Research report: Still ill? Assessing the financial sustainability of football (2023)
Published 7 September 2023
Applies to England
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Still ill? Assessing the financial sustainability of football
Kieran Maguire and Dr Christina Philippou, 20 June 2023
Overview and objective
1. Kieran Maguire (KM) of the University of Liverpool and Christina Philippou (CP) of the University of Portsmouth were commissioned by the Department for Culture, Media and Sport (DCMS) with providing a research paper considering how, if at all, the broader picture of financial sustainability has changed since the publication of their 2022 Research Paper ‘Assessing the Financial Sustainability of Football’ (PDF, 1.2 MB), which identified financial stress metrics for professional football clubs in the Premier League and the English Football League (EFL).
2. They were also tasked to identify key financial developments such as the level and type of debt in the football industry.
Introduction
3. The Fan-Led Review of Football Governance (FLR) concluded that the finances of many football clubs are fragile, putting them, and the communities to which they are the heart and soul, at risk. The 2022 Research Paper published alongside the government response to the Fan-Led Review of Football Governance concluded that:
- There is a widespread issue of many clubs being run in unsustainable ways from a traditional financial analysis viewpoint. This is not purely as a result of the COVID-19 pandemic, as the unsustainability issue was in evidence prior to the 2019/20 season.
- Football clubs tend to be more reliant underwriting losses via owner funding than companies in other mature industries. This increases insolvency risk if owners’ personal circumstances change. Traditional bank funding is uncommon given the risks of the football industry and the reputational damage in lending to an entity that has a loyal user base.
- There are systemic financial weaknesses in the football industry such that there is a risk that if one club is subject to an insolvency event, more could follow due to substantial sums owed on transfer fees.
- There is an issue of financial stress in football and it is wide-reaching. There are therefore serious concerns around the financial sustainability and fragility of football finances.
4. The government white paper set out the proposed introduction of an independent regulator for English football clubs with a primary strategic purpose of ensuring that “English football is sustainable and resilient”.
5. This research paper uses traditional financial and football industry-specific metrics to assess the broader picture of financial sustainability in the top five tiers of English football.
Financial sustainability metrics
6. This research paper replicates and updates the metrics used in the 2022 Research Paper (PDF, 1.2 MB) to evaluate the financial health of football clubs and the game as a whole. The metrics in the 2022 Research Paper covered the key financial aspects facing football clubs: profit (or, more commonly, loss), cash flow, debt, and dependence on ownership.
7. In this research paper, KM and CP updated the results for the latest published accounts for the Premier League and the EFL. They also extended their analysis to include the National League (fifth tier of English football) as the white paper set out the proposed Regulator’s scope to include “the top five tiers of the English men’s football pyramid”.
8. The key metrics[footnote 1] and areas considered in evaluating the financial health and failures of football clubs and the game as a whole used in the 2022 Research Paper were:
- Income based metrics
- Wage control
- Operating cash flow
- Current ratio
- Equity
- Football Net Debt
9. In addition to the above metrics from the 2022 Research Paper, KM and CP extended the Operating Cash Flows metric in this research paper from the case study approach used in the 2022 Research Paper.
10. This research paper also includes owner funding contributions analysis in line with the requirement to consider level and type of debt in the industry.
Income based metrics
11. These days, football clubs earn their revenues from three main sources: matchday (mainly ticket sales), broadcast (domestic, international, and UEFA), and commercial (kit manufacturing, kit sponsorship, official partners, etc).
12. Reliance on a particular income stream is important when assessing financial risk. Too much reliance on a single source can create increased pressure and panic when that source is affected. For example, matchday revenue was affected during the pandemic lockdowns so clubs that were very heavily dependent on matchday revenue (more common the lower down the leagues one goes) suffered more than those that were not.
13. Relegation from one division to another can also cause a big crash in income as clubs go from safety to where significantly lower income can affect financial sustainability.
14. In the 2022 Research Paper, the authors found Premier League reliance on broadcasting income pre-pandemic. Figure 1 shows the continued dependency of some Premier League clubs on broadcasting income in 2021/22, with 7 of the clubs (35%) showing a heavy reliance (over 75%) on broadcasting income.
15. Dependency on broadcast income goes hand in glove with problems if clubs are relegated and unable to reduce their cost base, particularly as there is evidence of a lack of economic resilience across most clubs (including the wealthiest ones) to economic shocks.[footnote 2]
16. While the EFL does not show similar levels of reliance on broadcasting income (four clubs (17%) exceed the 75% financial dependence limit), the new domestic EFL broadcasting deal will give an uplift in income particularly to EFL Championship clubs, and therefore what difference does it make to changes in dependence may need to be considered in the future.
17. The further down the pyramid one goes, the lower the dependency on broadcasting and the higher the reliance on matchday income. The large number of small company accounts filed by football clubs does not allow for analysis across all clubs from EFL League One down and therefore these metrics were not included for clubs below the Championship in this research paper. If any parties want to ask for this information for clubs in lower leagues, it can be supplied, but would be a small sample.
