Sheffield Wednesday Chairman Milan Mandaric commented last week that the club is losing £5M per year. Some were understandably disappointed by this – the club had experienced dire financial problems for many years with debts reportedly rising to around £30M before Mandaric rescued the club from the brink of administration in the final few weeks of 2010.
The cost of funding a League One promotion season in 2011/12 saw the Owls record a loss of £5.2M. His comments suggest that the increase in various revenues as a result of playing in the Championship have been countered by increased spending and the club is set to record a loss for the past financial year.
No business is happy to run at a loss but in the world of professional football, other than a select few, it seems that this is very much the norm.
In the Championship for example, it has been reported that Ipswich made a loss of £16M in 2012, Blackburn may be facing losses in the region of £40M, Leicester lost around £30M in 2012, Middlesbrough's losses in 2012 were over £13M, Bristol City, Nottingham Forest and Cardiff all lost in excess of £10M last year.
Football finance analysts Deloitte reported that only 3 clubs in the Championship made an operating profit in 2011/12 and the average loss per club in the division over the 2 seasons prior to 2012/13 was higher than what the Owls are thought to have lost.
The adage that the best way to become a millionaire is to be a billionaire and buy a football club seems to ring true in many cases.