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Derby directors make ‘tough decision’ to apply to go into administration

Derby County v Nottingham Forest – Sky Bet Championship – Pride Park Stadium
(Image credit: Bradley Collyer)

Derby have applied to enter administration, the club announced on Friday night.

The Sky Bet Championship club issued a statement which claimed the club’s directors “had no choice but to make the tough decision” to file notice to appoint administrators.

The Rams said the move was due to “a number of developments”, including a failure to identify new owners and the continuing impact of Covid-19 on revenue streams.

The statement read: “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.”

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Derby are set to face a mandatory points deduction as a result of the move. The club are already facing separate points penalties for prior breaches of Financial Fair Play rules.

The PA news agency understands that the 12-point penalty for going into administration is mandatory, and will be applied once the club has officially entered administration.

However the club could conceivably appeal citing extenuating circumstances, given their insistence that their plight has been a direct result of the unprecedented Covid climate.

Swansea City v Derby County – Sky Bet Championship – Liberty Stadium

Wayne Rooney’s are facing a points deduction (Nick Potts/PA)

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 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.”

West Bromwich Albion v Derby County – Sky Bet Championship – The Hawthorns

The Rams drew at West Brom in their last match and currently lie 16th in the Championship (Nick Potts/PA)

The club’s statement continued: “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.”

EFL regulations state a prospective appeal against a mandatory 12-point penalty will only be heard under circumstances of ‘Force Majeure’.

The regulations state: “It is intended that this appeals process should be limited to circumstances which are deemed unforeseeable and unavoidable.”

Derby County v Sheffield Wednesday – Sky Bet Championship – Pride Park

The Rams avoided relegation to League One on the final day last season (Nigel French/PA)

The development is the latest setback for the Rams, who remain subject to a transfer embargo after breaking the EFL’s financial rules.

A fifth regulation that Derby have failed to comply with – default in paying transfer fee instalments – was added to the current list on the EFL website’s embargo reporting service two weeks ago.

Derby escaped relegation from the Championship on the final day of last season after drawing 3-3 at Pride Park against Sheffield Wednesday.

The club then avoided a points deduction, which would have sent them down, when the EFL decided not to appeal against a decision to only fine the club for failing to comply with finance rules.