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NEW ARTICLE: Is it possible to "compete" outside the top flight and break even?

Reading the increasingly depressing stories that seem to appear weekly about the latest club in huge financial trouble and our own unnerving, yet inevitable, accounts is it possible for clubs nowdays to compete outside the Premiership?

Theoretically if every club outside the PL is skint there should be a natural correction where by every club stops paying silly wages beyond their means and let the market equalise and operate at a sustainable level where they break even if not turn a small profit.

Because the gulf is so vast and ever widening between the PL and the rest there seems to be a mentality of get there at all costs. For 3 teams that will pay off. For those that miss out it's damaging and can set you back years financially and as a result on the pitch where it matters.

Catch 22 of the cliche of needing to speculate to accumulate but if the gamble doesn't pay off you're lumped with players on hefty contracts many of whom won't be snapped up by top level teams and won't necessarily want to walk away for the less rewarding contracts offered by rival teams in you're league or below.

Years back as Curbs and co demonstrated it was a realistic and possible option to craft a team together capable of promotion and survival in the PL with a and still turn a healthy profit or at least stay in the black. It's changed since then as we know too well having being lauded as the perfect model of how a football club should be run to where we were a couple of seasons ago and the slightly healthier in the short term position we find ousrselves in now.

It's a no win situation for clubs at our level and below. Dont spend the money on assembling the squads required for the best odds of promotion and chances are now the team will struggle to win their league if rivals are splashing the cash. Combined with that another downside being that crowds dwindle as floating fans bore of mediocraty or lack of instant success and vital revenue decreases further lengthening the odds of promotion.

Whilst management obviously plays a part in it and those shrewd in the tactical department compensate to a degree for lack of funds it is also requisite to be equally adept in the transfer market. And of course such managers are few and far between and likely to be highly sought after.

I think CP is a very good manager and whilst still cutting his cloth has done extremely well for us to have us competing and (perhaps over optimistically) not rolling round in hysterics at the notion that scraping a play off spot wouldn't be beyond the realms of possibility. However had he not had the money which presented the financial clout over rival clubs and allowed him to fund our promotion winning team I'm not sure he or many other managers would necessarily have achieved it.

That is not of course taking anything away from the manager but I think the money aspect is such a determining factor in success in the game today. You can sense the frustration amongst fans that if funds had been available to bolster the squad with extra class this year then we probably would be soaring higher in the Championship.

I can only see it getting worse next season with the ridiculous money involved in the top flight. £70m for a team that finishes bottom?! How can any team compete with a relegated club that has the money to keep top flight players on hefty contracts for at least a season or two.

I can see in 5 years, if not sooner, an increase of yo yo clubs with the same 6 or so clubs trading places in the PL each season perhaps with a few lucky one offs who may somehow get their but by which time they won't have a snowball's chance in hell of even competing against the accumulated wealth of the other 19 teams who have soaked up the PL gravy train's rewards for a couple of seasons.


For anyone outside of this gold plated bubble it will probably be a case of the least worst run clubs "prospering" in the lower leagues as opposed to being well managed. Maybe similar to having a top league of 20 Rangers and Celtics whilst everyone outside of it will mirror Cowdenbeath and Raith Rovers on the pitch and on the balance sheets.

Maybe the masses don't care and "football" today is all about the big clubs, the soap opera and Balotelli's new haircut. We have Super Sunday pitting one millionaire who's shagged someone/said something/ snorted something on the box in a bit, who cares what is happening to Rotheram?

Unless there is a collective acknowledgement of the reality of the situation the game outside the PL will implode and without a drastic correction of the finacial situation there wont be any competition because there can't be.

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Comments

  • Good article!
    I hope we can stay and compete in the championship, maybe the odd visit to the pl but would probably be too damageing in the process-and as you say ts not really about football as I know and love.
  • The short answer, I think, is that it is possible ( just ) but becoming an ever more remote prospect. The gap in TV money - 70 million next year in the Premier League against 2 million odd in the Championship - is grotesque and partly explains why the Championship has become a financial basket case, with a huge turnover in managers. Ironically, whilst the Fair Play Rules are designed to create a more level playing field, they may, in one sense, follow the law of unintended consequences and reinforce the division that exists.

    The irony is that the Championship is the fourth best supported league in Europe but gate money is not enough to compete against the TV wedge and, following the OnDigital fiasco, there is no meaningful competition for the Championship TV rights.

    Difficult times
  • edited January 2013
    T'was ever thus.

