Middlesbrough accuse Derby County of 'cheating' amid legal battle and administration turmoil

Boro launched legal action against Derby after The Rams secured a 2018-19 Championship play-off place at their expense. They claimed Derby were ‘cheating’ under the EFL’s profit and sustainability rules.

Wycombe Wanderers also launched a case following their relegation last season.

Derby have since admitted breaches of profitability and sustainability rules relating to the £81million sale of Pride Park to their former owner Mel Morris, resulting in a points deduction.

The Rams are now in administration and an EFL statement claims that potential buyers ‘appear unwilling to assume the risk of defending’ the legal cases against the club. Derby’s administration and EFL membership status is at serious risk without a willing buyer.

Part of the EFL statement read: “The EFL is keen to try and resolve the current impasse.

"The EFL invited each of the Administrators, Middlesbrough FC, and Wycombe Wanderers to make submissions on this point last week, and we are now in the process of reviewing those submissions with a view to identifying a route to resolve the conflict which exists between the respective positions of, on the one hand, Derby County, and on the other Middlesbrough and Wycombe Wanderers.”

In response, Middlesbrough attempted to clarify their position with the ‘full facts’ opposed to ‘ill-informed speculation’ with their own statement – it reads:

Why are MFC bringing a claim now?

MFC became aware that Derby County was cheating under the P&S Rules during 2018/19. MFC first intimated a claim against Derby in May 2019 immediately following the end of the 2018/19 season. The claim was held in abeyance whilst the EFL Disciplinary Proceedings against Derby were followed through to a conclusion. MFC then sent Derby County a Letter Before Action in the autumn of 2020 and started arbitration proceedings against Derby in January 2021. Derby used various procedural tactics to seek to delay the proceedings and as a result the claim has yet to be finally determined. MFC is not responsible for the delay. Had it been finally determined, and an award made in favour of MFC, there would be no dispute that MFC would be a Football Creditor.

It is said the claim has no prospect of success so why continue?Given that the claim is confidential, MFC does not understand how people can assert it has no prospect of success. MFC is a commercial organisation and would not pursue frivolous litigation at huge costs unless it had been advised that there is a good prospect of success. The claim is not limited merely to the amortisation issue in respect of which a Disciplinary Panel have already found Derby to have breached the P&S Rules. Without breaking the confidentiality of the proceedings, in simple terms, MFC allege Derby and its directors systematically cheated under the P&S Rules and that such cheating affects the integrity of the competition. At least two clubs, namely Middlesbrough and Wycombe, were directly affected by the cheating, albeit in different seasons. In simple terms so far as MFC is concerned, had Derby not cheated, MFC would have been in the play-offs. However, Derby did cheat and, as a result, MFC lost the opportunities that arise as result of that.

How can MFC hold the administrators and EFL to ransom in demanding that its claim, reported to be worth over £40m, be met in full as a condition of the share in the EFL transferring?

That is not what MFC has said. The club believes that it is a Football Creditor but accepts that, as things stand, the size of the debt due is unknown. All MFC have said is that any new owner should be required to honour the final decision of the Arbitration Panel on behalf of Derby once that is known. There is a certain inconsistency to the arguments presented by the administrators. On the one hand, it is said that there is no prospect of the claim succeeding, in which case there is no risk for a new owner. But, on the other hand, the administrator apparently cannot find a new owner because they will not proceed without the claim being settled due, presumably, to the fact that it has merit and might succeed. If the claim has no prospect of success MFC does not understand why a new owner would resolve the matter by accepting that the arbitration decision should be honoured. Of course, if the claim has a value as MFC believes, there is no reason why MFC should not, as a Football Creditor, be entitled to recover the monies due to it.

Why is Steve Gibson refusing to compromise the claim?

MFC has made it clear since the administrators were appointed that it was happy to discuss how the claim is dealt with and whether a compromise could be reached with the administrators or the new owner. The administrators contacted MFC in November 2021. However, there has been no contact at all since then, until this week. The administrators ignored MFC’s correspondence from November and MFC’s offer to continue engagement. MFC has made clear that it does not wish to see Derby County fall into liquidation, and that MFC is happy to be realistic in its expectations in order for Derby to exit administration. However, it is ultimately up to the administrators or the new owner to put a firm and realistic proposal forward or merely agree that MFC’s claim, when finally determined, will be met in full by the new owners.

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