What is a soft transfer embargo and what does it mean for Sheffield Wednesday?

The Hillsborough club, who are now the subject of an embargo for the second consecutive year, are unable to register players with the restrictions in place unless any deal is given dispensation by the Football League.

But what does all this mean for the Owls? Take a look at our whistle-stop tour of the ins and outs of the Wednesday situation.

What is a soft transfer embargo?

While the words ‘transfer embargo’ are bound to send shivers down the spine of football supporters, a ‘soft embargo’ isn’t quite so damning. Where the embargo imposed on the club last summer saw the club unable to make any permanent signings between April and August, taking them beyond deadline day, The Star understands that Wednesday’s current situation is less difficult to navigate, and that it will be lifted as soon as the EFL’s requirements are fulfilled.

What have Wednesday done wrong?

Put simply, the club have failed to hand in their accounts on time. In fact, according to Companies House, they are 49 days overdue and counting. Championship clubs were instructed to deliver their paperwork by April 1 and it is understood that Wednesday are yet to do so. In theory, the ban will be lifted when the club hand over their accounts – as long as the findings are satisfactory.

Chairman Dejphon Chansiri warned earlier this year that Wednesday could face sanctions again if their financial issues could not be solved. But the Thai businessman is believed to have completed a sale-and-lease back of Hillsborough to ease concerns that the club’s financial set-up is in breach of Profitability and Sustainability (P&S) rules. The finer details of the deal are expected to be revealed in the accounts.

Why a soft embargo?

Transfer embargoes are more common where clubs have fallen foul of overspending restrictions brought about by Financial Fair Play, or P&S rules. The P&S guidelines, which were introduced at the start of the 2016-17 campaign, state clubs cannot post losses of £39m over a three-year period or they will face penalties from the EFL. Punishments range from transfer embargoes to points deductions and these were the terms under which Wednesday were punished last summer.

Fixed-term transfer bans, such as those suffered by the likes of Nottingham Forest, Bolton Wanderers and Fulham in 2015 and to cash-strapped Birmingham City last Summer, are more often put in place for serious breaches of financial rules.

What does this mean for Wednesday?

In a nutshell, it means the club are unable to register new players until the terms of the embargo are lifted. The club have been widely linked with a number of signings, with Steve Bruce keen to add six players to his squad before the season starts, and are understood to have agreed terms with free agents Moses Odubajo and Julian Börner. A further free transfer with Cardiff winger Kadeem Harris is being negotiated, but is unlikely to be confirmed while the ruling is still in place.

Who else is under embargo?

Reading are believed to have fallen foul of P&S guidelines and have agreed a deal with the EFL to sell players by the end of July in order to make up the unknown shortfall. The Berkshire club’s spending exceeded the £39m limit thanks to an excessive wage bill and costly pay-offs paid to the likes of former manager Paul Clement and CEO Ron Gourlay. It is not known if any other Championship clubs are under embargo.

So what’s next for Wednesday?

Submit the accounts. The club extended their year-end date from May 31 to July 31 to buy more time, but with transfers on the line the club will not want to drag their heels. The Star understands Wednesday have been in regular dialogue with the EFL and are confident the ban will soon be lifted. It is believed the Owls are edging nearer to posting their accounts.

As soon as Wednesday have satisfied the EFL's requirements, they should get the green light to trade again.