The majority of clubs in English football are ‘living on the edge of financial disaster’, a bombshell investigation has found.

The Independent Football Regulator’s long-awaited State of the Game report demands ‘urgent reform’ while delivering the troubling revelation that an incredible 94 per cent of clubs are loss-making, with two-thirds of those in the EFL and National League effectively trading while insolvent.

A desperate push to keep up with rivals in a world of spiralling player wages has been identified, which has created ‘a dangerous cocktail of rising debt and over-reliance on owner funding’ which ‘leaves clubs and their fans at risk’.

And the incredible gulf between the Premier League and the other leagues, described as ‘a financial cliff edge’ has grown significantly, with the average top-flight club earning more than eight times the average Championship side.

The system of parachute payments for those relegated from the Premier League has also come under fire, amid a view that the staggered windfall encourages those in the second tier to overspend and ‘take even bigger risks’ to ‘chase the dream’ of a place in the promised land.

Further down the pyramid, a rise in operational costs has been blamed for 17 EFL and National League sides incurring costs that exceed revenues which means that the group will make a loss even if they did not have to pay their players.

The Independent Football Regulator has warned that the English game is on the edge of a financial cliff, with 94 per cent of its clubs currently loss-making 

IFR chair David Kogan described a ‘massive contradiction’ at the heart of English football

More than 60 per cent of those in the EFL and National League are ‘technically insolvent’ while more than a quarter of clubs would be unable to survive for more than a month if their owners withdrew funding.

The IFR says the report, spread across 245 pages, should serve as ‘a wake-up call for English football’. It has also announced a six-point plan to tackle some of the issues found and to improve the financial sustainability of clubs and resilience of the pyramid.

The plan includes a host of measures aimed at managing financial risk, which include holding more cash and ensuring robust contingency plans are in place should an owner pull their backing.

In what may come as a boost for the EFL, it also called for a shift in revenue distribution in an attempt to ease the cliff edges and calls for clubs to show proof they are listening to fans and taking steps to ‘improve diversity and governance in the boardroom.’

The report found that in 2025/26 English football generated more than £9bn. However, £7.5bn of that was in the Premier League, £1bn in the Championship, £460m in Leagues One and Two and £70m in the National League.

At the birth of the Premier League, in 1992, the average top flight club earned 2.7 x the revenue of the average Championship side. That gap is now x 8.7.

Between 2021/22 and 2025/26 player wages exploded, growing by 33 per cent in the Premier League, 32 per cent in the Championship and a scarcely-believable 71 per cent and 63 per cent in Leagues One and Two. In 2025/26 agent fees increased from £317 million to £584 million – representing 17 per cent of English clubs’ total transfer costs in 2025/26.

In the Premier League, average losses more than doubled from £20 million in 2021/22 to £44 million in 2025/26 while in the Championship they remained relatively stable between £11-£13 million until 2024/25, before increasing to £22 million in 2025/26. In League One, average losses more than trebled from £2.4m in 2021/22 to £7.5m in 2025/26 while in League Two, losses increased more than fourfold from £0.6 million to £2.7 million over the same period.

Debt across the game has risen from £2.8bn in 2020/21 to £4.1bn in 2024/25 and is forecast to reach £5.1 billion by 2026/27. Premier League clubs account for around 75 per cent of total debt.

Discussions are ongoing between the EFL and Premier League over a new distribution deal worth an extra £1.8bn over 10 years. But the government backed IFR has warned it will step in should no agreement be reached.

It will also carry out an annual risk assessment.

IFR chair, David Kogan, said: ‘At the heart of English football’s success is a massive contradiction. While some of our clubs are among the richest and most competitive in the world, others are standing on the edge of financial disaster.

‘Skyrocketing revenues have been outpaced by costs which in turn have pushed up debt, loss-making and an over-reliance on owner funding.

‘A significant number of clubs told us they would not survive if their owners walked away. This lack of resilience can no longer be ignored.

‘Anyone reading this report can be in no doubt about the need for intervention.’ 

The EFL said it welcomed the report, which ‘reflects concerns the EFL has consistently raised’.

A spokesperson added: ‘Particularly the disproportionate distribution of growing revenues and the financial cliff edges this has created, most notably between the Championship and the Premier League. These pressures are distorting competition and contributing to rising losses, debt and over reliance on owner funding, creating material risks for clubs throughout the pyramid.

‘These initial findings reinforce the EFL’s longstanding position that English football generates sufficient revenue to sustain both a successful Premier League and a thriving pyramid. The EFL’s purpose is to help make Clubs sustainable and the challenge is not simply how much money flows into the game, but how it is distributed and spent.’

Culture Secretary Lisa Nandy said she would ‘urge the football authorities to consider the findings for the good of the game’.

Football fans for years have lived with the anxiety of knowing their club could be one bad owner or poor month away from ruin,’ added Nandy, who was involved in Wigan Athletic’s fight for survival. 

‘This report doesn’t just validate that anxiety, it has blown the doors off the game with the most stark uncovering of the state of football club finances in England today.’

The Premier League said it ‘shares the IFR’s preference that there should be a football-led solution to revenue distributions’.

‘As the report makes clear,’ a spokesperson added, ‘new funding must go hand in hand with effective financial controls and wider reforms to strengthen clubs’.

‘We believe the proposal we have made to the EFL, which was unanimously approved by Premier League clubs in July, meets the objectives the IFR has set out in its report. The league remains committed to concluding a long-term partnership with the EFL that is fair, generous and balances the interests of all clubs.’

The FA said the report ‘provides welcome independent scrutiny on some of the financial challenges and risks which are present in the English professional men’s game’. 

A spokesperson added: ‘We will carefully review and consider the full findings of the report, and remain committed to working collaboratively with the Independent Football Regulator and our stakeholders across English football to support the long-term financial sustainability of the game.