English football clubs lose money. At every level, from the Premier League to North West Counties League, that truth holds. Owners prop up losses. When they either get too weary, too bored or too cash poor to carry on, the best hope is that there is someone else to step in and that that person is prepared to be a custodian of the club.
It is tempting to see the Championship as the epicentre of the storm: far less of the gold plating that the Premier League enjoys but with plenty of its excesses and vast dollops of desperation culture. It’s a reasonable argument, clearly. Clubs routinely spend more on salaries alone than they make in revenue in the second tier.
But what about League One as the embodiment of a broken financial system? In the Championship, at least there are three places of 24 every year that provide glorious riches to alleviate your financial mania. Next season, two extra play-off places will increase the chances of the second-tier lottery win. The reasons for overreaching are obvious.
In League One, you don’t even get that. You are fighting for one of three positions that provide the opportunity to lose a great deal more money. Sunderland may have moved through the Championship quickly, but they are the exception. Birmingham City, with all their grand ambition and League One domination, have been sat back down to earth.
Charlton Athletic lost more than £15m last season in the third tier, got their promotion and are eight points above the bottom three with five games to go. They will not be relegated but they can see a ceiling. For owners, League One promotion is like paying off your mortgage and being given a Wonga loan as a prize.
By the end of March, 10 current League One teams had released annual accounts for last season. The average is skewed by Cardiff City who *gulps* lost £35m in getting relegated. But both Wycombe Wanderers and Burton Albion announced losses of between £8m and £10m. Others ranged between £5m and £8m, dotted throughout the division. Which is both extraordinary and extraordinarily frightening. The revenues are simply not enough to justify it.
There are clubs who have overseen better. Lincoln City have been promoted automatically with one of the lower wage bills and more sustainable recruitment models. Exeter City posted a profit (although they are reeling from financial issues that made their fan ownership model creak and may well be relegated). Peterborough United’s player trading model and promotion of youth is to be admired, but some supporters wonder whether it actually leads anywhere.
Again, these are the exceptions. A fragile economic ecosystem was implicitly put at greater risk by the presence of Birmingham City and AFC Wrexham in the division last season. League One owners spoke of the knock-on effect of two record-breaking budgets. The salary expectations and asking price of every player in the market went up at a higher rate than revenues ever would. In the case of Wrexham, it really is keeping up with the Joneses.
In that environment, what choice is there? Those who have invested in longer-term plans, wider recruitment nets or smarter use of data may escape some of the aftershocks. Others must pay up or shut up and don’t expect the supporters to stay quiet if they choose the latter and performances go south.
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Daniel Storey: My weekend with English football’s biggest overachievers Pete Hall: Virgil van Dijk is not good enough for Liverpool any moreWhere does this end? The i Paper understands that there exists multiple EFL owners in Leagues One and Two who would be keen to explore salary cap initiatives and greater cost control. The issue of wealth distribution may well be engaged by the new independent regulator, but if that merely leaks towards squad costs then it merely exacerbates the same issues.
Football does a good job of ignoring its unsustainability. I get it: you’re providing escapism and excitement and you’re selling a dream. Both of those are mighty difficult while preaching the benefits of greater parsimony just so long as someone else down the road or over the hill is prepared to overspend. Clubs that reach financial emergency are usually able to escape, albeit with deep scars; that likely breeds complacency and permits wilful ignorance.
But the difficult conversations are coming and they will contain unpleasant questions with worse answers. More supporters need to understand – and it isn’t nice to hear: it does not matter if your club signs that player or gets that promotion. It matters that it exists in a decade’s time.
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