Figure 1: Broadcast revenue as a proportion of total revenue in the Premier League 2022
| Club | Broadcast % of revenue 2022 |
|---|---|
| Burnley | 85% |
| Watford | 80% |
| Brentford | 80% |
| Crystal Palace | 79% |
| Southampton | 76% |
| Norwich City | 76% |
| Wolverhampton Wanderers | 75% |
| Brighton & Hove Albion | 72% |
| Leicester City | 70% |
| Aston Villa | 69% |
| Newcastle United | 69% |
| West Ham United | 65% |
| Everton | 64% |
| Leeds United | 61% |
| Chelsea | 49% |
| Liverpool | 44% |
| Manchester City | 41% |
| Arsenal | 40% |
| Manchester United | 37% |
| Tottenham Hotspur | 35% |
Slave to the wage
18. The most significant costs for football clubs have for decades been and continue to be in relation to player recruitment and retention, as managers and fans ask for an everlong list of on-pitch talent as a means to an end success.
19. Wage control ratios [wage / income x100] are the most common metrics used in terms of determining the affordability of wages. Often referred to as wage-to-turnover or wage-to-income ratios, these show how much of club income goes to pay player wages and give an indication of whether cost controls in a club are robust. UEFA, the governing body of European football, considers a wage-to-income ratio limit of 70% for financial stability[footnote 3], and it is this limit that is used in this Research Paper.
20. In the 2021/22 season, there were ten clubs (50%) in the Premier League that exceeded UEFA’s 70% wage control guideline (see Figure 2).
Figure 2: Premier League Wage Control 2022
| Club | Wage control 2022 |
|---|---|
| Newcastle United | 95% |
| Everton | 90% |
| Leicester City | 88% |
| Norwich City | 85% |
| Crystal Palace | 77% |
| Aston Villa | 77% |
| Southampton | 75% |
| Burnley | 75% |
| Wolverhampton Wanderers | 73% |
| Chelsea | 71% |
| Brighton & Hove Albion | 66% |
| Manchester United | 66% |
| Leeds United | 64% |
| Watford | 62% |
| Liverpool | 62% |
| Manchester City | 58% |
| Arsenal | 58% |
| West Ham United | 54% |
| Brentford | 48% |
| Tottenham Hotspur | 47% |
21. Since the commencement of the Premier League in 1992/93, revenue has grown from £205 million in 1992/93 to almost £5.5 billion in 2021/22. This is an increase of 2,559%, but is exceeded by wages rising by 3,613% in the same period. The lack of cost control in these decades has contributed to clubs not taking advantage of income growth.
22. The picture in the Championship (see Figure 3) highlights the concern around wage control, as overspending on wages is a prevalent strategy in a league whose successful teams get promoted to the Premier League[footnote 4]. In the 2021/22 season, 21 Championship clubs (88%) exceeded UEFA’s 70% guideline, with seventeen (71%) exceeding 100%.
23. Note that the three clubs below the 70% guideline were in receipt of parachute payments of between £34-£42 million from the Premier League.
Figure 3: Championship Wage Control 2022
| Club | Wage control 2022 |
|---|---|
| Stoke City | 209% |
| Nottingham Forest | 197% |
| Preston North End | 178% |
| Birmingham City | 177% |
| Derby County* | 161% |
| Reading | 150% |
| Blackburn Rovers | 146% |
| Cardiff City | 146% |
| Swansea City | 137% |
| Fulham | 126% |
| Queens Park Rangers | 125% |
| Millwall | 120% |
| Bristol City | 119% |
| Bournemouth | 115% |
| Middlesbrough | 106% |
| Peterborough United | 103% |
| Luton Town | 101% |
| Barnsley | 94% |
| Coventry City | 87% |
| Hull City | 82% |
| Blackpool | 76% |
| West Bromwich Albion | 65% |
| Huddersfield Town | 55% |
| Sheffield United | 49% |
24. When player sale profits are taken into consideration, thirteen clubs in the Premier League made a loss on an Earnings Before Interest and Tax (EBIT) basis, which excludes finance costs and one-off adjustments such as impairments, redundancy and debt conversions (see Figure 4).
Figure 4: Premier League Adjusted EBIT Profit 2022 (£m)
| Club | Adjusted EBIT profit 2022 (£m) |
|---|---|
| Brentford | 50 |
| West Ham United | 36 |
| Leicester City | 21 |
| Watford | 16 |
| Burnley | 14 |
| Liverpool | 9 |
| Chelsea | 1 |
| Brighton & Hove Albion | -10 |
| Tottenham Hotspur | -13 |
| Newcastle United | -16 |
| Crystal Palace | -16 |
| Norwich City | -17 |
| Southampton | -17 |
| Wolverhampton Wanderers | -26 |
| Manchester City | -26 |
| Arsenal | -36 |
| Everton | -52 |
| Aston Villa | -54 |
| Manchester United | -62 |
| Leeds United | -76 |
25. There are other metrics that can be used, such as taking into consideration the long-term cost of player transfers by adding amortisation costs to wages to work out the total cost of recruiting and retained players for a club.
26. This adjusted wage control [(wages + amortisation)/ income x 100] metric indicates that seven clubs in the PL (Figure 5) and nineteen in the EFL Championship (Figure 6) have player costs that exceed income. This means that the clubs are losing money before they incur day to day overheads such as heat and light, travel, legal etc.
