English football generated around £9 billion in revenue during the 2025/26 season. Yet 94% of clubs across the top five men’s leagues lost money over the same period, recording combined losses of approximately £1.7 billion, according to the Independent Football Regulator’s draft State of the Game report.
Those numbers point to a clear contradiction at the centre of the national game. Commercial income continues to grow, driven by the Premier League, but wealth at the top has not created financial stability further down the pyramid. The regulator warns that persistent losses, growing debt and heavy reliance on owners to pay routine bills could leave clubs exposed if that support stops.
The 94% figure needs careful context. Recording an accounting loss does not automatically make a club insolvent, and it does not mean administration is imminent. The real risk arises when losses become a long-term pattern, cash reserves run low and a club cannot keep operating without regular cash injections from its owner.
A wealthy game with widening gaps
Out of the estimated £9 billion generated in 2025/26, the Premier League accounted for more than 80% of all revenue across the top five tiers. Within the top flight itself, the six highest-earning clubs brought in 56% of Premier League club revenue.
That financial concentration has grown over the past three decades. Average Premier League club revenue has increased more than thirtyfold since 1992/93, compared with roughly a threefold rise in UK gross domestic product. In 1992/93, the highest-earning Premier League club brought in 70 times as much money as the lowest-earning club in the fourth tier, and by 2024/25 that gap had widened to 173 times.
Losses also rose across all four professional divisions between 2021/22 and 2025/26. Average annual losses in the Premier League more than doubled from £20 million to £44 million, while Championship losses climbed from £11 million to £22 million. Over the same period, average losses in League One jumped from £2.4 million to £7.5 million, and League Two losses increased from £600,000 to £2.7 million.
These deficits carry different risks depending on the division. Premier League clubs bring in far more revenue and have wider access to commercial income, even when they post substantial accounting losses. Lower down the pyramid, a smaller loss often represents a large share of the money a club brings in, making the shortfall much harder to absorb.
Rising costs are squeezing clubs at every level
Player wages remain one of the clearest financial pressures across the divisions. Between 2021/22 and 2025/26, wage bills rose by 33% in the Premier League, 32% in the Championship, 71% in League One and 63% in League Two.
That wage growth hits clubs below the top flight hardest because their broadcast, commercial and matchday revenues are far smaller. Twenty clubs, primarily in the Championship, League One and National League, spent more than 80% of their revenue on player wages, while six spent more on wages than they generated in total revenue. Tighter budgets also force clubs to weigh long-term youth development against short-term recruitment fixes, a dilemma reflected in the debate around Endrick, Real Madrid and Mourinho’s trust.
Other recruitment and operating expenses have climbed alongside player salaries. Annual transfer costs recorded through amortisation doubled across the pyramid from £1.3 billion in 2021/22 to £2.6 billion in 2025/26, and agent fees rose from £317 million to £484 million over the same timeframe. The regulator also found 17 EFL and National League clubs whose non-player operating costs exceeded all of their revenue, meaning they would have made a loss even if they had paid nothing in player wages.
That finding challenges the assumption that every struggling club can fix its finances simply by cutting the playing budget. Staffing, facilities, travel, stadium upkeep and other routine expenses still have to be paid. When everyday running costs outstrip revenue, long-term player pathways can suffer too, and debates over the structural challenges behind Australia’s women’s league talent problem show why player development depends on more than talent alone.
When a club depends on its owner to survive
The regulator’s sharpest warnings focus on daily cash flow and owner funding. Most EFL and National League clubs have significantly negative operating cash flow, meaning their day-to-day operations consume cash rather than generate it. Outside transfer windows, many of these clubs lack enough liquid assets to cover their short-term liabilities and rely on owners to bridge the gap.
Between March 2025 and March 2026, 67 clubs received at least six owner-funding injections, and 28 clubs received 12 or more. In figures supplied to the regulator, 66% of clubs said they could not survive for more than 90 days without new owner funding, while 29% said they could not survive beyond 30 days.
In practice, that dependency leaves a club exposed to any sudden shift in its owner’s finances or willingness to keep paying. If an owner stops funding the club, management may have to find fresh investment or rapidly cut costs to pay wages, suppliers and other bills. Despite that risk, the report notes that most EFL and National League clubs have no contingency plan for an owner becoming unwilling or unable to support operations.
Balance sheets across the leagues show similar strain. More than 60% of EFL and National League clubs had liabilities exceeding the book value of their assets, as did 20% of Premier League clubs. On this accounting measure, those clubs have negative equity and are described as technically insolvent, and 46% of EFL clubs would still have negative equity even after accounting for estimated squad values.
Technical insolvency and negative equity should not be confused with administration or bankruptcy. Negative equity is a balance-sheet measure, whereas a club’s immediate ability to pay bills depends on cash flow, available financing and when liabilities fall due. However, when weak balance sheets combine with sustained losses and reliance on a single source of funding, a club has far less room to absorb a financial shock.
