Sheffield United risk 12-point deduction after former parent company liquidated

Sheffield United could be hit with a 12-point deduction this season after the Championship club’s former parent company was liquidated by a business court in London on Wednesday.

American investors Helmy Eltoukhy and Steven Rosen set up COH Sports Bidco Limited (CSBL) in July 2024 to buy Sheffield United from Saudi royal Prince Abdullah Bin Mosaad bin Abdulaziz bin Al Saud’s multi-club group United World.

That deal, which valued the club at just over £100million ($135million), was completed in December that year, with CSBL paying an initial instalment of circa £30million ($41m) but a second payment of £35million ($47.6m) arrived late and a final payment, of a similar amount, never came.

That prompted United World to “reluctantly” file a winding-up petition against CSBL in July, which was granted — without any protest or request for more time to pay the company’s debt from Eltoukhy, Rosen or the club — by Judge Paul Greenwood via a compulsory order on Wednesday. The whole matter was wrapped up in a matter of seconds.

This would appear to be a clear breach of the English Football League’s (EFL’s) insolvency rules, with a 12-point deduction being the standard sanction for clubs, or their owners, that avoid paying debts by either declaring bankruptcy or being wound up by a creditor.

However, Sheffield United’s fate will now hinge on how the EFL’s board assesses the move Eltoukhy and Rosen made in June, shortly before United World’s winding-up petition was filed, to transfer Sheffield United’s shares from CSBL to 1919 Partners LLC.

How did we get here?

In a “board update” posted on the club’s website on June 22, the Delaware-based 1919 Partners was described as United’s new “parent company”, which “sits at the centre of the ownership structure and enables the club to attract additional investment over time”. The statement also claimed that the move had no impact on the club’s day-to-day running.

United World saw things differently and wrote to both the EFL and new Independent Football Regulator (IFR) to ask if either organisation had sanctioned this share-transfer and remind the league that CSBL still owes Prince Abdullah just over £35m.

The EFL and IFR have subsequently confirmed they are investigating the transfer of Sheffield United’s shares from CSBL to 1919 Partners. The liquidation of CSBL will only increase the pressure on both bodies to come to a decision.

Sheffield United are playing Championship football for a third successive season (Mark Sutton/Getty Images)

In a statement issued after the liquidation ruling, United World noted that “no defence was filed and the debt of more than £35million was not disputed”.

It continued by saying United World had made “every effort to resolve this matter amicably”, even until Wednesday morning, but these efforts received no response.

“It appears that Helmy Eltoukhy and Steven Rosen are simply not concerned about this means for the club. What happens to Sheffield United now is the result of their choices,” it said, before adding that it will continue to pursue “the full sums owed”.

What EFL sanction could Sheffield United face?

An EFL spokesperson said the league “notes” the court’s decision and will now “consider the implications in line with its regulations, including whether any further action is required”.

There is an obvious parallel with the 2009 case that saw Southampton docked 10 points — which relegated them to League One — when their parent company went into administration.

But the EFL is actually looking at three separate issues in regard to Sheffield United, as it is already investigating if its rules were broken with the share transfer to 1919 Partners, as well as if CSBL’s liquidation counts as an “insolvency event” for the club.

It is also investigating if it constitutes a second strike within 10 years for Rosen, as he was a director of an American firm that went bust in 2023. Under EFL and IFR rules, that would mean he could not be a director of an English club or exert control over one.

“The EFL continues to consider other regulatory matters following changes to the club’s ownership structure and developments within the wider group,” the league spokesperson continued.

An IFR spokesperson added: “We are examining the court’s decision on COH Sport in detail, and we are in contact with the club and the EFL.

“The IFR can assess an incumbent owner’s honesty, integrity and financial soundness under its Owners, Directors and Senior Executives regime, should it have grounds for concern.”

Michelle Quinn, Partner at Grosvenor Law, commented: “The June transfer of assets raises serious questions. Looking at the dates, this transfer took place very shortly before the winding up petition was presented. COH will have known, or strongly suspected, that a winding-up petition was imminent.

“The liquidator will be going through that transfer with a fine-tooth comb to see if they can clawback those assets.”

What have Sheffield United said?

Sheffield United, who have had three short stints in the Premier League over the last two decades, were top of the Championship and on track for an immediate return to the top flight when Eltoukhy, a healthcare entrepreneur, and Rosen, a private-equity fund boss, bought the club.

But a late collapse that season saw them go into the playoffs, where they lost to Sunderland at Wembley. The team finished 13th last season and started this campaign with a 0-0 draw at home to Birmingham City.

Sheffield United have issued a statement to say they are aware of the hearing but it is a “matter between the current owners and former owner”.

“The football club is in contact with the EFL and the day-to-day operations are unaffected,” a spokesperson added.