Figure 5: Premier League Adjusted wage control 2022
| Club | Adjusted wage control 2022 |
|---|---|
| Everton | 127% |
| Newcastle United | 122% |
| Leicester City | 119% |
| Wolverhampton Wanderers | 110% |
| Aston Villa | 108% |
| Norwich City | 106% |
| Chelsea | 104% |
| Crystal Palace | 99% |
| Southampton | 99% |
| Leeds United | 95% |
| Burnley | 93% |
| Brighton & Hove Albion | 92% |
| Arsenal | 91% |
| Manchester United | 87% |
| Watford | 84% |
| Manchester City | 81% |
| Liverpool | 80% |
| West Ham United | 73% |
| Tottenham Hotspur | 65% |
| Brentford | 64% |
Figure 6: Championship Adjusted wage control 2022
| Club | Adjusted wage control 2022 |
|---|---|
| Sheffield Wednesday (2021) | 249% |
| Forest | 220% |
| Birmingham | 212% |
| Preston | 202% |
| Derby (2018) | 183% |
| Cardiff | 181% |
| Reading | 181% |
| Bournemouth | 171% |
| Blackburn | 171% |
| Fulham | 170% |
| Bristol City | 158% |
| Swansea | 150% |
| QPR | 141% |
| Stoke City | 139% |
| Millwall | 139% |
| Middlesbrough | 129% |
| Peterborough (2021) | 119% |
| Barnsley | 111% |
| Luton | 110% |
| Coventry | 102% |
| Hull | 93% |
| West Brom | 90% |
| Huddersfield (2021) | 88% |
| Blackpool | 81% |
| Sheffield United (2021) | 71% |
Operating cash flow (OCF)
27. Operating cash flow is a measure of liquidity of the club as operating cash flow measures the cash generated from day-to-day trading activities of the club, win or lose. Given the restricted information supplied to Companies House, this information is only included for the Premier League and Championship in this research paper.
28. For most businesses OCF is a positive figure. The cash generated can then be used to fund discretionary spending in the form of investing activities (for football clubs this is usually player transfer fees and capital expenditure projects) or financing commitments, such as loan repayments or occasionally dividend payments.
29. For a mature business, OCF would only be expected to be negative under extenuating circumstances, as this would indicate the business is failing to generate cash resources that make future day-to-day trading sustainable.
30. The Premier League, despite generating more revenue than any other league in world football, only has eleven (55%) of its clubs generating a positive OCF in 2021/22 (see Figure 7). In the Championship, it is only one club (see Figure 8), which again should be noted is in receipt of parachute payments.
Figure 7: Premier League Operating Cash Flows 2022
| Club | OCF 2022 |
|---|---|
| Liverpool | 113 |
| Tottenham Hotspur | 102 |
| Manchester United | 96 |
| Arsenal | 91 |
| Brentford | 49 |
| Wolverhampton Wanderers | 38 |
| Leeds United | 22 |
| Brighton & Hove Albion | 10 |
| Crystal Palace | 6 |
| Manchester City | 4 |
| Aston Villa | 0.3 |
| Newcastle United | -0.3 |
| Southampton | -5 |
| Watford | -10 |
| Burnley | -12 |
| Everton | -28 |
| Leicester City | -29 |
| Norwich City | -30 |
| West Ham United | -52 |
| Chelsea | -88 |
Figure 8: Championship Operating Cash Flows 2022
| Club | OCF 2022 |
|---|---|
| Middlesbrough** | 0 |
| Huddersfield Town | 2 |
| West Bromwich Albion | -1 |
| Blackpool | -2 |
| Coventry City | -2 |
| Luton Town | -3 |
| Barnsley | -5 |
| Millwall | -9 |
| Peterborough United | -9 |
| Sheffield United | -10 |
| Preston North End | -11 |
| Blackburn Rovers | -14 |
| Bristol City | -16 |
| Swansea City | -18 |
| Bournemouth | -19 |
| Cardiff City | -20 |
| Hull City | -22 |
| Queens Park Rangers | -23 |
| Birmingham City | -23 |
| Reading | -23 |
| Stoke City | -35 |
| Fulham | -36 |
| Nottingham Forest | -38 |
| Derby County* | -82 |
Current ratio
31. The current ratio [current assets / current liabilities] is a commonly used financial analysis ratio that measures liquidity in organisations i.e. ability to repay short-term debts.
32. Liquidity is important for the day-to-day running of football clubs, as lack of cash creates an inability to pay debts on time or on the last hour of the last day of work. Therefore, low current ratios indicate a liquidity issue within the club. While liquidity issues are often bridged by loans that can be repaid at a later date or further equity investments by owners, this is an indicator of potential problems should, for example, an owner become unable to continue supporting the club. This issue is covered in more detail in the section on owner funding contributions.
33. The 2021/22 current ratios of the Premier League clubs show ten Premier League clubs (50%) having current ratios below 0.6 (see Figure 9).
