English football clubs are "dangerously exposed” to financial risks, with 94% of teams across the country’s top five divisions operating at a loss, the Independent Football Regulator (IFR) said in a report released Tuesday.
Established last year, the IFR proposed tighter cost controls and stronger contingency planning as part of a six-point plan to improve the financial sustainability of English football.
The draft State of the Game report, which will undergo an eight-week public consultation before a final version is published, found that nearly two-thirds of English Football League and National League clubs were "technically insolvent” and increasingly reliant on financial support from their owners.
"While some of our clubs are among the richest and most competitive in the world, others are standing on the edge of financial disaster,” IFR Chair David Kogan said. "A significant number of clubs have told us they would not survive if their owners walked away.”
The regulator said clubs should manage financial risks more effectively and have contingency plans in place in case their owners withdraw financial support.
Britain’s Culture Secretary Lisa Nandy said the findings painted a stark picture of club finances.
"Football fans for years have lived with the anxiety of knowing their club could be one bad owner or poor month away from ruin,” she said in a statement.
"This report doesn’t just validate that anxiety, it has blown the doors off the game with the most stark uncovering of the state of football club finances in England today.”
Premier League backs report
The Premier League said it agreed with the report’s preference for a "football-led solution to revenue distribution.”
"As the report makes clear, new funding must go hand in hand with effective financial controls and wider reforms to strengthen clubs,” the league said in a statement.
The Premier League is negotiating a new revenue-sharing deal with the English Football League. Media reports said Premier League clubs had offered 1.8 billion pounds ($2.38 billion) over 10 years, in addition to existing funding, while the EFL had asked for 1 billion pounds over five years.
"We believe the proposal we have made to the EFL, which was unanimously approved by Premier League clubs in July, meets the objectives the IFR has set out in its report,” the Premier League added.
No political pressure over Man City case
Kogan said he had faced no political pressure since Manchester City were found guilty of serious breaches of the Premier League’s financial rules by an independent commission.
City have appealed the decision and continue to maintain their innocence, saying the commission’s opinion contains "clear material errors.”
The IFR has the power to assess the suitability of club owners in cases involving financial wrongdoing, raising the possibility that City’s ownership could face scrutiny if the club loses its appeal.
"I’ve made it very clear ... any form of political interference in the way we operate is going to result in my resigning from this role,” Kogan told reporters at Manchester’s National Football Museum.
"Just to be crystal clear, we’ve come under absolutely no political pressure whatsoever on this or any other topic.”