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A Growing Gap: Analysing the Championship’s new financial realities

Richard Pike looks at the finances of the English Football League, specifically the Championship’s new financial realities.

As we approach the quarter way point in the 2017-18 English Football League Championship, the evidence shows the division is resembling more and more a Premier League 2 with every passing season.

The Football League Championship, English football’s second tier, is often described by fans across England as better than the English Premier League when it comes to entertainment and unpredictability of the division. If one looks at some of the teams in the Championship and their historic performances and periods of success throughout the years, sides such as Leeds United, Nottingham Forest and Aston Villa, one would be hard-pressed to find a second tier league in any other country in world football with as much prestige. The league’s current standing is reflected in the impressive statistic that the Championship was the 4th highest league in Europe when it came to average attendance for the 2014-15 season.

Officially, the Championship is part of the English Football League alongside third and fourth tiers Leagues One and Two. It is widely described alongside those divisions as being far away from the riches of the Premier League. To illustrate this point, the record-breaking domestic three year valuation of the Premier League TV rights deal between 2016-2019 was valued at GBP 5.13 billion. This stands in stark contrast to the recently signed new 5-year GBP 600 million deal for live coverage of English Football League games between 2019 and 2024. This massive divide between the Premier League and the Football League in terms of TV revenue led the sports columnist Alan Nixon in British newspaper The Daily Mirror to label the financial gulf as “the gap between the Premier League Have Lots and football’s Have Nots”

It is evidently clear reading the aforementioned figures to see that, indeed a huge gulf has emerged between the top flight and tiers 2,3 and 4 in the EFL pyramid. However, if you scratch a little deeper and have been watching matches and following the 2017-18 Championship results this season, tell-tale signs have emerged of another large gap in the EFL pyramid, between the Championship and Leagues One and Two.

The first of these is a 10-year future income projection between the years 2017-2027 into how the current 5-year television deal for the EFL, the deal to follow it, and solidarity payments provided by the Premier League to the rest of the Football League will be divided up between each of the 72 Football League clubs. These payments rely on the abilities of credit card processing for European companies, and for those companies being open to UK citizens to buy tickets, merchandise and other options. The individual conducting this study is the chairman of League Two club Accrington Stanley, Andy Holt. The results of Mr Holt’s study might be an estimate, but they make for particularly bleak viewing if you are a fan of a League One or Two club. Holt’s projection showed that by 2027, each club in the Championship will be receiving an average of GBP 13 million per season in income from the aforementioned sources, an increase of GBP 6 million on the estimated GBP 7 million each currently receives.

By contrast, over the same ten year period, Holt estimates that League One clubs will see an increase of only GBP 0.25 million in income per season, from GBP 1.75 million to GBP 2 million. League Two clubs will see only the same GBP 0.25 million income increase from GBP 1.5 million to GBP 1.75 million. In his study, Holt also alluded to how the Premier League solidarity payments to Football League clubs from its huge TV deal are set to be distributed. Holt estimates that of the solidarity payments, 80 per cent will go to Championship clubs with League One clubs getting 12 per cent and League Two clubs getting just 8 per cent. For the second tell-tale sign into how the gap is now beginning to emerge between the Championship and the rest of the Football League, one only has to look at the current standings of one club in the 2017-18 Championship so far, Bolton Wanderers.

Last season, under the guidance of manager Phil Parkinson, who famously led then 4th tier club Bradford City to the English League Cup final in the 2012-13 season, Bolton, after just one season in League One after their relegation to English football’s third tier in 2015/16 returned to the Championship by virtue of a second place finish. However, after having returned to the second tier, a bleak reality has dawned on Bolton; after 11 games out of 46, the club currently sits rock bottom, with just two points. Nine defeats have been suffered in that time frame, one of which was a 4-0 demolition by Hull City, a recently relegated Premier League club currently beset with fan discontent and an exodus of top players. Bolton are by League One standards a big club; the population of the town is around 130,000, they have a good-sized stadium and until the 2011-12 season were a Premier League club. So far, though, the club are struggling to make the step up back to the Championship; avoiding relegation back down to League One is looking a tough ask as they currently sit 7 points from safety.

