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

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The Political Economy of Football V2

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