English football’s widening financial divide and dependence on owner funding have been laid bare by the Independent Football Regulator.
Its State of the Game report warns of urgent problems across the pyramid, although football finance expert Kieran Maguire has questioned whether its proposed reforms will deliver meaningful change. The findings show 94 per cent of clubs across the top five divisions made losses in 2025/26.
More than 60 per cent of EFL and National League clubs had liabilities exceeding the book value of their assets, leaving them technically insolvent on an accounting basis.
Owners carrying the risk
The immediate vulnerability is cash. Some 66 per cent of clubs said they could not survive beyond 90 days without fresh owner funding, while 29 per cent could not last more than 30 days. Meanwhile, 68 per cent had no contingency plan if their owner walked away.
IFR chair David Kogan told BBC Sport that 32 clubs were operating with only a month’s cash available. He warned that an owner’s decision against making the next payment could have immediate consequences.
“That is a very, very risky scenario. This is the moment of addressing these problems before money starts to dry up.”
The financial returns help explain the regulator’s concern about continued investment. Between 2021/22 and 2025/26, investors were estimated to have lost 41 per cent of their original investment, accounting for changes in club value and annual losses. Over the same period, investing in the FTSE 100 would have generated a return exceeding 36 per cent.
That reliance on external finance leaves football vulnerable beyond the circumstances of any individual owner. The IFR warns that weaker economic conditions or reduced investor appetite could threaten funding across the game.
A growing gulf between clubs
The inequality stretches well beyond the familiar gap between the Premier League and Championship. In 1992/93, the highest-earning top-flight club brought in 70 times as much as the lowest earner in the EFL. By 2024/25, that multiple had reached 173.
Over the same period, average Premier League revenue grew from 2.7 times the Championship average to 8.7 times. By 2024/25, the respective figures were £341m and £38.9m, illustrating how much harder it has become for the second tier to keep pace.
The report also stresses that clubs rely on matchday, commercial and broadcast income in different proportions, giving them different risks. Broadcast revenues can change sharply following promotion, relegation or qualification for European competition. That creates incentives to overspend in pursuit of success, while relegation can leave costs out of step with reduced income.
Of significant interest to Imps fans is that within the Championship, parachute payments create another imbalance. First-year payments reached £48.7m per club in 2025/26, against £5.3m in solidarity payments for clubs without parachute support. The IFR argues that this encourages overspending as clubs attempt to compete, contributing to wage inflation.
Costs have risen sharply across the divisions. Between 2021/22 and 2025/26, average player wage costs increased by 33 per cent in the Premier League, 32 per cent in the Championship, 71 per cent in League One and 63 per cent in League Two.
Player registrations can be valuable assets, with trading providing an important source of cash. However, wages are recurring commitments that can be difficult to reduce quickly, leaving clubs exposed when income falls.
Yet player spending is only part of the problem. Seventeen EFL and National League clubs incurred non-player operating costs greater than their revenues, meaning they would still make losses even if their players worked for free.
Stadiums are important financial and cultural assets, but only 60 per cent of clubs own their ground. Clubs higher up the pyramid have greater opportunities to invest in infrastructure and grow revenue, while the incentives weaken further down. Stadium costs and other overheads take a proportionately greater share of lower-league income and are often difficult to cut when funding falls.
Transfer financing adds further pressure. Around £1.2bn of future transfer income has already been exchanged for immediate cash, while clubs reported £4.8bn in transfer payments owed against £1.5bn due to them. Those arrangements connect clubs and lenders, increasing the risk that financial difficulties spread.
Borrowing costs have also risen, alongside debt relative to revenue in League One and League Two. Smaller clubs have limited access to debt products during a short-term cash crisis, while larger clubs face more expensive borrowing and debt terms that can increase pressure following relegation.
Lincoln City’s figures offer context for the funding required even when income improves. In 2024/25, turnover rose almost 22 per cent to exceed £8m, but City still recorded a £2.9m loss. Shareholder funding totalled £3.6m, with cash balances of £1.6m and positive net assets of £4.5m at the financial year end.
Another warning, or meaningful reform?
The IFR wants changes to revenue distribution, stronger financial planning and action to reduce losses. Clubs must also demonstrate how supporters influence decisions, improve governance and hold appropriate financial resources by May 2030.
However, Maguire has challenged the idea that identifying the problems represents a breakthrough. Writing on X, he said Championship wages had exceeded revenues in ten seasons out of eleven, while similar reports in 2020 and 2021 had already highlighted football’s financial problems.
He pointed to the ITV Digital collapse, the crises at Bury and Macclesfield Town, Covid and controversial accounting practices as warnings that had failed to produce lasting change. His concern was that the regulator’s proposals remained aspirations rather than a convincing route to reform.
“The IFR action plan proposals are a wish list, a bit like me wanting to lose three stone and join The Cure as back up guitarist to Robert Smith.
“The diet starts tomorrow, just as I said yesterday.”
The Premier League and EFL have yet to agree a new funding settlement, although Kogan believes a deal is close. The regulator has warned it will consider using its powers if football cannot find a solution, leaving the effectiveness of that intervention as the next major test.
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