This is a version of the clubs twitter thread, published 9th of February. You can view it HERE
There are many clubs who have the independent means or other financial options to continue but for many clubs in financial distress seven weeks after the period for which funding was available expired there are no viable and sustainable options.
So, we have insufficient funds to continue, where does that leave us?
Just being in this position immediately places you in breach of their rules punishable by suspension from the league. You started a season on back of the promise of either income from fans or grants. You now have neither and by notifying the league of the situation they are empowered to take any action against you without limit. The league has not informed clubs that rule 4.3 (below) will not be applied.
If requested by the Competition a Club must demonstrate to the reasonable satisfaction of the
Board that it has sufficient funds to meet its financial obligations for the Season or any outstanding partthereof. In the event of a Club failing to provide such information to the reasonable satisfaction of the Board then the Board may request a personal interview with the Club with a view to seeking further information and details and in the event of a Club still failing to satisfy the Board then the Board may impose such penalty as it may reasonably decide including but not limited to the imposition of an embargo or the suspension of a Club from the Competition.
OK, I could probably cut deals with HMRC and other creditors to buy more time.
Yes you could and then you would in breach a second time for entering into a Time To Pay agreement and facing the prospect of not being able to register any players. The league has not informed clubs that rule 3.6 (below) will not be applied.
Any Club that
• Enters into a time to pay agreement with HMRC after (9 June 2012) for the repayments of any amounts due in respect of a PAYE/NI and or VAT liability will be subject to an immediate Embargo as defined in Appendix H of the Competition Rules.
I don’t know where I stand with Sport England funding so I guess I could get a quicker loan
Yes you could and that’s another breach of the rules unless you only need less than £5k for less than 3 weeks as this is an emergency loan and has to comply with this rule below. The league has not informed clubs that it will waive the restrictive definitions of emergency loans.
A Club is permitted to introduce an Emergency Loan without complying with the criteria set out above providing that such a Loan is:
• Not more than £5k in value; and
• Is repaid in full by the Club within twenty-one days of receipt.
So that’s why they want us to take the Sport England loan, it’s the only one allowed by their rules.
Bizarrely, no. The Sport England loan will also leave you in breach of their rules as whilst unsecured, it is not subordinated to all other creditors. The league has not informed clubs that it will waive the restriction definitions of permitted loans.
"Permitted Loan(s)" means any Loan or Loans entered into after 7 June 2013 and which is/are:
(b) for Permitted Loans entered into after 10 June 2017, has conditions in the loan agreement whereby the loan is unsecured and is subordinated to all other creditors in the event of a Club suffering an Insolvency Event and also subordinated to the costs of any such Insolvency Event.
Can I just risk it and borrow money to continue, what can they actually to do me?
The frightening answer is they can issue whatever punishment they want. The league has not informed clubs that the sanctions for taking any of the loans will be waived.
Where a Club breaches any of the above regulations in relation to Permitted Loans, Emergency Loans and other ancillary matters, it is under an ongoing obligation to advise the Competition of the fact and circumstances of the breach(es) immediately. Any Club found to be in breach of the above regulations shall be subject to such sanction as the Board may decide.
OK, so I should just plough on and get into debt I can’t pay, is that their solution in their rules?
No! That is the death spiral of all punishments. For starters, an immediate 10 point deduction and then unless you can find your way out of the problem on to relegation and then expulsion. The league has not informed clubs that the sanctions for triggering any type of insolvency event will be waived.
If an Insolvency Event shall occur in relation to any Club that Club shall be deducted 10 (ten) points.
13.B.1. In the event of a Club entering an Insolvency Event between the end of the AGM and start of
the AGM immediately following thereafter (‘the next AGM’) then it shall automatically be relegated by one Step at the next AGM,
Notwithstanding the above, in the event of a Club being subject to an Insolvency Event at the date of the AGM, then the Club may be subject to such sanction as the Board may determine, (including expulsion from membership of the Competition).
Fine. There is no financial solution. So we should stop playing and avoid all of those sanctions?
No. That’s another breach. This is their most popular rule to quote, rule 8.39, if you fail to play without just cause they can expel you and then also deduct points, make you pay your opponent’s expenses, fine you and then give your opponents the points. The league has sent this rule to clubs repeatedly in advance of fixtures.
Any Club without just cause failing to fulfil an engagement to play a Competition match on the appointed date shall for each offence be liable to expulsion from the Competition and/ or such other disciplinary action the Board may determine, including the deduction of up to a maximum of three points from the offending Club’s record, any expenses incurred by their opponents, and a fine.
In the event of a Club being in breach of the previous paragraph of this Rule then the Board may award points to the Club not at fault as if the match had been played and the League table shall reflect the position as if the match had been played with the result awarded by the Board.
OK, so I have to show up, but I can just furlough my first team and play a weakened team right?
Still No. A different breach and this is more open ended and they don’t specify a punishment for this one so is at their discretion. The league has not informed clubs that it will not impose sanctions for a breach of rule 8.23 either.
Each Club shall be prepared to kick-off at the scheduled time unless a satisfactory explanation is offered. Any Club commencing a Competition match with less than 11 Players may be subject to a fine. Each team participating in a match shall represent the full available strength of each competing Club.
So in summary, no course of action is free from sanction?
Out of money? Against their rules.
Negotiate with HMRC? Against their rules
Private loan? Against their rules
Sport England loan? Against their rules
Play on and get into debt you can’t pay? Against their rules
Don’t play on and stay afloat? Against their rules
Play on with academy or U23? Against their rules
Surely if you ask them they will advise on which rules they will set aside or which to follow?
Sadly no. See below.
“As the rulebook is not explicit please can you advise and order these offences in order of severity…
1. Not fulfilling a fixture
2. Deliberately fielding a weakened side
3. Taking a loan that clearly does not meet the ‘Permitted Loan’ definition
4. An insolvency event
All appear to expose clubs to the most severe sanctions available to the League so I am not sure why only rule 8.39 is being quoted.”
“I have been forwarded the email, and I am not getting into this debate as to what rule is more serious than another.
As they are encouraging the Sport England loan I am sure they will waive the rules on that one.
Yes. I am sure they will and so the only allowable option is likely to be to saddle a community club with a large debt for years to come when there is no prospect of a return to a full stadium and normal revenues and ask us to risk the future of our club to complete their competition for which they failed to deliver the promised funding. In effect we all get to pay for their failure.