English Football: Financial Sustainability and Governance

Laura Kyrke-Smith Excerpts

Thursday 6th March 2025 Westminster Hall

[Yuan Yang]

I agree with my hon. Friend, who is an advocate for his local club, that too many clubs across the country are suffering from the unfair distribution through the football pyramid. In fact, that is the first issue I will describe: the problem with the money going in. The last four decades have seen a complete transformation in English football, which has been characterised by a widening gap between the clubs at the very top and the rest of the football pyramid. Ticket sales over that time have become less important as a source of revenue. Instead, the biggest source has become the multibillion-pound broadcast deals agreed by the Premier League.

We all celebrate the success of the Premier League�s dealmaking, generating the most revenue out of the big five European leagues. That dealmaking is notable for many reasons, not just the large amount of money involved. The 20 premier league clubs get together to sell a deal collectively. However, economists and competition lawyers have raised concerns about the impact that collective selling has on fans and smaller clubs, and they have argued that collective selling is justified only when there is a public benefit. However, most clubs do not currently benefit from these broadcast revenues. The vast majority stay in the premier league and, as a result, the gap between the top and the rest grows wider every season.

This season, premier league clubs and the four recently relegated clubs held on to 94% of the league�s broadcast revenues. That means that the remainder of the 68 clubs in the EFL received just 6%. In comparison, the German Bundesliga ensures an 80:20 split between the top two divisions. Meanwhile, the Union of European Football Associations�better known as UEFA�allocates 75% to the champions league and 25% to the two competitions below it. Those leagues have chosen those ratios because they find that it creates a sustainable pyramid for them. The EFL has long sought a similar distribution ratio with the premier league.

We want all clubs to work together to protect the pyramid as a whole because, without its base, the top of the game would crumble. As we all know, the pyramid serves as a platform for player development and talent spotting. Reading�s Michael Olise broke through locally and moved on to Crystal Palace, and I am sure that we can think of many such examples.

The national popularity of the premier league rests on our strong local football cultures, which are spread by clubs in their communities and the sports charities attached to them, working with people aged six to 60-plus. However, last year, the premier league and the EFL failed to agree a deal for a more equitable distribution of funding between clubs, underscoring just how sticky the first problem of income is.

The second problem is the money going out�the expenditure. Costs have been driven up to unsustainable levels. The concentration of riches in the premier league creates an overwhelming incentive to spend big and chase the dream. According to football finance expert Kieran Maguire, on average, for every �100 a championship club brings in through revenue, it spends �101 in wages. That is clearly unsustainable. Reading�s current owners, Dai Yongge and Dai Xiu Li, took over in 2017 when Reading was near the top of the championship. They also chased the dream. By 2021, Reading football club was spending over 200% of its annual revenue on player wages. Overall, Reading�s owners have invested over �200 million in the club. It is no surprise that they would spend at that level.

The NGO Fair Game has shown a clear correlation between how high a club is in the league and how high its spending is on wages. This competition is made more intense because of parachute payments, which I will not go into at length. However, overall, the pressure to compete means that clubs often spend beyond their means. This is unsustainable. We have spending rules such as financial fair play, but breaches continue to happen.

[Laura Kyrke-Smith (Aylesbury) (Lab)]

My hon. Friend is making an important point about costs. One of the brilliant football clubs in my constituency, the Aylesbury Vale Dynamos, really struggles with the cost of keeping its ground maintained. It is at real risk of flooding, and the cost of dealing with that is huge. The other club in my constituency, Aylesbury United, has not had a ground in Aylesbury since 2006. Does my hon. Friend agree that, given the costs that they incur, having access to a secure and financially sustainable ground to play on is an essential part of the sustainability of vital grassroots football clubs?

[Yuan Yang]

I agree with my hon. Friend, who has a deep interest in her local clubs. Fans need to be able to see their clubs perform in their local area. Many MPs who are in this debate have concerns about the relocation of their grounds or lack of appropriate grounds.

The final problem is ownership. The first two problems have shown how little incentive there is to be a well-run club that spends responsibly. Most clubs rely on a generous owner to stay afloat. When the good will or cash flow of that owner starts to run dry, clubs often have nowhere else to turn. Reading fans know the perils of this dependence. The current owners, the Dai siblings, put the club up for sale almost two years ago, but they have not been seen at the club in well over a year. Fans have mostly been kept in the dark. Credible bidders for the club�some of whom I have had the fortune to speak to�have made offers, and they have been turned down and dragged through lengthy negotiations. Bidders have faced difficulties in navigating the ownership structure of the club in which the stadium, the training grounds and the club itself have been separated into different corporate entities, and in which club assets have been used as collateral for other loans.