The transfer market is creating obligations for tomorrow
Because transfer fees are often paid in instalments, clubs can be owed money for players they have sold while still owing money for signings they have made. The regulator estimates that English clubs carried £4.8 billion in transfer payables and £1.5 billion in transfer receivables in 2025/26, leaving net transfer debt of approximately £3.4 billion.
The report also raises concerns over transfer factoring, where a club sells or borrows against future transfer-fee receipts to receive cash sooner, usually at a discount. This form of financing grew from £55 million in 2021/22 to £779 million in 2024/25, with around £1.2 billion of transfer receivables monetised through financing arrangements.
Factoring helps clubs manage payment timing, but it also means money expected in future seasons has already been used. For clubs that lose money year after year, covering the next funding gap becomes harder once future transfer receipts have been brought forward. Deferred payments and transfer debts also link clubs together financially, so one club failing to meet an obligation can hurt other clubs expecting to receive that money.
The report does not claim that every transfer-financing deal is reckless. Its broader warning is that a system built on persistent losses, deferred payments and ongoing external funding can pass financial stress across the pyramid when one part comes under pressure.
The promotion race makes restraint difficult
The Championship shows how English football’s structure encourages clubs to take financial risks. Promotion to the Premier League brings a massive jump in income, with the regulator estimating that total revenue rises by 376% for a club moving up from the second tier.
That prize encourages owners and executives to spend heavily on players to chase promotion, even though most contenders will miss out and remain stuck with those spending commitments. Championship clubs without parachute payments spent an average of 84% of their revenue on player wages, compared with 57% at clubs receiving parachute payments.
Parachute payments are designed to cushion relegated clubs against the sharp drop in broadcast income. Even so, the regulator notes that in 2025/26 a Premier League club received up to 17 times as much in domestic competition distributions as a Championship club without parachute payments, while a club receiving first-year parachute payments collected up to five times as much.
Relegation still leaves clubs facing a steep financial drop. For clubs relegated in 2024/25, the report calculates an average 42% fall in revenue alongside a 34% reduction in wage costs, illustrating how difficult it is to cut spending as quickly as income falls.
This gap leaves the sport with a difficult balancing act. Sharing more revenue may help narrow the financial divide between leagues, but the regulator argues that any new distribution model must support financial stability rather than fuel another round of promotion spending.
What the regulator wants to change
The IFR’s draft action plan sets out six broad priorities. These are reforming revenue distribution, reducing financial losses, strengthening governance at National League level, improving how clubs manage financial risk, ensuring supporters’ views are taken into account, and improving corporate governance and progress on diversity and inclusion.
On financial resilience, the regulator wants clubs to plan more effectively for risks, hold appropriate financial reserves and prepare for the possibility that owner funding stops. It says its six-point plan is intended to reduce systemic risk and improve club financial soundness by the time clubs receive full licences by May 2030.
Responses from the leagues highlight where the next debate will be fought. The Premier League welcomed the draft report and said any new funding should come with effective financial controls and wider reforms. It argues that its existing proposal to the EFL meets the report’s objectives and that a football-led settlement remains the preferred route.
The EFL also welcomed the report’s focus on sustainability, saying the central findings reflect longstanding concerns over revenue distribution, financial cliff-edges and reliance on owner funding. It argues that English football generates enough money to support both a successful Premier League and a thriving wider pyramid, provided the way money is distributed and spent changes.
Both bodies agree on the need for greater stability, but an agreement on the exact distribution of revenue and the controls attached to extra funding remains unresolved. How the leagues balance immediate financial support with limits on unsustainable spending will determine whether the reforms make a lasting difference.
Why the numbers matter to supporters
Financial distress affects far more than the boardroom. It shapes squad planning, academy investment, staffing levels, stadium maintenance and a club’s ability to make credible long-term commitments. Supporters often feel those pressures through repeated cost-cutting, uncertainty over ownership or the sale of key players to meet financial obligations.
Across football, clubs constantly weigh immediate results against longer-term building. A good run on the pitch is only one part of a wider project, a distinction explored in our coverage of Ross County’s scoring surge and wider rebuild.
For supporters, financial health ultimately determines whether their club can remain a stable part of its community and compete without gambling its future. The regulator’s findings do not mean every loss-making club is about to fail. They do show, however, that too many clubs operate with too little protection if an owner withdraws support, income falls or costs keep rising.
The next test for English football
The draft report is open to public consultation until 5pm on 8 December 2026, and the regulator will review responses before publishing its final report by 24 May 2027.
Fixing these problems will require more than telling clubs to spend less. English football’s economic model rewards success so heavily that individual clubs often feel compelled to take financial risks just to keep pace with rivals. Without changes to incentives, revenue distribution and financial planning, spending restrictions alone may not ease the pressures that drive clubs to overspend.
English football has built a huge global audience and a highly valuable Premier League, yet the regulator warns that top-flight wealth cannot guarantee the security of the wider pyramid by itself. The test now is whether the game can turn record revenue into a more resilient system where clubs do not need constant owner funding to survive, and where ambition on the pitch does not come at the expense of their future.
Leave a Reply