Championship club Hull City took English forward Louie Barry on loan from Aston Villa in January but then failed to pay his initial loan fee or monthly wages until early July. These sums came to more than £830,000 and the total number of days in default were 311, with the February-to-May wage payments adding up to 168 days between them.
Under EFL rules, clubs get a warning when they hit a
cumulative late-payment total of 10 days, an automatic fine of five per cent of
the amount owed after 20 days and a transfer-window ban on paying fees for
players after 30 days. All of this is managed by the EFL’s Club Financial
Reporting Unit, with any disputes now handled by the Club Financial Review
Panel, a bespoke group of experts on call for expedited decisions.
Having been notified of their three-window ban on July 3,
Hull City promptly appealed against the decision and were given a hearing on
August 6.
The club wanted the three-window ban replaced by a suspended
sanction for the current window only. The EFL, on the other hand, came to the
hearing with a counter-offer of a two-window ban, with the third suspended,
providing the club do not exceed more than seven days of late payments between
now and next July.
The club tried two lines of argument in the appeal. The
first was an attempt to say they were not late in paying Aston Villa at all and
the second was an appeal for clemency on the basis that the punishment was
disproportionate compared to four recent cases involving other EFL teams.
Hull’s first argument hinged on two details. The first was
that they received an email from Aston Villa’s chief financial officer in
February that started with “good news!” and then explained that Villa may owe
Hull £51,000 in payments related to a sell-on clause in a previous transfer
deal between the clubs. Villa’s CFO wrote that he was “happy you pay us nothing
until we get clarification” from the Premier League.
Later that month, Hull received those payments directly from
the Premier League and Villa then invoiced them for the £240,000 loan fee in
March. Hull, however, decided to stick with the advice in the February email
and do nothing. Likewise with Barry’s wages.
Hull told the review panel they thought their actions were
justified because Villa failed to issue a “default notice” on the late
payments, despite EFL guidance making it clear that loan fees are “centrally
monitored” and do not need a default notice to “start the clock”.
Villa’s increasing frustration with Hull culminates in an
email on June 30 that said, “we can’t afford to keep funding your cashflow”. It
also included a demand for payment “in short order” or Villa would have to
inform the EFL.
That did the trick, as Hull paid the loan fee the following
day and his wages three days later. A proposed deal to sign Barry
permanently for £3.5million collapsed, though.
In a vindication for the EFL’s decision to set up a bespoke
panel for these cases, the panel delivered its verdict on August 18 and it was
a conclusive win for the EFL.
“It is evident from all the material that the true reason
the club did not pay these sums is because it could not,” the panel’s chair
Christopher Quinlan KC wrote. He added that the breach was “serious”, Hull had
failed to “self-report” as required, the defaults were “not inadvertent” and
Hull had disputed the breach “unreasonably”.
Given all that, Hull should probably consider themselves
lucky that the EFL decided to suspend next summer’s ban on spending money on
loans or transfers. The ball is now very much in club owner Acun Ilicali’s court
to demonstrate that these cash flow issues were temporary and all is well with
his Turkish media business.
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