Review of Championship Finances 2013

This time last year we took a look at a summary of 2012 accounts and concluded that a typical Championship club was losing £7M


Some clubs were losing considerably more in an effort to secure promotion to the FAPL or simply a hangover from having been relegated. The reader will be aware that Financial fair Play (FFP) regulations have been introduced which limit losses (excluding depreciation and academy costs) to £8M this season and £6M next season.


Most of these figures have been taken from the clubs' published accounts. In some cases we have made an estimate based on 2012 accounts and journalist coverage of clubs finances. Unfortunately journalists do not always cover every number used below but we have been able to ensure that the overall picture is accurate.


The revenue split will be reasonably accurate, given that the Championship TV distributions are the same for all clubs (excluding parachute payments). Where precise match day revenue has not available it has been estimated based on factors like 2012 accounts and average attendances. All parachute payments have been verified from another source.


Obviously, the 2012/13 figures are now a whole season out-of-date, but this is the most recent year in which clubs have published their accounts, so it is the latest available, if not the greatest. It is possible to forecast this season for most clubs but to do this with any accuracy requires detailed knowledge of the club or a fair amount of research - the clubs worth researching in our opinion would be Leicester, QPR and any other club likely to breach FFP - Brighton is a fascinating case because they have publically chosen to shrink costs and sell players in order to comply. This in turn has compromised their play-off hopes but they become sustainable on the way whereas clubs which overspend and fail need to find new finance, new owners or simply hope for the best.


Profit/(Loss) before Tax




Only five (out of 24) clubs made profits before tax in 2012/13: Blackpool because they chose not to use their parachute payments to strengthen the squad and Palace, Huddersfield and Peterborough due to player sales. Watford made profits because of appearing at Wembley and the cheap acquisition of players like Vydra from other clubs owned by the Pozzo family. Six clubs in the Championship this season would breach FFP if they retain the same financial budgets and Cardiff and Hull secured promotion by maintaining losses far in excess of FFP limits. The losses have been adjusted to remove depreciation, academy costs and player amortisation.


Of the clubs who lost money in excess of FFP limits, Bristol City were relegated and Middlesboro and Brighton are known to have adapted their model to ensure compliance. Leicester(already promoted), Forest and Blackburn are taking legal action to challenge FFP:









The highest revenues came from: Bolton £35 million, Wolves £32 million, Leeds £29 million, Blackburn £27 million, Birmingham £24 million and Brighton £23 million. And yet none of these clubs were promoted!


At the other end of the spectrum, six clubs generated less than £13 million: Barnsley, Peterborough, Millwall, Huddersfield, Bristol City and Charlton. Of this group all except Huddersfield were relegated last season or are in the relegation mix this season. It is very clear that higher revenues are needed to avoid relegation.


At first glance parachute payments would appear to create a natural advantage but one club with parachute monies (Wolves) was relegated and it is only Burnley and Hull who have found a way to resecure Premier League status. However the picture is shifting this season with all three relegated clubs from 2013 competing in the play off slots. The reason is clear in that parachute monies are bigger and last longer so clubs are financially more secure which in turn supports a more mature approach to the squad and management.


It is interesting to note that the group of clubs with revenues of c. £15M such as Ipswich, Forest, Wednesday, Burnley, Derby, Palace and Hull appear just as able as the wealthiest clubs to compete in the Championship. It would take a much more detailed study of each club to examine the reasons why. Suffice it to say that the author believes that CAFC could and should make a determined effort to appear in this group over time.


Also note that clubs with larger than normal commercial revenues are either in brand new stadia (Cardiff, Brighton, Leicester) or they have other commercial operations (Bolton hotel, Leeds media interests in radio and print).Given the size of crowds, commercial revenues at Charlton, Forest and Huddersfield look below par.


Matchday Revenue


Only Leeds earned significantly more than £8M. Note that Charlton is midway in this table in the same ball park as Watford and Palace who competed in last season’s play-off final. It is interesting to note that there is a much higher correlation between match receipts and league position than the real driver which should be costs (all revenue + losses). Logically one would assume that the more is shelled out, the higher a club should finish but this is disproved below. Clearly clubs experiencing success will tend to draw higher crowds and there is an open question as to what gates and revenues CAFC might attract should they be competing at the right end of the table. One would hope that an additional 2-4,000 fans might be attracted by a mix of cheaper prices and better football and results.


Media Revenue


All clubs receive £2M on the Championship TV deal and clubs not enjoying parachute monies receive a £2.1M “solidarity payment”. Watford and Palace enjoyed enhanced media revenues for appearing in the play off final. Charlton media revenue will be enhanced this season due to the cup run. Again better results and football should produce income with more TV appearances and ideally an appearance at Wembley in Cup or even play-off final!







This final table has been sorted by league position. One would expect that spending more on the playing squad and club would enhance the chances of success but the table indicates otherwise:

• Charlton had the lowest costs of clubs finishing in the top half of the table
• Typically to finish in the top six a cost base of £30M is required – that is £10M more than Charlton spend
• Palace and Watford were the exceptions - Watford had the Pozzo clubs supporting
• Derby and Burnley are succeeding this season with a cost base of £22M or just £5M more than Charlton
• A correlation calculation shows only a 33% link between costs and league placing


Despite Leicester having very high costs and losses they actually announced a plan to attempt to comply with FFP. They have converted all of their debt to equity which removes a £7M annual interest bill and plan some other cost reductions and revenue increases. We will see if their accounts for this season which must be filed by Dec 1 2014 comply. Even if they don’t, the penalty for them is small compared to the FAPL TV deal and parachute monies (should they come straight back down) which total £120M.


Note that any promotion bonuses are excluded when compiling the FFP result but these were not available for this research.




There is a very wide range of income (£9-35M) and losses in the division which in turn support a wide range of costs (£10-51M). Low revenue and low losses means a low cost base which virtually guarantees a relegation fight. However, higher up the league table there is simply no clear correlation between costs and on pitch performance. A cost base of c. £20M has served Palace, Watford, Burnley and Derby well. Anecdotally, in the last two seasons we have all seen some very expensive squads leave the Valley with no points.


If one strips out the extremes of the top three and bottom three clubs then the middle range of costs goes from 17M (Sheffield Wednesday, Millwall and Charlton) to £35-40M (Wolves, Hull, Leeds and Brighton). The overall average for this group is £26M. With the introduction of FFP this should reduce given that the average revenue for the division is £17M and the FFP loss limit is £8M moving down to £6M next season. Therefore the cost limit will be £23M. Charlton at £17M have the ability to expand.

It would be senseless to argue for expenditure in the region of £40M at CAFC for there is no guarantee of results and it simply is not going to happen. However, while other clubs have to cut their cloth, lifting expenditure at CAFC from £17M to say £20M may prove very productive if the money is used wisely, building on the foundations already in place. As suggested elsewhere in this article, an increase of £3M in costs leading to better football and results might easily be matched by an increase in revenue streams through higher gates, more TV coverage and higher commercial revenue. Better league performance will also add value to player sales as players will appear more attractive to competitors – whether to sell or not is a different question.


K Messere