The Championship continues to be a financially punishing league, with 19 of the 24 clubs having made losses in 2016-17, according to an analysis of their most recently published accounts by the consultant Deloitte.
The enormous financial gap with the Premier League has for years led Championship clubs to overspend on players’ wages and make losses, in the effort to claim the bonanza of promotion. This is despite financial fair play rules, introduced to try to staunch the losses clubs have historically made in the EFL’s top division.
This week it emerged that Aston Villa have a £4m overdue tax bill and made heavy losses for the second year running, the owner, Tony Xia, having said the club has “severe [FFP] challenges next season” after losing out on promotion to Fulham in the play-off final. In 2016-17, their first season in the Championship, Villa made a £14m loss, following an £81m loss recorded in their 2015-16 relegation year.
The Championship total was swollen by the parachute payments the Premier League makes to relegated clubs, a total of £219m, 30% of the league’s total revenue, received by eight Championship clubs. Clubs relegated before 2016-17 received parachute payments for four years; the system has now changed to three years, with £42m paid in the first season in the Championship, £34m in the second and £16.6m in the third.
The EFL’s current TV deal amounts to £90m a year – just 3% of the Premier League’s £2.8bn a year, shared among all 72 clubs, although the 24 in the Championship receive the bulk of it. From 2019 an agreed new five-year deal will pay £120m annually. In agreements struck to govern the relationship between the Premier League, which was a breakaway in 1992 from more equal sharing in the Football League, the top flight pays £100m in “solidarity” to lower leagues, including £4.3m to the Championship clubs.
However the disparity with the Premier League and internal inequalities with clubs receiving parachute payments mean Championship clubs’ finances are difficult. Burton, Leeds and Reading did record pre-tax profits, as did Nottingham Forest, although this was only because of a £40m credit from the previous owner, the Kuwaiti businessman Fawaz al-Hasawi, waiving a loan as part of the takeover by Evangelos Marinakis.
Yet Deloitte pointed out that although most clubs rely on the financial support of owners, increasingly overseas investors seeking the windfall of promotion, it is five years since the last Football League club collapsed into insolvency.
“While we have suggested that the changing dynamics of the Championship may promote greater stability in the future, the reality is that it may take some time until this translates to many clubs being able to operate independently of the financial backing of their owners,” the report said.