In recent years, the Premier League has flourished as one of the best leagues in the world, and with its success, the financial implications of the league have grown exponentially. Clubs have started to be managed as international businesses, and team crests have become commonplace icons across all cultures throughout the globe. TV rights have skyrocketed, with the Premier League’s current deal agreed in 2015 worth a humbling £5.14bn.
With all this considered, the gulf in profitability between the Premier League and England’s second division, the Championship, is unnerving. The Championship is considered by many as an unpredictable league, with a handful of teams every year making a push for promotion. However, for their team to compete amongst England’s best, club owners are required to get their cheque books out.
Reports have shown that clubs that successfully achieved promotion from the Championship in recent years averaged losses of £550,000 a week. Current holders of the Championship title, Wolverhampton Wanderers, took the league by storm in 2018, ending their campaign on a colossal 99 points. However, their dominance came at a huge cost, with the West Midlands side reporting a loss of £59.7m throughout the season, an average of over a £1m loss per week.
Similarly, after Newcastle’s promotion back to the top flight in 2017, the Magpies suffered a heavy loss of £59m during their journey back to the Premier League. Add on top the current predicament of Bolton Wanderers and their financial issues regarding players wages, it is apparent that the Championship is an economic wasteland for club owners.
The reason behind such huge losses for Championship clubs seems to lie in the cost of wages and transfer fee amortisation. In 2017/18, Wolves, Birmingham City and Reading all paid more than twice as much in wages and amort than their seasonal income. With the Royals finishing in a disappointing 20th position that season, it beckons the question over the sustainability of a Championship club when promotion is out of the question and such heavy financial investment has been made.
When teams are spending so much in a push for promotion, it seems that going up is a make-or-break situation for clubs in the Championship. However, the rewards for a promoted team are staggering. During the 2017/18 season, the smallest amount of TV rights money earned by a club was the £95.4m granted to West Brom. This figure alone trumps the seasonal income of the highest-earning Championship side in the same season, with Aston Villa reportedly making an income of £68.6m.
A disheartening correlation can be found when comparing the income of clubs in the Premier League, and the losses of clubs in the Championship. The income of Premier League giants is ever-increasing, with Liverpool’s expected profits reaching the eye-watering heights of £100m after their Champions League success last season. In contrast, the combined operating loss of Championship clubs since the 2014/15 season is spiralling out of control. The combined loss of Championship clubs in 2014/15 was £288m. That number has increased annually, eventually resulting in the £391m collective loss in 2016/17.
With the Premier League increasingly becoming a profitable international franchise, should more care be taken with Championship clubs in their pursuit of top-flight football?
Sean Fisher @seanfisher1502