Posted on August 27, 2015
The Championship clubs have together racked up more than £1.1billion in debt, exclusive research compiled by Initiated revealed, highlighting the alarming state of some of the teams battling to reach the top of English football. The research includes figures from Yorkshire teams Huddersfield Town, Hull City, Leeds United, Rotherham United and Sheffield Wednesday.
The research, which analyzed the most recent financial accounts of the 24 clubs in the Championship this season, also found that total debt was almost double the division’s collective turnover.
Bolton Wanderers remain the side with the biggest debt pile of £182.1million – the vast majority of which is owed to Eddie Davies, a self-made millionaire thanks to making thermostats and kettle parts. Chairman Phil Gartside has previously described Davies’ endorsement as “humiliating”, but it’s no secret the businessman is now looking for an exit.
Other clubs that have run up significant net debt are Queens Park Rangers (£179.6m), Ipswich Town (£82.4m), Cardiff City (£81.1m) and Hull City (£64.8m). Only Preston North End is in a clean cash position thanks to owner Trevor Hemmings’ decision to wipe more than £34million from its balance sheet in the club’s latest accounts filed at Companies House.
The debt figure paints an alarming picture of how difficult many clubs are to adjust to life in the Championship after dropping out of the Premier League. Combined revenue totaled £646.4 million, with a significant portion coming from parachute payments to relegated clubs.
The parachute payments, designed to cushion the financial blow, currently total £60million over a four-year period. However, from 2016-17 payments will be made over three years instead of four, while clubs that are relegated after just one year in the Premier League will only qualify for two years of payments.
Despite the heavy indebtedness of the 24 Championship clubs – which averages £48.5m each – a recent report by insolvency specialist Begbies Traynor has revealed that Financial Fair Play (FFP) rules had an impact.
Its Red Flag Alert Football Distress Report says only three clubs out of 72 in the Championship and Leagues One and Two are suffering from “serious financial difficulties”. This is a 63% reduction in the number of football clubs in financial difficulty since the last survey in March 2014.
The Championship FFP rules were introduced in April 2012, setting limits for losses and penalties, including transfer embargoes for overspending. In November 2014, clubs agreed a new set of rules from 2016–17 under which finances will be monitored over three seasons in which a loss of £15million is allowed.
Pictured: Last season’s £120m Championship play-off final between Middlesbrough and Norwich
*Elsewhere in Yorkshire football news today, the Hollywood actor Russell Crowe has confirmed he will not buy Championship Leeds United side. It comes six months after the movie star, who appeared in Gladiatorasked his Twitter followers whether or not he should buy the club.
Insider’s full football financial report for the Championship will be released tomorrow, detailing each club’s ownership and current financial position. Click here to subscribe to Insider’s daily business newsletters.