will come in to buy it because they are Derby." But how many points will Derby face being deducted this fiscal year? They will also be subject to further deductions next fiscal year.

"In all likelihood, you would buy a League Two team with 50m debt. There are only so many people out there who are willing to do this.

Some fans fear that no one will be willing to take on such an undertaking, and the club could go under. Some feel it is impossible, especially since MSD, a creditor, would lose so much.

The cause is gaining support from many supporters. Derby managed to sell their first allocation, and they have a second one. They will be taking 2,000 to Bramall Lane on Saturday against Sheffield United. They entertain Reading at Pride Park on 29 September.

Those who are close to the situation believe that the latest developments in Derby's unfortunate recent past allow the club to clarify its position, dispel some conspiracies and move forward.

However, this feeling of longing is not present today amid all the uncertainty.