Article shared by Shrimper Matt Slater from a colleague of his at The Athletic
Fear and losses in the National League: ‘Clubs of our size generally lose around £1m a year’
There is a scene in the Welcome to Wrexham documentary series when reality begins to bite at the Racecourse Ground.
Co-owner Rob McElhenney is on the phone with Shaun Harvey, advisor to the club’s board, and there are some financial issues to be addressed.
The planned playing budget of £1.5million ($1.8m) for a season in the National League — the fifth-tier of English football and its top division below the EFL — can be forgotten, confesses Harvey. “You’re going to be somewhere near £2.3million,” he says.
McElhenney, on the other side of the Atlantic, winces.
None of it, you suspect, can have come as a complete surprise. McElhenney and Ryan Reynolds, the famous faces in charge of the Welsh club, had already been told Wrexham were forecast to lose £1.1million in their first season of ownership. If they failed to win promotion to the EFL, which is what happened as they suffered defeat in the play-offs, and the same would happen again. “That’s scary as ****,” Reynolds said, bluntly.
Then came the sentence that has become emblematic of financial life for a large number of clubs beyond the three divisions of the EFL.
“You always talked about it being sustainable,” Harvey tells McElhenney. “Well, it’s sustainable as long as you’re happy to continue paying for it.”
Indeed.
Wrexham are yet to publish their first full set of accounts under McElhenney and Reynolds for a 2021-22 season that will juxtapose an enormous spike in revenues against unprecedented spending. However, plenty of their fellow National League clubs have already painted a stark picture of the investments being made to try to scramble up the ladder into the EFL.
Wrexham
A snack bar brings in some extra revenue at Wrexham’s Racecourse Ground (Photo: Oli Scarff/AFP via Getty Images)
Notts County, the club battling for the division’s sole automatic promotion spot this season with top-placed Wrexham, showed a loss of £1.7million for 2021-22. Total borrowing from the club’s owners, meanwhile, had climbed to £12million.
Woking, another club aiming for EFL promotion under American ownership this season, lost £965,000 when they finished 15th in the 23-team division. Their accounts detailed that director Drew Volpe had lent £575,000 to a club who have never made it out of non-League in their 136-year history.
The list of National League clubs reliant on the financial support of their owners is long and extends to the regional divisions that sit directly below it in the sixth tier. AFC Fylde and Ebbsfleet top National League North and South respectively, but both have spent heavily in pursuit of success.
Fylde, a Lancashire club with two EFL near-neighbours in Blackpool (Championship) and Fleetwood Town (League One), attract average home crowds of around 1,000 and have racked up borrowings of £1.3million to owner David Haythornthwaite. Meanwhile, Kent side Ebbsfleet lost broadly that amount in the 2020-21 season alone. Their last set of accounts, running to the summer of 2021, showed loans of £3.7million. “The company is reliant on its ultimate parent company, Kuwaiti European Holding Company (KSC), for continued financial support,” said a note in the accounts.
Non-League football is changing. Overseas investment has become increasingly common and so, too, is a willingness to chase success through increased spending. Making annual losses has become the norm. It has been estimated that the average annual deficit for a National League club is somewhere close to £700,000.
Chesterfield, who are next in line below the current top three of Wrexham, Notts County and Woking in the hunt for promotion out of National League, are another club operating in the red to stay in the arms race. Their financial support comes from Phil and Ashley Kirk, wealthy fans who last year agreed to invest an initial £1million into the club they grew up supporting. “Our only wish is to do good for the town and for the club,” the Kirks said last year.
Those resources have ensured Chesterfield remain able to compete under Paul Cook, a manager with many years of experience in all three EFL divisions, after posting losses of £2.37million last season, but also underline a stark reality. Without a willingness to take a heavy financial hit, the thought of reaching the EFL grows ever more fanciful. Losses are more of a necessity than a choice.
“It doesn’t make it right but, for clubs of a certain size, you’re almost expecting a loss,” says Chesterfield chief executive John Croot, a stalwart who joined the club’s board in 1987.
“I tend to think clubs of our size generally lose around the £1million mark a year at this level. If you’re serious about challenging in the National League, that’s almost what you have to do. There are exceptions, like Sutton, who went up in the COVID year (2020-21), but it’s very hard to avoid a loss if you’re trying to win promotion.
“We don’t accept it’s the way it has to be. We’re fortunate we’ve got an investor, but it comes back to trying to become sustainable. We accept we can’t do that this year, or the year after. It has to be long-term.”
