Derby County would not have gone into financial meltdown if an independent football regulator had been in place to stop former owner Mel Morris overspending, according to Tracey Crouch.
The former sports minister believes the Rams could have avoided the pain of administration and a 21-point deduction, which threatens to relegate the club from the Championship.
Derby’s future still hangs in the balance with the administrators Quantuma yet to appoint a preferred bidder and the EFL felt compelled this week to demand an urgent update.
The club has debts of around £60M, including £28M owed to HMRC.
Crouch published a fan-led review of football in the autumn, which proposed a tough new independent regulator for the national game.
If the recommendations are adopted by Government later this year, the regulator will have the power to monitor the finances of clubs in real time. And according to Crouch, this along with other measures will prevent the collapse of clubs, like Bury
‘In the past we seen people come in buy football clubs, make lots of promises and chase dreams and not have the money and end up making a situation like Macclesfield and Bury and indeed, unfortunately, like we are seeing at Derby, Crouch told the Financial Times Business of Football Summit.
‘We actually took some evidence from Mel Morris, we asked him if some of these things were in place would Derby be in the situation they are in now and he said 'no, not at all'.
‘I think live, real-time financial monitoring is really important in that.’
Morris himself has estimated that he spent more than £200 million trying to return Derby to the Premier League.
The coronavirus pandemic exacerbated a parlous financial situation and led to the club losing up to £2M per week.
However, the underlying problem was the spiralling costs as the Rams pushed for promotion, making the play-offs in 2018 and 2019, but failing to take the crucial step to realise the riches of the Premier League.
Derby’s wage bill almost trebled, rising from £16 million to £47 million. It meant for every £100 of revenue, the club were spending £151 on wages.
Crouch’s review of the game strongly recommended a regulator, with extensive powers to tackle reckless owners who risk the future of their clubs by spending beyond their means.
The review recommends a regulator should strictly monitor clubs' finances and oversee a much stronger owners' and directors' test.
Upon its publication Culture Secretary Nadine Dorries said she supported, in principle, the idea of an independent regulator.
In her comments to the Financial Times summit, Crouch said Dorries is due to formally respond to the review in April, with plans to legislate set out in the Queen’s Speech in May.
‘If legislation is not in the Queen’s Speech, I would be very disappointed,’ said Crouch.