Derby have applied to enter administration, the Championship club have announced.
According to the club’s directors in a statement released on Friday, they “had no choice but to make the tough decision” to file notice to appoint administrators. Derby claim the move was due to “a number of developments”, including a failure to identify new owners and the continuing impact of the pandemic on revenue streams.
“Last week, it became clear that the process which has been underway to identify a purchaser for the club likely would not be productive over the near term, despite the number of negotiations with credible parties,” read a statement. “Because the Covid-19 pandemic has had a severe impact on the revenues and profits of all of its businesses, the club has been unable to service its day-to-day financial obligations. The directors had no choice but to make the tough decision to take this action and protect the club.”
The statement continued: “The irony is that the club’s financial forecasts show the emergence of a financially sustainable picture. Absent the Covid-19 pandemic, we undoubtedly would have been able to trade through. However, the impact of the Covid-19 pandemic and the unpredictability it has created represents too much of a strain. The club’s revenues and cash flow took a circa £20m hit.”
Derby face a 12-point deduction as a result of applying to go into administration having already been fined £100,000 for breaking accounting rules, for which they could face more points deductions.
In their own statement, the Football League confirmed the likely 12-point deduction as well as expressing disappointment at Derby’s use of the pandemic as a reason for their parlous financial state. “Once the EFL has received formal notification of the application, the [12-point] deduction will be applied,” the statement read. “The EFL will in due course engage in discussions with the relevant parties with the aim of achieving a successful outcome for the long-term future for the Club.
“The League is disappointed with the comments made by the Club in respect of Covid lending facilities. The EFL entered into a debt raise to provide its Clubs with access to funds that would support them in dealing with the impact of Covid and, as with any loan, this was subject to a timeframe and eligibility criteria which Derby County was unable to meet.”
Derby’s owner, Mel Morris, has seen two prospective deals for the sale of the club fall through, while on the pitch manager Wayne Rooney has had to deal with a transfer embargo prior to the summer window opening, meaning he could only sign free agents with strict conditions on salaries.
In July the former Manchester United and England forward also inadvertently hampered the club’s resources by injuring midfielder Jason Knight during a practice game. The Republic of Ireland international suffered a damaged ankle and only returned to action last week, in the 2-0 defeat to Birmingham.
Derby, who narrowly avoided relegation to League One last season, sit 16th in the Championship have won just one of their opening seven games of the campaign. As things stand, a 12-point deduction would see them drop to last place, on minus five points. They host Stoke City on Saturday.