Planet Swans ArchivesDeloitte Sports Business in their latest review of football finance make this statement based around the increased interest in the competition as well as rising attendances at the matches themselves.
And, despite the fact that those who come down from the Premiership having massive payments, the report suggests that the advantages of these are outweighed by the unpredictability of the competition itself. The unpredictability that saw Stoke and Hull promoted last season and Bristol City missing out at the final hurdle – all three clubs who didn't have the benefits of these parachute payments.
However, the cost of chasing the Premiership dream saw operating losses at the level increase for a third successive year although the gap in operating performances between the average Premiership and Championship club decreased from £9.1m to £7.9m
However, the total losses across the Championship clubs during 2006/7 increased from £53m to £75m (and average of over £3m per club) Half of this increase was due to a growth in wage levels of £11m taking the wages/turnover ratio to 79 – up from 72% as the pressure of securing promotion increased to reduce these financial pressures.
The 24 Championship clubs at the end of 2006/7 had an aggregate net debt of £289m whilst ten clubs filed accounts showing a debt of £10m or more. The only realistic way of a Championship club significantly reducing that kind of debt in the short to medium term was via promotion to the Premiership or some funding injection from it's owner or a new owner itself.
West Brom were held up as a good example for clubs top follow. Promotions in 2002 and 2004 were followed by relegations in 2003 and 2006 but Deloitte's Dan Jones said that the club had used the windfall money to invest in the infastructure itself and that with their latest promotion they now have a much stronger financial base from which to work. The report also said that clubs that just go out and spend the windfall money with no commercial strategy can end up coming unstuck.
