EFL Championship Clubs: Financially Susceptible
Football Governance Bill received the Royal Assent in July 2025 thereby converting it into an Act which possibly can be described as a watershed moment for English football.
The Football Governance Act grants powers to a body that is independent from government or football authorities and is meant to safeguard the clubs from any financial storm while keeping the fans in mind. It will also help the EFL and Premier League reach an agreement over their funding differences. It is important because of the ever-widening financial chasm between the two leagues.
Only time will tell how this turns out is but once can only hope English football clubs, especially the ones in lower leagues get into a financially sustainable position.
Today’s blog is aimed at highlighting the financial status of a Championship club and the gap with Premier League to give you a perspective.
Revenue
On an average, a Championship club revenue is 1/7th of the Premier League club. In 2023/24, the aggerate revenue of Championship clubs was £958m, working out an average of £40m per club. This also includes the ‘parachute payments’ which was £230m in 23/24 received by five clubs. If we take that out, the Championship league revenue would be £550m with an average of £30m per club.
Over the last five-year period, the gap with Premier League (including parachute payments) has kept on increasing putting further strain on the Championship clubs. Parachute payments, a bone of contention for a long time, further adds a layer of complexity within the Championship league clubs.
As per Match Day Finance, in 2023/24, of the five clubs who received parachute payments totalling £230m, Leeds United, Leicester City and Southampton — all in their first year out of the Premier League — each received £48mn. Watford and Norwich City, in their second year, received £43m. However, in both the 24/25 and 25/26 seasons, only four clubs would receive parachute payments reducing the total payments by about £43mn.
The Football Governance Act includes the contentious issue of parachute payments for a final settlement. The regulator can now mediate a financial deal between the leagues, should they be unable to agree one themselves.
Wages and Profitability
EFL clubs are plagued with the perennial problem of high wages to revenue (W/R) ratio. In 23/24, only four clubs registered a less-than 70% W/R ratio, which is recommended by UEFA to ensure financial sustainability. Twelve clubs have registered a greater-than 100% W/R ratio and another three clubs in the borderline 90%+ range, with the highest three being:
– West Bromwich Albion – 154%
– Hull City – 143%
– Preston North End – 138%
Gross wages have increased by 26% over 22/23.
Over the last six years, the cumulative W/R ratio of Championship clubs has been on the very high end with four times over 100% range and last two years being in 90% range. This puts the league in a highly volatile situation. As per Matchday Finance, only four clubs reported a profit for the season, Southampton, Watford, Coventry and Blackburn, all as a result of profit from player sales.
Sadly, this reflects in the profitability section of the clubs. For the fourth consecutive year, Championship clubs’ operating losses have continued to be over £300mn each year. These losses are offset by funding input by owners and that causes further strain on Championship club ownership. As per Deloitte Annual Review of Football Finance UK, twelve Championship clubs received equity injections from owners totalling £554mn in 2023/24. Three clubs (Birmingham City, Leeds United and Middlesborough) made up 70% of this total, highlighting the willingness of some owners to fund clubs’ operations and player spending. It’s a cyclical pattern.
Therein lies the dilemma. The club either takes the gamble, which is more often than not very calculated, to lose money in order to remain competitive and fight for promotion which will bring in riches or stay within the league with limited wage spends and try to remain as sustainable as possible.
Investor Interest in Championship Clubs
In spite of the precarious financial position of the Championship clubs, they still seem to attract enough interest from institutional investors particularly from the USA. An investment in Premier League can still be understandable from the intent of optimizing commercial opportunities. In Championship and lower leagues though, the success of Wrexham has kind of led to romanticized aspirations with about 10 clubs having at least a partial US owner. The long-term goal for these ownership groups is to take a club into the Premier League and benefit from the valuation increase.
In 25/26 Championship, at least 18 clubs / 75% of league clubs have at least one private capital related shareholder and 9 clubs are part of the multi-club ownership (MCO). The interesting part? All of the private capital investment happened since 2022.
One module related to internationalisation strategy of clubs in our Master in Football Business Management program deals extensively and gives an in-depth understanding of the private capital involvement and the rise of MCO in modern football. You can read more about the programme here. The new session of the program starts in October 2025.
Conclusion
The Championship and league level football, with all its financial challenges, is the lifeline of English football and the fight to achieve promotion will continue. The revenue is not enough and the struggle will continue. Broadcast income is not expected to be substantial anytime soon. Does that mean, it’s time for the Championship clubs to create that brand beyond its local confines? With the international private capital investing in the clubs, it might be the right time to emphasize on marketing itself
The other contentious issue regarding parachute payments will hopefully be taken up and resolved soon by the revival of Independent Football Regulation bill by the newly elected government
We hope to see the old clubs bounce back to their rightful positions!
Graphs: SBI Barcelona
