Takeover silence and mounting debts: how did it come to this for Derby? | Ed Aarons

“I hope together we can help steer this club back into a sustainable place in the Premier League,” announced Mel Morris in September 2015. Born and raised in Littleover – less than five miles from Pride Park – the man who made most of his estimated £500m fortune after backing the firm behind the mobile gaming app Candy Crush Saga had finally achieved a lifelong dream of buying his beloved Derby County.

The club had just missed out on the play-offs a few months earlier, and Morris’s optimism appeared understandable. Yet 10 full-time and interim managers later, Derby are battling to avoid relegation under Wayne Rooney with a squad whose wages were unpaid at the beginning of January. The club no longer owns its own stadium and has mortgaged its training ground in pursuit of further finance.

As a proposed takeover by Middle Eastern investors grows more unlikely by the day, Derby are in a precarious financial position and in danger of relegation to the third tier for the first time since the mid-1980s despite a recent renaissance on the pitch.

Morris initially bought a 22% share in the club in May 2014, days after they had lost to Queens Park Rangers in the Championship play-off final, and Derby posted an operating loss of close to £10m two months before he purchased the club from the US-based holding company North American Ownership group 16 months later. After another defeat in the play-offs in 2016 and finishing ninth the following season, losses had risen to more than £20m.

Neither Gary Rowett in 2018 nor Frank Lampard a year later could break the play-off curse, and an accounting miracle appearing to take place in the East Midlands a few months after the 2019 defeat by Aston Villa at Wembley. Derby announced that for the financial year ending June 2019 they had made an operating profit of £14.6m.

It emerged that – much to the chagrin of fellow EFL clubs – the club had sold Pride Park to Morris for a reported £80m and leased the property back from him for £40m. Derby were charged by the EFL with breaching financial regulations but vigorously denied wrongdoing and an independent disciplinary panel last August cleared them and ruled that the club had not inflated the valuation of their stadium.

Derby no longer own their stadium but were cleared of wrongdoing over its sale. Photograph: Nigel French/PA

Last summer it was reported that Morris’s purchase of Pride Park was financed by Rams Investment Limited, a company with links to the Swiss-Turkish businessman Henry Gabay. Gabay – who was arrested in France last year in relation to a German tax evasion scandal but has denied any wrongdoing – wrote on Twitter: “Delusional, fake news has no limits”

Despite the financier’s claims to the contrary a Land Registry document states that Rams Investment Limited holds a charge on Pride Park. The same document makes clear that any sale of the stadium is conditional on written consent from Rams Investment. However, a Derby spokesman said there was categorically no loan or charges outstanding to Rams Investments Limited and/or Gabay and said the club would be in touch with the Land Registry to amend the error.

Only a year after the purchase of Pride Park, Morris entered into a loan agreement with MSD Holdings, an investment group part-owned by Michael Dell, the founder of American computing company Dell Inc. The amount MSD loaned to Derby was reported to be £30m secured on Pride Park, with a further loan, secured on their Moor Farm training ground, taken in October. Documents relating to the loan registered at Companies House stipulate that Derby cannot sell their training ground without the written consent of MSD with charges held against “The Derby County Football Club Limited, although a Derby spokesman told the Guardian that the MSD loan was taken out by the company that owns the stadium (Gellaw Newco 202 Limited), not by the club itself.

Derby’s owner, Mel Morris, enjoys the play-off semi-final win over Leeds in 2019. The club lost the final to Aston Villa.
Derby’s owner, Mel Morris, enjoys the play-off semi-final win over Leeds in 2019. The club lost the final to Aston Villa. Photograph: Nick Potts/PA

In November, it was announced that a £60m deal had been agreed “in principle” to sell Derby to Derventio Holdings UK Limited, a company owned by Sheikh Khaled Bin Zayed Al Nehayan, whose cousin Mansour bin Zayed Al Nahyan is the owner of Manchester City. It is unclear whether the debt Morris has accrued in relation to the stadium and the training ground will need to be refinanced if the takeover is completed.

Derventio Holdings UK has been assisted by Christopher Samuelson, an influential financier involved in takeovers at Reading and Aston Villa. Samuelson and fellow director Andrew Obolensky resigned the day after the takeover in principle was announced, leaving Midhat Kamil Kidwai as Derventio’s only director and Sheikh Khaled – who has previously failed with attempts to purchase Liverpool and Newcastle – listed as a “person with significant control”. A few weeks later, the club and Bin Zayed International issued a joint statement assuring supporters that the takeover remained “on track” with a view to completion before Christmas.

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That failed to materialise. Derby ended up paying the players their wages for December more than a month late and being placed under a transfer embargo, with the CEO, Stephen Pearce, blaming the error on a misunderstanding with the prospective new owners.

Last week in an interview with the Mail on Sunday, Morris insisted that the takeover was “not finished” and vowed to keep the club afloat until a transition to a new owner is complete. “Literally every day is spent trying to work out how to improve our situation,” he said.

There have been reports of new American investors and of Erik Alonso – a Spanish agent who briefly worked as an adviser to Sheffield Wednesday’ owner Dejphon Chansiri – having also shown interest in purchasing the two-times league champions. But with the debts piling up, it seems Derby’s future remains very much in the balance.