State of Championship Club Finances

Personally I think the EFL should not allow football clubs as a company to make any financial losses! Financial Fair Play is a nonsense. For a company to accrue losses of £39m over 3 years is insolvency in any other business and it should not be allowed to continue.


Iv been through the accounts of just about every club that’s been in the championship in the last few years. The turnover of each club before owner support, excluding Parashoot payments and before player trading is between £12M to £26M. Not the 100s of millions some fans of other clubs seem to believe.


Only exception to that is Leeds, they had a turnover of £48m and a wage bill of £46m for the accounting period of 2018/19. The owners have supported transfer fees plus running costs.


Preston have a consistent turnover of £12m, their wage bill for 2018/19 was £19m up from £14m 2017/18. they are losing £7m before operating costs and transfer fees! But that’s deemed as acceptable by the EFL under sustainability rules. They are lucky to have Trevor Hemming, a billionaire and lifelong supporter picking up the tab, but he’s creating internal long term debt.


Bristol City, turnover of £17.5m and a wage bill of £24m - Steve Lansdown their owner and life long fan is picking up the bill, but their accounts show a debt to him in excess of £100m. What happens if/when he dies and his family or trustees want to recover the debt? Meltdown! as what happened with Bolton when Eddie Davis their former sugar daddy sold the club, he died shortly afterwards and the trustees tried to recover some of the debts due.


Sheff Wednesday is crazy. Turnover of £25m and a wage bill of £42m. - The owner, not a life long fan, no ties to Sheffield or the uk and is funding a deficit of £17m plus all the running costs and payment of transfer fees.. he’s not gifting this money to the club, he’s loaning and creating debt! If he was putting the money in as equity fair enough but he clearly isn’t.

Should he walk away, they are finished, because the money required to pull them out would be astronomical!

As for the purchase of Hillsborough for £60m to cover the FFP. This is off the books, but £60m for a piece of land approximately 5 acres in Sheffield 6, it would have a book valuation of £8m and I’m being generous. Even including their training ground on middlewood road £15m is being over the top. I’m basing that on actual land valuation at £1m an acre, as prime building land, which it’s not and a token £3m on the actual stadium itself. The stands have not been touched in over 25 years so the stadium has a token book value not the rebuild or replacement value.


The EFL has to stop owners using clubs as a debt instruments! An owner should be allowed to put £200m a year if they wish, provided that money is paid into the club as Equity. ie gifted to the club and not debt or loans. In my view the EFL should give a tolerance of no more than £2m a season in losses and these should be forward projected at the beginning of the season and tallied at the end, should the books not tally, penalties given to the offenders. Immediate Demotion points deduction etc.


This would deter overspending and over the top ownership support as the high net worth owners would not benefit by claiming tax losses and debt relief on their investment.

 

Never understood why for FFP instead of showing they have available funds that EFL don’t say a potential owner has to pay a % of the turnover of a club into a separate account, that can only be used for running the club and viewing access is granted to that account full time for EFL to monitor.

On Bristol City, the 100million aside, I actually think their model is the right way forward for clubs, most of the £100 million has been invested into infrastructure and surrounding areas to improve match day and commercial revenue, which has improved considerably over recent years and helps compensate the playing side.

 

Bristol City’s debt to their owner is all football related. The infrastructure of the ground is owned by another entity still owned in their owners domain, he also owns the rugby club which shares Ashton Gate. I’m not suggesting he’s doing anything sinister, they are lucky to have a genuine fan benefactor. But it’s doesn’t take long to build up masses of internal debt when your subsidising between £10 and £15m every season. Granted they have sold players, but they have bought heavily aswell.

 

Ashton Gate Ltd was owned by Bristol City until recently (2018) and you are correct are now owned by Steve Lownsdon, the mo ey generated though is put through the Football side and last year had a 22% increase of revenue, now it is more established and growing.
The point I was making was the owner has a clear plan that instead of relying on him every year, it is to generate enough money from player trading and Commercialism to self sustain.

 

Great OP with some good proposals. I bet a lot of owners would not be interested in taking on the clubs under the proposed suggestion as they see debt as their financial instrument not equity. But i agree with this kind if measure as it will attract the right kind of owners, ones who put their money where their mouth is and where the fair playing field is levelled.

if owners were allowed say 2m of equity per season from personal funding would we see our owners contribute i wonder. Im not sure how money gifted to the club works in the FFP or league rules

 

I agree with your post, with the exception of the extract above. It's bad enough that some clubs will be richer than others by virtue of having a larger fan base, but I can stomach that, it's just how it goes. However, the idea that Club A should be more successful than Club B simply because some wealthy idiot has nothing better to do with his money than stick it into his favourite club - frankly, that stinks. It's supposed to be a sport, not a plaything fantasy world for the super rich.