Can a club such as Chesterfield, who were relegated from League Two in 2017-18, ever hope to be sustainable while playing in the National League? “That’s a bloody good question, to be honest,” says Croot, who has welcomed an impressive average attendance of almost 7,000 to games at Technique Stadium, just south of Sheffield, this season.
“We’re going to aim to be, but it’s not as if we can say we’ll have a budget of £700,000 because then our attendances would drop accordingly and, in all probability, we’d be bottom half of the National League. We need help trying to be sustainable.”
There are exceptions to the rule that says success can only come with spending in National League.
Wealdstone, a part-time club from the north west outskirts of London, are believed to operate on one of the division’s smallest budgets and yet are currently eighth. Boreham Wood, who are from the same area and reached the FA Cup fifth round last season, are another to command admiration for their ongoing progress. They are seventh.
However, to achieve promotion to the EFL is usually expensive.
Stockport County’s route back, achieved in 2022 after 11 years in non-League, came with losses of £2.6million last season and they were reliant on owner Mark Stott converting a £7.7million debt into equity in the summer after the side from Manchester’s southern outskirts had gone up as champions. “This puts the club in a strong financial position and for this, we are very grateful,” said their chief executive Jonathan Vaughan.
Grimsby Town, too, lost just short of £1million in the season that concluded with their win in the National League play-off final over Solihull Moors last May.
Wrexham are odds-on favourites to follow that lead and, even with two months of fresh streaming income of £225,000 between December and February, will already know any promotion comes at a cost.
The level of spending under McElhenney and Reynolds has set them far apart from the National League crowd in the past 18 months. Paul Mullin is thought to be the highest-earning player below the EFL, having joined on a free transfer in the summer of 2021 after his 32 league goals helped Cambridge United win automatic promotion out of League Two; fellow forward Ollie Palmer’s £300,000 move from third-tier AFC Wimbledon the following January pushed the wage bill up even higher.
This season has seen more signings from EFL clubs, including Elliot Lee (having just helped Luton Town win promotion to the Championship), Mark Howard (from League Two’s Carlisle United) and Jordan Tunnicliffe (League Two’s Crawley Town) on frees, as well as Eoghan O’Connell (Charlton Athletic of League One), Andy Cannon (the Championship’s Hull City) and Anthony Forde (League One’s Oxford United) for undisclosed sums.
Nothing was being left to chance ahead of Thursday’s National League transfer deadline, either.
Wrexham signed Billy Waters, second-leading goalscorer this season for League Two Barrow, before luring Ben Foster, the former Manchester United and Watford goalkeeper who played for England in the 2014 World Cup, out of retirement on a contract that will run until the summer. “Wages wise, it’s literally peanuts,” Foster told his Fozcast podcast.
The current playing budget at Wrexham is closely guarded, but some National League rivals believe it has climbed north of £3million and potentially as high as £3.5million. Some clubs in League One do not spend that much.
Paul Mullin
“We went to Wrexham (this week) last year and lost 6-5 in the 98th minute,” says Jim Parmenter, who has owned Dover Athletic, now in National League South, for 19 years.
“They were very pleased, but I told them our entire playing squad was on less than one of their strikers. That gives you a reflection of where we are with financial differences now.”
Dover finished bottom of the 2021-22 National League, winning just two of their 44 matches. A 12-point deduction, handed out after not fulfilling all games during the pandemic-affected previous season, meant they ended the campaign with just one point.
This season has been one of consolidation, but Parmenter accepts Dover, currently 16th in the 24-team table, cannot keep pace in an increasingly competitive field.
“It’s very challenging for us this season,” he adds. “Every week we’re wondering where the wages are going to come from. And I don’t believe we’re by any means unique in that. I’d say there’s 30 per cent of clubs thinking about how they’re going to get promoted and 70 per cent thinking about how they’re going to survive. You can put that across most of non-League football.
“There’s an unrealistic expectation for individuals to just keep putting their personal wealth into football clubs, even though it brings no guarantees. I’ve put a significant amount into Dover in the last 19 years — millions. Even if I put in another £1million over the next five years, it would make no difference to compete at the top table.
“The clubs spending a lot of the money (in the National League) are the ex-league clubs. It used to be a league of dreams, where small, well-run clubs could build and have a good chance of promotion to the Football League, but that’s gone. It’s sad.”
If the National League has developed competitive faults, though, its popularity continues to grow.
