Self-regulation and deductions finally ‘put the brakes’ on football spending
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Recent high-profile points deductions and ongoing investigations into breaches of the Financial Fair Play (FFP) rules, together with the Premiership’s profitability and sustainability regulations (PSR), have contributed to the lowest recorded levels of distress in the 12 years of the report, which details key signs of financial distress in the companies that own and operate English and Scottish League clubs.
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Hide AdFor the first time since the data was recorded, there were fewer English Football League Clubs showing signs of distress than those in Scotland, where just three clubs (7%) are similarly indicating the early signs of financial distress, down by almost two thirds from a total of eight clubs a year ago.
A period of continued financial hardship, a lower value pound and a strong US dollar have made UK clubs an attractive investment opportunity for US investors in recent years, and that trend continues to be prevalent with more English clubs likely to see North American investment, or outright ownership, as high-profile clubs show success from overseas investment.
“The penalties for breaching regulations are now better understood, and with a few notable exceptions the Leagues are demonstrating swifter action that has a material impact on clubs’ crucial promotion and relegation,” commented Begbies Traynor partner Julie Palmer.
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Hide Ad“In terms of a comparison with the UK’s wider economy, which is facing the pressure of rising costs, wage inflation and lower consumer spending, the sport is in good shape, but obviously there are challenges around the huge gulf in revenues that remain between the Premier League and the lower divisions. As that gap widens, the temptations to risk everything on getting into the world’s highest profile league obviously increases, and we have seen clubs risk penalties this year.
“During the summer promoted clubs would normally be working hard to invest in their teams and get ready to compete again in the next campaign. But what is clear is that PSR has influenced the summer transfer activity as much as, if not even more than, last year, with the 30 June Premier League year end creating almost its own transfer window with the use of what looked like ‘swap’ deals to ensure PSR compliance.”
“In order to be a more effective deterrent, and to protect clubs who don’t break the rules from being unfairly disadvantaged, PSR decision making needs to be streamlined and penalties applied mid-season, rather than after promotion has been achieved, or relegation avoided.
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Hide Ad“Some high-profile clubs still need to sell in the coming year to stay within the rules, and while that’s not great for the fans who want new stars on the pitch, it is already having a steadying effect on what previously seemed to be ever escalating wages,” she added.
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