Championship clubs tighten belts on wage costs as figures drop

Second-tier clubs’ wages-to-revenue ratio fell to 94.5 per cent in 2022-23, down from 108 per cent in 2021-22 and a record high of 126 per cent the season before that.

Combined revenue among Championship clubs was up 10 per cent to £749million compared to the prior campaign, the Deloitte Annual Review of Football Finance found.

Approximately £200m of that revenue total was generated by five clubs in receipt of Premier League parachute payments, Deloitte said.

Despite the higher revenue figure, the Championship still registered operating losses of £316m, with no club in the division posting an operating profit before player trading.

Aggregate revenue across the three divisions of the EFL reached £1.1billion, with commercial revenue up 21 per cent in the Championship and matchday revenue up 17 per cent.

Tim Bridge, the lead partner in Deloitte’s Sports Business Group, said: “The Football League may have seen an uptick in revenues in 2022-23, but clubs across the EFL are still battling to manage cash requirements.

“Many clubs are propped up by owner funding as they aspire to promotion, but exiting the league at the wrong end exposes a club to instability. This makes a strategy for long-term stability critical, underpinned by appropriate support provided by the governing bodies.”

Championship clubs are working on how to enhance or replace their existing profitability and sustainability rules before the end of the year. Talks on a new financial settlement with the Premier League, which was set to come hand in hand with new financial controls for the Championship, have stalled.

Premier League clubs’ combined revenue exceeded £6bn for the first time in 2022-23, but pre-tax losses were up 14 per cent to £685m amid rising wage and transfer amortisation costs.

Everton and Nottingham Forest were docked a combined eight points last season in relation to breaching Premier League profitability and sustainability rules (PSR), which measure non-allowable losses.

The PSR will remain in place next season while new financial regulations are trialled in shadow form. The squad cost rules (SCR) will limit spending on items such as wages, agents and transfer amortisation fees to 85 per cent of revenue, while top-to-bottom anchoring (TBA) caps the amount any club can spend on squad-related costs at five times the forecast lowest central payment to a club in that season.

Clubs in the top five tiers of the English game also remain set to be subject to licensing conditions imposed by an independent regulator in the future, with the Conservatives, Labour and the Liberal Democrats all committed to creating a statutory body to protect the English professional game’s financial sustainability in their General Election manifestos.

Revenue across European football grew 16 per cent to 35.3bn euros (£29.9bn), with the average wages-to-revenue ratio falling across all of Europe’s ‘big five’ leagues.

Jenny Haskel, the insights and knowledge lead for Deloitte’s Sports Business Group, said unification on financial regulation among the sport’s stakeholders was vital for sustainable growth.

“Making sure that all stakeholders are aligned to an ambitious but overall strategy will be really important, as well as making sure that regulation is fit for purpose and that as we continue to see regulation evolve, that all stakeholders are considered,” Haskel told the PA news agency.

“Then hopefully we’ll start to see, as these financial metrics continue to fluctuate, growth in a positive way over the next few years.”