EFL confirm nine point deduction to Birmingham - but further penalties may come
22 March 2019
Blues out of play off running but five points clear of relegation slots.
Will Birmingham face further penalties next year? Questions over strength of sanction.
The EFL have confirmed Birmingham City’s nine point deduction for breach of the Championship’s Financial Fair Play rules after news of the sanction was leaked earlier today.
Birmingham pleaded guilty to breaking the rules at a hearing earlier this week. The Championship league table will be amended with immediate effect, although Birmingham have been granted 14 days to make an appeal. The deduction leaves Birmingham five points clear of relegation having previously been seven points off the play off slots.
The EFL had wanted to give Birmingham a 10 point deduction, but reduced the penalty by a point for their pleading guilty. There will be no financial penalty other than costs being awarded against them.
“The Profitability and Sustainability Rules, aligned with those in the Premier League, became effective in 2015/16. Season 2017/18 was the end of the first full reporting period with Birmingham City the only Club found to have breached those requirements, when it incurred adjusted losses of £48.787 million, £9.787 million in excess of the permitted losses,” said an EFL spokesman.
“The Disciplinary Commission had the opportunity to consider all relevant factors in reaching its determination, including the Club’s mitigation.”
Needs to turn a profit this season to avoid further sanction
Birmingham may face further sanction next season for breach of FFP rules. Under EPL rules they are allowed combined losses of £39 million over three years, or £13 million per season.
But today’s judgement revealed the true extent of Birmingham’s problems: Combined losses of £46.8 million for 2016/17 and 2017/18. It means the club will need to turn a profit of £7.8 million this season to avoid further sanction.
The case had taken seven months to be heard after Birmingham were charged by the EFL last August, but publication of the judgement suggests that this had become belatedly protracted by Birmingham challenging the procedure and authority of the disciplinary commission.
Redknapp denied fault
Birmingham have spent excessively for a number of years, with former manager Harry Redknapp signing 14 players during a spell of just 13 months in charge in 2017, spending £23.75 million. Earlier this week he denied being at fault for Birmingham’s current problems, saying that he “didn't know anything about Financial Fair Play.”
“I was never warned by anyone at the football club that there was going to be a problem with that,” he said in an interview with the Daily Telegraph. "I don't think any of the signings were mine.”
However, Birmingham said in evidence submitted to the EFL that:
“This is a case of a Club which employed the wrong managers in the sense that: (a) The managers overspent on transfer fees, loan fees, signing on fees and player wages, having no or no adequate regard to the P&S Rules or the Club’s financial health generally; (b) The managers and their support staff largely failed but were, in many cases, entitled to substantial termination payments when their services were dispensed with.”
There has been particular anger at Birmingham’s conduct
There has been particular anger at Birmingham’s conduct, however, not just at the rules on losses made, but at the failure to try and reduce them. Last summer, despite having been placed under a transfer embargo by the EFL, they signed Denmark Under-21 international Kristian Pedersen from Union Berlin for a fee of over £2 million.
Having expressed “exceptional disappointment” at Birmingham breaking the terms of their embargo and having then tried to block Pedersen’s registration, the EFL belatedly approved the transfer in August.
“The EFL is not about restricting clubs’ activity,” said EFL CEO Shaun Harvey at the time. “We want clubs to be strong and we want them to be vibrant and want clubs to be strong. Clubs not being able to sign players they would like to sign is not good for the EFL.”
Never seen a case like that before
Harvey subsequently told the EFL disciplinary commission that he had never seen a case in which a club had ignored a transfer embargo, but that the signing of Pederson put the EFL in “a very difficult position.”
The sense among some of Birmingham’s rivals was that the club wilfully ignored FFP in the expectation that the rewards of a potential promotion to the EPL – which new players might help bring – would offset any penalties incurred by the EFL – even if it matched the £42.5million fine previously handed down to QPR for breach of FFP rules.
Unless Birmingham succumb to an unlikely relegation it won’t unduly affect their plans for the 2019/20 season
Certainly the relatively mild punishment handed out to Birmingham today as well as the lengthy wait for the disciplinary hearing to be held – to a point of that season where the destiny becomes predictable - won’t allay such scepticism: it ends a slim chance of promotion via the playoffs – Blues were seven points off the playoff slots with 8 games left – and brings a small chance of relegation to League One – they are now five points clear of Rotherham in the last slot.
The assumption is that a deduction that merely consigns the Blues to mid-table mediocrity won’t create a potentially expensive or damaging legal appeal that a plausible chance of promotion or relegation may have created.
Unless Birmingham succumb to an unlikely relegation it won’t unduly affect their plans for the 2019/20 season as a deferred points deduction would surely have done. Nevertheless, problems may still lay in store.