Football Distress Survey: Distress levels fall in English football as ‘trickledown effect’ of Premier League earnings helps lower-league clubs

The latest - 31 October - Football Distress Survey, which has been conducted by business recovery specialist Begbies Traynor since 2012, shows that only three of the English Football League’s 72 clubs (4.2%) are facing distress, 50% lower than a year ago, and a 25% fall in the last six months.

The new Football Distress Survey also shows that Scottish clubs in the lower leagues are seeing more distress than their English counterparts, with four clubs facing serious distress.

Commenting on the findings, Julie Palmer, managing partner at Begbies Traynor, said: “We’re finally starting to see the trickledown effect of the huge revenues in the upper tiers of the English football pyramid, and the clubs feeding them with new players are enjoying academy revenues, as well as new fans and income from the growth of the women’s game.

“Investment in academies has raised the sheer numbers of talented kids getting access to professional coaching, and has lifted the level of players in the lower leagues, as well as delivering the Premier League’s stars of the future. With many academy players now getting a chance to play in Leagues One and Two, and develop into valuable talent later, the lower league clubs that sign and nurture these players early in their careers can benefit from big pay days if their market value climbs drastically after a few years as a professional,” she added.

The Premier League and Championship together were estimated to generate 95% of the income in football last season, and the disparity between the clubs on the world stage and those at the grassroots resulted in the Government appointment of the new Independent Football Regulator, David Kogan, in October.  

“The downward trend of distress generally is welcome, and the trickledown of revenue to the lower league clubs is a big part of the new regulator’s remit. We expect moves by him that would facilitate further progress in coming years as he gets to grips with the disparity between the richest and poorest clubs,” said Julie Palmer. 

In Scotland, the trend is less positive with four clubs (9.5% of the total 42 clubs) from the lower leagues displaying early signs of financial distress (down 20% from 6 months ago, and also since the previous year).

Ms Palmer added: “Boards and executive teams are facing rising costs of running these big, expensive venues and are working smarter to find new income streams. As well as significant women’s team incomes, we’re seeing better utilisation of the venues these clubs own and pay for, especially for community and event uses.

“Like any business, clubs with fixed overheads and rising costs are re-examining their business plans to see if there are new streams of revenue that they can use to mitigate rising costs and leverage their assets and their fan base. This is crucial as the investors coming into the game, many from overseas, look to create sustainable profitable long-term businesses, especially where property assets are concerned. 

“The unwelcome alternative would be passing more of the rising costs to fans through higher prices for tickets, merchandise and food and drinks at the grounds, just at a time when fans can afford to spend less themselves. A balance is needed to make sure that the clubs are viable, don’t turn to their fans for all their revenues, and price them out of the grounds in the medium term.”