English Football's £9bn Problem: Losses, Owner Dependence and the Rise of Creative Compliance

David Kogan, the regulator's chair, put the contradiction in his foreword: English club football is simultaneously the "richest, best and most deeply competitive in the world while also standing on the edge of financial disaster". His argument is that the game must act before it is too late.

A 94% loss-making rate does not mean 94% of clubs are approaching insolvency. Accounting losses include depreciation, amortisation and financing charges that are not immediate cash outflows, and many clubs have owners both willing and able to fund continuing deficits. The more revealing question is what happens when that willingness ends, and it is on that measure that the report becomes uncomfortable.

Thirty-two clubs cannot withstand a month

The report requested financial information from 112 clubs. Of those respondents, 29% reported that they could not survive more than 30 days without new owner funding, and 66% could not survive more than 90 days. Kogan described the shorter-term finding to BBC Sport as thirty-two clubs operating on only thirty days' cash. These figures use the response population, not all 116 clubs in the report's remit. The central finding is that a substantial part of English professional football is not sustained by the money it earns, but by the continuing willingness of shareholders to supply more.

A club in that position is not necessarily in trouble. It may hold valuable assets, carry a strong squad and have an owner of considerable means, and while the funding arrives, nothing visible goes wrong. The exposure is to change rather than to the present — an owner who hits difficulties elsewhere, revises their priorities or decides to sell leaves a club with very little time to find a replacement.

What matters, then, is the quality of the commitment rather than the apparent wealth behind it. Equity capital, a shareholder loan, a legally binding funding undertaking and a verbal assurance that losses will be covered are four quite different things, with different consequences for the balance sheet, for repayment and for what happens in an insolvency. A wealthy owner who has made no enforceable commitment is a different proposition from a modest one who has. For clubs below the Premier League the distinction is sharper still, because revenues are smaller, external finance is harder to obtain, and replacing a departing investor can take longer than the club has.

Sixty per cent without a business plan

The governance finding is the one that should give supporters most pause. Sixty per cent of clubs have no business plan at all.

That is not an administrative criticism. Football clubs face unusually volatile revenues: promotion transforms income, relegation removes it almost overnight, transfer receipts are unpredictable, cup runs cannot be budgeted for, and player costs stay fixed when everything else falls. A business plan does not eliminate any of that, but it establishes how a club expects to finance itself if the assumptions change — and three in five clubs in the professional game are making decisions about wages, borrowing and investment without one.

The problem compounds where a club already depends on shareholder support. If there is no financial plan, there is no documented statement of how much funding is required, when it has to arrive, or what happens if the forecasts are wrong. The regulator's licensing regime is designed to make that discipline compulsory rather than optional, and on this evidence it is starting from a long way back.

Creative compliance: when the accounts improve and the economics don't

The most consequential thing in the report is a phrase. The regulator has adopted "creative compliance" to describe arrangements that improve a club's reported financial position, or its compliance with financial rules, without necessarily strengthening its ability to generate cash or meet obligations.

The examples it gives are the sale of a women's team or a hotel.

Nothing about selling an asset is improper in itself. Clubs dispose of businesses and property for sound reasons, and the accounting treatment of a disposal is governed by standards that exist precisely to handle it. The questions are narrower: what the asset was valued at, who bought it, whether the buyer was a related party, how any gain was recognised, and what actually changed in economic terms once the transaction completed.

To take the structure in the abstract — this describes a type of arrangement rather than any particular deal — a club that transfers an asset to another company under the same ultimate ownership may record a profit in its own accounts, depending on how the transaction is structured. If the wider group still controls the asset afterwards, that profit does not represent new money arriving from an independent investor, and a one-off gain does nothing for recurring operating profitability. Establishing which has happened means separating the club's individual accounts from the group's consolidated accounts, identifying the ultimate controlling parties and finding out whether consideration was paid in cash, deferred, or financed by the purchaser.

That is exactly the territory where regulation has to go beyond checking a number against a threshold, and it is why the regulator naming the practice matters more than any single statistic in the report.

It also lands directly on women's football. Where a women's team moves between related entities, the analysis cannot stop at the accounting gain: it has to establish who owns the operation afterwards, who funds it, whether its commercial prospects have changed and whether the players' employment conditions have changed with it. A transaction existing is not evidence of wrongdoing. Its substance has to be established case by case, and until now there has been little regulatory appetite to do so.

Debt heading for £5.1bn as broadcast growth stalls

Total club debt is forecast to reach £5.1bn by 2026/27. Net transfer debt — money owed between clubs on instalments, offset by amounts receivable — stands at approximately £3.4bn. The two measures are defined differently and should not be added together.

What makes the number matter is the revenue forecast sitting beside it. The report anticipates that broadcasting revenues will plateau or decline in the next rights cycle, which would be a structural change for an industry whose entire financial model assumes the television money goes up. Debt is manageable while the income servicing it grows. It becomes something else when that stops.

Transfer instalments are the sharpest version of the problem. A club commits to payments spread across several years, and those payments remain due regardless of what happens to the club afterwards — including relegation, which can remove tens of millions of pounds of annual revenue while leaving the obligations untouched. The accounting charge for a signing and the cash payable for it in any given year are different numbers, which means a club can look compliant on one measure while facing a payment schedule it cannot fund on another.

