Thursday 01 August 2024 6:55 am | Updated: Wednesday 31 July 2024 3:03 pm

Ed Warner: Is the ‘Wrexham Effect’ actually hurting lower league finances?

Sports Business Columnist

Wrexham's Hollywood owners have boosted their finances and helped to attract blue-chip sponsors

Our sport business columnist on Hollywood-bankrolled Wrexham’s impact on the lower leagues, a new golden generation of track and field athletes for Team GB, and offensive fancy dress at Test cricket.

One week until the football league kicks off and Wrexham AFC will hog the League One spotlight, just as their Hollywood story dominated League Two and the National League.

Much has been said about the positive “Wrexham effect”, but it’s not all pre-season friendlies against Chelsea in California and sponsorship from global brands for lower division teams. Many may yet find that Ryan Reynolds’ and Rob McElhenney’s venture indirectly wrecked ‘em.

Consultancy LCP has just published its second annual study of English football club finances. Its analysts have crunched the 2022-23 accounts of the 92 clubs in the top four divisions and, as last year, paint a picture of a fragile system with clubs heavily indebted to their owners and each other. Some 86 per cent of teams were loss-making. Net debt across the system increased by 27 per cent to £7.1bn.

Most striking in this year’s LCP report is the deterioration in the financial health of clubs in League One and Two. Within two years, aggregate annual losses in League One almost trebled from £44m to £121m, and in League Two jumped from just £2m to £35m. The authors attribute this in part to a Wrexham effect, with club owners striving to match the ambition of the Welsh team’s celebrity backers.

“The gambling for promotion culture previously seen primarily in the Championship now seems to be spreading to Leagues One and Two, where losses and debt levels are spiralling.”
LCP report July 2024

Take a look at the list of Wrexham’s sponsors. They include United Airlines as shirt sponsor and HP as “global technology partner”. Average attendance across all matches in Leagues One and Two last year was around 9,000. No wonder you don’t find global tech giants clamouring to back the other 47 teams in these divisions.

“HP was born in a garage in 1939 and has become one of the leading technology brands in the world. Wrexham Association Football Club was born in a bar in 1864 and is on its way to great things. We could not think of a better partner on this ride, for the club and community. Plus, our tech game really needs an upgrade. Pretty sure we still have flying toasters as screensavers on some of our computers.”
Wrexham owners Ryan Reynolds and Rob McElhenney

One architect of the LCP report tells me he believes that the Wrexham phenomenon is not all bad given the boost in interest it has generated for the lower divisions. But he does fear for the sustainability of clubs given the recent surge in their losses and debt levels.

I would add that these trends also strengthen the Premier League’s hand in resisting pressure to funnel an increased share of its TV revenue down into the lower leagues.

The leading clubs have already been arguing that any extra money may simply be squandered on players. LCP’s data can only reinforce that line of resistance, highlighting as it does the propensity of owners to chase short-term sporting success at the expense of their clubs’ long-term health.

It seems certain now that an independent football regulator will be established over the coming months. Although it might seem perverse for an industry revolving around the pursuit of victory, the new regulator’s core task will be to protect supporters from over-ambitious owners with shallow pockets. There is clearly a growing list of lower league clubs in urgent need of such protection.

LCP’s football sustainability report is rich in detail. If you have an interest in any of the 92 clubs (not including Wrexham, who were promoted that season) it is well worth a read (or you could just close your eyes to your team’s balance sheet and simply focus on the pitch – your call!).

You can find a summary and a route to read the full report here.

Team GB’s golden thread reaches purple track

Athletics nostalgists in Britain often wax wistfully about a past generation of heroes, but in truth there is a strong golden Olympic thread weaving through the decades.

In my athletics-watching consciousness, Olympic champions stretch from Dame Mary Peters through the Cold War warriors Seb Coe and Steve Ovett, Daley Thompson, Alan Wells and Tessa Sanderson, to Sally Gunnell and Linford Christie in Barcelona, Denise Lewis and Jonathan Edwards four years later, and then onto the 21st century run of Dame Kelly Holmes, the 2004 4x100m relay men, Chrissie Ohuruogu in Beijing, Super Saturday’s trio of Greg Rutherford and Dame Jessica Ennis-Hill with Sir Mo Farah, who doubled up again in Rio.

Morning Wire last week flagged an Ipsos poll showing athletics to be the most popular Olympic sport among Britons with 38 per cent interested in following it. Details here.

Only twice have there been as many as four British golds over these 13 Games; four times the GB team has failed to top a podium, including at Tokyo 2020. And this in the most competitive of all Olympic sports – after all, World Athletics has 214 member nations.

How exciting then to have a clutch of possible winners when the track action in Paris starts on Saturday.

In the second edition of this column, on the eve of Tokyo, I wrote that those were the first Games since 1988 when GB didn’t have a single favourite going into the competition, and that the team looked primed to peak four years hence. So it transpires.

Now there are arguably three British favourites – Keely Hodgkinson, Matt Hudson-Smith and Josh Kerr – and others with genuine chances of victory, especially Molly Caudery.

Britain’s track and field team tends to bag between four and eight medals at Olympics and World Championships. There’s every reason to believe its athletes could test and even break through the top of that range next week. After all, the 2023 World Champs saw a 10-medal haul.

Get close to that and this would indeed signal a golden generation shining as brightly as all those that have gone before.

If Olympic nostalgia is your thing, do listen to this Best and Worst of the Olympics pod and take a look at the book of the same name. You’ll find links here and here.

Sold down the river: Olympic ceremony divides opinion

On a train home from the Edgbaston Test match on Friday, one passenger gave us a lively running commentary on the Paris Olympic opening ceremony which he was following on his phone. It’s fair to say that drink had been taken.

“What are they going to put the Chinese on? An aircraft carrier?”

“Look, the Marshall Islands are on a speedboat!”

“Literally my favourite part of the Olympics is seeing all the athletes walking into the stadium. This is making me angry!”

Let’s hope he’s been cured of his ceremony blindspot and is dazzled instead by the sport in Paris – which, let’s face it, is what it’s really all about.

And on the subject of the opening ceremony. I assume Britain’s sports minister was in the Parisian deluge as, contrary to the belief I expressed last week, we do indeed have one. Stephanie Peacock was appointed on 9 July with apparently minimal fanfare. Hoping her time in office is a long, loud and sharp-elbowed one!

Don’t scare the kids: Fancy dress rules at Test matches

Lots of fancy dress in evidence at Edgbaston – count those Scooby Doos! None spotted a week earlier at Trent Bridge.

The Notts crowd had clearly taken the county’s website warning to heart: “We request that you refrain from visiting our venue whilst clothed in inappropriate fancy dress outfits that are liable to cause offence to children and young families.”

Impressive use of “whilst”, but I do feel we should be given more detailed “offence” guidelines ahead of future internationals at the ground. After all, if I’ve paid good money for my ticket…