Championship faces ‘financial armageddon’ after TEN clubs were placed under a transfer embargo last month
Ten championship clubs were simultaneously placed under a transfer embargo – with growing concern that some second-tier outfits may have to do with ‘financial Armageddon’.
Sportsmail may reveal that late last month nearly half of the competition was banned from registration in a bomb find that has led to claims that the integrity of the competition has been seriously undermined.
Clubs have collided with the English Football League on the basis of timing, after government guidelines stipulated that companies, including football clubs, can now extend the deadline for filing company accounts by three months.
It appears that the EFL has chosen not to reflect this extension period, leaving a large number of clubs on a collision course with the football organization due to late submission of their respective bills.
The clubs in question were Birmingham City, Blackburn Rovers, Cardiff City, Coventry City, Derby County, Huddersfield Town, Luton Town, Reading, Sheffield Wednesday and Stoke City.
Ten championship clubs were simultaneously placed under a transfer embargo last month
OFFICIAL STATEMENT COVENTRY CITY
Coventry City can confirm that it has been placed under a transfer embargo by the EFL.
Due to the Coronavirus crisis, the government allowed companies to extend the deadline for submitting corporate accounts by three months and Coventry City chose to make use of this option.
Unfortunately, the EFL has decided not to replicate this extension within their own rules, which surprises us as they have adjusted some other rules due to the Coronavirus pandemic.
Coventry City will file their accounts as required by Companies House within three months of the end of February, at which point the EFL transfer embargo will be lifted.
‘This is purely an administrative embargo imposed by the EFL. This has no effect on the day-to-day business of the Club or its finances, and will not affect planned transfer activities in the coming transfer window. ‘
Of these, it is clear that Huddersfield has now come off the list, while Stoke is expected to follow suit shortly, with both clubs hit with the penalty due to administrative – rather than financial – issues.
However, the shocking size of the group has illustrated that tension clubs are under pressure, in some cases due to overspending.
On Tuesday, Coventry issued a statement confirming the transfer embargo, explaining that they had taken the government’s option to file company accounts with a three-month delay.
The club outlined that the ‘purely administrative embargo’ would then be lifted and that summer plans would not be affected.
Luton Town also hit a similar tone with its own official statement.
The club said: ‘Our first embargo in a decade is simply an anomaly caused by an out-of-sync timing of financial reports as a result of the pandemic.
‘The club’s annual accounts for 2019/20, while they have been finalized, have yet to be signed off by our accountants, which will be done well before the legal deadline.
Given the exceptionally difficult work environment created by the pandemic, the requirement to continue to play ‘behind closed doors’, financial forecasts have rightly been examined much more thoroughly and Companies House has extended the legal filing deadline to June to allow sufficient time to this extra work accurately.
The club will indeed publish unqualified accounts before the end of April.
Wayne Rooney’s Derby is one of ten second-tier clubs affected by the ban
However, the EFL rules could not be amended to comply with the Companies House expansion and require signed accounts to be submitted in March, which the club has not been able to achieve.
“The matter will be resolved when our accountants finalize the report in the coming weeks.”
The Covid-19 pandemic, which took away matchday earnings, has also had a serious impact and there are fears that many in the group will not be able to strengthen their squad for next season.
The EFL declined to comment. A spokesperson said: “The league does not confirm the names of clubs placed under a registration embargo.”
However, an anonymous official at a club not on the list said: ‘This shows what we are dealing with.
‘Having almost half of the league under embargo puts the integrity of the entire league in question.
These are not just one or two. Covid has had an impact, but there are a lot of clubs out there spending money they just don’t have. Financial Armageddon is coming. ‘
The transfer window will not open again until the summer. Some believe clubs are now taking the punishment in the hope that they will be in a position to work their way out of the embargo when the embargo is reopened.
An unnamed source warned of a ‘financial armageddon’ and player sales will be affected
But the official warned that the impact of the pandemic means it will be difficult to sell players to the top flight, saying: ‘The Premier League has said Covid will cost £ 2 billion this season.
In the January window, with a few exceptions, it was mostly loans. While top players can relocate, championship clubs will do well to get decent money for the players who already want to sell them. ‘
Clubs can be prohibited from signing players for a wide variety of financial offenses.
All those clubs on the list have been contacted for comment. There were no responses.