Figure 9: Premier League Current Ratios 2022
| Club | Current ratio 2022 |
|---|---|
| Burnley | 2.30 |
| Everton | 1.66 |
| Manchester United | 1.47 |
| Manchester City | 1.46 |
| West Ham United | 1.26 |
| Chelsea | 1.12 |
| Southampton | 0.91 |
| Wolverhampton Wanderers | 0.78 |
| Brentford | 0.62 |
| Norwich City | 0.61 |
| Leicester City | 0.58 |
| Tottenham Hotspur | 0.53 |
| Watford | 0.53 |
| Aston Villa | 0.51 |
| Liverpool | 0.43 |
| Arsenal | 0.40 |
| Newcastle United | 0.27 |
| Brighton & Hove Albion | 0.25 |
| Leeds United | 0.13 |
| Crystal Palace | 0.12 |
34. The 2021/22 season saw the majority of Championship clubs also fall into the liquidity risk areas highlighted by very low current ratios (see Figure 10). Low current ratios suggest it is a matter of time before cash flow becomes a problem (see also the section on Operating Cash Flows). Therefore, something must break, and often does, as club administration figures show[footnote 5].
35. The EFL club current ratio average in the period 2005-2014 was 0.53[footnote 6]. The average current ratio in the Championship in 2021/22 was 0.44, with 18 clubs (75%) below the limit.
Figure 10: EFL Championship Current Ratios 2022
| Club | Current ratio 2022 |
|---|---|
| Hull City | 2.17 |
| Swansea City | 1.55 |
| Fulham | 1.40 |
| Huddersfield Town** | 0.90 |
| Bristol City | 0.69 |
| Stoke City | 0.66 |
| West Bromwich Albion | 0.57 |
| Barnsley | 0.46 |
| Luton Town | 0.39 |
| Blackpool | 0.26 |
| Peterborough United** | 0.22 |
| Queens Park Rangers | 0.16 |
| Blackburn Rovers | 0.14 |
| Sheffield United** | 0.14 |
| Birmingham City | 0.13 |
| Derby County* | 0.13 |
| Bournemouth | 0.11 |
| Coventry City | 0.10 |
| Cardiff City | 0.10 |
| Preston North End | 0.06 |
| Nottingham Forest | 0.05 |
| Middlesbrough | 0.03 |
| Reading | 0.03 |
| Millwall | 0.02 |
36. The average current ratio in League One in 2021/22 was 0.76. Although the average was above the limit, 13 clubs (54%) still had current ratios below it (see Figure 11). This shows liquidity concerns in over half the league.
Figure 11: EFL League One Current Ratios 2022
| Club | Current ratio |
|---|---|
| Cheltenham Town | 2.54 |
| Shrewsbury Town | 1.95 |
| Plymouth Argyle | 1.83 |
| Cambridge United | 1.31 |
| AFC Wimbledon* | 1.03 |
| Sheffield Wednesday* | 0.96 |
| Doncaster Rovers* | 0.95 |
| Gillingham** | 0.87 |
| Portsmouth | 0.80 |
| Morecambe | 0.64 |
| Burton Albion | 0.60 |
| Lincoln City | 0.58 |
| Rotherham United | 0.56 |
| Wigan Athletic | 0.48 |
| Crewe Alexandra | 0.46 |
| Wycombe Wanderers | 0.46 |
| Bolton Wanderers | 0.42 |
| Ipswich Town | 0.41 |
| Milton Keynes Dons | 0.34 |
| Accrington Stanley | 0.32 |
| Charlton Athletic | 0.28 |
| Sunderland | 0.26 |
| Oxford United | 0.10 |
| Fleetwood Town | 0.03 |
37. The average current ratio in League Two in 2021/22 was 0.84, with 11 clubs (46%) below the limit (see Figure 12). This again shows a concerning level of liquidity risk present in the league.
Figure 12: EFL League Two Current Ratios 2022
| Club | Current ratio |
|---|---|
| Newport County* | 2.8 |
| Exeter City | 2.4 |
| Colchester United | 1.66 |
| Hartlepool United* | 1.52 |
| Stevenage | 1.47 |
| Tranmere Rovers | 1.28 |
| Salford City | 1.21 |
| Leyton Orient | 1.2 |
| Forest Green Rovers | 1.12 |
| Bradford City | 0.75 |
| Crawley Town* | 0.71 |
| Scunthorpe United* | 0.68 |
| Rochdale | 0.64 |
| Carlisle United | 0.57 |
| Mansfield Town** | 0.44 |
| Barrow | 0.3 |
| Swindon Town | 0.28 |
| Walsall | 0.25 |
| Oldham Athletic | 0.22 |
| Sutton United | 0.22 |
| Port Vale | 0.2 |
| Harrogate Town | 0.14 |
| Bristol Rovers | 0.12 |
| Northampton Town | 0.09 |
38. The average current ratio in the National League in 2021/22 was 1.29, highlighting a better liquidity in the National League, with seven clubs having a current ratio above 1. However, liquidity risk was still a concern, with 14 clubs (54%) below the financially healthy limit (see Figure 13).
