With clubs reimbursing deferred tax refunds and increasing salary costs, Derby County fell into administration after several years of financial mismanagement by its owners and breaches of EFL accounting rules. Derby’s annual accounts show operating losses reached £ 97million in the three financial years 2015/6 to 2017/18, with the club also fined £ 100,000 for its accounting policies by the English Football League (EFL), said GlobalData, a leading data and analytics company.
While the club have yet to submit their annual accounts for the fiscal year ending June 30, 2019, the end of the government holiday scheme and the refund of taxes may mean Derby is not the last club to enter. in administration during the era of the pandemic.
Patrick Kinch, Sports Analyst at GlobalData, comments: “While Derby has seen its revenues increase under its current owners, so have the losses, largely resulting from increased transfer expenses, player salaries and the sale of the Pride Park stadium, which Derby now leases, through a holding company owned by President Melvyn Morris. ”
The latest report from GlobalData Sport, ‘Main sources of income for the English Football Leagues (EFL) through the League, League One and League Two championships‘, revealed that all 72 clubs in the soccer league are facing ticket losses of up to ** $ 762 million based on current season ticket prices and the 2020/21 season largely behind closed doors, with lower league clubs relying more on ticket revenue and on-site merchandise in-selling than Premier League clubs, which can rely on more lucrative sponsorships and TV funds. The report also confirms that Derby County has a contract with betting brand 32Red worth $ 0.80 million per year, the sixth largest in the championship, and a kit supplier contract with Umbro, d ‘Also worth $ 0.80 million per year, both of which are likely to be factored into the administrator’s valuation of the club when seeking a new owner.
While the pandemic is part of the reason for Derby’s woes, the club have flirted with financial fair play rules, while also seeing transfer spending increase by * 364% from 2013-15 to 2016-18, with salaries reaching * 151% of income over the same period, double the ratio recommended by UEFA.
Clubs will also have to contend with ticketing losses for the 2020/21 season in their accounts for the fiscal year ending June 2021. For Derby, these estimated losses reach up to * $ 20 million based on ticket prices season 2019/20, the capacity and number of stadiums. home games, while operating costs have not decreased as the games continue to be played.
Kinch adds: “With EFL clubs having to reimburse the more than £ 77million in taxes that were owed to HMRC from March 31, and with the leave scheme ending in full from September 30, companies are currently required to pay 20% of the salaries of staff on leave, other clubs could suffer the same fate as Derby when these government support programs end. ”
According to GlobalData Sport’s EFL Revenue Report,
* Derby County Annual Accounts 2013-2018
** GlobalData Sport estimates based on available club data