Sheffield Wednesday has said it will “vigorously defend” its position after the Championship club was charged with misconduct by the English Football League (EFL) in relation to a deal it struck to sell its Hillsborough stadium.
The EFL has been probing the deal amid concerns it was agreed using creative accounting moves in order to ensure Wednesday stayed within the League’s profit and sustainability (P&S) rules, potentially avoiding a points deduction.
In a statement issued on Thursday afternoon, the EFL said following a formal investigation into financial information provided by Wednesday in relation to its 2017-18 P&S submission, the club has been issued with a number of charges relating to alleged breaches of EFL Rules.
Earlier this year the EFL launched an investigation into the club’s financial submission for the period ending July 2018, following the completion of the sale of Hillsborough. The EFL said it has reviewed a “large number of documents” obtained from the club as part of this process and concluded there is sufficient evidence to justify issuing charges of misconduct.
The charges are in respect of a number of allegations regarding the process of “how and when” the stadium was sold and the inclusion of the profits in the 2017-18 accounts. All charges will be considered by an independent Disciplinary Commission and, if the charges are proven, Wednesday could be hit with sanctions ranging from a reprimand to a points deduction, a fine, or even expulsion from the EFL.
In September, the EFL is reported to have asked Wednesday why a £38m (€44.4m/$48.9m) profit for the deal was declared in its 2018 accounts when Land Registry documents dated the acquisition to almost a year later.
The Hillsborough agreement was first reported in July when the club’s latest accounts detailed the £38m profit, without specifying the identity of the buyer. At the time, Wednesday reported a pre-tax profit of £2.58m for the period spanning June 1, 2017 to July 31, 2018, a stark contrast to losses of £20.8m and £9.8m, respectively, in the previous two sets of accounts.
Losses in excess of £13m per year over a three-year term would breach the EFL’s P&S rules, and had the Hillsborough deal not been included in the 2017-18 accounts Wednesday would have posted a pre-tax loss of £35.4m, taking it significantly past the £39m threshold.
In July, it was reported that Wednesday sold its ground to owner Dejphon Chansiri earlier this year before leasing it back in order to meet the EFL’s rules. However, although the accounts stated that Hillsborough was sold for about £60m during the 2017-18 period in question to deliver a £38m profit, they did not state the identity of the buyer.
Moreover, the Land Registry was said to have noted that the club still owns the venue, which has a capacity of nearly 40,000, while the accounts did not indicate that any cash was brought in after the sale.
The Guardian notes that the misconduct, rather than straight rules breach charge, suggests the EFL regards Wednesday’s behaviour as reflecting aggravated circumvention of spending regulations. The newspaper added that this is likely to result in a significant points deduction as a punishment.
In a statement, Wednesday said: “These charges will be vigorously defended. The club will be making no further comment at this time.”
A number of Championship clubs have been accused in recent months of conducting stadium sale deals exploiting a loophole to stay complaint with financial fair play regulations. In September, it emerged that Middlesbrough was preparing to sue the EFL over Derby County’s purchase of its own home.
Reading is another club to have come under scrutiny over similar deals, along with Aston Villa, after it emerged that its stadium, Villa Park, had been sold to a subsidiary company controlled by owners Nassef Sawiris and Wes Edens. Villa was promoted to the Premier League last season.
Image: Sheffield Wednesday