It’s unusual to write about other clubs but I think it’s important for Blues fans to understand that there is no EFL vendetta against Birmingham City, and that other clubs are in similar situations.
It’s more than just embargoes in place too. There are teams with threats of points deductions in their immediate futures, some of which could have a real effect on the bottom end of the table.
I wanted to pull together as much information as possible into one article so that we can see how bad the division really is.
Embargoes
Things have moved on since Blues were under a transfer embargo in the summer of 2017. While the EFL still doesn’t offer any warnings about what clubs might be close to being embargoed, the embargo reporting service on the official EFL website confirms which clubs are currently operating under transfer restrictions.
As it stands on Tuesday 14 March at 00:00, four Championship clubs are under a transfer embargo; namely Reading, Sheffield United, Burnley and Huddersfield Town.
In the aim of transparency, the EFL have also listed what specific rules clubs have broken that have resulted in them being placed under embargo.
Two of the teams that have been placed under embargo have found themselves in this situation in the last few days. Both Burnley and Huddersfield Town are under embargo for breaching Regulation 16.2, which is:
16.2 Each Club shall submit a copy of its Annual Accounts (as defined in Regulation 16.3 below) to The League, but in any event:
16.2.1 by no later than 1 March following the end of the financial year to which those Annual Accounts relate (in the case of a Championship Club)
Championship leaders Burnley have also apparently broken P&S Regulation 2.1.3, which relates to the club providing a profit and loss account and balance sheet for the current season which is prepared to EFL specifications and confirms their “P&S Calculation” for the year.
The Clarets have confirmed to their fans in a statement on Monday that the delay in submitting accounts was due to Burnley switching auditors, and feel that the EFL will have no issue with their accounts.
With Burnley 17 points clear of third placed Middlesbrough with just ten games to go, I think it won’t matter either way as they will almost certainly be a Premier League club again next season.
Second-placed Sheffield United are also under embargo, but in their case for breaking rule 52.2.3, which states
52.2.3 If a Club is in default of payments due to another Club (or club) under a transfer or compensation agreement the Club shall be subject to a registration embargo such that it shall not be permitted to register any Player with that Club without the prior written consent of The League until such time as the agreement is honoured.
Reports online have stated that this relates to former Liverpool forward Rhian Brewster, who was signed by the Blades in 2020 for a few that was expected to be as much as £23.5M.
Since signing for the Blades, Brewster has scored just four goals in 57 league games and has been out since October 2022 with a hamstring injury.
Sheffield United could face financial punishment for not paying transfer instalments under EFL rules.
However, unlike Burnley I think the Blades could still face sanctions if they are promoted, as I think all football leagues have a dim view of transfer fees not being paid.
For Huddersfield Town and Reading, a transfer embargo is only the start of their potential woes as both clubs could face points deductions.
Points Deductions
While Blues have been in the news due to the charges brought against the club and various individuals in connection with the failed Maxco takeover, it’s not just Blues who are in danger of a points deduction.
Both Reading and Wigan Athletic have been reported to be facing up to points deductions for various misdemeanours.
On March 1, the EFL announced that they are reviewing submissions from Reading to ensure that they have complied with a business plan imposed after the Royals breached P&S rules in 2021.
While there has been no confirmation that a breach has occurred, the signs do not look good for Reading. They currently have a six-point deduction hanging over their heads until the end of this season in relation to the original breach, and should they have failed to adhere to their business plan this will almost surely be imposed.
A six-point deduction would see Reading drop to 21st place behind Cardiff City on goal difference and just six points clear of relegation.
Wigan also have a suspended points deduction in place due to paying wages to players late on three separate occasions between June and October 2022.
It was confirmed a couple of days ago that Wigan has had a delay in meeting wage obligations due to “liquidity issues” and that the EFL are aware of the current situation.
While Wigan have tried to emphasise the financial strength of their ownership, the fact remains that there is a huge possibility the three-point suspended deduction could be activated, further cementing their position at the bottom of the table and reducing their chances of staying up.
Fellow strugglers Huddersfield are also in danger of a points deduction as rumours circulate that the club is heading into administration.
There have been financial issues at Huddersfield since late 2021, when unrelated businesses owned by Phil Hodginson (who owns 75% of the Terriers) going into administration which led to his resignation as chairman.
This meant that Dean Hoyle, who owns the other 25% of the club has had to step up to commit to funding the club, but he too announced he was stepping away from the day-to-day running of the club in October 2022.
If Huddersfield go into administration before March 23, they would receive a 12 point penalty this season; if it happens after that date the penalty would be imposed next season.
While relegation won’t be a mathematical certainty before March 23, it might make sense for Huddersfield to take the hit now rather than potentially starting next season in League One on minus 12 points.
While news of other clubs problematic positions could be useful for Blues, it’s not a great look for Championship football as a whole.
It’s clear that despite attempts to force clubs to be more sustainable, they are not working as more and more clubs seem to be pushing financial limits in an attempt to get out of the division.
It’s my understanding that while Blues will be close to the threshold for P&S rules, they will remain within limits and not be embargoed.
This situation cannot continue for a long period of time though.
As per the interim accounts piece I wrote, the club is currently losing £450k per week; even with a reduction in the wage bill at the end of the season and the potential of a Jude Bellingham sell on fee to come in, I think the summer is going to be a massive balancing act transfer wise.
It should also be noted that this remains the case even if the OPL takeover is successful.
Looking around at the financial landscape of the Championship I think we need to be realistic in where we want the club to be as fans.
With the likelihood of an independent regulator for football being appointed in the medium term, I think an aim of self-sustainability has to be the way forwards – not just for Blues but for all clubs.