Sheffield Wednesday and Birmingham City were each hit with transfer embargos in 2018.
The football finance expert, Kieran Maguire, has told BBC Radio Sheffield he suspects that Sheffield Wednesday are already under a soft transfer embargo.
Wednesday found themselves in a similar position in the lead up to last summer’s transfer window, lasting until the final two weeks of August, having fallen foul of the English Football League’s Profit & Sustainability rules, which allow Championship clubs to lose a maximum of £39 million over a three year period.
And although the Owls have yet to publish their latest financial accounts, Maguire is not expecting any pleasant surprises.
“I suspect that Wednesday are already under an embargo,” the University of Liverpool lecturer told Wednesday’s Football Heaven show. “And what they will have to do is to demonstrate to the EFL that they have taken some steps to reduce those losses.
“So if they can say, well, we’ve got three players who are on big contracts, they’re going to be out of contract at the end of 2019, we’re not going to renew those contracts and they’re on, say, £30,000-a-week each, that’s £5 million saved for next season.
“So what they have to do is just to go before, effectively the headmasters at school when you’ve been misbehaving, and say, well, OK, I’ve turned a corner, I’m going to do it better in future and these are the steps that I’m taking to address that particular problem.
“And then the EFL might say, OK, well we’ll either take you away from the soft embargo altogether, or it will be renewed for a further six or 12 months and we’ll take it from there.”
Nevertheless, according to Maguire, Sheffield Wednesday’s situation is far less grave than that of Birmingham City, who are said to be facing a 12-point deduction having breached a soft embargo of their own last summer.
“I think there’s two issues with Birmingham,” he added. “If you take a look at Birmingham, last year under Harry Redknapp they were spending £202 in wages for every £100 that was coming through, and there appeared to be little indication or willingness by the owners to cut back that level of expenditure. And that’s also been reflected in the accounts they’ve produced for the first six months of 2018-19 back in Hong Kong.
“The reason why clubs are especially annoyed with Birmingham City is that they were placed under a soft embargo, which meant they were unable to sign players for a fee.
“But if they were allowed to sign players on free transfers and loan deals they could only pay them £600,000-a-year, and Birmingham simply said, oh, we’re going to ignore that and they went and signed a full-back called (Kristian) Pedersen for £2.4 million – I don’t know what his salary is.
“Whereas Wednesday abided by the soft embargo rules – Derby County abided, assuming that they were under a soft embargo as well – but Birmingham City just appeared to show two fingers to the authorities and that’s made the rest of the division very angry.”
Maguire also explained how Sheffield Wednesday could still get around their issues with P&S, which should not affect their ability to keep those such as Keiren Westwood, Liam Palmer and Gary Hooper who are out of contract this summer.
“If they sell players who are in contract, and they sell them for a transfer fee, that can have a significant impact on the results,” he added. “So your profits from player sales you’re allowed to offset against your trading losses.
“My understanding is that the soft embargo only applies to recruiting new players. So if you want to offer an existing player and contract on existing terms then that’s perfectly acceptable.”
Receive exclusive football transfer news and updates twice a week to your mailbox
