By David Owen
June 7 – Clubs in England’s second-tier Championship paid out more in wages than they generated in revenue for a second straight season in 2013-14, underlining the risks decision-makers are prepared to run to improve their chances of promotion to the promised land of the Premier League.
In a further blow to any immediate prospect of instilling a more risk-averse culture in this intensely competitive division, financial data published by Deloitte, the professional services firm, has disclosed that the only three Championship clubs to register an operating profit in 2013-14 – Blackpool, Wigan Athletic and Yeovil Town – have all since suffered relegation.
On a brighter note, Deloitte’s Annual Review of Football Finance also makes note that the calendar year 2014 was the first since 1996 when there were no “insolvency events” in the Football League.
This may reflect that while many clubs retain substantial debts, their creditors increasingly are their owners. According to Deloitte, of aggregate net debt of £1.1 billion owed by Championship clubs, owners’ soft loans accounted for £833 million, up from £395 million a year earlier. Other loans amounted to £259 million against a 2013 figure of £577 million.
On wages, Deloitte calculated that: “Total Championship wage costs exceeded £500 million for the first time, rising by £56 million to £518 million in 2013-14, a 12% increase.
“Over the same period”, it said, “revenue rose by £54 million to £491 million (12%).
“The wages to revenue ratio was at 105%, the second consecutive season with a ratio of over 100%…
“Almost half of the clubs in the Championship had wage costs greater than revenue and only three clubs had a ratio below 70%…
“Queens Park Rangers, AFC Bournemouth and Nottingham Forest dwarf the rest of the Championship wages to revenue ratios, standing at 195%, 169% and 165% respectively.”
This gamble has now paid off for Bournemouth, crowned as champions last month, who will now play Premiership football, against the likes of Manchester United and Chelsea, in 2015-16, while pocketing its share of the proceeds from the Premier League’s lucrative broadcasting deals.
Pre-tax losses in the Championship in 2013-14 amounted to £247 million, equivalent to more than £10 million per club. This in a division in which annual revenue averaged only £20 million.
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