Figure 13: National League Current Ratios 2022
| Club | Current ratio |
|---|---|
| Wealdstone | 6.21 |
| Dagenham & Redbridge | 5.02 |
| Altrincham | 4.17 |
| Boreham Wood*** | 3.24 |
| FC Halifax Town | 2.62 |
| King’s Lynn Town | 1.97 |
| Yeovil Town* | 1.01 |
| Grimsby Town | 0.71 |
| Woking | 0.64 |
| Stockport County | 0.48 |
| Wrexham | 0.48 |
| Dover Athletic | 0.48 |
| Torquay United | 0.36 |
| Chesterfield | 0.34 |
| Eastleigh | 0.33 |
| Solihull Moors* | 0.32 |
| Bromley*** | 0.22 |
| Aldershot Town | 0.21 |
| Maidenhead United | 0.17 |
| Notts County | 0.17 |
| Weymouth | 0.16 |
| Barnet | 0.15 |
| Southend United** | 0.09 |
Equity
39. Other indicators of liquidity concerns arise when equity (shareholders’ funds, both share capital and retained profits/losses) is negative as this indicates that the club has more liabilities than assets. While balance sheets value player registrations at cost and therefore often undervalue club assets, having negative equity is an indicator of risk of failure. It is also an indicator that the club will struggle to find a lender if in need of a loan, as it is hard to argue for receiving something from nothing.
40. Thus, the level of equity is expected to be positive if the organisation in question is a going concern (expected to continue operating going forwards). Negative equity indicates that the organisation is technically insolvent, and thus requires further owner injections for it to continue operating as a going concern or face the long road to ruin.
41. At the end of the 2021/22 season, five Premier League clubs (25%), 20 Championship clubs (83%), 10 in League One (42%), 13 in League Two (54%) and 12 in the National League (52%) had negative equity at year-end.
Figure 14: Negative equity in the top five leagues of English football 2021/22
42. Figure 14 shows that of the 115 (normally 116) clubs in the top five tiers of English football in the 2021/22 season, 52% had negative equity, i.e. were technically insolvent.
Football Net Debt (FND)
43. The industry-specific metric Football Net Debt[footnote 7] (FND) looks at debt owed to lenders and other football clubs. UEFA notes that “it is important to look at net debt in context, rather than in isolation, as the debt taken on to finance investment is clearly perceived as far less risky compared to that of debt taken on to fund operating activities, which might lead to financial sustainability issues for clubs.”[footnote 8] The metric was used in order to assess the risk to clubs’ sustainability. The higher the ratio, the higher the perceived risk of the business.
44. Football net debt (FND) is calculated[footnote 9] as: borrowings - cash/cash equivalents + net balance due on transfers. UEFA use FND as an industry specific metric to look at the potential repayments due from clubs to providers of funds and other football clubs for outstanding transfers, which are often arranged on credit terms.
Figure 15: Premier League Football Net Debt 2022 (£m)
| Club | Football Net Debt 2022 (£m) |
|---|---|
| Tottenham Hotspur | 952 |
| Manchester United | 909 |
| Arsenal | 575 |
| Brighton & Hove Albion | 381 |
| Leicester City | 377 |
| Liverpool | 184 |
| Newcastle United | 170 |
| Leeds United | 148 |
| Watford | 132 |
| Crystal Palace | 109 |
| Southampton | 106 |
| Wolverhampton Wanderers | 94 |
| Aston Villa | 85 |
| Manchester City | 75 |
| Everton | 47 |
| Brentford | 46 |
| Norwich City | 42 |
| West Ham United | 36 |
| Burnley | -2 |
| Chelsea | -58 |
45. At the end of the 2022 season, FND was over £4.4 billion, £700 million higher than at the end of the 2018/19 (pre-pandemic) season. Some of this is in the form of owner loans which are interest free and no fixed repayment date, which could be viewed as quasi-equity. The figure would have been almost £6 billion had it not been for the takeover of Chelsea, who owed the club owner £1.5 billion before his assets were frozen by the UK government and the club sold.
46. Debt is not inherently a problem for a business. The ability to service debt as payments fall due is a greater concern. Football is different to many other industries as owner objectives are often non-profit maximising[footnote 10] and instead the club is treated as a trophy asset where the objective is on field success and the merits arising thereof.
47. Another aspect of debt in football, debt repayment profiles highlight long-term costs a club is committed to, as well as any large loan repayments coming up which may create a “pinch point”. When debt is due for repayment in the near future, this creates more pressure on the club in question than debt that is longer-term, although rescheduling of due dates when getting closer to repayment is a common occurrence (though not undertaken an infinite number of times for the same loan). This is worth bearing in mind when looking at FND.
48. FND therefore should be considered in conjunction with other metrics.
Owner funding contributions
49. Because of the reluctance of the traditional commercial banking sector to lend to football due to risk and reputational damage, owner funding is more prevalent in football than other mature industries.
50. This funding can be in the form of loans, some of which are interest bearing and others interest free, and equity, which is not repayable.
