One of Football’s Top Finance Analysts has warned that Championship clubs could go bust in the current financial climate with figures of a combined loss of £650million being recorded for 2018/19 as reported by The Mirror.
Kieran Maguire has collated figures which show that the Championship is one of the most affected football leagues and of the two clubs in the second tier of English football only Hull City who broke even and now relegated Rotherham United made a profit of £1million.
These latest numbers are a clear indication of the lengths and gambles that clubs are going to in order to try and reach the Premier League or to steer clear of relegation to League One.
“Anyone who has looked closely at the Championship in recent years will not be surprised,” said Maguire, a football finance expert from the University of Liverpool. “And it is vulnerable because a lot of the clubs are reliant on one individual – a club owner who has to cover these losses.”
“It only takes the owner’s main business to tip over to cause trouble – and obviously that can happen in these circumstances because no-one is making anything at the moment. It is a very precarious level at the best of times and it is relying upon wealthy individuals being able to transfer their wealth to the football club.”
“Anything that interferes with that chain of cash is a big problem. You might be wealthy but if that wealth is tied up in assets, tied up in property, for example, or in stocks and shares, it is hard to convert assets into cash at a time of crisis… which is clearly what we are in.”
Aston Villa recorded the biggest loss of £95million but did win promotion to the top flight, however had they not done so this indicates a huge gamble that may not have paid off and subsequently left the club in dire financial straits.
There has been a huge overspend in terms of wages and transfer fees and with the Coronavirus pandemic causing an even bigger strain on finances, this is the reason why the immediate future of these clubs is a real concern.