Sky Sports News’ football correspondent Rob Dorsett explains the Baggies’ current situation as West Brom are charged with breaching the EFL’s Profitability and Sustainability (PSR) rules.
What is the current situation?
It is not clear when West Brom were first reported for the breach by the club’s financial reporting department. They, like all 71 EFL clubs, had to submit their accounts three and a half months ago, by December 31st, but what has happened since then?
I believe there are negotiations and discussions going on about whether expenditures that are allowed outside of the PSR calculations, such as women’s teams and infrastructure, can be included in the accounts.
When former owner Lai Guochuan ran the club, loan interest seemed to be the central issue.
What I heard is that even if West Brom breached the PSR, it was a minor breach, not a major breach. Therefore, if the independent committee determines that the rules have been violated, the points will likely be reduced, albeit minimally.
It is unclear and remains to be seen when this independent committee will meet to decide West Brom’s fate, although there is likely to be no aggravating factors or serious breaches, so Leicester could be awarded three points instead of the six awarded.
That is, unless it can be proven that no rules have been broken, as the club has publicly stressed.
Neither the EFL nor the club were able to comment as the process is ongoing.
Will a decision be made by the end of the season?
In short, yes.
EFL guidelines clearly state that if a club is found to have breached the PSR, they will be subject to some kind of penalty (in most cases a point deduction) in the season following the breach.
This is a key principle that all EFL clubs would like to see, ensuring the integrity of the sport is maintained and clubs that break the rules are punished at the earliest opportunity.
The accounting period we are focusing on here is 2024/25 and these accounts will be submitted to the EFL at the end of December, so the guidelines say penalties should be taken this season and the EFL is committed to finalizing this before the end of the season.
But when is “the end of the season”? Will it be when the final whistle blows at the end of the final round? Is it the day before next season’s pairings are decided?
It’s possible, but from what I’ve heard it’s highly unlikely, that the sanction will be decided after the final game of the Championship season and all parties are doing everything they can to resolve it as soon as possible.
This could have a major impact on the retention battle.
A situation like this, where five clubs are dependent on the outcome of an independent panel that will decide whether one of the five clubs will have points deducted at the end of the season, is terrible for the integrity of the sport.
The current reality is that West Brom, Leicester, Oxford, Blackburn and Portsmouth are battling each other to avoid the remaining two relegation spots, and no one knows what West Brom’s current true point total is.
According to the current table, they have 46 points and sit two places outside the relegation spots. However, is that 46 points really less than 43 points?
There is an incredibly difficult and worrying situation in which a club at risk of relegation is facing the possibility of point deductions, and many other clubs are also curious to know the outcome.
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Highlights of the Sky Bet Championship match between West Brom and Millwall.
There is also a very real possibility that Sheffield Wednesday, Leicester and West Brom, the three clubs relegated from the Championship, will be relegated due to point deductions.
This isn’t good for anyone, but it’s a system that all clubs knew about and voted for in advance. EFL is simply applying these rules.
And it all comes down to interest?
It is my understanding that the key to the disagreement between EFL and WBA is how interest payments on loans taken out by previous owners should be classified.
New owners Birkul have paid around £5m in interest during the accounting period on a loan of more than £20m taken out by previous owner Lai Guochuan, but feel strongly that these payments belong to the owners, not the club.
They therefore believe that these amounts should not be included in the club’s PSR calculation.
However, it is clear that the EFL thinks differently, and as interest is a fundamental part of what clubs have spent and are still borrowing, it must be included in the PSR calculation.
We would like to emphasize that there has been no comment from the WBA or EFL on this matter and our information has come from elsewhere.
Simply put, I am told that WBA is in breach of the 2024/25 PSR regulations if interest is included on the loan, but if interest payments are not included, WBA is compliant.
Is the EFL under pressure to solve this problem?
yes. It would give a very bad impression if the deductions were made very late in the season, or even after the final round.
It’s possible, but I think it’s very unlikely. The EFL is desperate to resolve this issue as soon as possible, but they are in the hands of an independent commission.
Contrary to fan opinion, it is not the EFL that is handing out punishment. They can only file charges through the club’s financial reporting department.
And remember, this is the system voted on by the club. They want PSR violations to be punished in the season immediately following the violation, and it’s a very, very complicated process, so the timescales are very tight.
However, if a club goes into administration, a 12 point penalty will be imposed immediately unless the club goes into administration after the fourth Thursday in March. This is to maintain the integrity of the sport in the department. There is no such restriction with respect to PSR infringement.
West Brom remain adamant that they have not breached the regulations, saying in a statement on Monday: “The club believes it is in full compliance with the P&S regulations. The club continues to work with the EFL’s club financial reporting department and looks forward to resolving this matter.”