Table 1: 2022 Premier League borrowings and owner loans
| Club | Borrowings (£m) | Owner loans (£m) |
|---|---|---|
| Tottenham Hotspur | 950 | 98 |
| Manchester United | 684 | 0 |
| Arsenal | 454 | 454 |
| Brighton & Hove Albion | 409 | 406 |
| Leicester City | 344 | 254 |
| Everton | 174 | 0 |
| Liverpool | 159 | 71 |
| Watford | 124 | 47 |
| Wolverhampton Wanderers | 118 | 13 |
| Manchester City | 113 | 49 |
| Southampton | 92 | 0 |
| Crystal Palace | 82 | 8 |
| Leeds United | 73 | 34 |
| Norwich City | 68 | 1 |
| Burnley | 63 | 1 |
| Brentford | 62 | 61 |
| West Ham United | 56 | 0 |
| Aston Villa | 25 | 8 |
| Newcastle United | 0 | 0 |
| Chelsea | 0 | 0 |
51. The analysis in Table 1 indicates that larger clubs that have a minimal chance of relegation (Tottenham, Manchester United) can access the debt markets as they are close to guaranteeing Premier League revenues in the future. The likes of Leicester, Brighton etc are more likely to borrow from the owner as they have a higher relegation risk.
52. Of the total Premier League borrowings of just over £4 billion, £1.5bn (37%) is from owners.
Table 2: 2022 Championship borrowings and owner loans
| Club | Borrowings (£m) | Owner loans (£m) |
|---|---|---|
| Barnsley | 0 | 0 |
| West Bromwich Albion | 2 | 0 |
| Fulham | 5 | 5 |
| Luton Town | 6 | 2 |
| Blackpool | 12 | 12 |
| Peterborough United | 14 | 13 |
| Millwall | 18 | 10 |
| Coventry City | 28 | 26 |
| Hull City | 29 | 19 |
| Swansea City | 35 | 16 |
| Huddersfield Town | 44 | 34 |
| Sheffield United | 48 | 18 |
| Derby County* | 54 | 49 |
| Queens Park Rangers | 74 | 61 |
| Preston North End | 78 | 77 |
| Reading | 84 | 83 |
| Stoke City | 92 | 92 |
| Bristol City | 99 | 89 |
| Cardiff City | 107 | 99 |
| Nottingham Forest | 115 | 59 |
| Birmingham City | 135 | 117 |
| Middlesbrough | 148 | 142 |
| Blackburn Rovers | 162 | 144 |
| Bournemouth | 184 | 165 |
53. In the EFL Championship, total borrowings are £1.6 billion but £1.4 billion (85%) is from owners. Most of the third-party loans are from boutique lenders such as Macquarie or MSD Holdings, or the EFL itself who provided funding guaranteed by the PL19 during lockdown.
Other concerning trends
54. There are a number of clubs that do not file accounts by the statutory submission date. For example, Derby County has not published any accounts since 2018. Since then, the club has been in administration, sold and bought back its stadium and been subject to two sets of points deductions culminating in relegation to the third tier of English football.
Conclusions
55. The metrics and issues considered in this research paper evaluating the financial health of football clubs and the game as a whole were:
- Income based metrics
- Wage control
- Operating cash flows
- Current ratio
- Equity
- Football Net Debt
- Net owner funding
- Owner funding contributions
56. The 2022 Research Paper found that there is a widespread issue of clubs being run in unsustainable ways from a viewpoint of traditional financial analysis. This continues to be the case post-pandemic in the 2012/22 season (see Tables 3 to 7).
57. In the tables in this section, the figures in bold (and followed by the symbol ^) are guidelines for financial distress, and should be treated with caution as they are:
(a) historic in nature and football industry finances are volatile and
(b) at times open to interpretation by those preparing the accounts who may allocate individual line items to differing areas of the financial statements.
58. The broader picture of financial sustainability has changed little since the findings detailed in the 2022 Research Paper, which identified metrics of financial stress for professional football clubs in the Premier League and EFL.
59. The findings in this research paper show that there continues to be a widespread issue of clubs being run in unsustainable ways from a viewpoint of traditional financial analysis. This is not purely as a result of the pandemic, as the clubs are “still ill” in 2021/22.
60. Football clubs tend to be more reliant on owner funding and underwriting of losses than companies in other industries that have been trading for a similar length of time. This increases the reliance of clubs on owners and, if their personal circumstances change, increases insolvency risk. This remains an issue in 2021/22.
61. There is an issue of financial stress in football and it is wide-reaching, across all of the top five tiers of English football. There are therefore serious concerns around the financial sustainability and fragility of football finances.
