Is the financial gap in English football finally being addressed?
The collapse of Bury Football Club in August 2019 rightly caused a stir in the English football community.
After a protracted financial crisis, the 134-year old club was finally expelled from the English Football League when a deal for it to be purchased by investment company C&N Sporting Risk fell through. Bury were not just another lower league club, having won the FA Cup on two occasions and the expulsion makes the Shakers the first EFL club to drop out of the league since the liquidation of Maidstone in 1992.
Despite the 27 year gap between these two events, Bury’s demise is by no means an isolated incident. Fellow northern League One team Bolton Wanderers were in a similar situation, just days away from administration and subsequent league expulsion. However, in contrast to the fate of Bury, Bolton was saved when a takeover deal by Football Ventures was completed in time. Other teams that have been suffering financially include Morecambe FC, Coventry City, Oldham Athletic, and even former Premier League winners Blackburn Rovers.
The plight of these clubs, with centuries of heritage behind them, could lead you to believe that English football is on the verge of collapse. Yet, there is a lot of money to be made in English football. Manchester United, who are the most valuable team in the Premier League, are worth almost £4 billion. The Premier League TV rights deals for 2019-22 were sold for £5 billion, and the top teams earn around £150 million each from the league. In addition to this, revenue is received from sponsorships, licensing deals, kit sales, and ticket sales. More money circulates around the industry through wagering. Betting on football is big business, and is estimated to be worth as much as £1.5 billion. Competition is strong amongst bookmakers, with many offering promotions to attract new customers.
However, there is a huge gulf between the Premier League and the leagues lower down in the English football pyramid. The crisis is a little more nuanced than that though, as a chasm exists within the Premier League too. Liverpool generated a £125 million profit on £455 million of turnover in 2018, while even Southamptom managed a £35 million profit on £153 million of turnover. However, Crystal Palace lost £36 million, Bournemouth lost £11 million, and even Everton suffered a £13 million loss.
It didn’t always used to be like this. Before 1885, professionalism in football had been banned by the English Football Association, with competition instead being held between amateur sides that competed in the FA Cup (the only formal competition at the time). Professionalism led to a sharp rise in popularity for the sport, and clubs had to build bigger and bigger stadiums to accommodate their swelling fanbase. By the beginning of the 20th century, football had grown so popular that it had overtaken cricket as the national sport.
By 1950, there were 92 clubs that were separated into four divisions. The 1970s and 80s saw a decline in match attendance, and a ban on English clubs in European competitions between 1985 and 1990 saw many top English players leave for continental teams. To help compete with European teams, the top English teams decided they needed to increase their revenues. This led to the creation of the Premier League in 1992, allowing them to sell TV rights themselves. Overtime, this created a lot of wealth in the league, although it was not distributed equally, which has led to the situation we have today.
The desire to compete against the largest clubs in Europe has created a scenario where lower league teams are suffering, while the clubs at the top of the Premier League are reaping the rewards.
In the wake of the collapse of Bury, action is being taken to prevent this from happening again. Financially crippled football clubs are not good for English football, even those right at the top of the sport. The negative press it generates brings sport into disrepute and affects the reputations of the richest teams.
At present, Championship sides receive £4.5 million each season in “solidarity payments” from the Premier League. However, several top teams, including Manchester United, have proposed an increase to help provide much needed cash for the lower leagues. Under current arrangements, League One sides receive £675,000 per season and clubs in League Two get just £460,000. This will also likely increase under the plans.
The plans have not yet been formalised and will require 14 of the 20 Premier League clubs to agree before they can be put into place. However, it is a positive sign, showing that the plight of the lower league clubs may now be starting to be understood by those at the top of the sport.
Regardless of the money, lower league teams are finding that they need to come up with innovative ideas to hold off the financial demons. These can include arranging friendlies with bigger clubs, agreeing ground-sharing deals with the reserve sides of higher placed clubs, or by selling their most talented players to teams in higher leagues. This latter one, of course, is a double edged sword, bringing in cash, but taking away much needed talent that could have otherwise helped them to promotion or prevent relegation.
Remaining financially sustainable is a difficult balance, but as the Chairman of non-league side Ilkeston Town Football Club explained: “promotion into the national leagues is a target we aim for but it can’t happen at the potential expense of the club’s long-term future.”
Money in English football has found itself concentrated in the top teams, who attract the largest shares of TV rights revenue, biggest ticket sales, and have the largest reach for merchandise. This has created a scenario where some lower league clubs are beginning to struggle to balance the books. Collapsing football clubs are not good for anyone in the sport, so Premier League teams need to look at ways that they can support the smaller teams. However, in the meantime, it is prudent for these smaller sides to exercise prudent financial management.