Derby County Football Club today announced that the Club, the ultimate holding company of the group, and all of the subsidiary companies have filed notices of intention to appoint administrators.
This action was made necessary by a number of developments. 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. 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 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 COVID-19 pandemic and the unpredictability it has created represents too much of a strain. As the COVID-19 pandemic and lock down tightened their grip, the Club’s revenues and cash flow took a circa £20 million hit. This season, COVID-19 has continued to have a negative effect on the Club’s revenues. Unlike other sectors, football has been able to only marginally reduce its cost base with the majority of outgoings being associated with playing staff who obviously could not be furloughed. It is widely known that we had significantly reduced our wage bill, but the major benefit of these reductions were not going to take effect until this season.
The COVID-19 lockdown also meant that we were unable to have face-to-face meetings with a number of potential purchasers who could not visit the stadium or training ground. A planned sale of the club and stadium that was due to close in January 2020 collapsed when the EFL was coerced into challenging the Stadium Sale transaction, a charge that would be dismissed some 9 months later. The ongoing litigation and charges in regard to the P&S regulations and the protracted timetable for this to reach a resolution, added further uncertainty and made negotiations challenging.
These issues also led the EFL to preclude the Club from drawing down circa £8.3 million of financial assistance, as was made available to all other Championship clubs in respect of settling PAYE liabilities, further aggravating our cash flow and ability to meet our financial obligations. Even today, we await the EFL’s response in these matters. This response is important to the Club, its supporters and also to any prospective purchaser of the Club.
We wish to thank our supporters, staff and especially our creditors who have sought to help through the pandemic while we have worked to find a purchaser. The Club’s owner has provided substantial funding throughout this period, even as the process has been underway since June 2019 to find a purchaser. We are especially grateful to MSD Partners, who have been hugely supportive and have provided additional financial assistance this year, going far beyond the original loan it provided in August 2020.
We know this situation will raise concerns among our supporters. The Club respectfully asks that our supporters continue to show their support, especially to the playing staff under Wayne Rooney and our employees who have all been outstanding during these difficult times. This ongoing support in turn will be instrumental as we seek to find a new owner to take the Club forward.
We appeal to the EFL to now assist the Club and the Administrators in any way they can in the effort to find a purchaser.
We cannot stress enough how devastating it is to be forced into this position. We all – the owner, the members of the board, and our staff – are true Derby County supporters. We will continue our work under the stewardship of the Administrators to help facilitate their process and their effort to find a purchaser.
Once Administrators have been appointed in the coming days it will be customary for them to communicate with staff and supporters about timescales and processes to seek a purchaser and address creditor concerns.
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