Leonard Curtis directors and co-author of the firm’s Football Finance Report, which focuses on the EFL Championship and was launched last month, have issued a series of warnings over the future of the game following publication of the Independent Football Regulator (IFR)’s much-anticipated draft State of the Game report on Tuesday (13th October).

The IFR’s 245-page report, which seeks to lay out the key issues facing English club football across the pyramid, concludes that the game’s finances are “dangerously exposed, with the majority of clubs living on the edge of financial disaster”.

According to the study, in 2025/26, 94% of clubs across the top five English leagues were loss-making, in terms of profit before tax.

The IFR noted that in the EFL Championship, while average losses remained relatively stable, at between £11m and £13m from 2021/22 to 2024/25, they increased to £22m in 2025/26, equivalent to around 59% of revenues.

The report also noted that on average, for every £1 of revenue, clubs require external financing equivalent to 57p in the Championship, compared with 33p in the Premier League, with the figure at 72p in League One, 26p in League Two and 55p in the National League.

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Potential impact of regulation

The State of the Game report consultation will remain open until December, with the final report to be published in early 2027 when a series of recommendations are expected to be made.

The decision to set up the IFR has sparked widespread debate across the game, with many welcoming the move but others fearful of its potential impact.

Leonard Curtis – a multi-disciplinary professional services firm with over 30 years of corporate restructuring expertise – has extensive experience of dealing with regulated businesses, such as investment banks, law firms and loan providers.

Alex Cadwallader, a Leonard Curtis director and insolvency practitioner, who leads the company’s Business of Sport project, stressed that the IFR is likely to face numerous challenges in tackling some of the game’s key issues.

“Regulation at its very core is brought in to protect customers or the public by managing behaviours and to control certain systems within a particular industry,” he explained.

“However, we first need to remember that just because an industry is regulated it doesn’t mean bad actors won’t still find a way to operate in it.

“Here at Leonard Curtis, we have market-leading experience in the banking and legal sectors dealing with the fallout where owners have taken control of historic businesses purely for their own benefit and to line their own pockets, often fraudulently.”

Cadwallader also warned that the presence of a regulator can have several unintended consequences in any sector.

“These are multiple and include a more relaxed attitude, with many companies and individuals expecting regulation to fix all the key issues, along with increased compliance costs and success ultimately being achieved in audit and legal rooms.”

He added: “In English football, regulation could also slow the growth of the game as potential investors may prefer less regulated leagues.”

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New Financial Performance Index for the Championship

The IFR’s State of the Game report identifies the impact of parachute payments – received by relegated Premier League teams when they drop into the Championship – as one of the major issues “affecting the systemic resilience of the English football pyramid”.

The IFR study follows the launch on 16th September 2026 of the inaugural Leonard Curtis Football Finance Report, which analyses the financial health of clubs in the EFL Championship and features a new Financial Performance Index for the division.

Data in the Leonard Curtis report shows that Championship clubs receiving parachute payments generated 2.8 times the average annual revenue of non-parachute clubs across the ten-year period from 2015/16 to 2024/25 (£59.7m vs £21.3m).

In 2023/24 and 2024/25 (the last two seasons for which financial data is publicly available for all clubs) the average revenue advantage of teams in receipt of parachute payments was as high as £62-66m per club.

Leonard Curtis CEO Dan Booth said: “In the Leonard Curtis Football Finance Report, which looked at the state of the EFL Championship, we talked about the ‘haves’ and ‘have-nots’, and the IFR report further confirms this.

“While revenues have gone up so have costs, with a worrying 94% of clubs across the top five leagues not making a profit – how?

“It feels like when it comes to sport in general and in particular football we lose all ability to exist in the real world. In no other business would we accept that salary costs are allowed to be in excess of our income.”

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Clubs spending “beyond their sustainable means”

Prof Rob Wilson, provost at University Campus of Football Business (UCFB) and co-author of the Leonard Curtis Football Finance Report, commented: “The IFR's findings on the EFL Championship are particularly concerning. These are not isolated examples of poor financial management. They point towards a structural problem in which the financial rewards associated with Premier League promotion encourage clubs to spend beyond their sustainable means.”

