Championship challenge: Navigating English football's financial future

The financial health of English football is increasingly under scrutiny and Championship clubs are the greatest cause for consternation. The underlying football fundamentals of England’s second tier remain strong, providing the foundations to sustain and build domestic engagement and an incredible opportunity to grow global interest. It’s a competition with a wealth of authentic narrative about fans, communities, players and an increasingly multi-national mix of owners. It’s the landing point for relegated clubs to seek resurgence, the platform for some larger football communities seeking promotion after many years away from the top, and occasionally a dreamy wonderland for a smaller town club to punch above its weight.

The symptoms and health risks

Escalating player wage costs and agent fees drive persistent and growing levels of annual losses. Despite impressive revenue growth over the past 20 seasons (average annual growth of 6%), Championship clubs’ aggregate losses over the same period total £4.5 billion. These annual losses are being funded by a combination of owner injections through equity (£0.9 billion across the past 5 seasons) and soft loans, alongside more risky sources of cash from external lenders, player sales and, for the lucky few, promotion to the Premier League. These annual financial results and funding strategies yield a deteriorating balance sheet position, for which the latest published snapshot in 2025 reveals aggregate net debt of £1.4 billion and very few clubs with significant positive cash reserves.

This financial fragility fuels fans’ frustrations, the media’s portrayal of ‘clubs-in-crisis’, churn of ownership, regulatory interventions such as player transfer embargoes, complexities of legal disputes and, unfortunately, the occasional distress and uncertainty of an insolvency situation. For club owners, their personal reputation, well-being and financial health are at stake. For the competition overall, this uncomfortable off-pitch business narrative blurs the focus away from football.

The causes

Football’s innate competitiveness and passionate personal desire for triumph over others drives the intensity of talent recruitment and retention. Club owners seeking to satiate their fans’ appetite for success are simultaneously and collectively succumbing to the financial demands of players, managers and their agents. The financial prize of promotion to the Premier League, even when short lived, provides an added dimension which fuels clubs’ business behaviours, with these increasingly tending to prioritise shorter term goals.

Recognising the need for collective action and financial regulatory intervention, the Football League and its member clubs have devised a variety of antidotes in recent decades, influenced in the past by the Premier League’s somewhat short shrift financial regulatory methods. In the circumstances, the Football League has commendably battled to help mitigate some of the worst financial excesses over the past 20 years.

Remedies to deliver a healthier financial future

Our Annual Review of Football Finance has now monitored the financial health of clubs for 35 years and, whilst recognising there is no panacea for football’s financial problems, has recurringly promoted stronger governance and regulation to help strike a better balance between clubs’ costs and revenues.

The evolving, fiefdom-like regulatory landscape faced by the professional clubs across the top five divisions and in UEFA competitions will now also be shaped by Government legislation, and the ways in which this is implemented in practice by the leadership of the new Independent Football Regulator. The significant scale of supervisory resources (IFR’s headcount rapidly building up in 2026 towards triple figures) and legal powers of the Regulator, and the considerable reporting requirements for the clubs, enable a different style of future financial control. This is set to be a more prudential approach, focussed on forward-looking financial plans and requirements for clubs and their owners to have sufficient cash and liquid resources available to support the club’s future operations and guard against financial shocks.

Whether it comes through a negotiated New Deal or the Regulator’s backstop powers to intervene, there will be some future changes to the distribution of monies generated by the Premier League. Redistribution prerequisites include having effective financial controls for clubs to appropriately balance their costs and revenues, as well as including mechanisms that encourage investment for the long-term benefit of individual clubs and the game, in infrastructure (modern stadia and training facilities) and operational activities promoting youth player development and fan/community engagement. English football can also benefit from reducing the leakage of payments to agents and redirecting the savings responsibly. With almost £0.5 billion spent on these by Premier League clubs in 2025/26, which amounted to 105% of League One and Two clubs’ collective revenue in 2024/25, the impact could be transformational for the rest of the pyramid. However, an aligned effort across the wider football ecosystem will be required to mitigate a risk of talent flight.

The regulatory shift for Championship clubs effective from 2026/27, to Squad Cost Rules akin to those of the Premier League, signifies a closer regulatory and financial linkage between the top two tiers. Meanwhile, the tightening of the financial control rules for League One clubs will suit the business and finances of those wanting to operate at a sustainably lower level and with less reliance on owner funding, whilst retaining the opportunity to grow for clubs that want it. Stronger structuring of player contracts and compensation relative to a club’s competitions and revenue generation will facilitate compliance. Appropriately packaging and promoting the linkage between the top two tiers of English football could help boost future revenues.

Clubs will not suddenly become profit generating enterprises, but the amount of annual funding at each level of the game needs to be appropriately pitched in order to retain a strong population of supportive owners from the UK and around the world.

The health of the game will also be aided by future efforts to trend to a stable and coherent regulatory landscape for clubs and owners in the medium to long-term.

Regulations and those that write and enforce them should not be mistaken as the singular answer to the Championship’s financial problems. Primacy of roles will depend on the impacts of the new Regulator’s game plan and the response of the clubs and competitions within its remit.

This vision of a healthier financial future for English football will also need a collaborative multi-channel communications strategy to help build institutional trust amongst fans and communities. To cover tough topics with business, financial, accounting and legal facets, and also to better face the reality of football’s inevitable ebb and flow of on- and off-pitch results.