Derby County face being deducted as many as 21 points after announcing their intention to enter administration.
The EFL has confirmed the Rams face a 12-point deduction once the insolvency event is finalised, adding to the nine-point deduction agreed in talks with the EFL this week for breaching Championship financial fair play rules.
Owner Mel Morris has told Sky Sports News he is "devastated" after citing the financial impact of Covid-19 and a string of failed takeover attempts as the cause of their mess, but the EFL is "disappointed" by the club's comments about the pandemic, having offered them the same financial support as the rest of its 72 clubs.
Administrators are expected to be appointed early next week and will take complete control of the finances at a club that has been losing between £1.3m and £1.5m per month, according to Morris, with the priority of paying creditors and HMRC.
Under Morris, the club has simply been unable to pay their debts and agree a sale to new owners, which has included another failed attempt by a third potential buyer this week.
Morris's priority is to make the process as smooth and painless as possible, and to look after the club's employees first and foremost, which includes manager Wayne Rooney.
A Derby statement late on Friday said: "This action was made necessary by a number of developments. Last week, it became clear that the process which has been underway to identify a purchaser likely would not be productive over the near term, despite the number of negotiations with credible parties.
"The irony is that the club's financial forecasts show the emergence of a financially sustainable picture. Absent the COVID-19 pandemic, we undoubtedly would have been able to trade through. However, the impact of COVID-19 pandemic and the unpredictability it has created represents too much of a strain.
"We appeal to the EFL to now assist the club and the Administrators in any way they can in the effort to find a purchaser."
Subsequently, the EFL confirmed: "The club will be subject to an insolvency event under the terms of the EFL's Regulations. As a result, the club faces a 12-point deduction. Once the EFL has received formal notification of the application, the deduction will be applied.
"The League is disappointed with the comments made by the club in respect of COVID lending facilities. The EFL entered into a debt raise to provide its clubs with access to funds that would support them in dealing with the impact of COVID and, as with any loan, this was subject to a timeframe and eligibility criteria which Derby County was unable to meet.
"The EFL will in due course engage in discussions with the relevant parties with the aim of achieving a successful outcome for the long-term future for the club."
Rooney's side sit 16th in the Championship after their opening seven games of the season.
Recent timeline of Derby events
- Jun '18: Mel Morris buys Pride Park
- Jan '19: Marcelo Bielsa 'Spygate' saga
- May '19: Play-off final defeat
- Jul '19: Frank Lampard leaves club; Phillip Cocu appointed
- Aug '19: Wayne Rooney joins club
- Sep '19: Keogh, Bennett and Lawrence in car crash
- Jul '20: Derby capitulate and miss play-offs
- Dec '20: Phillip Cocu sacked; Rooney appointed coach
- Dec '20: Players not paid
- Jan '21: Rooney appointed permanent manager
- May '21: Remain in division after Sheff Weds deducted points
- Jun '21: Fined £100k and told to refile accounts
- Jun '21: Transfer embargo until accounts refiled
- Jul '21: Unable to field team with only nine players available
- Jul '21: Rooney injures his own player, Jason Knight
- Sep '21: Deducted nine points
- Sep '21: Face additional 12-point deduction after announcing their intention to enter administration.
Sky Sports News reporter Rob Dorsett: "I have spoken to Mel Morris. He has explained an awful lot to me.
"He is very upset. One thing Mel Morris is, is a Derby County fan and he is devastated that despite what he thinks are his best efforts and he is adamant that they are his best efforts, this was unavoidable.
"The figures he told me are quite shocking. He says that Derby, as one of the bigger clubs in the Championship with a big crowd, a big stadium, and a big wage bill relative to other clubs in the division, was losing £1.3m to £1.5m every single month and that has been going on for more 12 months. Quite simply that wasn't sustainable."
Neville: This can't happen to a club like Derby
Sky Sports' Gary Neville:
"We have got to stop this happening. When owners come into football clubs, there should be an obligation to be able to cover their obligations they sign up to. Until we have that in place, we're going to continue to have big trouble.
"Examples like Derby will keep coming forward. We have had Bury, Macclesfield, Wigan, Bolton, all these clubs. It's got to stop.
"I know there has been a fan-led review led by Tracey Crouch, she's put recommendations forward, Oliver Dowden said he was going to support those recommendations, and I know Nadine Dorries [Secretary of State for Digital, Culture, Media and Sport] has just taken over from Oliver Dowden. We need to hear from Nadine Dorries that she's going to support the recommendations to put an independent regulator in place to change rules in English football, to stop this happening.
"Derby are now in a perilous position. My hometown club were there three or four years ago. It has to stop.
"It's the desperation to be part of this, the Premier League. It's amazing, the Premier League. But there is a desperation and an urgency. You should be disappointed if you don't go up, or if you go down, but not to the point where you lose your club.
"Derby have chased, and they have chased, and they have chased. And they have not got the golden ticket.
"Now they may go out of business. That cannot happen to a football club and institution like Derby County."