The Independent Football Regulator has published its first report into the state of English football, and it has told the top league to agree to a deal to redistribute cash to those lower down. If it doesn’t, it will force them to do so.
The report’s statistics are sobering. Some 32 clubs could not survive a month if their owners pulled extra funding and 94 per cent of clubs in the top five divisions lost money last season. The regulator blames the widening gap between the Premier League and the rest: a Premier League club typically earns around nine times as much as a Championship side does, up from 2.7 times in 1992. This, the report says, has led to more reckless spending and mismanagement by clubs, resulting in financial crises. But are the report’s proposals really necessary, and, if so, will they actually work?
The collapse of Bury and Macclesfield Town in 2019 and 2020, respectively, spurred the creation of the regulator. Both clubs faced years of financial troubles before eventually running out of money. It spurred the then Tory government to start a fan-led review and then Keir Starmer to promise regulation in the 2024 Labour manifesto. It’s with that in mind that the regulator is seeking to stop clubs from going bust.
But are Bury and Macclesfield Town really gone? Both teams were quickly refounded, one under private ownership and the other fan-owned. Both have been promoted three times since, with Macclesfield narrowly missing out on promotion to the National League last season, which would have returned them to the division in which they spent much of the 1990s and 2010s. They even beat Premier League club Crystal Palace in the FA Cup in January.
Rather than let clubs decide what risks they’ll take to achieve success, the regulator aims to limit spending on players and wages, redistribute more money from the top of the football pyramid and make clubs more financially stable. In typical jargonese, it wants ‘effective financial distribution to enable the fluidity of the pyramid to be protected, so a well-run club can aspire to move up the divisions’. There is, however, a contradiction in the regulator’s proposal, one that it accepts. It acknowledges that a football club’s success is related to spending more than its competitors on players and wages, but then seeks to limit that spending.
Wanting ‘well-run clubs that can aspire to move up the divisions’ is a noble aim, but it already happens without the interference of a regulator. In the past decade, Brighton, Bournemouth and Brentford have gone from battling in League One to challenging near the top of the Premier League table. Brighton and Bournemouth are even playing in Europe.
The regulator may mean well, but its recommendations are contradictory
Further down the football pyramid, there are other examples of well-run clubs. Lincoln City made it from the National League to the Championship in nine years, while Luton went from non-league football in 2009 – following a points deduction for financial irregularities – to the Premier League in 2023. At the time, they were the poster boys for prudence, investing a large part of the windfall in their stadium and facilities, but they faltered on the pitch and are back in League One. Should they have been given even more money to stop their fall?
The report warns of relegated clubs running into financial problems because they suddenly have to pay Premier League wages on Championship income. The Premier League already gives around £200 million a year to relegated and recently relegated clubs in ‘parachute payments’ to soften the blow. It also gives a further £100 million in ‘solidarity payments’ to other clubs down the pyramid. The report complains that parachute payments distort the competitiveness of the Championship but simultaneously wants to redistribute more money. Even when it asked club owners what they would spend the extra money on, most claimed that they would want to spend the money on long-term infrastructure, but one club owner admitted that extra money would actually go on player salaries. So more money doled out to the lower leagues would simply exacerbate the overspending on wages that the report wants to combat.
Despite receiving substantial parachute payments, Wigan, Blackburn and Bolton all ended up in financial trouble. Bad owners were sinking clubs long before the disparity between the leagues started. Accrington Stanley (who are they?) went bust in the 1960s and a slew of other clubs faced difficulty in the 1970s and 1980s: Bristol City, Chelsea, Wolves (twice), Charlton, Derby, Swansea, Middlesbrough and Newport County. Most of these clubs survived and are doing fine, if not better.
The regulator may mean well, but its recommendations are contradictory. To stop smaller clubs from spending more money means bigger clubs with bigger facilities will always retain advantages over the minnows. A pyramid where some clubs cannot fail is a pyramid where other clubs cannot succeed.
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