With the 2014/15 football season underway, business advisory and accountancy firm BDO LLP has released a new report that reveals the wealth gap between clubs, including those in the South West, continues to grow across and within the various leagues.
While Financial Fair Play (FFP) rules should assist in promoting sustainability, the study, Focusing on the polarisation of football finances and the impact of FFP, also suggests FFP may have the unintended consequence of locking in a wealth imbalance.
The report features the views of 67 finance bosses of clubs across the English Premier League (EPL), the Football League and the Scottish Premiership, who were interviewed to find the biggest challenges facing the business of football. Their responses show an industry of extremes where long term stability hangs in the balance.
Almost all respondents (94%) felt that the wealth gap between larger and smaller clubs is widening, with 79% of EPL clubs and 76% of Football League Championship (FLC) clubs seeing the gap increase within their own leagues.
What’s more, CFOs believe that FFP rules, which have been introduced to promote stability in the game, will take time to take effect and may lock in the existing differential. Although 90% of clubs said they had complied with the rules and thought they were workable, 44% believe that the rules to need to be refined or changed to some degree, while 61% think that they do not yet meet the principal objective of promoting sustainability.
Graham Randall, partner and head of BDO in Bristol, commented: “As the gap between clubs and leagues has widened, major sponsors have become more discerning and are concentrating their marketing spend on a handful of clubs with brands capable of giving them global coverage. The success of the EPL is unparalleled in world sport and it has generated huge revenues, but this wealth has tended to concentrate in the hands of few and at the expense of many. Polarisation of the industry has to be taken as a serious issue when considering sustainability and the long term health of the game as a whole.”
However, BDO’s report also reveals that there is still demand for football club investment, though the preference remains to take on Football League clubs and invest in seeking promotion. Interest from third party investors increased 8% year on year to 29% in 2014, which may spell bad news for EPL bosses who are considering an exit.
Graham Randall added: “The growing gap between clubs, which is being driven by broadcast rights, global brand creation and the deep pockets of some owners, may be of concern if we are to maintain a broad base of high quality football in the UK. While the enduring popularity of the game is unlikely to be affected by these issues in the short term, polarisation in the long term may cause increasing concern for clubs, fans and regulators alike.”
