Even clubs which are held up as role models for the rest of the EFL had to take a huge financial gamble to get to the Premier League, it is claimed.
The EFL is hoping that the Football Governance Bill, which is being scrutinised by the House of Lords this week and would see the introduction of an independent regulator, can break an impasse in talks between the Premier League and the rest and make the professional sport in England more sustainable.
EFL chairman Rick Parry has been pointing to the huge financial chasm between the top flight and the rest – and then between clubs in receipt of parachute payments and the rest beyond that – which encourages some owners to spend a lot more money than they bring in to try to win promotion to the big time.
It has paid off for clubs such as Brighton and Hove Albion and Brentford, whose wage bills dwarfed their income when they went up but now bank at least £100 million each season thanks to the Premier League’s media deals, but others like Derby County showed the danger of what happens when it goes wrong.
Derby reached the play-off final in 2019 but lost 2-1 to Aston Villa, and while Villa’s excesses were quickly mopped up by the benefits of playing on the big stage, then Derby chairman Mel Morris pulled the plug on investment and the club went on a descent towards administration and relegation.
Stoke City’s owners have been trying to find a middle ground that allows backers to put in money as long as it can be guaranteed, while lobbying for changes to tackle the financial gulf between the top flight and the rest.
Parry told StokeonTrentLive: “Deloitte produce a very helpful annual report on football finances, which they have been doing for the past 20 to 30 years and the figures are all laid out in there starkly. If you look at the amount of money that Championship clubs routinely spend on average on wages, it’s in excess of 100 per cent of turnover. Three or four years ago it was getting as high as 120 per cent.
“If you look at promoted clubs, Luton’s was 150 per cent. If you go back to Brentford, it was nearly 250 per cent, Brighton was in excess of 150 per cent. If you roll the dice and gamble and get promoted, people might argue it’s worthwhile. The converse of that is if you look at the likes of Derby County or Reading even, who had a go and paid well over the odds in wages, didn’t make it and for whatever reason owners decide they are not going to keep on doing it anymore.
“Owner funding is great until it isn’t, until it stops. We have this boom and boost cycle where a new owner comes in, decides to have a go, spends over the odds, gets fed up, the club goes into administration, somebody picks it up… Surely there is a better way, where we can make clubs sustainable, so they where they can live within their means and still be competitive. Nobody wants to reduce competition, nobody wants to stifle ambition, but it’s a broken system at the moment when way too much of the money is flowing into the Premier League and not flowing downwards. If we value the pyramid, we need money to flow down.
“We have 30 clubs in the EFL at the moment with Premier League experience, 19 in the Championship this season. Many of them have greater experience in the Premier League than 14 clubs who are up there at the moment and yet the division of revenues is completely and utterly skewed so that the 14 in the Premier League are getting about £1.8 billion from TV monies, the 14 clubs in the EFL with the most experience in the Premier League will be sharing about £90m, about five per cent of the money, and yet we’re supposed to have a competitive pyramid. What we need to change is fairly obvious, the figures are pretty terrifying.
“If the Bill doesn’t go through, and we sincerely hope it does, we’ll pick ourselves up and keep going. The game is incredibly resilient. There are great things happening in the EFL, the Championship is having a fantastic season on the pitch, hugely entertaining. We’re delighted with the new partnership with Sky both in terms of the money provided and exposure. Clubs and owners are doing great things.
“The game will go on but this is a once in a generation opportunity to try to bring about change. Bringing about a change in the game with its current voting structure is virtually impossible. It does need that independent view of the facts and figures and then an independent body with the ability to do something about.”
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