    Once upon a time the local butcher or whoever was a benefactor for the local football club partly because he had a genuine interest, partly to enhance his business and partly to massage his ego and enhance his local reputation.

    The club often would have made losses without that input, even when there was a maximum wage for players, as enough people wouldn't come through the gate. Unlike many businesses football is labour intensive in that a certain number of players are required.

    Jack Walker was probably the last example of the breed I'm talking about.

    The situation today is essentially the same except that the numbers are considerably bigger and there are more complicated regulations because of the internationalisation of the game.

    To directly answer the question posed as the heading to your excellent analysis "no" in a climate of unlimited wages unless either the TV money is more equitably distributed or clubs lower down go part time.

    That said even Ryman and Blue Square South part-timers can pick up £300-£500 a week.


    Football clubs need benefactors.




  • Nice article. Unfortunately fear it will get worse before gets better. Will take a so called big club to out of business before there is a wind of change.
  • Short answer .... No you can't ....
  • Newcastle would be nice, only because of Pardoo- my cousin is married to one of their players!
  • The clubs on parachute payments of around £16 million a season for five years should be able to balance the books.
  • To answer your question.....no you can not compete and break even. I'd be shocked if any Championship sides have managed to do that in a long time. As for 5 or 6 years down the line I would expect a two tiered Premiership One and Two to be in place.
  • A very good article, Rodney. The gaps are getting bigger at the top end. At least when the Championship starts each season, every team has some chance of going up or down. There is no chance that some premiership clubs will be relegated and only a slim chance of a few more. Promoted teams from the championship are therefore realistically looking at mid- table at best - they are in the pot of 10-12 teams that might come down- not good odds.

    I am not sure where it will end. Instability leads to surprising outcomes. The top few might form a European league, premier 1 and 2 might evolve making L1 teams feeling there's a big gap etc.

    All I do think is that something might crashing down at some point.

  • Very important post.

    EPL or bust.. that is the bottom line unless something changes.

    EPL is a massive export TV product which attracts massive revenue. The rest (including us) are currently business no-hopers.

    Ironically, in order to get to the EPL and get the financial survival you must sell your club to some dodgy global corporation and change your name and club history. Loyal fans become paying extras in a drama for viewers in China, Singapore, Malaysia, Korea, Japan etc.
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  • A club can run without making a loss outside the top flight. Yeovil have managed to balance the books over a number of seasons. They are club that, it could be argued, would be expected to be in the fourth tier of English football with the occasional spell in the third tier. Accordingly, by their own standards Yeovil are competitive by getting in the third tier and remaining there.

    Charlton are different to Yeovil and will have higher minimum running costs but also higher income streams. I suspect we could run without making a loss in the third tier, however the funds available for players would be reduced. It is likely that crowds would drop but despite this we would be competitive in the third tier in certain seasons (this year for example).

    The top two divisions operate in a manner that resembles a cold war arms race, with spending by one team causing another to spend money. It does not appear possble for us to break even in the second tier of English fooball without so significantly weakening the squad that relegation would be inevitable. Wigan have demonstrated that we could in theory stay in the top flight and break even. However, even this would require a manager and team to overperform realistic expectations and surely it would be a case of when not if we were relegated.

    I suspect financial fairplay could assist the matter, but I would favour immediate draconian points penalties for breaches.



    Theoretically if every club outside the PL is skint there should be a natural correction where by every club stops paying silly wages beyond their means and let the market equalise and operate at a sustainable level where they break even if not turn a small profit.

    As things stand, if most clubs did this, it would become more tempting for individuals to spend silly money on players as success would be more likely. So I doubt, without rules, whether the market would sort itself out.



    However had he not had the money which presented the financial clout over rival clubs and allowed him to fund our promotion winning team I'm not sure he or many other managers would necessarily have achieved it.

    That is not of course taking anything away from the manager but I think the money aspect is such a determining factor in success in the game today.

    Had all clubs in the third tier operated at a break even level then we would have had the third largest budget just behind that of Sheffield United. Huddersfield appear to have spent above their break even level, and in turn so (it would appear) did Wednesday and United. Had we not responded and spent above our break even level, we would not have been competitive and the playoffs would have been the best we could have realistically achieved. This does not diminsh CP's achievement, (even with the enhanced funding he received) he could have been expected to finish in a playoff place but instead lifted us top by a margin.

  • Very important post.

    EPL or bust.. that is the bottom line unless something changes.

    EPL is a massive export TV product which attracts massive revenue. The rest (including us) are currently business no-hopers.

