The frightening increase in losses in lower league football continues

It's not the big 6 you have to complain about. As I have said over and over again it's the yoyo clubs who are to blame. They hold a ridiculous amount of power in any Premier League vote and have consistently used this for their own self interest by keeping and increasing Parachute payments which do nothing but cause inflation down the leagues. Burnley is the perfect example of this, they spend just enough hoping they might squeeze out of the bottom 3 and get another year in the Premier League but they spend it on players who are PL relegation fodder but quality Championship players so if they go down they are well equipped to come back up and the parachute payments protect them from their wages being an issue plus they have a season of PL money anyway which gives them a good chance of bouncing right back. And even if they don't they have more seasons of being subsidised.

A few seasons back United and Liverpool put together project big picture which the rest of the big 6 (well it was more like the top 8 as they had more support) which not only would have helped make the Premier League better by preventing yoyo clubs derailing any vote like they regularly do now (The longer you had been in the league you would have got more weight on your vote) and would have done away with the current parachute payment setup but would have also put alot more Premier League money into English Football outside the PL and not just to the Championship but all the EFL and even beyond that. The EFL and National League were in support of it as were most of the clubs in both setups but again the yoyo clubs in the PL scuppered it and then were even able to increase parachute payments when they threatened to derail votes on increasing sub numbers and then also when it came to PSR regulations

 

If there is a single and fundamental reason for the losses incurred at every level of the football pyramid it's player's wages. Capping the playing budget in Lge 1 & 2 has helped a little but the bizarrely named FFP regime still allows owners to subsidise their clubs almost without restraint. There are still many clubs in the PL and the Championship whose playing budgets are 150% of their entire revenues. And that attitude is filtering down the leagues. There are plans being developed to limit playing budgets in the PL and the Championship to something around 80% of revenues which is a start but will take many years to introduce it fully. Unfortunately the new plan will still allow owners to subsidise their club almost without restraint and the idea of imposing limits on playing budgets linked to revenues will still be full of gaping holes. Without imposing additional limits on owners direct funding of their clubs or by tightening the losses which clubs are allowed to make, the plans will come to nothing. And the owners of clubs at all levels don't appear to support the idea of imposing limits on their own funding or financing of their clubs. It's madness. No other business sector could be run in such an unbusinesslike manner.

I'm hoping that the new independent football regulator will take a tougher line on this than the EPL, FA and EFL have done to date. But I have no doubt that he will be opposed by some vested interests with very deep pockets .. and access to the best sporting lawyers.

 

Top 6 wages and even the wages of all the solid premier league teams has very little impact on the likes of Burton though. It's the parachute payments that do more to cause imbalance.

The Premier League gives money to EFL clubs in 2 ways with both linked to broadcast revenue

1. Solidarity Payments - All EFL clubs get these (Even those getting Parachute payments). For the current season it's £5..2mill per club in the Championship. League 1 & League 2 get a reduced amount of
2. Parachute Payments - Clubs get these for 3 years after relegation with each year seeing a reduction. For this season the amounts were
   • Year 1 - Around £50mill
   • Year 2 - Around £42mill
   • Year 3 - Around £18mill

So basically in the Championship you can have as many as NINE clubs all getting parachute payments. When the Championships average revenue is £24mill the fact even year 3's are making 75% of everyone else revenue from Parachute payments and the Year 1 and 2 are getting nearly double it skews things. If you want to get promoted you have to spend at as close to their level as possible even when it's not viable.

Even the head of the EFL Rick Parry has spoken out about Parachute payments and how it hurts the EFL more than it helps. That money alone going into the solidarity payments instead plus way more extra ontop than the PL's last increase which was part of the project Big Picture proposal along with a fairer and deeper split would have improved things significantly.

 

That's incorrect for the PL. NO PL club spends over 100% of revenue on wages. There are a couple in the the 90% range and a buch in the 80% range but over half are below 70%. Villa are one of the worst and that's why they keep complaining about PSR forcing them to sell players.

And Premier League owners are limited on investment, at least on the playing side of things. They can put in £90mill across a 3 year period. If they want to put unlimited money in they have to put that money into 'infrastructure' which the club will benefit from long term even if the owners piss off.

 

Man Utd spend 56% of there revenue on wages. Lets say a wage cap was added and that slashed the wage bill to 35% all that ends up meaning initially is either

1. Owners make more money. Is it better owners make more than the players who bring people enjoyment?
2. Transfer fee's go up because clubs realise English clubs have even more money in the bank so exploit that

Longer term though it would kill English football. The MLS is a perfect example, the quality of their league has increased massively but it keeps getting kneecapped because players can go and sit on the bench in Europe (and not even always the top level) and make way more a week than they can under the MLS wage cap. We are also seeing now lots of young talent going to Saudi to play in their fake league (A league where half the club are owned by the Wealth Fund and the other half by the Ministry of Sport isn't a real league) because they get paid so much when it ruins their career. We would just see all our best players leeched away by Europe and we would struggle to buy the talent and the quality and appeal would drop which would cause more financial issues.

The only way you can get wages under control would be for a FIFA mandated world wide wage cap but that would be difficult to get an agreement on and implement.