The Political Economy of Football V2

The authoritative Swiss Ramble explains the new Squad Control Rules operative in the Championship. The full analysis is available on his Substack page. As the 2026/27 season approaches, clubs in the EFL Championship will have to comply with a new set of financial regulations, as a new Squad Cost Rules (SCR) financial framework will replace the previous Profitability and Sustainability Regulations (PSR). The SCR system will limit a club’s spending on player and manager-related costs to 85% of its income, alongside a limited level of owner funding. In the May press release, the allowable equity injection was given as £33m over a three-year period (up to a maximum of £15m a season).   However, this has been slightly increased according to the recently published 2026/27 regulations, so the three-year allowance is now £34.3m, while the maximum per season is up to £16m. The EFL listed a number of objectives behind the move from PSR to SCR: Create a simpler and more responsiv...

Although things have taken a turn for the worse on the pitch, Luton Town’s finances look in pretty good shape. This was referenced by chief executive Gary Sweet after the double relegation, “The backdrop of our custodianship of the football club is financial stability. It’s an absolute cornerstone. The club was unstable, it’s more stable now than it probably ever has been financially and structurally.” The club’s sustainable approach resulted in limited expenditure on the squad after promotion to the top flight. Instead, the club invested much of their windfall gains in building a new stadium. While such investment will be beneficial to Luton’s long-term prospects, it is clear that this strategy had an adverse impact on their ability to compete in the Premier League.   Indeed, the directors admitted that they had probably under-spent in the transfer market, especially in the January window, as they attempted to stay up: “In hindsight the club might have reinforced more.” It...

It looks very likely that the three teams promoted from the Championship last season will be relegated from the Premier League. What is clear is that the number of points required to finish above the dotted line has been trending downwards for a decade, as have the cumulative points haul of the three relegated sides. It now requires mismanagement on a pretty epic scale for an established Premier League club to be relegated. Seventeenth-placed Wolves are averaging less than a point per game but could feasibly fail to win another point and stay up with 26 points, which is what 18th-place Luton finished on last season. When Charlton were in the top flight the survival target was 40 points. Usually, however, they are putting up a better fight than this. The nine-point gap between 18th-placed Ipswich and Wolves in 17th is also the biggest gap at this stage in the Premier League era, and by some distance: only once has the deficit been more than three points. Yet even huge investment...

 Greg Campbell has hit back at a recent article in the Financial Times by Brentford’s Cliff Crown on the subject of the proposed football regulator.  Campbell is a partner in Campbell Tickell, a management consultancy.   He has written a code of governance for football clubs. ‘I was interested to read the opinion piece from Cliff Crown, chair of Brentford Football Club (“Regulation must not stop football clubs that dare to dream”, Pink ‘Un, February 4). However I believe there is more to the story. While Brentford’s recent track record is impressive, parachute payments (to clubs relegated from the Premiership to the Championship) create a yo-yo effect instead of promoting competition. Clubs like Southampton, Leicester, Burnley, Sheffield United, Norwich, Ipswich, West Brom and not many others continually bounce up and down between the Premiership and the Championship. The parachute payments system distorts competition and makes it very hard for others to break thr...

Bristol City’s 2023/24 accounts cover a season when they finished 11th in the Championship, an improvement of three places over 2022/23 and the club’s best performance for five seasons. However, the board acknowledged that this campaign was still below its aspirations, “Once again, the club found itself hovering around mid-table for the majority of the campaign and whilst there was little threat of relegation, there was not much excitement generated for a promotion push either.” This season will be City’s 10th in a row in the Championship. During this time, they have not finished higher than 8th, so have missed out on the play-offs every season. On the other hand, they have now improved their league position three years in a row. Bristol City have steadily managed to reduce their losses from the record high of £38.4m in 2020/21, but they have still lost a hefty £149m before tax in the last decade, when they only managed to generate a profit once with £11m in 2018/19. Bristol Ci...

