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.
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