    Ironically, in order to get to the EPL and get the financial survival you must sell your club to some dodgy global corporation and change your name and club history. Loyal fans become paying extras in a drama for viewers in China, Singapore, Malaysia, Korea, Japan etc.


    That last paragraph is very depressing.



  • That last paragraph is very depressing.

    And incorrect.
  • edited January 2013
    In a nutshell: No it is not: FL salaries are far too high, player contracts are too long and squads are too big. Most owners' expectations are unrealistic. Before many more years we will have a US sports set up with no promotion or relegation into and out of the premier league. Either that or there will be a Euro League and a second strata English Premier League. Smaller clubs (like CAFC) will be frozen out and will remain second strata, only the big & rich will survive in the form as we know them today. The lower leagues will go local (no more Bournemouth travelling to play Carlisle) and part time.
  • 1 Don't forget the PL forced new rules on the FL making it easier for them to steal young players off FL clubs just about a year ago. We haven't really begun to see the effects of that on selling clubs yet. That may take a few more years.

    2 Sky money keeps the PL on the road to greed, greed and more greed. Those of you on Sky, if you don't like the behaviour of the PL and the instability it causes your club/English football, why not start a campaign to unsubscribe? Ah well, but, erm, yes, no missus, honestly...
  • I make my protest by subscribing and then not watching. That must really piss them off.
  • A good summary of the situation, RCT, and your final paragraph is suitably dire prediction. What the hell is the answer?
    Well, one club can't change things on its own. That's one of the problems a Trust faces. We can say that we want to help the club run on a sustainable basis, but what do we do if we are the only ones operating that way, while everyone else signs more expensive players in the mad dash to get in the Prem.
    Somebody mentioned Prem 1/2. That would be a start. It's what the Germans do. But RM and PV were arguing for that when we were in the Prem, and got nowhere. Since then the gap has widened ridiculously.
    I know what is wrong with the set-up. It is the existence of the FAPL as a separate entity, deciding what to do with the TV money, and feeding derisory scraps to the rest of us. that's what the Germans don't do. But how to undo that, that is one tall order.
    I've got this dream that if the majority of lower league clubs have Trusts with equity they could get together, and make football a hot political potato. Or the collapse of several big clubs, as somebody wrote. But even that wouldn't move someone like Richard Scudamore. He's a free market fundamentalist, and would just shrug his shoulders, while wondering what to do with his latest 1m in annual salary.
    The most positive thing I can say is that threads like this help us all to understand better what our Board - now and in the future - has to deal with.
  • I make my protest by subscribing and then not watching. That must really piss them off.

    Isn't it better to watch without subscribing?

  • edited January 2013
    A great article but the answer is a simple "no"! At least in the short term.

    You miss the fact that Charlton (and others) were losing money in the 90s and would have sold Rufus to Spurs for c. £3M if we had not won the play off final... sounds like a petty observation but my point is that clubs at this level have always lost money which is then made up with player sales and/or owner investment.
    How much they lose is limited to what the owners can afford and the size of the prize for promotion which in turn induces new investors to the table and justifies the year on year losses... Perhaps this is a big time lottery with a touch of Russian Roulette?
    There will always be investors buying in at this level as it is much, much cheaper than buying a Premier League club - those guys across the river could have saved themselves a fortune if they had come in here instead of buying West Ham!

    And there will always be Premier League clubs that finish mid-table for a number of years, soaking up the money, and suddenly find themselves in a relegation scrap - take a look at Villa and Newcastle... or ourselves for that matter ... so perpetual yo-yo clubs is a nice theory which is distorted by the chaos of day-to-day football!

    Having said all that I think this is a well written piece and this board and the new Trust should be putting some effort into discussing / exploring where this is going and what Charlton should do... Prague hints at collective action - perhaps all of the trusts and Supporters Direct can put something together since there will be a general election in a couple of years with a very tight result expected... Cameron is promising a vote on Europe but how about a vote on something closer to home like Football club regulations and the TV deals etc.
  • What I don't understand is why the championship doesn't find a decent TV deal.
    If they sold a package with live games televised on Saturday/Sunday etc, surely they could get a more lucrative contract.
    I don't think it would effect gates as most fans are hardcore. It would increase the popularity of the league and in the long term improve revenue streams.

    The premier league threw the football league away. Maybe it's time for the football league to throw the premier league away. Get rid of promotion to the premier league and make the championship the pinnacle.
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  • Can't dump the premier league ... All the money would go out it and we would just become a feeder division to the prem but get paid pennies on the pound because There's no incentive...