Table 3: 2022 Premier League clubs
| Club | % Broadcast revenue | Wage control | Current ratio | Equity (£000s) | FND (£m) | Operating Cash Flow |
|---|---|---|---|---|---|---|
| Arsenal | 40% | 57.5% | 0.40^ | 403,433 | 575.4^ | 90.9 |
| Aston Villa | 69% | 77.0%^ | 0.51^ | 175,352 | 84.8 | 0.3 |
| Brentford | 80%^ | 47.6% | 0.62 | 47,285 | 45.8 | 49.3 |
| Brighton & Hove Albion | 72% | 66.1% | 0.25^ | (150,541)^ | 381.3^ | 9.5 |
| Burnley | 85%^ | 74.5%^ | 2.30 | 104,892 | (2.0) | (11.9)^ |
| Chelsea | 49% | 70.7%^ | 1.12 | 440,827 | (57.8) | (88.4)^ |
| Crystal Palace | 79%^ | 77.5%^ | 0.12^ | (6,770)^ | 108.9 | 5.8 |
| Everton | 64% | 89.5%^ | 1.66 | 234,365 | 46.8 | (28.4)^ |
| Leeds United | 61% | 64.0% | 0.13^ | (59,951)^ | 148.0 | 22.1 |
| Leicester City | 70% | 84.7%^ | 0.58^ | (44,858)^ | 377.0^ | (28.5)^ |
| Liverpool | 44% | 61.6% | 0.43^ | 178,849 | 184.0 | 112.7 |
| Manchester City | 41% | 57.7% | 1.46 | 698,029 | 75.0 | 4.2 |
| Manchester United | 37% | 65.9% | 1.47 | 127,508 | 909.0^ | 96.4 |
| Newcastle United | 69% | 94.4%^ | 0.27^ | 106,138 | 170.0 | (0.3)^ |
| Norwich City | 76%^ | 88.1%^ | 0.61 | 2,705 | 42.0 | (29.9)^ |
| Southampton | 76%^ | 74.8%^ | 0.91 | 4,176 | 106.0 | (5.3)^ |
| Tottenham Hotspur | 35% | 47.1% | 0.53^ | 177,244 | 952.0^ | 101.5 |
| Watford | 80%^ | 61.7% | 0.53^ | (37,661)^ | 131.5 | (9.6)^ |
| West Ham United | 65% | 53.8% | 1.26 | 56,441 | 36.0 | (51.9)^ |
| Wolverhampton Wanderers | 75%^ | 72.9%^ | 0.78 | 54,304 | 93.6 | 38.4 |
| LIMIT | 75% | 70% | 0.60 | 0 | 200 | 0 |
Table 4: 2022 Championship clubs
| Club | % Broadcast revenue | Wage control | Current ratio | Equity (£000s) | OCF |
|---|---|---|---|---|---|
| Barnsley | 62% | 94%^ | 0.46^ | (4,828)^ | (4.6)^ |
| Birmingham City | 46% | 177%^ | 0.13^ | (112,390)^ | (22.8)^ |
| Blackburn Rovers | 51% | 146%^ | 0.14^ | (122,226)^ | (14.2)^ |
| Blackpool | 56% | 76%^ | 0.26^ | (7,688)^ | (1.6)^ |
| Bournemouth | 81%^ | 115%^ | 0.11^ | (148,159)^ | (19.3)^ |
| Bristol City | 28% | 119%^ | 0.69 | (32,051)^ | (15.9)^ |
| Cardiff City | 52% | 146%^ | 0.10^ | (55,965)^ | (20.5)^ |
| Coventry City | 49% | 87%^ | 0.10^ | (34,593)^ | (2.4)^ |
| Derby County* | 28% | 161%^ | 0.13^ | (3,998)^ | (81.6)^ |
| Fulham | 71% | 126%^ | 1.40 | 63,723 | (36.4)^ |
| Huddersfield Town** | 90%^ | 55% | 0.90 | (16,733)^ | 1.6 |
| Hull City | 50% | 82%^ | 2.17 | (8,024)^ | (21.5)^ |
| Luton Town | 59% | 101%^ | 0.39^ | (5,706)^ | (2.5)^ |
| Middlesbrough | 45% | 106%^ | 0.03^ | (131,924)^ | n/a |
| Millwall | 49% | 120%^ | 0.02^ | (116,449)^ | (9.2)^ |
| Nottingham Forest | 41% | 197%^ | 0.05^ | (116,513)^ | (37.9)^ |
| Peterborough United** | 22% | 103%^ | 0.22^ | (13,304)^ | (9.2)^ |
| Preston North End | 58% | 178%^ | 0.06^ | (45,303)^ | (11.4)^ |
| Queens Park Rangers | 42% | 125%^ | 0.16^ | (41,540)^ | (22.7)^ |
| Reading | 50% | 150%^ | 0.03^ | (155,703)^ | (23.5)^ |
| Sheffield United** | 88%^ | 49% | 0.14^ | 2,501 | (9.9)^ |
| Stoke City | 67% | 209%^ | 0.66 | (29,697)^ | (35.1)^ |
| Swansea City | 46% | 137%^ | 1.55 | 8,405 | (17.9)^ |
| West Bromwich Albion | 79%^ | 65% | 0.57^ | 19,872 | (0.7)^ |
| LIMIT | 75% | 70% | 0.60 | 0 | 0 |
Table 5: 2022 EFL League One clubs
| Club | Current ratio | Equity (£000s) |
|---|---|---|
| Accrington Stanley | 0.32^ | 2,354 |
| AFC Wimbledon* | 1.03 | (793)^ |
| Bolton Wanderers | 0.42^ | 14,637 |
| Burton Albion | 0.60 | 4,459 |
| Cambridge United | 1.31 | 1,975 |
| Charlton Athletic | 0.28^ | (20,499)^ |
| Cheltenham Town | 2.54 | 2,103 |
| Crewe Alexandra | 0.46^ | (404)^ |
| Doncaster Rovers* | 0.95 | 654 |
| Fleetwood Town | 0.03^ | (24,867)^ |
| Gillingham** | 0.87 | 2,171 |
| Ipswich Town | 0.41^ | 5,105 |
| Lincoln City | 0.58^ | 2,439 |
| Milton Keynes Dons | 0.34^ | (8,756)^ |
| Morecambe | 0.64 | 5,815 |
| Oxford United | 0.10^ | (20,018)^ |
| Plymouth Argyle | 1.83 | 15,268 |
