Sky Bet Championship side Birmingham City have been deducted nine points following a breach of the EFL's Profitability and Sustainability rules.
It comes after the Blues exceeded the permitted limits on losses - £39 million over a three-year period - alongside signing left-back Kristian Pedersen despite transfer sanctions in the summer transfer window.
After reluctantly accepting the player's registration, the EFL said prior to the beginning of the season: "The EFL is exceptionally disappointed that the Club entered into an employment contract with the Player at a time they knew they would be subject to a business plan for 2018/19 if they were in breach."
The Mail recently reported that Birmingham were spending £202 for every £100 brought into the club on wages during a turbulent time that saw multiple managerial changes. The likes of Gary Rowett, Gianfranco Zola and Harry Redknapp all having spells in charge.
The investigation started at the beginning of August. The EFL stating at the time: "The Club will now be referred to a Disciplinary Commission which will hear representations from both the EFL and Birmingham City before reaching its decision. The Commission, under EFL Regulations, has the ability to invoke a full range of sanctions should the breach be confirmed."
What do the Financial Fair Play rules say?
1.1 All Championship Clubs are required to meet the Fair Play Requirement (as defined in Rule 1.2) for each Reporting Period (as defined in Rule 1.4) following the commencement of these Rules. The first Reporting Period for the purposes of these Rules will cover the 2011/12 Season but the consequences of failing to fulfil the Fair Play Requirement will not be effective until 1st December 2014 (see Rule 6 below).
1.2 The Fair Play Requirement is a measure whereby a Championship Club’s Fair Play Result must be:
1.2.1 an amount equal to £nil or greater; or
1.2.2 an amount less than the aggregate of the Permitted Allowances (defined in Rule 5) in relation to the relevant Reporting Period.
1.3 The Fair Play Result is an amount equal to a Championship Club’s profit / loss before tax, after adjustment in accordance with the provisions of Rule 4.2.
1.4 A Reporting Period is the period over which a Championship Club is assessed for the purpose of the Fair Play Requirement. For each Season the Reporting Period is (subject to Rule 2.2 or Rule 2.3) the immediately preceding 12 month period recorded in the Championship Club’s Annual Accounts. For example, for those Championship Clubs with a financial year ending in the period May, June or July the Reporting Period for the 2014/15 Season is the 12 month period ending May, June or July 2014.
There will be no further financial penalties for the club, which also means that they will not have any future transfer embargo related to the matter.
Birmingham are the first club to be deducted points since the EFL introduced their new Profitability and Sustainability rules at the start of the 2016/17 season.
In a statement on Friday, the EFL said: "At a hearing on 18 March 2019, the Club pleaded guilty to the charge, and after hearing representations from both parties, the panel has fully considered the matter and ruled a nine point deduction is appropriate, which will take effect in the current season.
"The Profitability and Sustainability Rules, aligned with those in the Premier League, became effective in 2015/16. Season 2017/18 was the end of the first full reporting period with Birmingham City the only Club found to have breached those requirements, when it incurred adjusted losses of £48.787 million, £9.787 million in excess of the permitted losses.
"The Disciplinary Commission had the opportunity to consider all relevant factors in reaching its determination, including the Club’s mitigation."
It means that Garry Monk's side now sit in 18th place with 41 points - having previously been 13th. They are just five points above the relegation zone, although with a significantly stronger goal difference than the teams around them.
Birmingham backed for the drop
The nine-point deduction, combined with recent form that has seen them lose their last four games, has moved the Blues into 16/1 with Sky Bet for relegation this season.
Birmingham take on promotion-chasing sides in West Brom, Leeds, Sheffield United and Derby in their next six fixtures, with the other two coming up against relegation rivals Rotherham and Ipswich.
Sky Bet Championship relegation (odds via Sky Bet)
- Bolton - 1/66
- Rotherham - 10/11
- Reading - 15/8
- Millwall - 7/1
- Wigan - 8/1
- Birmingham - 16/1
- QPR - 250/1