Six of its 24 clubs currently boast an average attendance of over 4,500 and another eight consistently top the 2,000 mark. Kidderminster Harriers, Chester and Dulwich Hamlet do the same in the regional divisions below.
And therein lies the attraction and appeal to outside investors.
The National League now presents opportunities and a route to the EFL without being hampered by spending restrictions. Significant TV money might not come with winning promotion — roughly £1million in solidarity payments per year as a League Two club — but there is no shortage of owners prepared to splash the cash to try to get there.
All but two or three of the 24 National League clubs now operate a full-time playing squad. It has become League Three in all but name.
The trickle-down is also evident.
As well as big-spending Fylde and Ebbsfleet, King’s Lynn Town and Havant & Waterlooville are both thought to be carrying big budgets in an attempt to get promoted to the National League this season. South Shields, with former England forward Kevin Phillips as manager, have also shown enormous ambition in their attempts to climb out of the seventh-tier Northern Premier League.
Everyone wants to be somewhere else, but some within non-League see risks in the benefactor model. It is only sound so long as your owner retains enthusiasm for the project.
Salary caps do not exist in National League, nor does any form of the financial fair play safeguarding in place for Premier League and EFL sides.
The National League says protection instead comes from its own financial reporting mechanism, where monthly checks are carried out to identify any clubs unable to meet their obligations, such as PAYE tax. Big-money signings, too, have to be approved by the league, which first seeks assurances the buying club can afford the deal.
One potential means of curbing clubs’ spending are the new contracts proposed by the Football Association this week.
The changes would see injured non-League players only paid in full for 12 weeks before reverting to statutory sick pay of £99.35 ($121.36) per week. The Professional Footballers’ Association, effectively the players’ trade union, says it will not support these new contracts and it remains to be seen if the National League’s top clubs would opt-in when signing a player from the EFL.
“There’s no restriction on what you pay your players, or what you spend on players,” says Dover’s Parmenter, who believes one club in the Isthmian League (the seventh and eighth tiers of the English game) are paying a player £1,000 per week this season. “Supporters of those clubs love it because they get success, but what happens when they don’t? And that’ll happen.
“The only answer for me is a salary cap — I’ve argued that when I was on the National League board. Some clubs will always be able to spend more than other clubs, that’s never going to change, but there needs to be a scale which enables the less well-off clubs to compete. At the moment, there’s no level playing field.”
The awkward question in all this is where a landscape dominated by benefactor-backed clubs leaves those that are fan-owned. Can they still hope to do what Exeter City did in 2007-08 and AFC Wimbledon three years later and win promotion out of the National League? On this latest annual Non-League Day in the football calendar, is romance still alive?
Chester FC, formed in the wake of former EFL club Chester City’s financial collapse in 2010, are hopeful this will be the season they get promoted from National League North. They are currently third. Fellow fan-owned sides Darlington (fifth) and Scarborough Athletic (seventh) are also in the mix to go up to non-League’s top tier.
“The way the game is set up at the moment, it presents challenges for supporter-owned clubs who are committed to sustainability,” says Jim Green, Chester’s vice-chairman.
“We’ve lobbied fairly extensively around the changes we feel English football needs to introduce and some of the stuff that’s come out of the recent white paper is really heartening. Whether it goes as far as we think it needs to, we’ll find out. But they are steps in the right direction.”
That UK government white paper for reforming English football, published in February, proposed an independent regulator which would go as far down the pyramid as the National League but no further. However, the hope is that a cultural change would follow. That was clear last week as Chester hosted the annual conference of Fair Game, a band of clubs campaigning to improve football governance.
“You look at what clubs are spending in the National League, less so in the National League North and South, and it’s eye-opening to see what we would be competing against up there,” Green says.
“Clubs are in a position where they can post multi-million-pound losses. We would say that’s not sustainable but the owners of the clubs I’m sure will say it’s sustainable as long as they keep putting their hands in their pockets.
“I can understand the incentives of getting into the EFL. The funding distribution in League Two is on a different level to what clubs get in National League, so I understand the attraction, but there are only two clubs that can go up each season.
“Whether it’s wages or transfer fees, there are astronomical amounts being paid for players and that will always be a gamble. Where does that club stand if one individual walks away? We can only focus on what we’re doing and build our club up.”
You can drive between Wrexham and Chester in half an hour, but their football clubs are worlds apart financially. It is the new National League in a nutshell.
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