Bolton and Sheffield United – Same Division, Different Levels of Potential

People understandably may point to another newly promoted club to the Championship, last season’s League One champions Sheffield United to refute Bolton’s difficulties. The Blades have so far surpassed expectations and are currently sitting an impressive third in the standings. However, it is important to understand that a comparison between Sheffield United and Bolton shows huge gaps between the two clubs in terms of foundations and infrastructure. Sheffield United might be sharing the city of Sheffield with their fierce rivals Sheffield Wednesday, however, with a population of 575,400, Sheffield has more than 4 times the population of Bolton and a more than sufficient population to sustain two Championship football clubs, as both sides have stadium capacities in excess of 30,000.

Another significant comparison point between both clubs is their ownership and financial status. As recently as the 2015-16 season, Bolton were carrying GBP 172.9 million in debt, the majority of it accrued as a result of years of fighting against the odds in the Premier League. Under Sam Allardyce, who twice achieved UEFA Cup/Europa League qualification as Bolton manager, this was a high water mark for the club given their resources compared to other top flight clubs.

Prior to the conclusion of the 2015-16 season, Bolton were taken over by the Silver Shield Consortium, a consortium led by their former striker Dean Holdsworth and Ken Anderson. As a result of the takeover agreement, former owner Eddie Davies, agreed to write off the GBP 172.9 million in debt, all of which was owed to him. However, whilst the huge debt mountain may have been cleared, finding enough funding to remain competitive at a high level has proven a monumental challenge. Bolton’s most recent accounts showed a loss of GBP 6.7 million for the financial year ending 30th June 2016, a rather uncomfortable figure after just one season under new ownership.

Compare this to Sheffield United, who in September 2013, when the club were languishing in 17th place in League One, saw 50 per cent of their club acquired by Prince Abdullah bin Mossad bin Abdulaziz al-Saud, of the royal family of Saudi Arabia. The wealth of the prince’s family is an estimated GBP 12 billion, which gives the Blades significant spending power to establish themselves in the Championship and possibly even win promotion to the Premier League in the non-too-distant future.

Needless to say, Sheffield United being based in a city with a large population and having a stadium capacity of 32,702 seats was a major pull for investors either from the UK or overseas. One look at the Championship table so far after 11 games of the current season highlights the huge difficulty and challenge clubs based in towns, as opposed to cities, now face in trying to compete. Alongside Bolton who are bottom of the Championship, Burton (population 72,299) are in 21st position out of 24, Reading (population 162,700) are in 20th position out of 24 and Barnsley (population 91,297) are 18th out of 24.

Above Barnsley in 18th place are only 3 other clubs who are based in towns, Middlesbrough who currently stand in 11th place, Ipswich Town, who currently stand in 8th place and Preston North End who currently stand an impressive 6th place. The rest of the Championship is comprised of member clubs who are either one of many in a huge city like London (Queens Park Rangers, Millwall, Fulham and Brentford), mid to large size cities with 2 big clubs like Birmingham (Aston Villa and Birmingham City) and Sheffield (Wednesday and United) or mid-sized cities with just one large club located there (Derby, Wolverhampton, Leeds, Cardiff).

Comparing the above with the turn of the millennium, the 1999-00 Championship had a very different look about it in this regard, evidence for this development being a relatively recent one. That season, town clubs were a plentiful sight, they included Huddersfield Town (now in the Premier League), Barnsley, Ipswich and Bolton (all in the Championship currently) Blackburn Rovers, Walsall and Gillingham (now in League One), Crewe Alexandra, Grimsby Town and Swindon Town (now in League Two), Tranmere Rovers (now in the National League, English football’s 5th tier) and Stockport County (now astonishingly in the National League North, English football’s 6th tier).

Spain and Italy – Progression is not as much of a Population Factor

The composition of clubs in the Championship now increasingly resembles that of the Premier League. There are currently only 4 clubs out of 20 based in towns in the Premier League: Watford, Huddersfield, Burnley and Bournemouth. In the Championship, there are only 7 clubs out of 24 who are based in towns. In the aforementioned 1999-00 season, the Championship was comprised of 12 town clubs, half of its membership. It is also worth noting that the number of town-based clubs in the current season in League One and League Two comprise of 15 clubs in each league. Clearly, the figures above show the domination of city-based clubs in the top two tiers of English football. That said, is this is a solely English phenomenon? Is the situation seen developing above mirrored in other large European leagues?