    That would be the death of the quality of the championship ...
  • What I don't understand is why the championship doesn't find a decent TV deal.
    If they sold a package with live games televised on Saturday/Sunday etc, surely they could get a more lucrative contract.

    Great suggestion but the key TV market is not in Europe its Asia. That's where they have the numbers and the money and that's why we have 12 noon EPL kick-offs on Sunday. Mugs in England are paying £60 for tickets to EPL matches then getting up at 5am to struggle on public transport to see their team play away in the rain while TV punters in Hong Kong settle down with a chilled beer in their local bar at 8pm. Perfect.

    Even better, the Hong Kong punters get that great TV close up of same mug head in hands or chanting at the opposition to add suitable drama to the TV spectacle.

    Sadly few have heard of Leeds, Notts Forest, Derby County, Sheffield Weds etc in Asia and the Championship does not attract big name players so unless FL start doing some serious PR and marketing in Asia, the Championship will fail to be an attractive TV product and can all expect the money gap between the EPL and the rest to widen further.
  • edited January 2013
    some thoughts: the alure of staying in the top flight, with all that money available will make a fair number of yo you teams pay over the odds and have to use a lot of the parachute money to sort themselves out, so yes parachute money is higher but so is the money needed to stay in the perm.

    also the championship will become more, a boom bust league with speculators picking up clubs for a farthing from administration, with the aim of spending to get the rewards

    finally, clubs with a great academy are somewhat insulated from this, so that may be the answer

    I must say i still find it astonishing that sky money went up for the prem and down for the chumps.. insane...

  • Raz, I wasn't astonished at all. The FAPL is nothing more that the 20 chairmen, and Scudamore, whose huge salary is entirely dependent on them. He keeps his job because he is a good salesman who has negotiated great TV deals for them. There is absolutely no real pressure to give more of this money to the rest of football. Sometimes they throw a few scraps when the media pressure ups a bit. Scudamore will tell the chairmen to do it because it is "good PR". The FAPL should be abolished as a separate entity but only the government could do that, and they would only do so after a huge collapse of clubs.
  • sure but there was always some distribution, and it was in the right direction, it now seems to have reversed, I guess its something to do with the tv deal for the chumps tho
  • arent cartels like this uncompetitive, and anti competition or am I grasping at straws?
  • It's greed by the EPL that clouds their judgement I am sure because its obvious to me that the pyramid of English football is year on year being eroded from the bottom up. Sooner or later we are going to see a number of clubs outside the EPL go under and judging by the accounts published there is no club safe. Do we as fans really want our 92 professional clubs to be decimated so that armchair fans on the other side of the world can enjoy the EPL soap opera ?
  • What I don't understand is why the championship doesn't find a decent TV deal.
    If they sold a package with live games televised on Saturday/Sunday etc, surely they could get a more lucrative contract.
    I don't think it would effect gates as most fans are hardcore. It would increase the popularity of the league and in the long term improve revenue streams.

    The premier league threw the football league away. Maybe it's time for the football league to throw the premier league away. Get rid of promotion to the premier league and make the championship the pinnacle.

    The Football League does sell its product. Various countries in Asia and, I believe, Australia, as well as Sky in the UK, now have live Championship games, even League One games during international break weekends, plus the League Cup.

    But, how much are the TV companies paying for this package? I would guess a relative pittance. It's second best. They've hardly hit the jackpot with the showcase League Cup Final between Swansea and Bradford this season!

    Leeds, Wolves, Nottingham Forest and even ourselves may be well known names in England but most Asians, and probably other overseas fans, are only interested in Man Utd or Liverpool.

    Also remember one major reason why football is popular in Asia: gambling. Yet I have never met a Thai who has bet his few baht on the televised Derby County v Barnsley game.

    The Premier League rights in Thailand have changed for next season with the winners allegedly paying six times more than the amount paid last time.

    And for anyone who really believes that a TV deal for the Championship would prove lucrative, I leave you with these words:

    REMEMBER ITV DIGITAL


  • perhaps Ch club should be able to sell their games individually too, plus more games being up for sale, and how about the 3 o'clock rule for away fans, so once a club has sold its away allocation it the game can automatically be sold to subscribers outside of the local area, and or if the whole game is a sell out.
  • There is clearly no big money in championship tv but 14 of the premier league teams should remember that they are no different to Wolves, Leeds, Blackburn and of course ourselves. Maybe Charlton just have to pay the price to get back to the top table but do we all know what that price is?
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