Defying Gravity: The Ever-Expanding Football Universe

Annual Survey of Football Finance Directors

This article provides a synopsis and analysis of BDO’s 20th Annual Survey of Football Finance Directors (January 2026), which examines the financial realities of professional football across the Premier League, Football League (Championship, League One, League Two), and the Women’s Super League (WSL).

BDO (originally an acronym for Binder Dijker Otte) is the fifth-largest accounting and professional services network in the world.

The report, titled "Defying Gravity: The Ever-Expanding Football Universe," captures the fundamental paradox in professional football: record-breaking revenues and valuations coexisting with worsening financial health and systemic instability.

Key findings include:

• Revenue Growth: The Premier League achieved record revenues of £6.4B in 2024, supported by a new £6.7B domestic TV rights deal.

• Worsening Losses: Despite high revenues, over 90% of surveyed clubs expect to incur a pre-tax trading loss in 2025.

• Evolving Ownership: Ownership is increasingly dominated by international investors, particularly from the US, with over half of Premier League clubs now having a majority US shareholder.

• Regulatory Shift: The industry is entering a watershed era of regulation with the establishment of the Independent Football Regulator (IFR) and new domestic spending controls like the Squad Cost Ratio (SCR).

Key Concerns of Participants

Finance Directors and club leaders expressed significant anxieties regarding the sustainability of the current model:

• Declining Financial Health: More than a quarter of clubs flagged that their finances were "in need of attention," a worsening trend compared to previous years.

• Unsustainable Wage Inflation: Average wages in the Championship have reached 93% of revenue. Even in the Premier League, clubs placed 8th to 17th operate at an average wage-to-turnover ratio of 69%, leaving them highly vulnerable to revenue fluctuations.

• Reliance on External Funding: Nearly 90% of clubs stated they require shareholder funding in the near future to stay afloat.

• Regulatory Burden and Disparity: Participants fear that new SCR rules will solidify the advantage of elite clubs with high commercial revenues, making it impossible for smaller clubs to bridge the gap. Some expressed concern that the IFR would add "additional workload without any serious changes" to sustainability.

• Women’s Football Independence: 60% of women's teams remain dependent on inter-company loans and contributions from affiliated men's teams, raising concerns about their long-term viability if those men's teams face financial pressure.

Evidence of Systemic Risk

The document and supporting data highlight several factors that could trigger a "Big Crash" or contraction in the football ecosystem:

The "contagion mechanism" of transfer debt

A significant systemic risk is the "chain reaction" created by the transfer system. One club's payable is another club's receivable; if a systemically important club (like a "Big 6" member) faces a liquidity crisis and delays payments, it can force smaller creditor clubs into cash flow insolvency. Net transfer debt in the Premier League alone has reached record levels, exceeding £3B.

Mortgaged future income

Clubs are increasingly "plugging financial gaps" by seeking advancement on broadcasting distributions and transfer receivables. This "mortgaging of future income streams" reduces future liquidity and leaves clubs with no buffer if revenue growth plateaus.

The "Yo-Yo" financial abyss

The financial gap between leagues has created a "cliff edge." The average revenue for a relegated Premier League club is £135M, while a Championship club without parachute payments averages just £25M. This disparity forces promoted clubs to gamble on unsustainable wages to avoid relegation, often leading to "zombie clubs" that service historic debt rather than investing in growth.

Dependence on player trading profits

Clubs are inherently reliant on profits from player sales to stay within Profitability and Sustainability Rule (PSR) limits. If player transfer values were to collapse — potentially due to a "fire sale" in the summer of 2026 as clubs rush to comply with new SCR rules — the entire model of using player trading to offset losses would fail.

Multi-Club Ownership (MCO) risks

While MCOs spread risk for investors, they create systemic risks for the game's integrity. There is concern that MCOs navigate PSR rules by "moving costs or profits around their group" and that the "feeder club" model could discredit smaller European leagues by turning them into mere development pathways.

 

• Original Article published by Paul Quin @ https://theesk.org

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