David Kogan, chair of the Independent Football Regulator (IFR), has delivered a comprehensive draft analysis of football finances, highlighting significant challenges and structural issues within English football’s leagues. The report, titled *State of the Game*, spans over 240 pages and focuses on the evolving financial landscape, particularly within the Championship and League One divisions.
Sam Rush, former Derby County CEO and current CEO of General Sports Worldwide, praised Kogan’s independence and commitment, emphasizing that the regulator’s role is far from straightforward but necessary. Rush noted that Kogan has firmly positioned himself to protect the interests of football clubs and expressed confidence in his leadership amid concerns the IFR might lack enforcement power.
A central theme in the report is the financial evolution of the Championship, where rising wage inflation and increased investment have been accompanied by significant revenue growth. However, costs have grown equally sharply, with the average annual loss for clubs at this level reaching £22 million. Similar financial pressures are beginning to emerge in League One, where the playoff model has expanded, posing risks of unsustainable spending patterns.
The report addresses why the Championship appeals to investors despite its financial risks. Unlike conventional investments, football clubs offer volatile but high-reward prospects. Promotion to the Premier League can nearly double an investor’s stake, and reaching the Premier League can almost triple it, making it an attractive, though precarious, gamble. Kogan and Rush both argue for a shift toward long-term ownership models, where custodians invest sustainably in clubs and local communities rather than seeking short-term gains.
Redistribution of revenue from the Premier League to the English Football League (EFL) plays a critical role in this context. Although £9 billion circulates through the football system, 83 percent is concentrated among the 20 top-flight clubs, leaving EFL clubs with a smaller share largely consumed by escalating wage bills aimed at Premier League promotion. Rush highlighted that previous revenue-sharing agreements have often come with conditions favoring top-tier clubs, such as the Elite Player Performance Plan, which allows Premier League clubs to acquire young talent from EFL teams at minimal cost.
The report also calls for greater fiscal responsibility among EFL clubs themselves. Operating losses on the order of £22 million annually cannot be sustainable, and the precarious financial health of some clubs—some reportedly able to survive only a few weeks without owner support—raises concerns. Rush recommended implementing covenants requiring owners to maintain funds equivalent to three years' operating costs to mitigate risks such as owner insolvency or protracted takeover processes, which can extend from 12 to 18 months.
Overall, the draft analysis by the IFR underscores the need for systemic reform in football financing structures to ensure long-term stability and growth across all league tiers.