The consortium led by sports marketing executive Andy Appleby is now in pole position to attempt a takeover of Derby County after increasing the amount of money it is prepared to invest.
Sportsmail understands there are no other credible players left in the running for the beleaguered Rams, and unless another party steps forward fast, which is considered unlikely at this stage, Appleby’s group will hope to assume preferred bidder status imminently.
The only issue is believed to be if the consortium has put forward enough money to convince the administrators, Quantuma, that they can satisfy the creditors and the EFL.
However, sources with knowledge of the process insist that appointing a preferred bidder is just a first step towards doing extremely difficult deals and the club 'could still go bust'.
‘There is a good reason why there is just one group left,’ said a source, spoken to by Sportsmail. ‘It is because it is a really difficult deal to do. A lot of pieces have to fall into place. Finding a preferred bidder is just step one. The prospects are still very bleak.’
Derby’s former chairman, Appleby, ran the club from 2008 to 2015, when he sold his stake to Mel Morris. During his tenure, the Rams reached the 2014 Championship play-off final, losing out to QPR.
Appleby, an American, is founder and chairman of General Sports Worldwide, a sports marketing and management agency and his team includes, ex-Derby CEO Sam Rush and former Wolves chief executive Jez Moxey.
It is believed he upped his offer to £30M at the end of December, according to The Telegraph, and is reportedly 'ready' to take over the club 'as quickly as the administrators will allow'.
Derby went into administration on September 22, after it racked up huge debts under former owner Morris.
The club was hit with a 12-point deduction for going into administration and a further nine-point penalty for financial mismanagement.
As a result Wayne Rooney’s plucky side sit bottom of the Championship 11 points from safety.
Despite that, Rooney’s players are fighting for their lives to retain their tier-two status, in what supporters optimistically describe as ‘the great escape’.
The Rams have claimed 10 points in the last four games and registered recent wins over high-flying Bournemouth and West Bromwich Albion.
Off the field, fans will be heartened that finally the administration process looks set to move to the next stage with the appointment of a preferred bidder and some even hope their club may sign new players in the January transfer window.
However, there is a sharp contrast between the perception of fans and those who are experienced in football club takeovers. Sources remain deeply concerned for the future of the East Midlands side and describe transfer talk as ‘Alice in Wonderland stuff’.
The reason for the ongoing concern for Derby’s future is a combination of the size of the debt, which remains greater than the market value of the club; the ongoing losses which could still force the club out of business, and the timing of this crisis, which coincides with significant tightening up of rules around takeovers.
‘There are so many reasons why this does not work,’ one source cautioned fans, who are understandably desperate for the process to proceed and succeed.
Sportsmail assesses the challenges Derby County still face, once a preferred bidder is installed.
Will the money on the table cover the debts?
Aspiring owners must submit what they are prepared to pay to rescue the club and it is widely believed that Derby’s administrator, Quantuma, has been holding out for more than has been on the table to date.
The administrator initially said it would announce a preferred bidder at the beginning of December, then the end of December and the club is still waiting more than a week on.
Now Andy Appleby’s group have offered more money, they expect to be confirmed. But even at that point any rescue is far from done.
Quantuma will take the group’s offer to the creditors, but there is no guarantee it will be accepted.
Will the tax man fold and accept less than he is owed?
While he has a connection with the club, Appleby will want the takeover to make financial sense, and huge issues remain. Number one still appears to be the £29M debt owed to Her Majesty’s Revenue and Customs.
The taxman has recently had his preferential status restored, which means that in theory at least, he must be paid in full after years of playing second fiddle to football clubs who were paid first.
But to pay the taxman in full, given the other debts that have to be settled, would put the cost of the deal well above any reasonable estimate of market value and if the Rams go down to League One, which remains a distinct possibility despite the players’ herculean efforts, it will be worth even less.
Therefore, the administrators will have to do a deal with HMRC and persuade it to accept less than it is owed, or a payment plan, which would kick debt further down the road. It remains to be seen if HMRC can be persuaded.
‘We really hope they will come to a commercial deal in terms of the proposals we are going to make to them,’ the joint administrator Carl Jackson told local media in November.
However, the taxman may feel he would set a poor precedent if he folded the first time his precious, new status was tested. How then would he force the next club in administration to pay up?
And what about the other debts?
Under EFL rules, money owed to other football clubs (£8.3M) must be paid in its entirety or the club’s licence to play in the Football League could be put at risk, and all creditors have to receive 25 pence for every pound they are owed, or more points deductions could follow.
But it doesn’t end there. The preferred bidder also has to provide a detailed business plan to the EFL and proof of funds to cover the budget of the loss-making club for the first two years.
One estimate suggested to Sportsmail puts that lot at between £30M and £50M, depending on whether HMRC accept 25 per cent of what it is owed.
And even then, there is also a £20M debt owed to MSD Capital, which is secured against a ground that remains in the ownership of Morris. So, it is complex to say the least.
And.... the other [potential] debts?
It is not just the known debts that a buyer must factor in, either. In any takeover there are legal issues that could result in huge expense.
Often, new owners ask the previous lot to commit to the cover any future costs. But in this case that will not happen, which is one of the reasons another interested party, American bidder Chris Kirchner, is believed to have backed out.
At Derby, there is legal action pending from Middlesbrough and Wycombe Wanderers, who want compensation for lost revenue, which they claim Derby cost them by breaking Financial Fair Play rules.
Is time running out?
Meanwhile, the pressure is on to move to the next stage.
‘The next crunch will be mid-January,’ experienced insolvency practitioner, Gerald Krasner, of Begbies Traynor, told The Athletic last month.
‘That’s when the money runs out, and they’ll have to start selling players.’
The administrator’s official report in November, reported in The Sun, revealed Derby had only £630,000 in the bank.
Despite some redundancies Derby is still losing money and Quantuma had to take out a short-term loan in October to cover costs and the January payroll is looming into view. If the money runs out, Derby goes into liquidation.
Encouragingly, the Derby Telegraph has reported today that the administrator has rejected bids for Lee Buchanan and Louie Sibley.
In the end, the most preferential debt of all is the money owed to the administrator. If it ever looks like there won’t be enough money to pay them, the end is nigh.
And the process just got a whole lot harder....
It is unfortunate for Derby that it finds itself in crisis at the very moment football is under the spotlight.
Tracey Crouch’s review of football governance, published at the end of last year, seeks to set a high bar for how takeovers are managed, plans scrutinised and future owners vetted.
The government will decide in the coming months whether to adopt the MP and former sports minister’s recommendations, but inevitably, the game’s authorities are already toughening up.
Those who have been a part of football club takeovers say it is now a much more onerous process to obtain EFL approval, which will take at least two months.
In early December, Quantuma said they hoped sell the club in January, that was pushed back to February and with further delays to the announcement of a preferred bidder, any sale is now looking like March at the earliest.