League One is a three way fight between wealthy owners

A three-way fight for promotion between a New York hedge fund, a Kazakh billionaire and two Hollywood actors has fuelled a record transfer splurge in English football’s third tier, as wealthy team owners look to get ahead of tighter financial rules taking effect this summer.

The 24 clubs in League One have spent almost €56mn this season — more than the total for the past eight seasons combined — according to figures from data website Transfermarkt. Table-topping Birmingham City, owned since 2023 by US hedge fund Knighthead Capital, has spent more than €35mn, equivalent to about 63 per cent of the league’s total spend.

Birmingham City smashed the League One transfer record last summer to sign striker Jay Stansfield from Fulham for €17.8mn. The club is also responsible for the next two most expensive signings in the division: Christoph Klarer at €4.15mn and Willum Thór Willumsson for €4mn. Huddersfield Town, owned by US businessman Kevin Nagle, spent more than €3mn on forward Joe Taylor from Luton in the winter transfer window, which closed on Monday night.

The record outlay in League One comes ahead of new spending rules being introduced by the English Football League, which administers divisions other than the top-tier Premier League. From next season, clubs will be able to spend only up to 60 per cent of turnover on players, including wages, while using equity injections from owners to fund transfers will also be subject to new restrictions.

Birmingham suffered relegation from the second tier in its first season under US ownership. Knighthead, which brought in former NFL star Tom Brady as a shareholder and adviser, has made the football club the entry point for a proposed £3bn regeneration project in Britain’s second city. Tom Wagner, the firm’s co-founder, told the Financial Times last month that his ambition was to take the club back to the Premier League, the top tier, and “remain there for a long period of time”.

Other big League One spenders include second-placed Wycombe Wanderers, which was bought by Kazakh tech billionaire Mikheil Lomtadze last May, and newly promoted Wrexham. The Welsh club has risen from non-league football under the ownership of Hollywood actors Ryan Reynolds and Rob McElhenney, who have put the club at the centre of a hugely successful behind-the-scenes documentary, Welcome to Wrexham.

The three clubs are vying for two automatic promotion spots, although all three could ascend to the Championship, English football’s second tier, with a third space up for grabs via the end of season play-offs. As the value of clubs in the English Premier League has surged in recent years, international investors have increasingly looked to smaller-profile teams for investment opportunities.

In League One, US investors control or have stakes in several clubs including Huddersfield Town, Cambridge United and Lincoln City, while Crawley Town is controlled by WAGMI United, a US-led crypto fund.

Clubs in the Championship, one division below the Premier League, have also spent record amounts this season totalling €365mn. Two of the sides relegated from the Premier League last season, Burnley and Leeds, lead the way in terms of total spend, although both have made significant amounts from sales to top-tier sides. Wealthy owners in that league include Indian poultry magnates, the former chief executive of entertainment company Disney, Michael Eisner, the scion of the Louis-Dreyfus commodities trading empire, and a member of the powerful Indonesian Bakrie family.

League One clubs had average revenue of £9.8mn in 2022-23, according to figures from advisory firm Deloitte, and made an average loss of £5mn. However, neither Wrexham nor Birmingham were in the division that year, while one club — Derby County — was responsible for 30 per cent of the league’s combined losses.

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...

Spurs to sell minority stake

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Millwall punch above their weight

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....

The Political Economy of Football V2

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