The firm’s research is based on an annual poll of finance directors from a cross section of English Premier League, English Football League Championship, Football Leagues One and Two and Scottish Premiership clubs.

This found that nine in ten clubs in the Premier League are expecting to make profits after player trading in the 2017/18 season. Despite this, only 50% of Premiership clubs reported their financial position as ‘very healthy’, compared to 71% last year, which BDO suggests is a reflection that EPL clubs may have found it harder to resist the ensuing player wage and transfer fee inflation than they might have hoped.

Further down the league, the financial position is more precarious, with 21% of the 24 clubs in the Championship warning that their financial position is ‘in need of attention’ (compared with 15% last year) and 7% expect to breach profit and sustainability Rules for the 2017/18 season, with a further 7% only avoiding breaches through selling players.

However, with 70% and 89% expecting to make profits before and after player trading respectively, for the 75% who do not consider relegation in their top three concerns, the grass is still very much green at the top of the game.

The BDO report highlights a growing disparity in the financial footing between the elite clubs and the lower leagues. Outside of the Premiership, more FDs than the survey has seen since 2014 classified their clubs’ health as ‘a cause for grave concern or on the verge of administration’ (15% of League 1 and 17% of League 2).

The majority of these clubs have highlighted that they are not self-sustaining, instead being reliant on player trading and funding from principal shareholders to finance annual revenue shortfalls or operating losses. The majority (83%) of FL2 clubs are looking to additional principal shareholder investment in order to strengthen their club.

Overall, 71% and 64% of Championship clubs are expecting to make losses before and after player trading respectively, which is higher than last year, and 75% of clubs in this category are spending more than two-thirds of their revenue on wages. BDO’s research showed no FL2 responding clubs will be profitable before player trading and less than a third will be profitable after player trading, most likely at the expense of strengthening their squads for the future.

Outside the Premiership, over two-thirds of Championship clubs remain dependent on their principal shareholder to finance annual revenue shortfalls or operating losses; and half of FL2 clubs’ owners are looking to exit.

The research found that for the most part, investors have turned their sights away from Premiership clubs (no responding clubs received an offer of equity investment this year, albeit none of them were looking for one).

BDO said that while there has been much talk about the high levels of M&A activity from profile building investors over the last few years, in particular from Asia, this has damped down. While they made up one-third of all approaches to clubs surveyed last year, this year they accounted for only 13% of approaches to clubs across all leagues, with only six coming from the Far East.

Far Eastern interest in football club investments has waned somewhat this year (subject to on-off outbound investment restrictions), but has been replaced by US interest (both for investment value potential and cross-franchise operational synergies).

However, investors with medium to long term growth (promotion) ambitions are still drawn to the Championship, and institutional investors now make up the largest proportion of interested parties exploring such opportunities. The vast majority of Championship and Scottish Premiership clubs have been subject to a formal or informal approach in the last 12 months.

BDO’s annual survey of football club finance directors 2018 is here

Report by Pat Sweet