EFL sets up working group to consider financial rule changes
The EFL has set up a working group to consider changes to its financial rules amid continuing concerns over the long-term sustainability of several members of the Football League.
It emerged on Thursday that the group was set up in the summer, since when Bury have been expelled from the Football League after failing to demonstrate their financial viability, while neighbours Bolton narrowly avoided the same fate.
The EFL introduced new profit and sustainability rules in 2016-17 but major problems have continued to affect a number of clubs.
Although two EFL members, Birmingham and Oldham, saw winding up orders dismissed by a judge on Wednesday, Bury, Macclesfield and Southend all face winding up petitions in the next few weeks.
While there are issues throughout the Football League, much of the focus is on the Championship where there are concerns that clubs are over-extending themselves in a desperate bid to reach the Premier League.
The EFL’s rules state that most Championship clubs cannot lose more than £39million over the course of three seasons, though exceptions are made for clubs recently relegated from the Premier League.
However, new analysis conducted by accountants Deloitte and football finance group Vysyble which showed Championship clubs continue to run heavy losses.
According to the analysis, published by the BBC, Championship clubs ran up pre-tax losses totalling a record £307million in 2017-18.
That was despite highest-ever revenues of £749million, and was caused by spending on player and staff wages exceeding revenues by 11 per cent.
The analysis found that more than half of clubs in the Championship are spending more on wages than they make in income.
Three clubs – Wolves, Fulham and Cardiff – all had losses which exceeded £39million in one season alone, but earned promotion to the Premier League that season so were no longer subject to the EFL’s rules.
In a statement, the EFL said: “Club owners are fully aware of the current financial regulations in place and are cognisant of the risks that such an increase in outgoings can have on sustainability.
“Clubs, however, must be given the freedom and flexibility to strive for success within the parameters of the regulations.
“It should also be remembered that ‘operating profits’ are not the primary aim of most professional clubs, with owners opting to compete for success in what is an increasingly competitive marketplace.”
Clubs that overspend can be sanctioned with a transfer embargo or a points deduction, as happened to Birmingham last season.
The EFL added that is has “demonstrated that appropriate action will be taken in accordance with our regulations when breaches are identified”.
It added: “But it is important to acknowledge that the majority of EFL clubs are well supported by experienced owners and their boards, who are very aware of the economic challenges faced when operating a football club.”