Queens Park Rangers made a staggering loss of £65.4m in the year to May 2013
They are one of many teams in the Championship with huge losses and crippling debts.
Queens Park Rangers spent £41.4m on transfer fees last season and their wage bill increased to £68m per annum. That wage bill is higher than last season's Champions League runners-up Borussia Dortmund. Unbelievable when you compare the talent and the performance of the two sides.The London outfit's total debt now stands at an incredible £177.1m.
Tony Fernandes has said that the club is still making progress towards short-term and long-term goals despite relegation. "When, alongside my business partners, I purchased a majority shareholding in the club in August 2011, my goal was to turn QPR into an established Premier League club. Being relegated was obviously not part of our plans, but our focus and determination to achieve our long-term goals has not diminished."
"We are confident that the 2013-14 season will also see the club continue to make progress towards achieving its short, medium and long-term off-pitch target."
QPR spent huge sums on players under both Mark Hughes and Harry Redknapp who replaced the Welshman in November 2012. Players such as Esteban Granero, Park-Ji-Sung, Jose Bosingwa, Chris Samba and many more arrived on the back of high transfer fees and/or huge wages but yet failed to make any significant impact at the club.
Harry Redknapp's squad still contains plenty of high earners despite the fact they are now in the Championship. Andy Johnson, Bobby Zamora and Shaun Wright-Phillips remain at the club but haven't seen much game time this season. Others such as Granero, Julio Cesar and Loic Remy are out on loan and will be returning at the end of the season.
Such is the disparity between the Premier League and the Championship with regards to the TV revenue, clubs are spending more than they can afford in order to gain promotion to the top flight. The income generated at a top flight club is huge and can make a lasting effect for most sides. Even if relegated there are parachute payments to help with costs. Clubs gamble by spending big in the hope it pays off with promotion, and then once in the Premier League again they spend to make sure they don't suffer relegation and can carry on receiving the big TV money.
Leicester City look almost certain to gain promotion to the Premier League with The Foxes currently 13 points clear of third placed Derby County making it extremely likely they will gain automatic promotion. Leicester have a great squad and it is no surprise how well they are doing but it has come at a cost. They reported losses of £34m in the 2012-2013 which followed on from losses of £30m the year before.
Nottingham Forest also performing well in the Championship currently in 5th place reported losses of £17m under the ownership of Kuwaiti brothers Fawaz and Omar Al-Hasawi. If Forest can gain promotion then perhaps it could be said the expense was worth it but what happens if they don't? It's a very precarious position that clubs find themselves in.
Both clubs spent more on wages than their entire turnover and under the Financial Fair Paly rules in 2013-2014 any losses over £8m could result in a transfer embargo. As Queens Park Rangers losses are almost eight times that amount they will receive a hefty fine which could be in the region of £50m.
The huge money in the Premier League can have such a detrimental effect on Football League clubs. They spend big in order to get a slice of that jackpot and once they are there they spend more to try and sustain their place. If it goes wrong however there may be no way back.
Bolton Wanderers are only in their second season in the Championship since relegation and have struggled to compete at this level. They are only four places from the relegation zone and chairman Phil Gartside revealed that they lost £50.7m in the year immediately after their relegation. Their total debt now amounts to £163.8m with Manchester City, Manchester United, Chelsea and Fulham having larger debts. They have the Premier League revenue to help deal with those debts though. Bolton don't and could be spiralling further down the Football League if things don't improve along with many others if the gambles don't pay off.
image: © Tom Cuppens