Show us the money

Cod Almighty | Article

by Tony Butcher

10 July 2023

Football Finance: a tale of a trio of tiddlers

How do you finance a football club?

• Matchday sales (ie seats sold and merchandise)
• Commercial income
• Central support (share of broadcasting money and other EFL distributions); and
• Investment (loans or shares)

Sales just means you and me – we give the club more of our money. It is also known as increasing the ticket price. The only other way to increase income from this source is to have more of us. This means more turning up and increasing the capacity in the existing ground.

Commercial income is sponsorships of all kinds, room/ground rentals and merchandise. Flogging a few more shirts and getting someone to sponsor the Frozen Horsebeer Stand, that sort of thing.

Apart from avoiding relegation or getting promoted there is nothing much any individual club can do to increase the central support. It is a fixed, a given, a constant that is factored into the short term planning. It is what it is and that's that.

Ah yes, and finally we have "investment" - aka other people's money. This can be loans from the directors/owners or financial institutions. It can be "equity", which is a posh way of saying buying shares. Remember, loans are never benign, they have to be paid back. Unless the lender kindly writes them off it is simply a debt.

On the other hand shares are a one-off one-way flow of money into the club. The club does not have a financial obligation to the shareholder, the only way a shareholder gets their money back is if someone else buys the shares from them. Investing by way of buying shares in a business is a clean and simple way of funding. The only down side is that the existing shareholders may lose some of their controlling power.

So, it's a choice for those who control football clubs. How to finance your business plan and when to tap into those sources of income.

Us and Them
Now Town are tiddlers in football terms. We are, face facts. History and our self-image are irrelevant. Professional football is all about finance, that's where the power lies. The competence of the directors and management determine whether that power is used effectively. You can punch above your financial weight, but only for so long.

The 1878 Partners constantly refer to looking at best practice in other clubs, with an emphasis on those who are (or recently were) of similar size/stature: Stockport, Wycombe, 5 and 9 the Brighton Line, the Brentford Nylons. But there are two specific clubs who, just five years ago, were fellow fourth division staples after some years in the Bananarama wilderness. Town stayed in the gutter and stared up at Lincoln and Luton.

So how did they do that (when we didn't)?

Accountancy for Dummies
All three are officially regarded as financially prudent, well-run clubs by Kieran Maguire, the godfather of football finance. He's right – on paper they have all been able to finance their operations, to pay their debts as and when they fell due. They have all (albeit eventually in Town's case, after a change of ownership) been successful on the football field in the last half decade.

We are all similar but Town are the smallest tiddler. Town's ground capacity is smaller than these two "rivals"; and so Town's intrinsic financial capacity is smaller.

Let's go to that year zero. In 2017/18 Luton, Lincoln and Town were in the same league. Luton arose, Lincoln later arose and Town eventually sank. How? What lessons can we draw from each club?

Let's look at the evidence – the financial accounts filed at Companies House give us a clue. All figures are to the end of the 2022 season. And before anyone starts to mither about Covid, it was the same for all clubs and the accounts for 2021 cover that. Weirdly Town's turnover increased in that year whilst Luton's dropped by £2m and Lincoln by £1m.

Lincoln's annus mirabilis was 2017, winning the Bananarama and having a stupendous cup run that had the bank account overflowing with cash. On the back of that they had an upsurge in support which has hardly dissipated since. Lincoln were getting between three and four thousand more people per game through the turnstiles – to roughly the levels Luton achieved. Town? They just bobbed around 5,000.

Average Attendances

How does that impact in cash terms? Each year Town have simply been getting less money in through the turnstiles than these erstwhile competitors, on average £900,000 per season less than Lincoln – and nearly £3.5m less than Luton. In the 2021/22 season Luton's matchday income totalled £4.9 million, Lincoln's was £2.3 million and Town's was £1.2 million. Unless extra seating is put in the empty corners Town will never get near Lincoln's average, the need to accommodate away support sees to that.

