EFL Clubs See Financial Distress Levels Rise

The lower leagues of the EFL are under increasing distress as Championship and Premier League clubs return to health, according to the latest Begbies Traynor Football Distress Survey.

According to the Football Distress Survey (up to 31 March), conducted by business recovery specialist Begbies Traynor since 2012, four of the 72 clubs (6%) in the English Football League are in financial distress.

This is double the number from a year ago, but there is a slight fall in the last six months.

Between 2021 and 2023 the report, which measures key signs of financial distress in the companies owning and operating professional clubs across English and Scottish leagues, showed the lowest levels of distress in its 12 years. This latest version shows a reversal of this trend, concentrated in the lower leagues.

Commenting on the findings, Julie Palmer, Partner at Begbies Traynor, said: “Improved governance and financial mismanagement penalties had been contributing to the lowest recorded levels of distress among professional football clubs in the last few years.

“But with the Premier League and Championship together estimated to generate 95% of the income in the game last year, the disparity is beginning to show.

“This disparity in distribution will surely be on the agenda for meetings with the incoming Independent Football Regulator. This data illustrates the knife-edge many clubs without the bigger TV deals to boost the club revenues are on.” 

In Scotland, the trend is mirrored with five clubs (12% of the total 42 clubs) from the lower leagues displaying early signs of financial distress – unchanged from 6 months ago, and up 67% since the year before.

Julie Palmer, added: “Upcoming employment and tax costs as well as squeezed consumer spending will be on the mind of these clubs. There is also the additional worry that lucrative cup replays – which have rescued or funded a promotion push in the past – are not on the cards this year due to fixture congestion.

“We could see the impact of these factors in the next six months if clubs don’t enhance or seek new revenue streams.

“The game benefits from a strong foundation of smaller clubs who can, with the right performance, migrate through promotion to the upper tiers.

“The Government’s new independent watchdog will be able to see, through data like this, and direct contact with clubs and boards that inequity could threaten some of the most historic and established clubs and their communities.”

“The revival of Wrexham from non-league status to the Championship has seemed like a fairy tale, but it has not been done without huge media deals to creatively generate additional revenues and good management. It is a fantastic story for the game here, but we need to ensure a spotlight is shone on the more typical, struggling lower league clubs before they are pushed over the brink.”