The crazy word of Championship finances

The Championship has become the division of financial strain and distress. The majority of its 24 clubs are now conditioned to accept loss-making. Money spent on wages consistently — and comfortably — exceeds the collective revenue each year.

Fourteen Championship clubs have already shown they committed more to wages than they earned in total revenue for 2021-22, painting the latest dysfunctional picture of life in the Championship. Kieran Maguire, finance academic and host of the Price of Football podcast, has calculated the operational losses for last season to average out at a remarkable £476,000 ($594,000) a week for every Championship club.

Fulham, Bournemouth and Nottingham Forest, the three clubs eventually promoted last season, collectively lost £158million on their roads to the Premier League.

The EFL accepts life cannot go on like this in its marquee division. It continues to push for a revised distribution model in its arrangements with the Premier League; one that would increase solidarity payments to Championship clubs and narrow that yawning gulf between rich and poor. It would also prefer to see parachute payments — the guaranteed payments Championship clubs receive for their first three years after relegation from the Premier League — abolished.

If West Brom are unable to win promotion through the Championship play-offs next month, next season will be their first without Premier League money, either through membership of the elite or in parachute payments, since 2003-04. Though their last accounts showed a pre-tax profit of £5.4million, they added there was “a material uncertainty” over the future of the club if cash cannot be raised.

A host of clubs, including Stoke City, Bristol City, Preston, Blackburn and Cardiff City, are ultimately reliant on the financial support of their owners, who all oversaw losses of £11million or more last season. Turn off that tap, and the ship can soon go down.

Rotherham United are a Championship club unwilling to follow the modern convention of heavy loss-making. The last time they were here, in 2020-21, they fought with a wage bill of £8.2million, which equated to roughly two-thirds of their turnover. The eventual pre-tax loss of £800,000 would have been avoided had it not been a season played behind closed doors.

Rotherham’s fate was relegation back to League One in the spring of 2021 but an immediate promotion, as runners-up behind Wigan, sees them back punching above their weight once more.

There are high hopes this season will end with Championship survival after six years spent yo-yoing between divisions but owner Tony Stewart has done nothing differently. “I take risks but I don’t gamble,” says Stewart, a local businessman who first took control of Rotherham in 2008. “You have to run it as if you were running a business. If you don’t put your own pocket in jeopardy then you’re putting the club in jeopardy.

That refusal to entertain heavy losses has made life difficult for Rotherham in the Championship. They cannot compete with neighbours of the size of Sheffield United, now back on their way to the Premier League but who have received £80million in parachute payments in the last two years. Rotherham even lost players to League One Sheffield Wednesday last summer after their contract offers were trumped.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...

A poor financial record, but new hope at Everton

I recently saw an amusing video online in which a group of Everton fans were rebuked in jest for being hopeful. Football fans in general tend to swing between excessive optimism and excessive pessimism, but for many it seems that moaning is in their bloodstream (Spurs fans probably take the trophy). However, Everton fans have had plenty to moan about on and off the pitch. Let’s hope that a new era is about to begin for this grand old club. Everton’s 2023/24 financial results covered a fairly momentous season, when they ended up 15th in the Premier League, though they would finished three places higher if they had not received an 8-point deduction for breaching the Premier League’s Profitability and Sustainability Regulations (PSR). It was a worrying time for Everton fans, as the club faced a “perfect storm” of issues, including large financial losses, an ever increasing debt burden, a challenging stadium build and the tortuous sale of the club. There were eve...

The Political Economy of Football V2

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