Championship clubs suffering increasing debt threat

Whilst Premier League sides continue to thrive by pulling in huge amounts of revenue each and every season thanks to ticket sales, lucrative television deals and merchandising, things aren’t quite as rosy in the finance departments of many teams in the lower tiers of English football. Accumulated debt in the Championship reached a staggering £1.1 billion last season, nearly double the amount England’s second division currently generates in revenue, so what gives?

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Despite pulling in £646.4 million in revenue this year to date the Championship is still struggling with ever increasing debt problems and it’s Bolton Wanderers who have topped the red table as they stare worryingly at their £182.1 million bill. This alarming figure has much to do with the “parachute payments” that many clubs who are unlucky enough to drop from the Premier League receive. The payments were created in order to help ease the financial burden on clubs that drop from the top-flight; following relegation each club receives £60 million over a four year period although that time period is set to be reduced to just three from 2016/2017.

According to ‘How much is your club really worth?’ stipulate that Premier League outfits are worth a combined £8.4 billion whilst the average debt that Championship sides are currently facing is £48.5 million. It’s a shocking imbalance so what can be done to help readdress it? For now the incentive to drive teams forward in order to get them into promotion spots is greater than ever and holding on to that invaluable place in the top-flight once you arrive season after season is more crucial than ever.

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Thanks to increasing television and broadcasting rights, which will come into effect from next season, every Premier League club in match day action will be in line for many lucrative paydays, and that’s not just domestically but also when matches are aired and featured overseas. In fact from 2016 TV revenue thanks to a new deal between Sky Sports and BT Sports that will run for the next 3 seasons is worth a massive £5.14 billion, almost a 70% increase on the current deal.

It’s this allure that is driving some Championship clubs to adopt an all or nothing approach to reaching the promised land of the top flight. Once a club arrives in the Premier League you can guarantee increased ticket sales and attendances, especially when welcoming away teams to your home ground, as well as new money-spinning sponsorship deals and other merchandising opportunities. So whilst the top-flight clubs get richer Championship sides continue to struggle; is it time for the football governing bodies to step in to help rebalance this major disparity?

Championship clubs suffering increasing debt threat

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