Personally I'd ban any such donations/investments. Change the rules to outlaw any income other than through legitimate pre-determined channels (ticket sales, advertising, merchandising, etc.). Any club caught being "creative" and trying to filter funds into the accounts through non-approved methods is immediately relegated. No appeals.

I just hope that when all the rich idiots kick the bucket, their descendants decide that they'd rather watch cricket and take their money out of football.

 

Although I agree entirely with the sentiment, I believe the reality is entirely different.

The worry for Football across the globe is that these money men/women are propping up the game. If they had to play by the rules or a more severe set of rules they would leave and as you say clubs would be in such a state that the game would implode.

These benefactors are in it for one thing, to get to the Premier League, and then stay there. It’s like a gambler who loses on his first bet, then his 2nd and 3rd and he’s in a deep hole. Does he leave or does he keep going?

The Football league in particular know that there isn’t an endless line of billionaires who want to spunk money on Football. If they make it so the benefactor can’t plough money in then it’s not attractive enough.

If they are already in huge debt and and they tighten the rules then it will encourage the very thing you are worrying about which is footballing Armageddon.

I do agree with what you are wanting to do, but I fear we are too far beyond that solution now. Football has completely eaten itself.

 

I think FFP has been justified by the powers that be since introduction on the grounds that it protects clubs from overspending and going out of business but I personally think it was brought in purely to protect the big boys, the clubs that drive the most revenue for TV companies and FIFA. They dont want a unfashionable club becoming huge due to a wealthy backer, upset the status quo, the gravy train. Here this rule allows owners to put their own money in, but not too much. Potential and present owners of the big boys love this as they are protected somewhat. This is exacerbated by getting more money the higher you finish. Look at the Champions League, you can win your league but still have to play endless qualifying games if your not part of the kabal, wheras the big boys in Germany, Italy and Engalnd can finish 3rd and play one or two games extra, tops and then seeded to help them stay in the competition. Football is fecked in my opinion.
That said, still this doesent excuse teams like Wednesday and Wigan, the rules are put in place regardless of their intentions and have to be followed as other teams try their best to. I suppose its like sticking to 70 mph on motorway in your Porsche, its capable of 140, but rules are rules, dont and you get punished.

 

He seems to have a plan and as I said Bristol City are lucky to have him. My issue is why is the football club company, which in effect only consists of the football league registration, playing assets and liabilities for players contracts, carrying the internal debt. With this man, his intentions are honourable he’s local boy done good, he’s worth reportedly in excess of £2bn. I’m sure in time their £100m+ debt will be eventually written off as a tax write down in time. However, my point in this is, should this guy fall off a cliff in the meantime, how would Bristol City as a club be funded and make up his subsidy? If every season he decided right I’m subsidising the club by X amount of million, why is this not placed in as Equity, not debt! I understand the tax implication for him personally, however if this was to happen it would slow down the rate of ownership support and make buying a club to an overseas investor much less attractive.

 

My knowledge of other clubs is sparse, to say the least, but outside of the Premier League how many clubs are propped up by wealthy owners? Whenever we talk about it, it seems to be the same old names time and again - Wednesday, Bristol, Wigan (pre-new owner), etc.

There's a part of me that thinks that "football armageddon" can't come soon enough.

 

Excellent post.

 

it would be difficult to implement granted but the Premier League created a monster sky money was one thing. Now the £4bn TV deal for the premier league really the money trail leads again to the Far East.

the premier league is only attractive because of the football culture in England which is backed by the football league and right down the pyramid. It would not happen but the TV money needs to be shared more equally down the leagues, currently about £3.8bn goes into the premier league and about £150m goes the EFL for distribution. In an ideal would 50% should be kept by the premier league, parashoot payments should be stopped, 25% to the championship, 15% to 10% league 2 and remainder into grass roots.

 

He has done it as a share issue

 

The point about an owner being able to put £200m in a season was young and cheek. If the owner of a club was gifting money to their club as equity and not debt it would deter owners from doing it to such and extravagant level.

 

You’re right almost every club in the Championship is Supported in some way or other by owners, with very few exceptions.
This should be the concern of any governing body.

 

Not as I can see, but with him that will probably happen once he has written off the debt for tax.

 

I think it's player wages that have to fall back in line. It makes me sick that a footballer can earn in a week what a Doctor, Nurse, Teacher or member of NHS staff can earn in a year.

 

Yes I got that. I'd just rather it was zero.

 

The Bristol City one was probably a bad one to highlight because the owner their clearly had the right intentions, but it so how’s the level of investment he’s put in to compete and really they’ve had no success. Sheff Wednesday, should Chanseri walk away are totally screwed.

 

Agree with your post until the second last paragraph. Your whole argument was about clubs not running at losses then you would allow a £2 million loss. Some clubs can't afford to lose that much.