Damian Collins called for the creation of an independent financial regulator after Derby County announced it hadfiled a notice of appointment of directors.
The Folkestone and Hythe MP said it was “sad” to see the club in trouble, but it was “another example of the weak and unsustainable financial situation many clubs are facing.
“Until we have an independent financial regulator for clubs with the power to enforce league rules in real time, we will see more failures.”
The Rams said they “had no choice but to make the difficult decision” due to “a number of developments,” including the inability to identify new owners and the continued impact of Covid-19 on sources of income.
Derby, which remains under a transfer embargo, already faces a separate and additional points penalty for breaking EFL financial rules.
12 point deduction
The EFL confirmed the impending sanction on Friday, saying in a statement: “The EFL can confirm tonight that the club will be subject to an insolvency case under the EFL rules.
“As a result, the club faces a 12 point deduction. Once the EFL has received formal notification of the request, the deduction will be applied.
Derby could potentially appeal the 12-point penalty, as EFL regulations allow appeals in cases of “force majeure”.
Derby said in a statement: “Last week it became clear that the ongoing process to identify a buyer for the club is unlikely to be productive in the short term, despite the number of negotiations with credible parties.
“Because the Covid-19 pandemic has had a severe impact on revenues and profits from all of its activities, the club has not been able to meet its daily financial obligations. The managers had no choice but to make the difficult decision to take this step and protect the club. “
The statement continued: “The irony is that the club’s financial forecast shows the emergence of a financially viable image. Without the Covid-19 pandemic, we undoubtedly would have been able to trade.
“However, the impact of the Covid-19 pandemic and the unpredictability it has created is putting too much pressure on it.
“As the Covid-19 pandemic and the lockdown tightened their grip, the club’s income and cash flow took a hit by around £ 20million.
“We are asking the EFL to now assist the club and the administrators in any way they can in their efforts to find a buyer.
“We cannot stress enough that it is devastating to be forced into this position. All of us – the owner, the board members and our staff – are true supporters of Derby County.
“We will continue our work under the direction of the directors to facilitate their process and their efforts to find a buyer.
“Once the directors have been appointed in the next few days, it will be customary for them to communicate with staff and supporters on timelines and processes to find a buyer and address creditors concerns.”
EFL rules state that any appeal against a mandatory 12 point penalty will only be heard in “Force Majeure” circumstances.
The regulations state: “It is intended that this appeal process will be limited to circumstances deemed unforeseeable and unavoidable. “
Derby went on to say their current financial situation was partly due to the EFL’s refusal to sanction the club’s £ 8.3million financial aid for the PAYE debt settlement, according to other clubs.
However, the EFL denied the club’s request, responding: “The league is disappointed with the comments made by the club regarding Covid’s loan facilities.
“The EFL contracted an increase in debt to provide its lucbs with access to funds that would help them cope with the impact of Covid and, as with any loan, this was subject to a deadline and criteria. eligibility which Derby County was unable to meet. “
Derby escaped relegation from the championship on the final day of last season after a 3-3 draw at Pride Park against Sheffield on Wednesday.
The club then avoided a point deduction, which would have fired them, when the EFL decided not to appeal a decision to impose a fine only on the club for failing to follow financial rules.
Fair Game, the club-led campaign group calling for fundamental changes in the governance of the sport, said Derby’s fate illustrated the need for action.
General manager Niall Couper said: “The grief felt by Derby fans must be immense at the moment. It should never have come to this. Football fans deserve so much better. Football has to change and it has to change now.
“We need careful consideration. We need proper regulation. We must protect the history and traditions of our clubs, not play with their very existence.
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