Supporters of West Bromwich Albion are at the forefront of a campaign against a potential infringement of the EFL’s financial sustainability regulations, arguing that such a penalty could lead to relegation and would be among the most severe ever handed down.

While the specifics remain undisclosed, the suspected breach of EFL profit and sustainability rules (PSR) is believed to be connected to interest payments on a 2022 loan. This loan was crucial for the club’s survival during a period when former owner Guochuan Lai diverted funds to support other ventures within his business portfolio.

The Shareholders For Albion (S4A) collective has reached out to the EFL, emphasizing that the loan was a unique measure. Initiated by former WBA CEO Ron Gourlay in 2022, it aimed to protect the club by securing a dedicated financial reserve, ensuring that Lai, who borrowed £7 million, could not redirect these funds.

The group claims its previous communications with the EFL, which alerted them to Lai’s financial withdrawals from Albion, went unanswered. They believe that proactive intervention by the league could have stabilized the club’s finances more effectively.

As of now, neither West Bromwich Albion nor the EFL have verified any breach of regulations, leaving it uncertain if the alleged violation pertains to unreported interest payments on the loan.

West Brom’s possible financial violation may relate to interest payments on a loan the club took out in 2022 to keep afloat, at a time when its former Chinese owner Guochuan Lai had taken money out to help other parts of his business

West Brom are desperately fighting to avoid relegation from the Championship 

S4A also highlights the progress made under the new ownership of American Shilen Patel and the Bilkul Group. Significant efforts to stabilize Albion’s finances have been made, including the sale of key players like Tom Fellows, Torbjørn Heggem, Alex Palmer, and Darnell Furlong, all in a bid to achieve financial compliance. Remarkably, the club has managed to halve its losses over the past year.

Supporters’ dismay has been compounded by the timing of this development, in the midst of a desperate relegation battle, given that the Hawthorns executive team would have had to submit the accounts in question by last December.

The team have finally been set on a positive trajectory, going seven games unbeaten under caretaker manager James Morrison, the club’s third boss of the season, who was appointed after the chaotic 44-day tenure of Eric Ramsay. Bolstered by huge support home and away, Morrison’s side sit two points above Oxford United, who occupy the final relegation place, ahead of Saturday’s visit to Preston. But if they are hit with a points deduction and appeal it, the result could not be known until after the end of the season.

The sense of uncertainty is compounded by confusion – in part of the EFL’s own making – over what losses the league’s clubs are actually permitted to make. The EFL website states it is £39million over three years, though other sources suggest it is now £41.5million, taking account of inflation. Either way, Albion appear to have overspent by £1million at the most.

The idea of a two-point penalty for that would seem extremely harsh and disproportionate, given that Leicester City have finally accepted a six-point deduction for their gross overspend of £20million as they secured promotion back to the Premier League two years ago. That deduction could see the Foxes relegated after the home game against Millwall on Tuesday night.

Football finance analyst Kieran Maguire said this week that he believes Albion are no more than £1million over the PSR figure – a calculation reached by subtracting the £6million annual costs of Albion’s Category A academy and other outgoings from the overall £64m three-year losses. Academy costs are excluded from the final PSR calculation. If the breach is so marginal, it then ‘comes down to the EFL’s attitude,’ Maguire said.

‘The separate issue is that we are almost at the end of the season and it is not fair on Albion or the other clubs in the relegation dogfight,’ he added. ‘The issue is: A – is there going to be a charge?; B – if they are innocent or guilty; and C – whether the tariff is before the end of the season. 

All of the unknown is causing stress and distress for clubs, fans, owners and everybody concerned. If I was a fan or owner of Portsmouth or Oxford (who are in the same relegation fight), then I would be gunning for this to be sorted ASAP.

The team have finally been set on a positive trajectory, going seven games unbeaten under caretaker manager James Morrison

The Baggies are just two points above the relegation zone 

In an excellent episode of the Albion podcast The Liquidator this week, which examined the story in detail, host Adrian Goldberg pointed out that fans remain in the dark, with no one willing even to confirm the possible breach and some of the essential financial details not made public in Albion’s accounts.

Goldberg said: ‘It would be good if Albion or the EFL confirmed this, so that we all knew where we stood. Anyone would think that as supporters, we actually make this game possible, wouldn’t you? We do make this possible because without this, there is no game, and yet we are not being told everything that is relevant to the future of our football club.’

For many Albion fans, the worries of this past week bring back to mind the dark days of the Lai ownership – and the board’s need to take out that loan from US investment group MSD Holdings, which has extended finance to a number of British clubs.

It was supporters who led the way back then, with the formation of the Action 4 Albion group when the club were rock bottom of the Championship in October 2022. That group’s imaginative ‘Shine a Light’ protest movement, which asked supporters to switch on torches after 12 minutes of each half, provided a frequent reminder of the £12m in unpaid loans which Lai had taken out from the club in total. 

For many Albion fans, the worries of this past week bring back to mind the dark days of the Lai ownership

Eventually, Lai accepted how deeply unwelcome a presence he was in the Black Country and sold.

In the House of Commons this week, West Bromwich MP Sarah Coombes spoke for concerned fans in urging the EFL to resolve the issue. ‘A points deduction sending us down would be heartbreaking for fans, particularly because the source of the issue seems to be a loan from the previous owners,’ she said.

Lisa Nandy, Secretary of State for Culture, Media and Sport, said the new Independent Football Regulator would be looking at the issue. Albion fans would have liked to hear a greater sense of urgency from her.