Comment: Sheffield Wednesday exploit loophole in the English Football League’s flawed Profitability and Sustainability rules

The cat is finally out of the bag.

By dom.howson1
Sunday, 19 May, 2019, 11:45

It is understood Sheffield Wednesday chairman Dejphon Chansiri has purchased Hillsborough to ease their Profitability and Sustainability worries.

The picture should become a lot clearer when the club publish their accounts for the last financial year in the next few weeks.

Sheffield Wednesday chairman Dejphon Chansiri

Nonetheless, the news has caused quite a stir and divided the Wednesday fanbase.

Some don't see it as a big deal. Others feel very uneasy about the sale and lease back of Hillsborough.

But the Owls are not alone in going down this route.

Derby reported a pre-tax profit of £14.6m after selling their Pride Park stadium to owner Mel Morris for £80m last month.

Aston Villa are also rumoured to be considering a sale and lease back of Villa Park should they lose to the Rams in the Championship play-off final next week to avoid sanctions from the EFL.

The P&S guidelines, which were introduced at the start of the 2016-17 campaign, stipulate clubs cannot exceed losses of £39m over a three-year period or they will face penalties from the English Football League. Punishments range from transfer embargoes to points deductions. Wednesday were placed under a soft embargo in April 2018 after failing to meet P&S requirements.

Several second-tier clubs have voiced their concern over teams using creative accounting to bypass the rules.

But is what Derby and Wednesday have done to balance the books illegal? No. Is there anything in the rules to prevent such sale and lease-back schemes? No.

Both Derby and Wednesday have exploited a loophole in the system to solve their cashflow problems.

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It is, of course, a high risk strategy. Should either club find themselves in financial difficulties in the future, it is not a move they can repeat to get out of trouble. It is a one time thing.

But this is not a decision Chansiri, who took charge of the Owls over four years ago, will have taken lightly. He would have thought long and hard about the best way to counteract their P&S issues (Something he has repeatedly flagged up in the past 12 to 18 months).

The truth is that Wednesday's recruitment drive has let them badly down in recent years. They spent big on returning to the land of milk and honey, coming agonisingly close to securing promotion to the Premier League in Chansiri's first two seasons at the helm, but ultimately fell short.

Hopefully the club have learned from past mistakes and tweaked their approach to player trading. Recruitment is one of the areas where manager Steve Bruce will come into his own. His experience, knowledge and array of contacts will add plenty of value.

Chansiri accepts that he has not got everything right since replacing Milan Mandaric but no one should ever forget that the Thai businessman has invested heavily in a bid to make the club competitive at this level. The criticism of his regime has, at times, hurt him. He was very emotional at the last fans forum before Christmas.

Yet buying the ground is another example of Chansiri's huge financial commitment. No chairman or director in the club’s colourful 151-year history has bought into the club bigger than Chansiri. Not only does he care passionately about the club, but his heart is in the right place.

However, P&S rules prohibit Chansiri from spending what he likes on improving the first-team.

It also does not help the Owls that parachute payments have skewed the transfer market and created an unlevel playing field. The system rewards failure and has distorted the competition.

Daniel Plumley, a senior lecturer in sport business management at Sheffield Hallam University, has called for parachute payments to be abolished, claiming the EFL regulations "need a serious overhaul".

One thing is crystal clear – the P&S rules are not fit for purpose.