A Sheffield Wednesday supporting sport lawyer’s reflections on the EFL’s financial misconduct charges


When Thai businessman Delphon Chansiri bought my football club Sheffield Wednesday in January 2015, he was lauded by many supporters as the saviour with our golden ticket back to the Premier League (from which we’ve been absent since 2000). I was optimistic but, given my professional background in regulation, governance and integrity in sport, naturally for me it was tempered with some caution. His stewardship of the club since that time has to me shown a man who, although has the very best of intentions for the club he solely owns (including the stadium) at heart, has been at best naïve if not even misguided.

Prior to the English Football League (EFL) bringing misconduct charges against the club last week, “in respect of a number of allegations regarding the process of how and when [Hillsborough] stadium was sold [to a new company established and wholly owned by Mr. Chansiri] and the inclusion of the profits in the 2017/18 accounts”, we had already struggled to comply with the EFL’s financial regulations for Championship clubs, known as the Profitability and Sustainability Rules (P&S Rules). This included two periods of being placed under differing forms of transfer embargo, having financially gambled during the first two years of Mr. Chansiri’s reign to get to the “promised land” of the Premier League, but fell short in only reaching the play-off final in and semi-finals in seasons 2015/16 and 2016/17 respectively.

I once again became concerned about the club’s ability to comply with the EFL’s financial regulations when it was revealed that the most recent accounts were considerably late. It now appears this was done to financially engineer the sale of the stadium, for an alleged inflated price, to avoid breaching the P&S Rules.

We are not the only club to be under investigation (it is alleged) for such practices. I wasn’t aware until listening to the excellent Price of Football podcast, that under UEFA regulations on financial fair play, clubs are not allowed to include any profit made from an “internal sale” of an asset in its calculations. This used to be the case with the EFL’s rules as well, but this was mysteriously and without explanation removed from season 2016/17 onwards. So, although de facto Mr. Chansiri has done nothing in contravention of the EFL’s current regulations in essentially selling the ground to himself, he is for the purpose of the regulations a “Related Party” and therefore anything sold to a Related Party has to be done at a “Fair Market Value”. [Appendix 5, Part 2] The sale price of £60 million to Mr Chansiri’s new company was not it appears a Fair Market Value for the stadium.

The charges against Sheffield Wednesday came around the same time as charges issued against Saracens Rugby Club for breaching similar regulations in relation to the top-tier of domestic rugby in England (the (Premiership Rugby) were ruled upon by an independent disciplinary panel, with a total fine of £5,360,272.31 and deduction of 35 league points. Upon deciding not to appeal the suspension, the Chairman of Saracens Nigel Wray said in a statement, “Perhaps we have done the wrong thing for the right reasons…”.  Such a statement seems to reflect a question I asked at last week’s Sports Ethics and Integrity conference in Cardiff: why is it not viewed as “cheating” when a breach of financial regulations is proven rather than other types of misconduct (e.g. doping and match-fixing)?

This (misplaced) sentiment by Mr. Wray seems very much to echo the approach of Mr. Chansiri since he took-over at Sheffield Wednesday. Given comments Mr. Chansiri has made at fans’ forums the club has hosted, he does not agree with the financial regulations applicable to teams in the Championship and has always been looking at ways to circumvent them. This is because he has the best of intentions for the club, and there is no indication he is a “fly-by-night” owner, but this is really missing the point. The regulations are something that the clubs of the Championship agree to, with the EFL being a membership organisation, and any, “…Divisional Fair Play Rules shall not be adopted unless approved by 75% of the votes cast by those Member Clubs who are members of that Division present and voting either in person or by proxy.” [Regulation 18.3] After all, the Championship is seemingly the most financially unstable football league in the world. It is club’s overreach to get to the Premier League, with its riches, which is driving this reckless approach to financial management and governance. Any attempt by wealthy individual owners to circumvent the division’s regulations in this manner is in my opinion merely serving to fuel the instability and undermining the EFL’s “Financial Fair Play Objectives” [Regulation 18.1].

One of the things that I always say when teaching sports law is that you cannot look at matters in isolation and have to consider the prevailing circumstances at the time. Only last month the EFL, along with other stakeholders, was called before the House of Commons Digital, Media and Sport Select Committee to answer questions in relation to the circumstances that led to Bury Football Club being expelled from the competition, and the governance of the sport in general. As an example of the seeming lack of governance and financial oversight by the EFL of its member clubs currently, in September I attended an excellent panel on the finance of football at the Football Writing Festival 2019, during which it was highlighted that when Bury FC was last bought, for the grand total of £1, post-completion the new owner had 10 business days in which to provide to the EFL with the source and proof of sustainability of funding. In the event, he did not satisfy this but then all the EFL could do was apply sporting sanctions to the club, but could not stop him being a director at Companies House and cannot unwind any contract of sale.

Due to this high-profile and tragic failure of a long-established league club, the EFL has been under considerable criticism, along with The Football Association. The EFL have recently appointed a new Chairman, former Liverpool chairman, Rick Parry, with the charges laid against Sheffield Wednesday seemingly being the first major action taken under his tenure. It is clear that the EFL are no longer going to sit idly by and let the member clubs ride roughshod over the regulatory system they voted for (including a job advert recently being posted by the EFL for a ‘Club Financial Reporting Manager’).

As a supporter of the Sheffield Wednesday, perhaps a greater concern as a result of these misconduct charges even than the potential points deduction, is what happens afterwards in terms of the ownership and governance of the club. This concern arises from the fact that when faced with challenges and criticism previously, Mr. Chansiri has acted emotionally and said the club is for sale. If the club were unsuccessful in defending these charges, which they intend to do “vigorously”, surely he would be even more disillusioned with the EFL’s regulatory system and perhaps choose to walk away from the club? Furthermore, there are numerous examples in recent footballing history, including my father’s team Chesterfield FC and more recently non-league Dulwich Hamlet FC, where the ownership of the ground (or the land on which it sits) by a natural or legal person, rather than the club, is often a red flag for the club’s supporters and the local community.

As with other fellow Sheffield Wednesday supporters, I am to some degree grateful to Mr. Chansiri for having bought the club and allowed us to dream again. However, I cannot say I would be particularly pleased about going to watch a club who I know have cheated, especially as we have seemingly been at the very best reckless. If that is the case, I would not be surprised should the punishment be even more severe than some think in terms of a points deduction. Mr. Chansiri has shown a complete reluctance to sell players who have not been successful, for below their market value, despite the fact that we have a crippling wage bill, which has led to the pressure we have been under to comply with the EFL’s P&S Rules. I would rather have a sustainable, sensibly run and honest football club, than one at the behest of an owner who seems naïve to what is required to successful football club both on and off the pitch in modern times. I hope all fans of any club would want the same.