| Portsmouth | 0.80 | 17,172 |
| Rotherham United | 0.56^ | (2,207)^ |
| Sheffield Wednesday* | 0.96 | (58,191)^ |
| Shrewsbury Town | 1.95 | 14,669 |
| Sunderland | 0.26^ | (15,344)^ |
| Wigan Athletic | 0.48^ | 189 |
| Wycombe Wanderers | 0.46^ | (1,453)^ |
| LIMIT | 0.60 | 0 |
Table 6: 2022 EFL League Two clubs
| Club | Current ratio | Equity (£000s) |
|---|---|---|
| Barrow | 0.30^ | 1,836 |
| Bradford City | 0.75 | (1,113)^ |
| Bristol Rovers | 0.12^ | (5,329)^ |
| Carlisle United | 0.57^ | 5,401 |
| Colchester United | 1.66 | (30,393)^ |
| Crawley Town* | 0.71 | (445)^ |
| Exeter City | 2.40 | 5,610 |
| Forest Green Rovers | 1.12 | 3,662 |
| Harrogate Town | 0.14^ | (808)^ |
| Hartlepool United* | 1.52 | (2,716)^ |
| Leyton Orient | 1.20 | (10,571)^ |
| Mansfield Town** | 0.44^ | 135 |
| Newport County* | 2.80 | 838 |
| Northampton Town | 0.09^ | (4,683)^ |
| Oldham Athletic | 0.22^ | (3,521)^ |
| Port Vale | 0.20^ | (3,956)^ |
| Rochdale | 0.64 | 1,828 |
| Salford City | 1.21 | (18,523)^ |
| Scunthorpe United* | 0.68 | (2,369)^ |
| Stevenage | 1.47 | 1,739 |
| Sutton United | 0.22^ | 528 |
| Swindon Town | 0.28^ | (7,137)^ |
| Tranmere Rovers | 1.28 | 19,245 |
| Walsall | 0.25^ | 2,770 |
| LIMIT | 0.60 | 0 |
Table 7: 2022 National League clubs
| Club | Current ratio | Equity (£000s) |
|---|---|---|
| Aldershot Town | 0.21^ | (826)^ |
| Altrincham | 4.17 | 748 |
| Barnet | 0.15^ | 14,285 |
| Boreham Wood*** | 3.24 | 2,570 |
| Bromley*** | 0.22^ | 2,010 |
| Chesterfield | 0.34^ | 6,886 |
| Dagenham & Redbridge | 5.02 | 1,384 |
| Dover Athletic | 0.48^ | 1,139 |
| Eastleigh | 0.33^ | 2,605 |
| FC Halifax Town | 2.62 | (90)^ |
| Grimsby Town | 0.71 | (885)^ |
| King’s Lynn Town | 1.97 | (438)^ |
| Maidenhead United | 0.17^ | (1,497)^ |
| Notts County | 0.17^ | (10,749)^ |
| Solihull Moors* | 0.32^ | (4,008)^ |
| Southend United** | 0.09^ | (16,548)^ |
| Stockport County | 0.48^ | (211)^ |
| Torquay United | 0.36^ | (4,147)^ |
| Wealdstone | 6.21 | 324 |
| Weymouth | 0.16^ | 326 |
| Woking | 0.64 | (4,363)^ |
| Wrexham | 0.48^ | (821)^ |
| Yeovil Town* | 1.01 | 1,261 |
| LIMIT | 0.60 | 0 |
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These are based on club financial statements obtained from Companies House, some of which are unaudited. ↩
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Cox, A., & Philippou, C. Measuring the resilience of English Premier League clubs to economic recessions. Soccer & Society 2022: volume 23, pages 482-499. ↩
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UEFA (2022) UEFA Club Licensing and Financial Sustainability (Edition 2022). ↩
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Evans, R., Walters, G., and Hamil, S. (2022) Gambling in professional sport: the enabling role of “regulatory legitimacy” ↩
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Maguire, K., & Philippou, C. (2022) Assessing the Financial Sustainability of Football (PDF, 1.2 MB) ↩
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Evans, R., Walters, G., & Tacon, R. (2019). Assessing the effectiveness of financial regulation in the English Football League: “The dog that didn’t bark.” Accounting, Auditing & Accountability Journal, 32(7), 1876–1897. ↩
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Defined in the UEFA Club Licensing and Financial Fair Play Regulations as net debt which offsets bank overdrafts, bank and other loans, related-party loans and payables and transfer payables against transfer receivables and cash balances. ↩
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UEFA Club Licensing Benchmarking Report - Financial Year 2018 ↩
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Metric used as defined in Maguire, K. (2021) The Price of Football, 2nd edition, p137. ↩
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Maguire K: The Price of Football 2nd Edition (2021) page 181 ↩