Amid all the global turbulence over the last week, for those of us who love English football, there were dire warnings regarding the structural fault lines that are becoming ever more apparent within the game.
While the Premier League is rightly lauded as a huge success story for English sport, the rest of football is clearly seeing the unintended consequences of the top flight’s success.
In the Championship, the rung below the Premier League, the teams and the fans are experiencing yet another very exciting season. Of the 24 teams in the league, with eight matches to play, five are realistically battling for the top two automatic promotion places, up to 10 teams could make it into the play offs, and six are facing the jeopardy of relegation. This competitiveness makes fans regularly claim that the league is ‘the best in football’, but unfortunately that is not being seen in the Board rooms.
Last December Hull City, currently 5th in the league and with strong average crowd attendances of 21,000, reported a £41.7 million loss in the previous financial year. Even more alarming, high flying Coventry City, who are odds-on favourites to win promotion in May, published its financial results in January and posted a £21.6 million loss.
Last week it was the turn of Portsmouth to follow the worrying trend, by posting a £4.6 million loss. While modest in comparison to others, it demonstrates the parlous state that the division is in and the Portsmouth Chairman Michael Eisner was not shy about coming forward and issuing severe warnings to football’s administrators and regulators.
Eisner stated: “There are dark clouds hovering over the English football pyramid and it seems to me there could be a real collapse where only the Premier League survives.”
The backdrop to this emotive statement is the fact that every single club in the Championship lost money last year, with the combined operating loss of the 24 teams coming in at £411million. Perhaps surprisingly, the bad financial results are not down to poor trading – Portsmouth almost doubled its turnover to £24.5 million. Having won promotion to the Championship last season, the growth in revenue was simply used up by an increased squad cost as the club fights to stay in the league. And that fight, along with most other clubs, is being financed directly by club owners, desperate to keep the dream of getting to the promised land of the Premier League alive.
Since taking over Portsmouth in 2017, the Eisner family has put £54m into the club. That is a staggering amount of money to put into a club to keep it afloat, especially when you consider how established the club is having been formed in 1898 and with a loyal fan base that covers generations.
The issue for second tier football is what happens when owners decide to turn their back on the goal of getting promoted and stop bailing the clubs out. At the moment, there seems to be a fear among owners that if they don’t keep up then other clubs will capitalise, and their own club will drop from being a contender to being an also-ran – and with it the perceived value of the investment also plummets. Two good current examples of this are Sheffield Wednesday and Leicester City, both facing the prospect of relegation to the third tier, despite their historic achievements in the sport. Some will argue that for every Leicester and Wednesday there will be a Wrexham or Birmingham, with owners investing huge amounts in their clubs to achieve success.
Will the football bubble burst? Some commentators think it is inevitable as the gap between the mega-rich Premier League and the struggling Championship broadens. While all clubs dream of the possibility of reaching the Premier League, the reality is that most will not make it, and the ability to absorb significant losses every season is not sustainable.
It does look as though the reality of the situation is starting to dawn on the Championship clubs, and common sense may yet prevail. The clubs are due to vote on new salary cost rules which, if passed, will come into effect next season. These would effectively restrict a club’s spending on players, managers and agent’s fees to 85% of its revenue. A further proposal is to limit the investment that club owners can make to £33m over three seasons, with a ceiling of £15m in any one season.
On the face of it these seem very sensible and should stop the madness. But, as ever, the Premier League impacts all Championship activities – in this case relating to so called ‘parachute payments’. With the three teams relegated from the Premier League currently being given parachute payments of around £106m for the three seasons following their relegation, could the proposal to limit championship club’s investment create a further hurdle for clubs, like my own Swansea City, to ever compete in the top flight again?
With the 20 teams in the top flight and three teams receiving parachute payments, I can see a scenario that if the proposed new rules come into place, the Premier League quickly becomes the preserve of 23 clubs, permanently competing against each other in a completely different financial orbit. Those clubs that miss out will be resigned to competing for the accolade of ‘best of the rest’, or a very occasional unexpected play off success to enter footballing nirvana that the Premier League has become. The Championship clubs need to be careful what they wish for!
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David Little is a Partner at Bishop & Sewell in our expert Sports Law and Corporate & Commercial
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The above is accurate as at 26 March 2026.
The information above may be subject to change. The content of this note should not be considered legal advice, and each matter should be considered on a case-by-case basis.
