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MARTIN SAMUEL: Championship owners are considering group administration to solve wages dilemma  

The nuclear option, Championship club owners are calling it. In essence, it is evidence of their increasing despair over the impasse around player wages.

Owners and chief executives in the second tier of English football have had conversations about a process known as group administration, the last desperate act to avoid ruin, if no common ground can be found. It would need the agreement of all 24 clubs and require an enormous amount of trust from all sides, but it would change the face of the English game long beyond the coronavirus pandemic.

Group administration would involve every Championship club being placed into administration on the same day. Staff would be temporarily let go. Entire playing staffs would become free agents.

Championship owners are discussing group administration to protect their clubs while football is suspended during the coronavirus outbreak

Each owner would then buy the club back and negotiate contracts anew. It would be a doomsday scenario, a recalibration of the entire football industry.

It is hard to believe it would ever happen. Yet it has been discussed and Rick Parry, chairman of the EFL, is said to be aware of it. No doubt he is sceptical of such an extreme measure, but the fact the conversation has taken place at all should serve as a distress signal that clubs face financial disaster.

The logistics would be complex as any club entering administration incurs a 10-point penalty and, usually, a transfer embargo. These punishments would have to be waived, unless every club agreed to the plan. EFL rules state a change would require 75 per cent of Championship clubs to agree.

There would also need to be agreements around the poaching of players because if most clubs entered administration, an unscrupulous rival could use the measure to plunder squads for nothing.

All 24 clubs could agree to go into administration amid rising concern over player wages

All 24 clubs could agree to go into administration amid rising concern over player wages 

It is accepted that nought could be done about advances from the Premier League or from abroad, but clubs in the Championship have discussed a binding agreement between the members of that league at least.

Having wiped the slate, clubs would be bought back from administration by the same owners and staff re-employed. Reading, for instance, would re-form as Reading 2020, just as Middlesbrough have 1986 in their full company name, since being resurrected by Steve Gibson. 

Obviously, the wages on offer would reflect football’s post-coronavirus reality. It appears a far-fetched scheme, but it reflects the panic among clubs outside the elite. Future salary cap rules have also been part of the discussion, as a way of cementing cost controls into the path ahead.

So, could it be done? Certainly, there would be legal consequences, maybe even a players’ strike. There are rules that govern the payment of football creditors when a club is placed in administration, and it is hard to see how the relationship between Championship club owners and their staff could ever recover. 

Middlesbrough could reform just as they did when chief Steve Gibson saved the club in 1986

Middlesbrough could reform just as they did when chief Steve Gibson saved the club in 1986

The doomsday scenario would have serious implications, with players becoming free agents 

Then again, the relationship is at a low now, with the majority of EFL players following their Premier League counterparts and PFA advice in resisting wage cuts.

Leeds are an exception, although it has emerged their players can expect a two per cent bonus for accepting a wage deferral.

If the worst-case scenario develops and Championship clubs are looking at what one owner described as an ‘avalanche of bankruptcy’, much will depend on the legal direction the clubs receive over their responsibilities in the event of administration. 

Current rules state that football creditors, such as players, receive 100 per cent of what they are owed before a new business can be launched. Other employees, and non-football-related creditors, receive 25p in the pound, paid on takeover of the club’s assets.

There is huge concern for the future of teams in the EFL without any matchday revenue 

The legal argument centres on how easy it would be to alter this arrangement, and from when it applies. The Championship clubs exploring this option claim to have been advised that the rules governing payment of football creditors is voluntary and can be changed with a 75 per cent voting majority. 

Clubs could then vote to walk away from an industry agreement, and enter Government law on administration payment. Other advice is that the 100 per cent rule only applies until the last day of administration and would not involve paying up entire contracts. It would be a festival of litigation.

Then there are the wider implications that are not around staff and player wages. Collective administration places in jeopardy all other elements of club finance, from Premier League solidarity payments to debt. The clubs would have to re-apply to join the Football League, and would they be re-admitted, having jettisoned their responsibilities to players?

FA chairman Greg Clarke said clubs and leagues were at risk as fears rise around coronavirus

FA chairman Greg Clarke said clubs and leagues were at risk as fears rise around coronavirus  

For the Championship clubs to go it alone would jeopardise the basic tenets of the pyramid and solidarity. It would be an extreme reaction to what, it is hoped, will be a temporary problem.

What it does, then, is reveal the growing gulf between elements of the game; the resentment, the distrust and the panic that the coronavirus has wrought. Without doubt, there are owners who fear their club could fold unless running costs are swiftly addressed; without doubt, their greatest expense will be player wages.

‘We face the danger of losing clubs and leagues as finances collapse,’ said FA chairman Greg Clarke. ‘Many communities could lose the clubs at their heart with little chance of resurrection.’

So the talks around group administration are almost a scorched earth policy. If the clubs are going down, it all burns with them.