Commercial Breaks
The other major area of income that the club can maximise/control is in exploiting the commercial possibilities. In 2019 all three clubs received broadly similar cash amounts from their commercial operations. After that, well, things change:

Commercial Income

In her recent podcast interview Debbie Cook was proud of the "41% increase in commercial income" after the takeover. The figures don't show that, but let's cut her some slack, she may have been referring to this season and the definition of commercial for accounting purposes may be different from hers. But they do show that, after stagnation, under 1878 Partners it did rise 27% compared to pre-Covid, which is better than Lincoln's proportionate uplift. Luton are now beyond the clouds in turning water into wine.

Commercial Income per Game

Matching Lincoln's present income per game rate would bring in another £365,000 per annum. There is scope for catching up, but there will be a ceiling.

OK, but income and expenditure are two entirely different things. What have the respective clubs been spending? And where did the money come from?

Pots of Gold
The respective turnovers (i.e. total income) tell us the respective size of the clubs and how much is needed to be spent just to operate.


Lincoln came back into the league much cash richer than Town and have got bigger every year as Town (until the takeover) spent more or less the same as they always had. Luton were simply already "bigger" and their (TV) income doubled again on promotion to the second division.

And this is directly reflected in what the clubs spend on employing people.

Wage Costs

Your eagle eye will have noticed Luton are spending more on wages than their entire turnover. Lincoln and Town spend less, but Lincoln are allocating 90% of their income on wages, with Town down at 69%.

So Luton spent more than they had to be in the second division and Lincoln spend more of more to stand still in the third division.

The Bigger Picture
The overall positon of each club is eye popping – especially when you remember these are deemed "well run, financially prudent" football clubs. In the year to summer 2022 Luton lost £143,000 per week, with Lincoln losing £40,000 per week. Town "only" lost £18,000 per week.


The overall position of each club shows how much it costs simply to be in each league. In four of the five years from 2017 Town made profits - even in that Covid year.

Cumulative Losses

Town had basically stood still for six years and spent more of what they had on repaying debt. The reasons are entirely down to the previous owner's willingness and capacity to continue funding the club, plus his intentions in relation to retrieving his loans. We knew that, but it does bear restating.

This is just describing something obvious, but how do Lincoln and Luton fund these losses?

Do the Right Thing
Luton had already expanded their shareholding and now rely upon player sales with, for example, £9m of transfer income in 2019; short term loans from the owners…and £6m EFL Covid loans in 2021. Relying on player sales to fund the business is so Luton. It was their business model in the early 2000s (during the aftermath of Bosman and the ITV Digital collapse when virtually no player sales occurred) and they entered insolvency in 2007. The Premier League cash cow is a handy arrival in their world, especially as the Covid loans have to be repaid now. Luton may look like poster boys for the lower leagues, but they've done it through loans and football fortune, which does rely on luck.

Lincoln are trading at a loss but can fund those losses through the way they have chosen to operate. They had a plan and they don't plan on the basis of luck. And here it is in black and white.


Our county cousins have financed their rise through steady annual increases in their shareholding to fund the increasing cost of competing in whichever division they are in. In fact, they issued further shares last month bringing their total shareholding to £14,274,075. The £10.6m which has flowed in since 2017 funds the £7.6m of losses since they got back into the Football League with £3m "to spare".

The data leads us to one conclusion, that the Lincoln model is the one for Town to follow. If they can do it so can we.

The Way to the Stars
Ultimately, Town have limited options – sweat the assets (me and you paying more); winkle more out from the corporate sector (in an impeding recession?); borrow from banks (not a wise thing, especially with interest rates rocketing); borrow from rich owners (and rely on their whims and good intentions); or issue shares.

The 1878 Partners have set out their plan for continued but limited (and inferred finite) personal funding, to improve commercial income and will be seeking "appropriate investment partners".

Beyond those nebulous words there is no detail, no timescale, for the expansion of shareholdings. From their perspective it may seem logical to defer and deflect on detail, but when the time comes that message may get mangled and misunderstood. Far better for them to give a broad time frame in which they would hope to offer shares, and why. Get it out early, clearly and often.