‘Clubs at every level are at risk’ – the financial nightmare facing football

Of the 21 Championship clubs who competed in the EFL last season, the latest published accounts for five of them included parachute payments that came with relegation from the Premier League.

In 13 instances out of the remaining 16, the club’s wage bills exceeded their income. In their accounts, Reading and Birmingham said there was “material uncertainty” over their ability to exist as a going concern. As is the case for the majority of Championship clubs, they are reliant on funding from their owners.

It has been reported, external that in order to protect themselves, if agreement can not be found between individual clubs and the Professional Footballers’ Association over wage cuts and deferrals, a “nuclear option” of all 24 clubs going into administration was being considered.

But this notion has been rejected by alternative sources influential within Championship circles.

“It is hard enough getting all 24 clubs to agree the time of day, let alone the detail about how you could go about doing that,” said one. “It just wouldn’t happen.”

Each club has a very different funding model.

Some – Stoke and Preston are two examples – have long-standing, wealthy owners, who have already vowed to honour their financial commitments. In contrast, Leeds and Birmingham have already reached deferral agreements with their first-team squads. Others are looking at other ways to reduce costs. West Bromwich Albion chief executive Mark Jenkins has taken a 100% pay cut.

Evidently, distrust exists. BBC Sport understands EFL chairman Rick Parry is in receipt of a letter from a club questioning how wage deferrals – existing and in the future – are going to be paid and whether, until salaries are honoured in full, clubs are going to be allowed to make new signings or agree new deals with players whose contracts expire on 30 June.

The argument is some have stretched themselves too far and should not be allowed to avoid the consequences.

When Covid-19 has been dealt with and life has returned to normal, it is anticipated the financial operations of EFL clubs will be looked at again.

Insiders have told BBC Sport the present “Profit and Sustainability” regulations are “not fit for purpose”. The EFL already has a working group looking at the rule, which allows clubs not recently relegated from the Premier League to lose £39m over a three-year period. However, rather than look at the whole issue with scepticism, as has been thought likely, it is hoped the experience of the past month, and what lies ahead, will allow all parties to adopt a more mature position which, in theory, will provide the breathing space needed to reach more acceptable – and workable – regulations.