New report gives a huge ‘wake-up call’ to football, says Fair Game
“Here we have yet more evidence that football’s finances are broken. This report should be a wake-up call. Football has consistently shown itself incapable of regulating itself.”
Niall Couper, CEO of Fair Game
FAIR GAME has described a new report commissioned by UK Research and Innovation as a wake-up call. The 25-page report, Counting the Cost of COVID-19 on Professional Football Clubs and Their Communities’, has called for a comprehensive overhaul of football’s finances.
The report concludes that “football needs to be sustainable in its own right at every level of the game. It is possible, but it needs the collective will of all clubs to make it happen.”
Niall Couper, CEO of Fair Game, said: “It’s a new season but the crisis at the heart of the game is the same. Here we have yet more evidence that football’s finances are broken. This report should be a wake-up call. Football has consistently shown itself incapable of regulating itself. We need Government intervention and an independent regulator. Without this the clubs at the heart of our towns and communities will continue to be at risk.
“Fair Game’s proposes to address the financial imbalance by rewarding clubs that are sustainable, well run and engage their fans, through a new Sustainability Index. This is the culture reset football needs. The Index would be transformational for football.”
The comprehensive 25-page report, Counting the Cost of COVID-19 on Professional Football Clubs and Their Communities, was conducted by The Sheffield Business School and Sport Industry Research Centre at Sheffield Hallam University, and submitted by: Dr Daniel Plumley, Robbie Millar, Adam Davis, Richard Coleman & Dr Rob Wilson.
The report said: “The time for self-interest is over. Football clubs need to come together now more than ever to safeguard the finances of the game for the future. Covid-19 has highlighted the strategic weakness of the financial model operating across the football industry.”
The report contains four key recommendations:
To re-visit the broadcasting distribution mechanism in English football with a view to addressing financial imbalance
The appointment of an independent regulator to oversee football club finance
For clubs to target a model of becoming self-sustainable in the next 10 years
Increase fan and community engagement to develop sustainable futures
Facts and figures about football’s financial crisis from the report:
A high proportion of English football clubs make recurring losses and are financially unsustainable. A high proportion of clubs have high levels of debt, are over reliant on cash injections from club owners to fund day-to-day operations and have negative equity
In 2020, 43 of the 85 clubs who filed accounts in that year were technically insolvent based on their equity figure. This is 51% of all clubs that filed accounts for that year. Of the 43, seven were EPL clubs, 14 were in the Championship, 11 were in League 1 and a further 11 were in League 2. This means that in normal business terms, you could effectively wind-up half of the EFL. In League 1, 42 different clubs competed during the period 2016-2020 and 28 of those clubs (67%) were technically insolvent at the time of filling their accounts. In League 2, the picture is similar with 28 clubs out of the 45 different clubs (62%)
Revenue growth in English football has been substantial since the early 1990s but much of that growth has exclusively benefited English Premier League (EPL) clubs. Average revenue per club in the EPL has increased from £9.2m in 1993 to a high of £256m in 2019. Championship club revenues have risen from £2.7m in 1993 to nearly £26m in 2020. The gap of has grown from £6.5m to £230m.
This growth and financial disparity have caused problems with cost control, most notably in player wages. In the Championship, in 2019/20, this means every £1 of revenue that all clubs generate, £1.20 is being paid out in player wages. The recommended figure by the European governing body of the sport, UEFA and the EPL, is 70%.
Background on Fair Game and football’s financial crisis:
The recommendations in the UK Research and Innovation report chime with Fair Game’s proposals for a Sustainability Index. Fair Game argues that if you want to see culture change then offer a reward. Under the proposals developed by a team of experts, money would go to those clubs that score highly on four criteria: financial sustainability, good governance, equality standards and real fan and community engagement. We need to encourage clubs to be financially sustainable, to adopt good governance, to treat equality standards as more than just a tick-box exercise, and to have meaningful fan and community engagement.
We’ve modelled the impact. For clubs in the Championship this could mean an extra £6.3m a year, for League One an extra £5.1m and for League Two an extra £2.7m a year. And for the first time there would be financial redistribution from the Premier League to the National League, National League North and South and crucially the women’s game to help support the burgeoning interest.
To read more about the Sustainability Index click here.
