Bristol City’s Championship rivals Stoke City have posted losses of £56million for the financial year ending 2021, indicating the accuracy of Robins chairman Jon Lansdown that as many as seven clubs in the second tier will be under threat of failing the EFL’s Profit and Sustainability rules.
The loss recorded by the Potters exceeds the £38.4m red number posted by City in December for the same accounting period, with fellow second tier side Reading publishing losses of £35.7m earlier this week.
The numbers were featured in bet365’s accounts, with the Coates family owning the gambling company alongside Stoke, and greater details will be revealed when the club's own figures are released, but show yet again the huge financial impact Covid-19 has had on EFL clubs with wage bills that exceed turnover.
Stoke have cited having to play the previous season behind closed doors and the drop in parachute payments as the reason for the large losses.
Stoke have brought their costs down, as their losses for 2019/20 stood at £87m, while the sale of Nathan Collins to Burnley for £15m has helped manager Michael O’Neill remain in the black in terms of transfer spending.
But it will surely prompt fresh questions of the Profit & Sustainability rules as a number of clubs are likely to be in breach of them next season and therefore facing points deductions.
The EFL have made slight adjustments to the rules, as the £39m losses permitted over three seasons is now, in effect, four with the 2019/20 and 2020/21 Covid-impact campaigns taken as an average figure, plus add-backs for lost transfer revenue up to £2.5m and £5m, plus spending on infrastructure, allowed to be taken into consideration.
But last month City chairman Lansdown claimed that up to seven current second tier clubs are likely to be either close to, or will exceed the threshold and therefore in danger of being hit with a points penalty.
“I'd have thought there will be five, six, seven in our league in a similar position as we are and there will be others that are struggling," Lansdown said.
City have cited the collapse of the transfer market outside of the Premier League after the outbreak of the pandemic with Championship clubs unable to recoup any revenue in the market. The Robins estimate - based on historical figures - it cost them around £30m.
That has been met with some criticism, in particular former Crystal Palace chairman Simon Jordan who believes it was a poor business model to run a club on the promise of money that might exist in the future, depending on who may or may not would want to buy their players.
Discussions continue to be held with the EFL but, as yet, there is no indication lost transfer income will be taken into consideration.
In January, outgoing Stoke CEO Tony Scholes backed City's wish for the financial fair play system to be amended in light of the pandemic. He said: "It’s such a challenge because it limits what clubs can do in terms of investment.
“I think the rules are wrong at the moment. They limit ambition to a prohibitive level. I don’t think they are calculated correctly by including things such as amortisation and I think they are too historic in nature.
“It’s more about levelling the playing field than it is about sustainability and people need to be more honest and call it what it is.
“I do get the need for financial controls, particularly with some of the ownership groups attracted into the games. You do need to have some control on spending and spending needs to be of a level which is of a seemly nature.
“But, bluntly, they should be addressed at the point where needed which is player wages, agent fees and those kind of things. To do it against historic transfer spend doesn’t seem right to me.”
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