Owners keep Championship clubs afloat

The respected Swiss Ramble reviews Championship finances and says that it is not a pretty picture.

Championship loss before tax widened in 2020 from £238m to £449m, as the initial effect of the pandemic began to bite. However, it is clear that this division bleeds money in any case with total losses of £2.5 bn in the last decade, including £1.4 bn in last 5 years alone.

At an operating level, i.e. including player amortisation and depreciation, but excluding player sales and interest, the situation is even worse. Championship operating losses have been steadily widening, increasing from £203m in 2011 to £689m in 2020.

This emphasises the importance of profit from player sales to mitigate operating losses, but this has seemingly reached a plateau in the Championship. Having nearly doubled in 2017 from £123m to £222m, profit from player trading has only grown to £260m in the 3 years since.

Championship revenue shot up from £547m to £718m in 2017 (new TV deals), but has been relatively flat since then.  Broadcasting revenue has driven Championship revenue growth, rising by more than £200m from £168m in 2011 to £407m in 2019, but dropped £37m (9%) to £370m in 2020, due to broadcaster rebates and revenue deferred to 2020/21 accounts for games played after 2019/20 accounting close.

Much of the growth in Championship TV money is due to higher Premier League parachute payments, up from £60m in 2011 to £228m in 2020, largely coinciding with new deals in 2014 and 2017. It would be even higher if included payments to clubs relegated to League One.

There has also been good growth in commercial revenue in the Championship, which nearly doubled from £100m in 2011 to £184m in 2019, before dropping back £27m (15%) to £157m in 2020. Likely to fall further in 2021, as commercial partners had less exposure and division lost promoted Leeds United.

Over the last decade the revenue mix at Championship clubs has significantly changed. Taking 2019 as a more normal season, match day reduced from 32% to 19%, while broadcasting increased from 43% to 56%, though commercial was flat at 25%.

2019/20 revenue comparisons show a huge difference between the Premier League and Championship: total revenue £4.5 bn vs £633m; broadcasting £2.3 bn vs £370m; commercial £1.6 bn vs £157m; and match day £588m vs £105m.

Over the 10 years 2011-20 the magnitude of the revenue difference between the Premier League and Championship is staggering: total revenue £36.4 bn vs £5.6 bn; broadcasting £20.0 bn vs £2.9 bln; commercial £10.3 bn vs £1.4 bn; and match day £6.0 bn vs £1.3 bn.

Since 2013 the Championship wages to turnover ratio has been consistently above 100% with the lowest in this period being 93% in 2017. This increased from 104% to 116% in 2020, due to the revenue reduction arising from COVID.

Championship net interest payable is also very low, as most debt is provided interest-free by owners.   Most Championship clubs are kept afloat by owner funding.