There is ‘rising discontent’ across lower football leagues as financial inequalities between divisions creates tension and club profitability levels tank even at the top level, according to the latest BDO football finance survey
One in four finance directors at football clubs reported that their finances were in need of attention, with 70% reliant on shareholders to fund losses (up from 57% last year), as less than half are likely to make a profit this year.
BDO’s annual survey of football club financial directors – which questioned more than 50 clubs in the Premier League, Championship, and Leagues One and Two - found that after player-trading only 42% of Premier League clubs and 24% of Championship clubs are expected to turn a profit in 2018 compared to 89% and 28% respectively this time last year.
The BDO report showed that there was ‘an underlying sense of rising discontent’ in the sector, with financial inequality between divisions and player cost inflation being at the heart of the problem.
Confidence in central regulation is waning, trust in clubs to ‘play fair’ is diminishing and application of the fundamentals of good financial governance are inconsistent.
This is causing financial tension as many clubs are seen to be taking unnecessary financial risks to stay ahead of the game, potentially sacrificing long-term stability for short-term gain.
Ian Clayden, head of professional sports at BDO, said: ‘Based on what many of the clubs are telling us, the current financial governance structure of English football requires some adjustment.
‘In too many cases, promotion to the Premier League, and thereafter Premier League survival, is out-ranking cost control. The resulting player cost inflation – whether it be wages, transfer frees or agents’ fees – is forcing many EFL clubs to live hand to mouth, with reliance on player trading as a secondary profit centre.
‘As we embark on the next three years, with 2019-22 media rights secured, perhaps English football now has the headspace needed to consider whether the current structure and financial governance of the English leagues is right for the long term. Financial regulation and media rights distributions should both be high on the agenda.’
The findings reflect the current instability across lower division clubs with League One Bury Football Club facing administration after being expelled from the English Football League on 26 August. Bolton Wanderers Football Club was given a 24-hour reprieve last night when talks to find a new buyer for the 150-year old club stalled; if a buyer is not found, the Club will go into liquidation.
In the Premier League, Chelsea was given a two-transfer window ban following a breach of fair play regulations, while Manchester City was fined over a breach of image rights for players.
UEFA, the governing body of European football, has launched a financial management course for football players in conjunction with Spanish bank Santander.
The UEFA Financial Management Training (UEFA FMT) programme is an online training course with seven modules giving players grounding in mastering the basics of financial management and the tools to both plan in advance and keep on top of finances on a day-to-day basis. Modules cover the basic principles of finance such as cash management, credit, savings and investments, while also providing a comprehensive introduction into entrepreneurship.
The course is supported by a number of former players, including England goalkeeper David James, who advises youngsters who are just starting out in the game, as well as those who have established careers, to be careful who you trust.
‘Not being an expert in finance, the difficulty is you listen to something and think it's going to be right,’ said James. ‘It sounds so good and you get involved and then it doesn't work out. As the saying goes, if it's too good to be true, it probably isn't true.
‘My advice, and something I've learned later on in life, is that if someone gives you a contract or a deal, read it. Even if you don't understand it, at least get some knowledge of what you're about to do.’