Derby County owner reveals he has lost £200m as club set to appoint administrators
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Derby County FC is set to be plunged into administration after efforts to find a buyer for the club have hit a dead end.
On Friday evening (September 17), the Rams issued a statement saying that the Club, the ultimate holding company of the group, and all of the subsidiary companies have filed notices of intention to appoint administrators.
Derby County said the move was “made necessary” by a number of developments. Last week, say the Rams, that the search for a buyer was no nearer being succesful. The club added that, 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 say they had “no choice but to make the tough decision to take this action and protect the Club”.
A statement on Friday evening from the club said: “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 £20m 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.”
The Rams say these issues also led the EFL to preclude the Club from drawing down around £8.3m of financial assistance, as was made available to all other Championship clubs in respect of settling PAYE liabilities.
The statement added: “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.”
Meanwhile, over the weekend, beleaguered owber Mel Morris told the BBC that he apologised to Rams fans for the situation.
“It’s tragic, there’s no question. I can only apologise to the people there,” Morris told BBC Radio Derby.
“Am I disappointed? Yes. Am I sorry to the fans? Yes. I desperately wanted to get this club right up there if we could do that.
“From my perspective, I’ve put a lot of blood, sweat and tears – and a heck of a lot of money – into this club and it’s had some really good times under my tenure, but ultimately I’ve failed.”
Morris also said that he has invested some £200m in the club since he became sole owner in 2015 – all of which he claims to have lost.
He added: “We’ve got people interested in the club at this moment in time and my focus today, tomorrow – regardless of administration – is exactly the same. I want to find the best purchaser I can for this club and that continues,” Morris said.
“Hopefully, on the back of that, we preserve as many jobs as we possibly can.”