The authoritative Swiss Ramble reviews the finances of QPR:  https://swissramble.substack.com/p/qpr-finances-202122?utm_source=substack&utm_medium=email QPR’s pre-tax loss significantly increased from (restated) £4.1m to £24.7m, mainly because profit on player sales fell £17.4m to just £0.2m. Revenue rose £7.6m (52%) from £14.5m to £22.1m, as a result of COVID restrictions being lifted and business returning to normal.   The revenue growth was eaten up and more by operating expenses increasing £10.8m (30%) to £46.4m.  QPR’s cost base shot up, as the club appeared to return to the dark days of gambling on promotion. The wage bill increased £3.4m (14%) from £24.2m to £27.6m.    QPR’s £24.7m loss is the second highest reported to date in the 2021/22 Championship, only surpassed by Bristol City £28.5m. Since Tony Fernandes arrived in August 2011, total losses have amounted to £254m – or £314m if we exclude a £60m loan write-off in 2014. Since Tony Fernande...

From his Zurich base the tireless Swiss Ramble analyses another set of club accounts, this time Watford. Despite impact of relegation and COVID, the pre-tax loss reduced from £36m to £22m, even though revenue fell £63m (52%) from £120m to £57m, as profit on player sales shot up from £18m to £56m and expenses were cut £35m (21%). Other income included £2.5m insurance claim. Poor record on losses Even though the Hornets narrowed their loss to £22m, it was still one of the worst in the Championship, only “beaten” in 2021 by Bristol City £38m, Reading £36m and Boro £31m. Also worth noting that the other clubs relegated from PL in 2020 posted profits: Norwich £21m and Bornemouth £17m. Watford have now reported losses in three out of the last four seasons, even though they spent all but the last one in the Premier League. Their total loss over this period amounted to £79m. Overall, they had broken-even in the preceding 6-year period. The operating loss (i.e. excluding player sales ...

The Swiss Ramble provides a forensic analysis of the accounts of Bristol City from Zurich. The pre-tax loss widened from £10m to £38m, as profit from player sales dropped from £26m to £6m and revenue fell £10m (39%) from £27m to £17m, due to COVID. Wages to turnover ratio was 212%, clearly not sustainable,   gross debt £96m.    Unsurprisingly, the £38m loss is one of the worst in the Championship, though other clubs’ figures will also be bad when they publish 2020/21 accounts. The revenue decrease was largely driven by COVID (games played behind closed doors and stadium lockdown), as commercial fell £6.1m (44%) to £7.7m and match day dropped £4.0m (85%) to £0.7m. Broadcasting was also down £0.4m (5%) to £8.2m. Government grants up £1.0m to £1.6m. The Swiss Ramble estimates the club lost around £15m revenue in 2020/21 from a full season of COVID: £6m match day (games behind closed doors) and £9m commercial (conferences and events “heavily restricted”). This takes the...

Parachute payments mean that the Championship is anything but a level playing field.  In many ways it is a de facto Premier League 2. Relegated clubs receive 55 per cent of the Premier League media rights revenue for each club in year one, 45 per cent in year two and 20 per cent in year three. Clubs who are relegated after one season receive parachute payments for only two years. That adds up to about £42m for each club in year one, £34m in year two and £15m in year three.   The remaining Championship clubs receive £4.5m each, while those in League One and League Two receive £675,000 and £475,000 respectively. QPR chief executive Lee Hoos told The Times : 'The balance is tipping away from the original purpose which was to prevent a fire sale of players and cover the cost of relegation and contractual commitments, to where we are now, where clubs have a ton of extra financial firepower and can blow everyone else out of the water.' The origins of parachute payments are rath...

Football finance guru Kieran Maguire has produced some interesting figures on the median income levels for clubs in English football.    The Big Six have 3.3 times the income of the other 14 Premier League clubs.   Big Six wages are three times those of the other 14.  The other 14 have 2.6 times the income of parachute payment clubs.    In turn the parachute clubs have three times the income of other Championship clubs, bringing home the distorting effect of parachute payments. The Championship has 2.9 times the income of League One and League One has 1.6 times the income of League Two.

