Middlesbrough pursuing legal case against Derby over alleged finance breaches despite 12-point deduction

·4-min read
Middlesbrough pursuing legal case against Derby over alleged financial breaches despite 12-point deduction - CAMERASPORT VIA GETTY IMAGES
Middlesbrough pursuing legal case against Derby over alleged financial breaches despite 12-point deduction - CAMERASPORT VIA GETTY IMAGES

Middlesbrough are continuing to pursue a legal case against Derby County to sue them for alleged financial breaches despite the Championship club being put into administration by owner Mel Morris.

With Derby County having gone into administration, which will automatically dock them 12 points, sending Wayne Rooney’s side to the bottom of the table, it was unclear whether this legal case would continue.

But Telegraph Sport understands the case remains live and Middlesbrough continue to believe Morris acted in breach of EFL rules and made it impossible for clubs who stuck to the rules to compete fairly in the Championship.

Derby have appointed Andrew Hosking, from business advisory firm Quantuma, as the club's administrator and Middlesbrough's legal action will be another situation he will have to address. Derby also owe £26 million to HM Revenue & Customs while there are a number of other outstanding debts to pay.

Middlesbrough's dispute with Derby has been ongoing for more than two years. Steve Gibson, the Middlesbrough chairman, has been a passionate and outspoken supporter of Financial Fair Play - now known as the Football League's Profit & Sustainability rules - and has previously accused rival clubs of “cheating” in order to try and secure promotion to the Premier League.

Gibson even stood up at an EFL meeting back in 2019 and directly challenged the clubs who were attempting to find ways around the rules designed to stop clubs spending more than they earned to try and get out of the division.

These allegedly included Aston Villa, Derby, Reading and Sheffield Wednesday, with others who were no longer in the division, such as Bournemouth, Leicester City and Wolverhampton Wanderers also accused of breaking the rules by Gibson, by vastly over-spending on both transfer fees and wages.

But it is Derby who incensed the Teesside businessman with their behaviour, most notably when Morris bought Pride Park stadium for £80m and then leased it back from a company he owned in 2018.

That move by Morris enabled Derby to record a pre-tax profit of £14.6m for the financial year 2017/18, which meant they could hijack Middlesbrough's attempt to sign striker Martyn Waghorn from Ipswich Town that summer.

It is understood the north-east side had agreed a deal to sign the striker for £2.5m on wages of around £15,000-a-week and the player was due to travel to Teesside to sign a contract in August 2018.

But Derby hijacked the deal and paid Ipswich £5m for the player, while offering wages of around £25,000-a-week as well as more money to the agent for brokering the deal. Waghorn scored just 30 goals in 123 appearances for Derby before joining Coventry City on a free transfer this summer.

Having scrutinised Derby’s accounts, Gibson could not understand where they were getting the money from to spend so lavishly on players and duly complained to the EFL.

Derby have been docked 12 points and plunged to the bottom of the Championship table - ACTION IMAGES VIA REUTERS
Derby have been docked 12 points and plunged to the bottom of the Championship table - ACTION IMAGES VIA REUTERS

That was followed by legal action, which Gibson still intends to complete, despite Derby’s perilous financial situation and move into administration this week.

Since his initial move to sue Derby, Gibson was furious again last year when Middlesbrough's bid to sign Brighton defender Matt Clarke on loan was again hijacked by the east Midlands club.

Morris had urged Gibson to drop the case last season, but was unsuccessful with the relationship between the two described as “fractious” according to those who have spoken to Telegraph Sport. Gibson did not attend last season's game at Pride Park, while Morris was not at the return fixture.

Morris and Derby deny any wrongdoing. Speaking ahead of Derby's play-off final against Aston Villa in 2019, which his club lost, Morris accused Gibson of hypocrisy.

He said: "I consider the timing of their action to be cynical, an open attempt to try and steal our focus ahead of a crucial game. Fortunately, we are motivated by such actions. I’ll call it out there because I think it needs calling out.

"The sale of fixed assets is allowed in the rules. In 2016 a club [Boro] got promoted who chose to sell the tax loss from the football club to the parent company, because that then makes it revenue which is a positive towards profit, to help remain within Financial Fair Play.

"When I raised that at a meeting in March, the representative from the club said it was allowed in the rules at that time. So is this! What is different? You set the mould and we copied your lead, now you’re bitching. He [Gibson] had the hypocrisy to do that."

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