Championship and League One clubs in financial trouble; a third of owners want to sell clubs

James McAllister the captain of Yeovil Town lifts the trophy as his team celebrate victory during the NPower League One play off final between Brentford and Yeovil Town at Wembley Stadium on May 19, 2013 in London, England

Championship and League One clubs are facing trouble to keep afloat as most of their funding is only being received through benefactors of the club, thereby causing a third of the owners to contemplate the option of selling.

A survey conducted by accountancy group BDO on club finance directors shows that 65% of the clubs were dependent solely on the owners or principal shareholders to offset the operating losses. This figure has gone up from 58% which was the statistic last year. Figures are much higher in the Championship, going up to 94%.

The research further shows that 36% of club owners in the League One and about 28% of owners in the Championship are considering either a partial or a full exit over the next year or year and a half.

Due to large parachute payments being available to clubs relegated from the Premier league, there is the possibility of the development of a “Premier League Two by stealth,” felt Trevor Birch, a partner in the BDO group.

“There’s an increasing polarisation – the Premier League is almost a different game. In League One and League Two there is no hope for them except supporters trying to protect their club from oblivion and saying they’ll settle for no fireworks and some financial stability,” said Birch, as reported by The Guardian.

The reports have suggested that 83% of the Finance Directors in the Premier League were financially stable as compared to only 14% in the League One.

“Intense competition for a limited number of promotion places has pushed the majority of Championship and League One clubs into the red and created a dependency on principal shareholders bankrolling trading shortfalls,” said Birch, who has also been chief executive at Chelsea, Everton and Leeds United.

Unfortunately the positive strengths of the Premier League were having a downward effect on the clubs lower down the pyramid.

The survey has also indicated that with the introduction of financial fair play by UEFA, there are expectations that most clubs will spend less.

About 17% of the club will be spending more on wages while 56% of them are expected to spend less, while only 12% may make an increase in their transfer spending over the season.

Relegation clauses for players in the Premier League has been increased from 56% to 75%, in the time frame of just a year.

Read BDO’s full survey report here – Finally playing fair? Clubs start getting to grips with new financial regulations.