There has been a widening chasm between the EFL divisions in recent years.
The Premier League often takes the attention for the gap between the top flight and Championship, though Sunderland and Leeds United have made light of that this season.
However, it is becoming more difficult for clubs further down the divisions to survive following promotion to a higher level.
Clubs rising into League One from the fourth tier still appear to be well set the following year, but the division above is where the issues are starting to become more apparent.
Commonly referred to as ‘second season syndrome’, the promoted trio Lincoln City, Cardiff City, and Bolton Wanderers will all have their sights set on second-tier survival next season. However, it is the following year that clubs often struggle, when the momentum has worn off.
Football Finance expert Kieran Maguire discussed all things League One in an exclusive chat with Football Lowdown.
“When Derby County went up, they lost a fortune. We’ve seen big losses at Charlton, and Bolton tend to lose big amounts of money as well. So, it’s very difficult for a fan-owned club that doesn’t have that ability to write a check in the transfer window to commit itself to paying wages which, under normal circumstances, wouldn’t be deemed to be acceptable.
“I’m looking here at Huddersfield paying 159% of revenue as wages, Charlton 141%. The average in League One is 102%, which makes no sense whatsoever. For me, this is the fascination of football finance.
“You had this absolutely crazy situation with Birmingham City in 24/25, who were paying wages averaging £16,000 a week for the third tier of English football. That’s what the owners wanted to get promoted. It is possible under the EFL rules to buy yourself out of those divisions.”
That last point rings true, but there are still clubs that prove to be the exception to the rule. Lincoln, for example, have just won League One with a record-breaking campaign, despite having a bottom-half budget. Stevenage made the play-offs, finishing above clubs with much more money to play with. And at the bottom of the division, AFC Wimbledon, written off by many and expected to finish dead last, survived upon their return to the third tier.
However, inbetween those examples, there is an eye-watering amount of money that is being lost by clubs who are underachieving. And in order to try and turn their fortunes around the following year, those clubs are prepared to make even higher losses to try and gamble on winning promotion.
“There’s no doubt what we’ve seen in League One in the post-Covid years is a rapid acceleration of the losses being incurred by clubs,” Maguire said. “In 2019, they were probably losing a million pounds a year on average. That loss has increased to six or seven million.
“I was asked to do an assessment for a fan-owned club to say, ‘Realistically, how far can we go?’ Four or five years ago, I would have said top half of League One. Anything above that, you are either vastly overperforming or you’ve had a windfall this year.
“I think there are some that are slightly different. I think at AFC Wimbledon, because of the demographics and the history with the old Wimbledon, they could perhaps get a bit further. Even so, they’ve had their own financial challenges when they had the sinkhole. That was a classic example of football fans going, ‘I’d hate to happen to me, so I’ll help you out.’ There is a limit as to how far a fan-owned club can go.”