To create a case study, an examination of the population of the cities with teams inthe top two divisions in Spain, Italy and England was undertaken. The results were staggering; the English Premier League is represented by 14 different cities/towns and an average population of the place per club comes to 878,485. The Championship is represented by 18 different cities/towns/metropolitan areas and the average population of the place per club comes to 325,091. In Spain, La Liga was represented by 16 cities/towns/metropolitan areas and had an average population of 566,353, whereas the Segunda was represented by 19 towns/cities/metropolitan areas and had an average population of 232,924, over 100,000 inhabitants per place less than in England’s second tier. In Italy’s Serie A, 15 different cities/towns and metropolitan areas are represented with an average population of 560,268. In Serie B, 22 different places are represented, meaning that every one of Serie B’s sides are located in different places and the average population was just 139,897, nearly 200,000 inhabitants per place less than in English football’s second tier.

The criteria of this analysis were such that for each of the 6 leagues investigated, I counted only the size of cities/towns and not the size of metropolitan areas, which can include numerous districts and satellite cities/towns. Furthermore, I also discounted including the population of London and the population of Madrid in the average for the Championship and Segunda Division respectively as there are club(s) based in both London and Madrid in the first and second tier of the English and Spanish league system. Had I done, given London’s huge population of 8,787,892 in just the city itself, the results would have shown an even bigger gap than the just over 100,000 aforementioned. It is also important to acknowledge the populations of the 3 countries involved, England (54,786,300), Spain (46,468,102) and Italy (60,589,445) and that in each, the definition of a place as either a city or a town is different. For example, Girona, whose local team is currently in the Spanish La Liga has a population of just 97,586 is classified as a city, whereas in England, it is unlikely many places with a population that size would be classified as cities.

Nonetheless, my investigation lead me to the conclusion that population is nowhere near as much a factor in whether or not your club can reach the top 2 divisions in your countries’ footballing pyramid in Spain and especially Italy compared to England. For example, Burnley and Burton have the smallest population of all the places to currently have an English Premier League and English Championship team with populations of 73,021 and 72,299 inhabitants respectively. Compare this to Spain where Eibar and Soria (where CD Numancia are based) are the smallest places to have La Liga and Segunda Division clubs with 27,439 and 39,171 inhabitants respectively and Italy where Sassuolo and Cittadella are the smallest places to have Serie A and Serie B clubs with 40,780 and 20,025 inhabitants respectively. Amongst La Liga clubs, Vila-real (home of Villarreal CF) with 51,367 inhabitants alongside Eibar has a population lower than Burnley, the lowest population amongst Premier League clubs. In Serie A, alongside Sassuolo, Benevento (60,169) and Crotone (62,187) have lower populations than Burnley. If we spread down to each country’s second tier, in Spain, there are 2 places, the aforementioned Soria and Huesca (52,282) with lower populations than Burton, the lowest populated place in the English Championship. In the Italian second tier, there are 8 places alongside the aforementioned Cittadella, Frosinone (46,529), Empoli (48,004), Carpi (70,644), Avellino (55,448), Cremona (71,657), Chiavari (27,683), Ascoli Piceno (49,519) and Vercelli (46,552) with a smaller population than Burton.

Barnsley – A Sensibly Managed Club, yet constantly facing a fight for Championship Survival

As highlighted earlier in the article, good management, good scouting and good recruitment previously could enable a club to not just be able to reach the Championship, but also finish in the upper echelons of the table and potentially even challenge for promotion to the Premier League. One example back in the late 1990’s were Barnsley FC. The South Yorkshire club played in the 1997-98 Premier League, the first time in the club’s history they had reached the top tier of English football after finishing in 2nd place in the 1996-97 Championship season. Barnsley only lasted one season in the top flight before relegation back to the Championship but in the aforementioned 1999-00 Championship season, the club just missed out on promotion back to the Premier League after losing in the Championship promotion play-offs to Ipswich. Back then, Barnsley’s population was lower than the current 91,297 that it is now, but they were a perfect example of a club overachieving, punching above their weight by reaching the Premier League for a season and being one of the better sides outside of the Premier League between the years 1996-2000.

