Wednesday have fallen on 'very hard times'

The Financial Times previews the Championship season with a special focus on the challenges at Sheffield Wednedsay:

'The English football season is already under way outside the Premier League, with the Championship kicking off last night as upwardly mobile Birmingham City FC hosted recently relegated Ipswich Town. The game ended in a 1-1 draw.

Birmingham are part of a new but growing breed in lower league football, one where international capital and celebrity combine. The club is owned by New York hedge fund Knighthead Capital and backed (or fronted?) by retired NFL superstar Tom Brady. Rivals this season will include Swansea City, whose shareholders now include Snoop Dogg and Luka Modrić, and Wrexham, the Welsh side owned by Hollywood duo Ryan Reynolds and Rob McElhenney.

In England’s second tier, competition is always fierce and unpredictable, both at the top and the bottom. This season will be no different, with the three relegated clubs enjoying the financial boost of parachute payments, and at least two of the three promoted clubs — Wrexham and Birmingham — likely to push hard to challenge at the top. Both clubs spent heavily to reach English football’s second tier, smashing previous spending records on the way.

The prize is obvious — the guaranteed riches of Premier League football. That has helped make the Championship a big league in its own right, with combined 2023-24 revenue of almost £1bn, according to Deloitte. Whether all these clubs really have a chance at greatness is a moot point.

But the risks should not be dismissed either. Those same clubs lost more than £400mn, while net debt reached £1.5bn.

Just look at the sorry state of Sheffield Wednesday. This is a club that has been crowned English champions four times, and won the FA Cup three times. It was a Premier League team at the turn of the century, while its stadium — Hillsborough — was one of the host venues for Euro 96.

But the club is in serious financial difficulties. Player and staff wage payments have been missed several times in the past month, while debts to other clubs and the taxman have not been paid. The league has put Wednesday under tough sanctions, preventing it from paying any fee to sign new players until the 2028-29 season. The club and its owner, Thai businessman Dejphon Chansiri, are facing disciplinary charges.

Meanwhile the north stand at Hillsborough, which houses more than 9,000 seats, has been closed by Sheffield Council due to safety concerns.

Spending big for a promotion push is a dangerous game. Wednesday has lost more than £150mn during Chansiri’s decade in charge, but failed in its objectives on the pitch. Fans are among those hoping that a change of ownership is coming and Chansiri has signalled to the league that he is willing to sell.

English football has seen this story unfold before, most recently at Reading FC, where Chinese owner Dai Yongge took a punt on promotion, spent big, didn’t achieve his goals, then stopped funding the club. He finally sold to US businessman Rob Couhig in May.

Wednesday is a big club that has fallen on very hard times. The new English football regulator is, in theory, being introduced to make such problems easier to prevent. It remains unclear whether it has the power, the political will — or even the money — to bring about significant change.

For football fans not emotionally invested in any particular outcome, the Championship promises another riveting season of twists and turns. But lawyers, accountants and financial journalists are likely to be keeping a close eye too.

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The Political Economy of Football V2

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