Race for Premier League riches causing chaos to Championship finances

Pulse News Agency International by AFP

May 26, 2019 12:23 PM

Aston Villa and Derby County face off for the biggest bounty in world football on Monday with the riches of the Premier League guaranteeing around £200 million ($253 million) for the winner of the Championship play-off final.

Aston Villa posted huge financial losses after defeat in last season's Championship play-off final to Fulham

However, the lure of a Premier League windfall is seeing more clubs in England's second tier and further down the league ladder gambling by running at huge losses in the hope of making it to the moneybags top flight.

The Premier League released figures for the near £2.5 billion ($3.2 billion) distribution of television rights for the recently completed season on Thursday.

Despite winning just three league games all season, rock-bottom Huddersfield received £96.9 million, while relegated Fulham and Cardiff made more than £100 million.

Villa or Derby will be able on similar television income next season, plus £75 million worth of parachute payments should they go straight back down, and additional revenue from sponsors and ticket sales.

Stay in the Premier League for just one season and they can expect to make around £300 million.

"There is a new breed of ambitious domestic and overseas owners who see the bright lights of the Premier League no matter the cost," Kieran Maguire, a lecturer in football finance at the University of Liverpool, told AFP.

However, while the top end of the game thrives, clubs lower down the food chain are struggling badly.

The 20 Premier League clubs made a profit of £304 million in 2017/18, led by £100 million-plus surpluses for this season's Champions League finalists Liverpool and Tottenham.

In the same season, the 72 teams in the three divisions below in the English Football League (EFL) made a combined loss of £388 million.

From 2014/15 to 2017/18, the 12 clubs promoted to the Premier League averaged an operating loss of £30 million in the year in which they were promoted.

Parachute payments

Rules governing the losses clubs can make, were "blown out of the water", according to Maguire, by booming parachute payments for clubs relegated from the Premier League.

In order to prevent those clubs who came down from gaining a huge financial advantage, teams are now allowed to make losses of up to £39 million over three years.

However, parachute payments are still seen as what Maguire describes as a "necessary evil".

"Parachute payments help recruitment of players to the Premier League for the other 14 (outside the top six) ahead of overseas clubs in other leagues across Europe to enhance the overall quality of the Premier League," added Maguire.

As clubs further down the ladder spend beyond their means, though, harsh consequences are already being felt.

Bolton were unable to fulfil their fixtures at end the current Championship campaign as players went on strike in protest at unpaid wages.

The Wanderers will start next season with a 12-point deduction in League One after slipping into administration and a food bank has been set up for non-playing staff who have gone without pay.

Birmingham were docked nine points this season for breaching profitability and sustainability rules by losing nearly £50 million between 2015 and 2018.

Bury, who were promoted to League One last month, face a winding-up order over an unpaid tax debt of £277,000, while the players' wages have not been paid in 12 weeks.

And the financial future for whoever loses Monday's Wembley final is also bleak.

Middlesbrough chairman Steve Gibson has questioned how both clubs continue to live within the EFL's profitability and sustainability rules.

Villa posted a £36 million loss after defeat in last season's play-off final to Fulham.

Derby announced pre-tax profits of £14.6 million last month, but only after selling the club's Pride Park stadium to owner Mel Morris for £80 million and then leasing it back.

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Derby are desperate for promotion in Frank Lampard's first season in charge AFP

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Pulse News Agency International by AFP