Last season at one stage, Barnsley, after a long hiatus from the club’s glory days at the turn of the millennium looked like reviving their past glories and in January 2017, halfway through the 2017-18 Championship season sat in the top half and were outside contenders for a top 6 promotion play-off finish. However, Barnsley fell away from play-off contention post-January, finishing in a still very respectable 14th place, beyond their pre-season hope, when just survival would have sufficed for their fans. The reason for Barnsley falling away was that in the latter stages of the January transfer window, their squad was pillaged of 3 of its most talented playsers. Those 3 players in question were striker Sam Winnall, who signed for city club Sheffield Wednesday (owned by a Thai family who control the largest tinned tuna producing company in the world) for an undisclosed fee, right back James Bree and central midfielder and then captain Conor Hourihane who both signed for city club Aston Villa (owned by Chinese entrepreneur Dr Tony Xia and awash with a reported GBP 87 million in parachute payments for recently relegated Premier League clubs over the next 3 seasons should they fail to win back promotion to the Premier League in that timeframe. The fees for both Bree and Hourihane reportedly came to a combined GBP 6 million, which alongside the GBP 5.5 million reportedly received by the club from Swansea in the 2016-17 summer window for defender Alfie Mawson meant that Barnsley did at least receive significant financial reimbursement for their efforts in developing these players.

However, in the modern day era of football, generating money from developing players which results in high value sales is one thing, re-investing that money and being able to remain competitive is another thing entirely. Southampton are an example of a club who, like Barnsley, have proven good at generating funds via buying small and then selling big, however, continuing success for a model like this is dependent on continuously finding gems in the transfer market and through the academy. Very often it is impossible for a club to keep progressing and improving season-in, season-out under this method. Barnsley, who are 18th so far in the Championship this season, seem to be having this problem at present. Even if they were to suddenly climb the table and put themselves in play-off contention come January, the cash-rich city-based clubs will likely strip Barnsley of their prized assets once more.

This, in turn, means mid-season disruption in having to blood in new players, having to pay ever-increasing transfer fees and wages for these new players as selling clubs know a club like Barnsley suddenly has cash reserves and then hoping these signings turn out to be as good, if not better than the players sold. Simply put, a club like Barnsley hasn’t the finances of the clubs with parachute payments or those based in cities with large capacity grounds and wealthy benefactors. In essence, Barnsley’s chances of being a Premier League club once more are slim and all the above points to them constantly facing a battle to survive at Championship level, despite being a well-run club.

Town Clubs

Remaining competitive as a town club is still possible, but it requires great scouting and recruitment with luck and location playing just as important a part now as great management

The presence of town clubs in the top two divisions of the English footballing pyramid is still proof that should a club make good managerial appointments, recruit well when it comes to their playing squad and/or invest in their academy and reserve sides to eventually promote young players into their first team, it can still remain competitive. However, two factors which in the past were marginal when it came to a town club establishing itself in the upper echelons of the English pyramid are now just as important as good management and recruitment: luck and location.

As an example, consider the four current town clubs in the Premier League. In the case of Bournemouth, Eddie Howe has done a remarkable job at the club, firstly in getting the club promoted though the Football League to the Premier League and then being able to stabilise them with an impressive 9th place finish last season, just their second in the top tier of English football. However, the location factor played a vital part in Bournemouth’s rise, their south coast seaside base just 2 hours drive from London makes it an attractive location for investors willing to provide the club with finance to push onto the next level. This investor and finance was provided in the shape of Russian businessman, Maxim Demin in 2011.

Looking at Watford being able to rise to and be competitive in the Premier League, location was again an important factor, with the club being based just 20 minutes away from London by train. This location was able to attract the attention of Udinese’s owners, the Italian Pozzo family, who acquired the club in a takeover in June 2012. Udinese’s reputation for developing young talent is well known in Italian football circles and Watford’s near-London location, combined with the ability to attract several Udinese loanees at the start of the Pozzo’s ownership of Watford when they were in the Championship, played a big role in their eventual promotion to the Premier League in 2015.

