EFL charges are “unlawful” as Sheffield Wednesday come out fighting

Owls owner Dejphon Chansiri.     Pic Steve Ellis
Owls owner Dejphon Chansiri. Pic Steve Ellis
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Sheffield Wednesday have informed the EFL that charges brought against the club concerning the sale of Hillsborough are “unlawful”.

The Sky Bet Championship club deny all charges put forward by the EFL after they opened an investigation into the Owls’ profitability and sustainability submission for 2017-18.

Owner Dejphon Chansiri, finance director John Redgate and former chief executive Katrien Meire were all charged with misconduct by the EFL on Tuesday.

But 24 hours later, and the Owls have come out fighting, claiming they have written ‘authorisation’ to sell the stadium, the charges are “unlawful” and could even bring a counter-claim against the EFL for compensation.

A statement from Wednesday said: “The club has reserved all of its rights against the EFL and will take all such actions as are necessary to protect its rights and integrity, and those of its current and former officers, including in relation to inaccurate reporting.

“The club has also notified the EFL that it stands ready to bring a claim against the EFL to obtain compensation for its conduct.

“The club maintains that it consulted with the relevant executive officers of the EFL in connection with the stadium transaction and that it acted in good faith.

“The club has in its possession numerous emails, letters and other documents in which the EFL gave authorisation to the transaction, and on which authorisation the club understood it could rely.

“That authorisation gave rise in law to a legitimate expectation that the transaction would be accepted by the EFL, which is binding on the EFL.

“The EFL is acting in breach of that binding legitimate expectation by retrospectively treating as misconduct that which it had itself previously authorised, and this makes the charges themselves unlawful.

“The club is accordingly bringing its own claim against the EFL to establish that it is acting unlawfully, as well as standing ready, if necessary, to vigorously defend the charges.”

Wednesday are one of a number of clubs to have recently sold their ground to their owner or an associated company and leased it back as a loophole to avoid falling foul of the Football League’s “profit and sustainability” rules, but the only one charged so far. There have also been questions asked about Derby County, Reading and Aston Villa, the latter of whom won promotion to the Premier League last season.

Under the profit and sustainability regulations – the Football League (EFL) version of financial fair play – Championship clubs are allowed to incur losses of up to £39m over three years.

The Owls lost £9.8m and £20.8m in 2015-16 and 2016-17 respectively, but the sale of Hillsborough turned a pre-tax loss of £35m for 2017-18 into a £2.5m profit.

Although the League was making no comment, the timing of the process is thought to be behind their discomfort. The sale appeared in the Owls’ 2018 accounts despite Land Registry documents apparently saying it was not completed for another year. The payment is due in seven instalments over eight years.

Grounds have to be sold at market value in circumstances such as these. The £60m Chansiri’s company paid for Hillsborough compares to West Ham United’s £40m outlay on the Olympic Stadium, and the £27m Reading sold the Madejski Stadium for.