Yahoo Finance Football takeovers a potential ‘lifeline’ as players’ wages squeeze sport’s finances
Foreign buyers are likely to circle UK football clubs, as rising players wages and increased debt levels combine with a week pound to encourage potential takeovers, according to an influential study of the sport’s finances.
A closely-watched survey of the English Football League from Begbies Traynor, the business recovery consultancy, found that almost half the EFL clubs nationally were showing signs of strained finances. It said potential bid interest, similar to this summer’s £4.5 billion takeover of Chelsea, could be a “lifeline” for some clubs, where increases to players wages were sharp enough to “threaten the existence of many clubs”.
The rising wages, combined with increasing levels of debt, come just as the spending power of supporters is hit by the cost of living crisis, especially in London, where prices are already higher compared with the rest of the country. Clubs depending more on traditional revenue streams from matchday fans could face deeper difficulties. London EFL teams -- from Queens Park Rangers and Millwall in the Championship to Leyton Orient in League Two –- also face the prospect of disruption to crowds from planned Tube strikes, as well as the impact of national walk-outs by rail workers.
“The squeeze that keeps clubs from building a war chest and cash flow resilience offers an opportunity to overseas investors, especially when Brexit has left the pound so discounted,” said Begbies Traynor partner Julie Palmer.
“For some clubs that’s proving to be a welcome lifeline that prevents financial failure and the legacy of points deductions. Player wages are rising so much faster than the rate at which ordinary fans’ income is climbing. It’s a more prominent trend in the top tier of English football, but these trends are seen in lower divisions too.”
The survey, which has been carried out since 2012, found that 32 of the 72 clubs in the EFL, from the Championship to Division Two, were showing signs of financial distress. The average salary of a Premier League player has almost doubled since the survey started to £3.1m.
A weaker pound was seen as an important factor in this summer’s sale of Chelsea to a consortium led by Todd Boehly, the American sports entrepreneur, in a deal which followed the sanctions targeted on former owner Roman Abramovich after Russia’s invasion of Ukraine.