Seventeen clubs would lose money without any players

Player spending is the usual explanation for football's finances, and for good reason: the incentives to overspend in pursuit of promotion are enormous, particularly in the Championship. The report supports that. But one finding complicates it.

Seventeen clubs would still be loss-making if their players played for free.

That points to something beyond the playing budget — stadium costs, administration, staffing, financing obligations and other commitments running ahead of revenue before a single wage is paid. The aggregate figure doesn't identify which costs are responsible at which club, and the mix will differ. What it establishes is that for those seventeen, cutting the squad budget would not produce a sustainable business.

The distinction matters for how financial rules are designed. Squad-cost controls address the incentive to overspend on players; they do nothing for a club whose underlying operation loses money regardless. It matters for investors too, because a club losing money through deliberate sporting ambition is a different proposition from one losing money on its basic operations, and the two require entirely different remedies.

The £70m cliff edge

The regulator describes clubs at all levels — but particularly in the Championship, League One and League Two — as operating on "cliff edges", driven to overspend in pursuit of the division above.

The cliff has been thirty years in the making. In 1992/93, the first Premier League season, the average top-flight club earned £10.5m against £3.9m for the average club in the division below — a ratio of 2.7 to one. By 2024/25 the average Premier League club earned £341m and the average Championship club £38.9m, a ratio of 8.7 to one. Measured end to end, from the highest-earning Premier League club to the lowest-earning in League Two, the multiple has gone from 70 to 173.

The number behind the phrase is this: clubs relegated from the Premier League in 2024/25 saw revenue fall by an average of £70m.

That is why parachute payments exist. A relegated club carries contractual obligations agreed on Premier League income into a division that cannot support them, and the adjustment has to be financed somehow. It is also why they distort: a Championship club receiving them competes against clubs that do not, and the regulator identifies the resulting gap as a driver of spending across the whole division.

The policy problem has no clean answer. Remove the payments without addressing the revenue cliff and relegation becomes more dangerous; keep them and the Championship remains a division where some clubs compete with a financial advantage others cannot match. The Premier League and EFL have still not agreed a new settlement, and the regulator holds statutory powers to intervene if they cannot. But redistribution on its own will not fix the incentive. More money flowing down the pyramid can just as easily become more money bid for players, unless the spending discipline arrives with it.

The report also recommends a National League-specific strategy, recognising that the division at the bottom of its remit operates on economics unlike those above it.

Appropriate Financial Resources and the road to 2030

The Football Governance Act requires clubs to hold appropriate financial resources. The report's finding is that, on both liquidity and solvency, many would not currently meet that standard.

They have until May 2030. As part of the licensing regime, clubs will have to commit to an action plan setting out how they will get there — which turns a statutory principle into a dated obligation with a documented route attached. For a club dependent on owner funding, that may mean demonstrating the reliability of that support rather than asserting it. For others it will mean building reserves, improving forecasting, establishing contingency arrangements for the withdrawal of funding, or strengthening governance.

The regulator's stated concern is financial reality rather than accounting presentation, which is where licensing and creative compliance meet. A club should not count as resilient because a disposal produced a gain in one set of accounts, or because an owner has indicated in general terms that losses will be covered. Whether the licensing framework can hold that line is the open question, and the next four years are the test of it.

What this means below the regulator's boundary

The regulator's remit stops at the National League, covering the top five divisions of the men's game. The economics do not stop there.

Clubs in National League North and South, the Southern League, the Northern Premier League and the Isthmian League face the same wage competition, stadium costs and dependence on an owner or a supporter base, with considerably less visibility over any of it. Some are companies limited by shares, others community benefit societies, others unincorporated associations filing nothing at all. The 94% figure cannot be extended to them, because they were not in the sample.

The questions can. Does the club have a business plan? Can it meet its obligations without emergency funding? Are its shareholder loans repayable, subordinated or effectively permanent? Does it own its ground? What happens if the person currently funding it stops? Those are the questions the regulator is now putting to 116 clubs. Below the fifth tier, nobody is asking them at all, which is where they matter most — because that is where a single withdrawal of support can end a club inside a month, and where the public record offers the least warning that it is coming.

The supporter case

Tom Greatrex of the Football Supporters' Association said the report "clearly highlights the unsustainable, broken model of football's finances".

The argument behind that is not that clubs should be shielded from commercial loss, or that owners should be prevented from taking risks. It is that the consequences of a football club failing fall on people who had no part in the decisions: employees, local creditors, supporters and a community that cannot simply buy an equivalent club to replace the one that has gone. That asymmetry is the reason the regulator exists, and why its objectives cover club heritage alongside financial soundness and the resilience of the game as a whole.

The Bottom Line

English football's problem is not that clubs lose money. Losses are manageable where they are funded reliably and planned for deliberately. The report is troubling because it finds neither: widespread dependence on discretionary owner support, three in five clubs operating without a business plan, debt forecast to reach £5.1bn by 2026/27 and a broadcast market that may have stopped growing.

The warning about creative compliance is the one with the longest reach. Financial regulation fails if clubs can satisfy it by restructuring what their accounts show rather than what their finances are. Whether the licensing regime can tell those apart — and whether clubs use the time to May 2030 to build something that doesn't depend on a single person continuing to write cheques — is what the next four years will establish.