The action in the Championship gets underway again this weekend with the deals in the boardroom set to be as important as the goals on the pitch.
For the first time Financial Fair Play (FFP) fines and transfer embargoes will be introduced to curb the huge debts being racked up by the league’s 24 sides – which stood at a whopping £947m at the end of the 2012/13 season.
Yorkshire’s clubs are far from the worst offenders but between the six of them they have totted-up a startling £208m worth of debt, primarily through spending on transfer fees and wages.
The map below shows each club’s debt, the size of the bubble equates to their relative debt.
Overspending is not a new phenomenon, however the scale of it is increasingly worrying for fans.
Collectively the 24 clubs posted losses of £349m just over the period of the 2012/13 season. Lancashire side Bolton were the worst offenders, clocking up a £50m loss following their relegation from the Premiership.
Barnsley, who escaped relegation in a final day showdown with Huddersfield, were among only four clubs to make a profit over the course of the campaign. Hull were Yorkshire’s biggest spenders over the course of the season, no doubt aiding their successful bid for promotion to the Premiership.
Middlesborough and Leeds added nearly £14m and £10m to their debts respectfully to enable a mid-table finish. Newly promoted duo Sheffield Wednesday and Huddersfield, who made losses around the £4m mark, both avoided relegation on the final day alongside Barnsley.
Those figures are broken down further below.
Hull’s £37.7m loss came despite the club still receiving a parachute payment of £5.8m following relegation from the Premiership in 2010. These payments have become increasingly controversial because they make it harder for existing Championship clubs to compete.
Leeds’ income was boosted considerably by generating £14.7m in commercial income over the course of the season, the highest in the Championship. Huddersfield relied on the sale of striker Jordan Rhodes for a fee of upto £8m to limit their losses.
One of the clearest indicators of the overspending in the Championship is this ‘% of turnover spent on wages table’.
As you can see three out of our six teams in Yorkshire passed the 100% turnover spent on wages threshold, meaning they spent more than their turnover in wages alone in 2012/13. Hull and Middlesbrough were the worst offenders, with both teams spending around one and a half times their turnover on wages for their players and staff during the season.
It is this kind of spending that left Hull reliant on their controversial owner Assem Allam, who has been involved in a long running dispute with fans over renaming the club Hull Tigers. Middlesborough and Huddersfield are financially supported by their long-term owners Steve Gibson and Dean Hoyle respectively.
Leeds United, who were reportedly losing £1m a month last season, were recently sold to Italian Massimo Cellino while Sheffield Wednesday are due to be taken over by Azerbaijani businessman Hafiz Mammadov.
Dan Jones, a partner at the Sports Business Group, believes this kind of overspending in the Championship is making clubs more reliant on their wealthy owners. He stated in the 2013 Deloitte Annual review of Football Finance, that “the combination of clubs adjusting to the impact of relegation from the Premier League and others aspiring to achieve promotion, has now delivered almost a decade of ever increasing operating losses [in the Championship]. Clubs continue to spend 30% more than they generate – a clearly unsustainable position without owner benefaction.”
The growing debts at Championship clubs have had one clear impact on fans – increased admissions charges. In October 2012 the BBC’s Price of Football survey revealed the cost of going to football had risen by 11.5% in the past 12 months, almost four times the rate of inflation.
Thankfully for fans inflation busting increased were avoided last season and the cost of Championship football still lags far behind that of going to watch most Premiership teams. However it isn’t hard to see why clubs are hiking their ticket prices whenever possible.
If you divided the debt of each of Yorkshire’s Championship clubs by their average home gate – including both home and away fans – three of our six teams would be left with a burden of more than £1,000 per fan with Middlesborough and Hull fans facing up to a bill of close to £5,000 a piece. Ouch!
To see the size of the debt per fan hover or click on each bubble.
Of course these latest financial figures are now 12 months out of date so we now know that not only did big-spending Hull City gain promotion to the Premiership but last season they survived and qualified for Europe by appearing in the FA Cup final.
At the other end of the spectrum, Barnsley, the only Yorkshire team to make a profit in the 2012/13 season, were relegated from the Championship last May and will this weekend be kicking-off their campaign in League One.
So worryingly the moral of the story appears to be the more you spend and the bigger risks you take, the more you will be rewarded. As Shaun Harvey, the Football League’s Chief Executive pointed out to the Guardian, clubs make the same money by playing one season in the Premiership – with its multi-billion pound broadcasting deal – than playing for 30 years in the Championship.
Against such a financial backdrop its unsurprising many of our teams are prepared to run up huge debts in the hope of success, but the reality is only three teams can go up and the rest are increasingly running the risk of going bust.
So however big the season is on the pitch, with soaring debts and tougher FFP sanctions kicking in it looks like it will be even more significant on the bank balances of our clubs.
Main Image: Liam Kyle/Flickr. Most financial data taken from Swiss Ramble football business blog.