The Zurich-based Swiss Ramble blogger casts his authoritative eye over the 2018/19 accounts of Sheffield United. He comments: 'Apart from the pandemic, this has been a glorious period for Sheffield United. There is much to admire about their strategy. Despite their financial limitations, they have delivered on the pitch under Wilder, even with board room issues, and are genuinely competitive in the Premier League.' These accounts cover the final year of co-ownership between Kevin McCabe and Prince Abdullah. Since then the High Court has ruled that McCabe must sell his 50% share to the Prince for £5m. As a result, the club will purchase the stadium and training facility for £43.5m. The club's loss increased from £2m to £21m, reflecting the “exceptional cost of promotion to the Premier League”. Revenue rose 4% (£0.8m) to £21m, while profit on player sales was up £6m (69%) to £14m, but this was more than offset by £26m of cost growth. Although the £21m loss is obviously no...

Parachute and solidarity payments from the Premier League to Football League clubs have been cut for the first time since they were introduced. The payments are just over 2 per cent down on last season. Although this may not seem like a lot, it can make a difference to clubs with turnovers of £3m a year like Accrington Stanley where every penny counts. Parachute and solidarity payments are linked to the value of the Premier League's domestic TV rights and they fell by 7.5 per cent for the 2019-22 period from £5.4 billion to £5 billion (the value of overseas rights continues to increase). Parachute payments for the three clubs relegated from the Premier League are £31.8m. Solidarity payments to the other Championship clubs are £4.5m, £675,000 to League One clubs and £450,000 to League Two clubs. Clubs who were relegated from the Premier League in 2018 will receive £34.2m in second year payments with £15.2m for those who receive third year payments. The overall amount the Prem...

An all English Champions League final. That will silence knockers of the Premier League, for 24 hours anyway. There are always plenty of believers in the tall poppy syndrome ready to say that La Liga, Serie A or the Bundesliga are better. First, congratulations to Liverpool and Tottenham Hotspur for incredible comebacks. Anfield will always be one of my favourite football stadiums and I enjoyed going there when Charlton were in the Premier League. The owners of the club have invested money in the stadium, the manager and players, but in a prudent rather than reckless fashion. Tottenham Hotspur have come through a potentially difficult season with flying colours. No money was spent on the team in the summer and they have had a difficult stadium transition, albeit one that has ended with an iconic stadium. I was privileged at the beginning of the season to attend a reception opened by the Mayor of Haringey and meet some of the Spurs fans doing important work in the local communi...

The authoritative Swiss Ramble has examined the recently published reports of Sheffield United and comments, 'There is much to admire about their self-sustaining business model. Despite their financial limitations, they are punching well above their weight, as they have established themselves “as genuine contenders in the race to achieve promotion to the Premier League.”' One potential fly in the ointment is a High Court battle between the club's joint owners: the McCabe family, who have put in around £100m since the 90s, and Prince Abdullah, who joined the club six years ago by taking a 50% share of Blades Leisure Ltd. The Blades have consistently lost money since relegation from the Premier League in 2007. They twice reported profits because of special factors: 2009 £10m due to the £18m Carlos Tevez legal settlement; 2014 £31m due to £35m waiver of inter-company loan. There have been £20m total losses in the last four years. The £2m loss this time (down from £5.7m) is ...

Parachute payments were intended to cushion the blow of relegation from the Premier League and prevent clubs getting into financial difficulties. However, they have been criticised for distorting the competitive balance in the Championship. Clubs relegated from the Premier League now receive £91m over three years. The authoritative Swiss Ramble looks at how they work. It is evident that parachutes have a major impact on the competitive balance in the Championship, as the six clubs with the highest revenue in 2016/17 all benefited from these payments, most notably the three relegated the previous season (Aston Villa, Norwich City and Newcastle United). Eight Championship clubs received Premier League parachute payments in 2016/17 with Villa, Newcastle and Norwich getting £41m (up from £26m in 2015/16 thanks to the new TV deal), followed by QPR £31m, then Cardiff City, Fulham, Reading and Wigan all £16m. If parachute payments were excluded, the same three clubs would still have the ...