Birmingham City have been handed an immediate nine-point deduction by the EFL for breaching Profitability and Sustainability rules, Sky Sports News understands.
Birmingham are understood to have exceeded the £39m allowable losses over a three-year period (up to the end of the financial year, 2018). The club’s accounts for the 2017/2018 campaign showed a loss of £37.5m for that single season.
It is understood the EFL felt there was no attempt to curtail spending and the club’s losses thereafter, so these have been listed as aggravating factors in the EFL’s case against Birmingham.
Prior to the deduction, Birmingham were 13th in the Championship table with 50 points. Losing nine points would drop them five places to 18th with 41 points and leaves them five points above the relegation zone with eight games remaining.
Any punishment would be the first under the EFL’s new Profitability and Sustainability rules that were introduced at the start of the 2016/17 season.
It would be seen as a landmark ruling and one that will set a precedent for any future punishments for other clubs who fall foul of the EFL’s financial rules.
Sky Sports News understands Birmingham feel harshly treated under the sanctions already imposed.
Birmingham cannot negotiate a new contract with club captain Michael Morrison, whose current contract expires in the summer, due to a “soft embargo”, whereby all major financial issues have to be agreed in advance by the EFL.