The football news this week has been dominated by the devastating ongoing saga with League One clubs Bolton Wanderers and Bury FC, with Bury being removed from the English Football League (EFL). Their plight has opened the debate regarding the current financial state of English football and whether more can be done to prevent this happening again.
Bolton and Bury FC are two historic clubs within the EFL, with Bolton founding members in 1888 and Bury joining six years later. After over 130 years in the EFL, their future’s appear bleak with Bury on the verge of liquidation and Bolton two weeks from the precipice. They are victims of financial mismanagement from dodgy owners who promise the world but deliver little.
The Premier League is lauded as the richest domestic league in the world, with TV contracts totaling £9.2b and exorbitant players transfers coming in every summer. Yet down below in the EFL this financial picture is far less rosy. Every year 24 teams in the Championship fight for entry into the promised land, with two automatic spots or by winning the play-off final, dubbed the richest game in football as the overused cliche goes.
This fight for promotion has led to a massive inflation of transfer fees and wages for players, which is now reaching an unhealthy level. Wolves paid F.C Porto £16m for Ruben Neves in their pursuit of promotion in 2017. The top 16 signings are over £10m, and all have come in the past five years. With these big signings come increasing wages also.
The latest financial figures from the 2017/18 season show that wages increased once again from £693m to £748m. The combined revenue for all 24 team is only £701m,showing that clubs are taking massive financial risks gambling their future in search of the Premier League. The clubs wage bill is only one cost of many and if this is over 100% of total revenue this is a massive problem for their long-term sustainability.
Clubs are now overly reliant on wealthy financial backers, however the EFL Owners’ and Directors’ test has come under scrutiny for its perceived lack of stringency. The problems at Bolton and Bury have come about thanks to bad owners like Ken Anderson at Bolton and Steve Dale at Bury being allowed to purchase them. Anderson passed the test despite being previously being banned from being a company director for eight years in 2005.
Dale is a mysterious businessman who bought Bury for £1 in December 2018 as they struggled with massive financial problems. The clubs only description of Dale was as “a very successful businessman”, this is despite 43 of the 51 companies ever associated with Dale being liquidated. The EFL has admitted that they didn’t follow the usual checks on him because of the dire financial situation the club was in. These loopholes have allowed dangerous men like Anderson and Dale to own football clubs when they shouldn’t have been anywhere near them.
The troubles at Bury and Bolton are cautionary tales for the rest of the EFL, with plenty of clubs struggling with finances. In the Championship the latest figures paint a bleak picture. The league is spending on average 115% of total revenue on wages, a practice that cannot continue without more clubs going bust. Birmingham City were the worst offenders at a colossal 202%, a massive figure that ultimately led to a nine-point deduction last season with losses of £48.8m in three years.
Other clubs that are in danger of massive losses include Reading (197%), Derby County (161%), Brentford (135%), Nottingham Forest (122%) and Preston (113%). Reading have spent a lot in recent seasons both on transfer fees and wages, and reported a £21m loss in 2018. They need promotion in the coming seasons or they’ll breach Financial Fair Play (FFP) rules and face the same problems as Birmingham.
Derby sold Pride Park to owner Mel Morris to avoid FFP penalties as the club was on the verge of making a loss of £40m. The club has a top eight wage bill and this will only increase with the arrival of Wayne Rooney in January 2020. The club have come so close to the Premier League in recent seasons, with the arrivals of Rooney and former Eredivisie winning manager Phillip Cocu a big statement of their intentions.
Nottingham Forest have spent lavishly since new owner Evangelos Marinakis took over in 2017, with marquee signings including Joao Carvalho for £13.5m and high profile managers. The club made a small loss of £5.6m last year, with the figures from this year will show which direction the club are heading in. Will they go all in for the Premier League or will the choose a more sustainable financial model?
Both Brentford and Preston are much more stable than the figures suggest, with both having low wage bills and have been reliant on player sales to balance the books in recent seasons. Their success in mounting play-off pushes in 2017/18 with wage bills that ranked fifth and fourth in the league respectively is a massive achievement. Both have also made big profits from the transfer market, with Brentford making £46.4m in the past three seasons. Preston have made £16.1m in that time frame.
It’s clear from this week that the EFL has to do more to monitor who can buy football clubs, and how they are being run. An independent body that would handle the Owners’ and Directors’ test would surely help with the decision making process, along with added checks to ensure people like Anderson are not allowed to buy clubs using high interest loans that will only make the situation worse in the long run.
The financial situation in the Championship is skewed every season with the advent of more relegated Premier League teams and their vast parachute payments. This is driving the competitive market up as teams have to spend more to keep up. This is leading to some reckless financial situations as more clubs will end up on the brink of financial ruin unless they drastically reduce spending, which then will inevitably lead to a decline in their performance on the pitch.
English football and especially the EFL are in a very important time right, with more needing to be done to avoid another potential Bury or Bolton from occurring. We’ve seen this week how these clubs are focal points for the community, it’s vital everything is done to avoid losing them. Let’s hope that the examples of Bury and Bolton shock the EFL into action. Finally, my thoughts go out to both the fans of Bury and Bolton at this difficult time as they struggle for survival.
Do you have any thoughts on this issue? Feel free to either comment below or find me on Twitter @JWjournalism. I also want to say a massive thank you for reading this article I really appreciate it!