He added: “The IFR is right to identify parachute payments as a significant distortion within the Championship, something the Leonard Curtis report highlights.

“Parachute payments were introduced for a legitimate reason: to help clubs manage the financial shock of relegation, particularly where they have committed to Premier League-level contracts. That principle remains valid.

“However, the system creates a substantial competitive advantage for recently relegated clubs, while encouraging other Championship clubs to increase expenditure in an attempt to compete.

“The consequence is an inflationary cycle in which clubs commit increasingly large proportions of their income to playing costs, often without the revenues to sustain them.”

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Combined wages-to-turnover ratio never below 91%

The Leonard Curtis report underlines those challenges, with the data showing that while Championship revenues grew from £546.5m in 2015/16 to £920.3m in 2024/25, the combined wages-to-turnover ratio never fell below 91% across the ten-year period.

In 2024/25, 13 of 23 reporting clubs spent more on wages than their entire turnover (Sheffield Wednesday did not file accounts for the year due to being in administration).

The findings in the Leonard Curtis study also suggest that clubs with parachute payments were more than four times as likely to win promotion as those without them (31.4% vs 7%) over the ten-year period.

In 2024/25, parachute clubs had an average +26.8-point advantage, with three of the four recipients finishing 1st (Leeds United), 2nd (Burnley) and 3rd (Sheffield United).

Prof Wilson said: “We need to reconsider how parachute payments operate. We need a mechanism that protects relegated clubs without creating an uneven competitive environment or incentivising excessive financial risk-taking across the division.

“Ultimately, parachute payments should provide a financial safety net, as opposed to what we see now, which is a competitive trampoline.”

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Financial distribution agreement

Publication of the IFR’s report comes as discussions between the Premier League and EFL continue over a new system of financial distribution. The IFR has 'backstop' powers to impose a settlement if the two parties are unable to reach an agreement.

However, Prof Wilson warned that any new settlement must be accompanied by greater cost controls across the pyramid if it is to prove effective.

“The challenge is finding a distribution model that rewards commercial success while ensuring the pyramid remains financially viable,” he said.

“Simply transferring more money down the leagues, without addressing how clubs spend it, risks fuelling further wage inflation rather than improving sustainability.

“We need to connect any redistribution settlement to stronger financial governance, greater transparency and more sustainable cost structures.

“The objective should not be to make every club financially equal. It should be to create a system in which clubs can compete, invest and develop without placing their long-term existence at risk.”

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Ex-player Matt Jarvis: “Getting this right matters so much”

Former West Ham, Wolves and Norwich City player Matt Jarvis, who wrote the foreword to the Leonard Curtis Football Finance Report, said it was vital the game’s financial challenges were resolved.

“Behind every club’s finances are players, staff, supporters and families who depend on its future,” he said. “When a club gets into financial trouble, the impact reaches far beyond the pitch. For me, that’s why getting this right matters so much.”

Football’s enduring value and central place in communities

Echoing those comments, Dan Booth, who as Leonard Curtis CEO leads the private equity-backed corporate restructure firm, which helps business owners and their advisers navigate complex, challenging situations every day, said that amid the debate about the game’s future it was important to recognise football’s enduring value and central place in communities across the country.

“While everyone will naturally go to the detail of the numbers and the findings of the IFR report, we should not forget just how important football is to so many of us,” he said.

“More than half of all adults follow men’s football, with more than 15 million playing regularly. Couple that with the average age of a Premier League and EFL club being over 139 years old and we have some serious history and heritage to protect.”

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“Financial wizardry allowing the deckchairs to be rearranged”

Booth continued: “There is a strong feeling that football in general is actually a ‘not for profit organisation’ – with financial wizardry allowing the deckchairs to be rearranged as club owners and executives see fit.

“Yet these same owners and executives have a responsibility to the clubs, fans, heritage and future of the game loved by some many, to be the right and proper custodians.

“The spotlight quite rightly is on how those responsible for football should be thinking about the future of the sport. We all want the game we love to be enjoyed now and in many years to come, but like anything you want to last you have to take care of and protect it with everything you have got.”

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