Fans of West Bromwich Albion are leading the public fight against an alleged breach of EFL financial sustainability rules, which could potentially relegate the club, insisting such a judgement would be one of the most grievous ever imposed.
Though precise details are yet to be made clear, it is thought that the possible violation of EFL profit and sustainability rules (PSR) may relate to interest payments on a loan the club took out in 2022 to keep afloat, at a time when its former Chinese owner Guochuan Lai had taken money out to help other parts of his business.
The Shareholders For Albion (S4A) group, which has written to the EFL this week, insists that the loan was an exceptional one – secured in 2022 by former WBA chief executive Ron Gourlay to insulate the club with a ringfenced sum of money for operational needs which could not be siphoned away by Lai, who had borrowed a total £7million.
It was not cash sought to flagrantly enhance the team’s prospects.
The group says that emails it sent to the EFL at that time, informing the league that Lai was taking money out of Albion, brought no response, when league action against the Chinese businessman might have kept the Baggies on a firmer financial footing.
Neither Albion nor the EFL have confirmed the alleged violation of rules, so it is not known whether the breach is a result of the interest payments on that loan in some way not being accounted for.
West Brom’s possible financial violation may relate to interest payments on a loan the club took out in 2022 to keep afloat, at a time when its former Chinese owner Guochuan Lai had taken money out to help other parts of his business
West Brom are desperately fighting to avoid relegation from the Championship
S4A also points out that the club’s new owners – American Shilen Patel and the Bilkul Group – have made huge strides in getting Albion back on an even keel – selling first team players Tom Fellows, Torbjørn Heggem, Alex Palmer and Darnell Furlong in the push to be financially compliant. Losses have been halved in the last year.
Supporters’ dismay has been compounded by the timing of this development, in the midst of a desperate relegation battle, given that the Hawthorns executive team would have had to submit the accounts in question by last December.
The team have finally been set on a positive trajectory, going seven games unbeaten under caretaker manager James Morrison, the club’s third boss of the season, who was appointed after the chaotic 44-day tenure of Eric Ramsay. Bolstered by huge support home and away, Morrison’s side sit two points above Oxford United, who occupy the final relegation place, ahead of Saturday’s visit to Preston. But if they are hit with a points deduction and appeal it, the result could not be known until after the end of the season.
The sense of uncertainty is compounded by confusion – in part of the EFL’s own making – over what losses the league’s clubs are actually permitted to make. The EFL website states it is £39million over three years, though other sources suggest it is now £41.5million, taking account of inflation. Either way, Albion appear to have overspent by £1million at the most.
The idea of a two-point penalty for that would seem extremely harsh and disproportionate, given that Leicester City have finally accepted a six-point deduction for their gross overspend of £20million as they secured promotion back to the Premier League two years ago. That deduction could see the Foxes relegated after the home game against Millwall on Tuesday night.
Football finance analyst Kieran Maguire said this week that he believes Albion are no more than £1million over the PSR figure – a calculation reached by subtracting the £6million annual costs of Albion’s Category A academy and other outgoings from the overall £64m three-year losses. Academy costs are excluded from the final PSR calculation. If the breach is so marginal, it then ‘comes down to the EFL’s attitude,’ Maguire said.
‘The separate issue is that we are almost at the end of the season and it is not fair on Albion or the other clubs in the relegation dogfight,’ he added. ‘The issue is: A – is there going to be a charge?; B – if they are innocent or guilty; and C – whether the tariff is before the end of the season.
All of the unknown is causing stress and distress for clubs, fans, owners and everybody concerned. If I was a fan or owner of Portsmouth or Oxford (who are in the same relegation fight), then I would be gunning for this to be sorted ASAP.
The team have finally been set on a positive trajectory, going seven games unbeaten under caretaker manager James Morrison
The Baggies are just two points above the relegation zone
In an excellent episode of the Albion podcast The Liquidator this week, which examined the story in detail, host Adrian Goldberg pointed out that fans remain in the dark, with no one willing even to confirm the possible breach and some of the essential financial details not made public in Albion’s accounts.
Goldberg said: ‘It would be good if Albion or the EFL confirmed this, so that we all knew where we stood. Anyone would think that as supporters, we actually make this game possible, wouldn’t you? We do make this possible because without this, there is no game, and yet we are not being told everything that is relevant to the future of our football club.’
For many Albion fans, the worries of this past week bring back to mind the dark days of the Lai ownership – and the board’s need to take out that loan from US investment group MSD Holdings, which has extended finance to a number of British clubs.
It was supporters who led the way back then, with the formation of the Action 4 Albion group when the club were rock bottom of the Championship in October 2022. That group’s imaginative ‘Shine a Light’ protest movement, which asked supporters to switch on torches after 12 minutes of each half, provided a frequent reminder of the £12m in unpaid loans which Lai had taken out from the club in total.
For many Albion fans, the worries of this past week bring back to mind the dark days of the Lai ownership
Eventually, Lai accepted how deeply unwelcome a presence he was in the Black Country and sold.
In the House of Commons this week, West Bromwich MP Sarah Coombs spoke for concerned fans in urging the EFL to resolve the issue. ‘A points deduction sending us down would be heartbreaking for fans, particularly because the source of the issue seems to be a loan from the previous owners,’ she said.
Lisa Nandy, Secretary of State for Culture, Media and Sport, said the new Independent Football Regulator would be looking at the issue. Albion fans would have liked to hear a greater sense of urgency from her.