In the case of both Burnley and Huddersfield, luck alongside good recruitment and management played a very important factor in their rise. Following their relegation from the Premier League in the 2009-10 season, Burnley, like all relegated Premier League clubs, were the recipients of 4 years of Premier League parachute payments given to relegated clubs to ease the massive gap in finance between the Premier League and Football League. The appointment of their current talented manager Sean Dyche in November 2012 occurred when Burnley were into the third year of their parachute payments, since the appointment of Dyche, Burnley have only looked upwards.

At the end of the 2013-14 season, the final season where the club were entitled to parachute payment money, Burnley won promotion back to the Premier League. If there was ever a case of perfect timing, this was it. Despite relegation from the Premier League once again in 2014-15, Burnley received another set of parachute payments and crucially, this enabled them to maintain a good squad in the Championship and to keep Dyche (who surprisingly did not seem to attract the attention of Premier League clubs). Burnley won promotion back to the top flight in 2015-16 and last season preserved their Premier League status.

Huddersfield, like Burnley have struck it lucky with an excellent managerial appointment in German David Wagner, who was appointed partway through the 2015-16 season. Like Dyche, in his first full season at Huddersfield, Wagner surprised and stunned all observers by leading Huddersfield to the Premier League via promotion through the playoffs with a modest budget and without help from parachute payments. However, there was an element of good luck to their promotion to the Premier League as the 2016-17 season was a year where two of the three pre-season promotion favourites, Aston Villa and Norwich City, who had been relegated from the previous season’s Premier League had poor seasons and finished outside of the play-offs and promotion race despite having big budgets as a result of parachute payments.

The success enjoyed by the 4 clubs above is proof that town clubs can still survive, if not thrive in the upper echelons of English football, however, the luck element that all clubs need to be successful 15-20 years ago was probably just a small component of a well-managed club achieving success. Now, a well-managed club needs just as much luck and circumstances falling in their favour as well as just good management. Another important point to acknowledge is well-run clubs also have to attempt to keep talented managers out of the clutches of larger clubs, a job certainly not made any easier nowadays by high levels of manager turnover across all levels of the English football pyramid. Location, particularly if you are a town club located in a sparsely populated area of the country with little competition for youth players for your academy, a fanbase to share fans around is an important factor to consider as it can make it easier to attract the necessary investment to keep your club competitive at the top level.


Throughout the history of football in England and overseas, the population of the city where your club is based and capacity of your club’s stadium have always been potential advantages when it comes to a club’s ability to progress up and sustain themselves in the football pyramid. However, this season has been the clearest indicator yet that city clubs with large stadium capacities have a huge advantage over smaller town clubs. One feels like a monster has been unleashed this season with some of the thrashings that the town-based members of the Championship have suffered already this season highlighting this growing gap between newly promoted clubs from League One such as Bolton and small-sized perpetually fighting relegation from the Championship clubs like Burton compared with relegated Premier League clubs and other big city established Championship level clubs such as Leeds, Derby and Nottingham Forest.

Based on all the above factors, the Championship resembles more a “Premier League 2” with every season that passes and is a member division of the Football League in name only. With the size of the Premier League television deal growing yearly and the Premier League parachute payments for relegated clubs continuing to increase every three year cycle upon the announcement of a new Premier League TV deal, a desperate “dash to get a share of the cash” scenario has emerged among Championship clubs spending crazy sums to attempt to win promotion to the Premier League. According to a 2016 BBC Sport article, financial information gathered at the end of the 2015-16 Championship season saw 16 Championship clubs out of 24 spend either 100% or more of their turnover on player wages.

Even in some circumstances being a modest club based in a huge city like London is not advantageous as Championship side Brentford are finding out. So far in this season’s Championship, Brentford sit 19th out of 24 in the standings, were powerless to prevent 3 of their star players, Harlee Dean, Maxime Colin and Jota leaving to join Birmingham City, a side backed by wealthy Chinese owners. Brentford’s location in West London, mean that they are in competition locally with much historically larger clubs such as Chelsea, Queens Park Rangers and Fulham to attract supporters, not to mention other large London clubs such as Arsenal, Tottenham and West Ham. Being based in London can help a club attract sponsorship, but one suspects Brentford find it a much harder task to attract sponsors than the other aforementioned clubs.

Richard Pike

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