Sheffield Wednesday: Championship clubs will increase their matchday prices to combat Financial Fair Play, warns Owls chief Joe Palmer
Owls chief operating officer Joe Palmer has issued a stark warning to football fans, claiming the cost of watching Championship clubs will only increase over the coming years.
Given the lavish spending in the division, Palmer believes teams will have to start charging more on matchdays to ensure they remain within the Financial Fair Play (FFP) framework.
The changes to the FFP rules, which kicked in at the start of this campaign, permit second-tier clubs to post losses of £39million over a rolling three season timeframe. Teams cannot exceed an aggregate of £39m. Should they breach the regulations, teams will face a transfer embargo.
Palmer, whose duties include formulating the commercial and corporate strategy of Wednesday, told The Star: “The top clubs are going to be close to the FFP limit. They have to be.
“Championships costs are spiralling out of control. There’s absolutely no way these clubs, without the support of television revenue, can run profitable businesses. You can’t break even with the wages and fees in the game. It’s nearly impossible.
“Obviously the clubs who have come down are lucky because they have parachute payments but if they didn’t they would be well over. Most of the top 10 will be close to it.
“I think you are going to see over the next few years Championship clubs increase their matchday prices.
“Clubs are going to have to start charging more because they have to and there’s no way around it.”
Wednesday have received criticism in some quarters from supporters over the rise in their hospitality packages. The Owls have sold half of their 28 corporate boxes this season.
It costs a minimum of £35,000, plus VAT, to hire an executive box, each seating up to 10 people. The cost of a private box equates to £150 per person per match.
The package includes a three course meal, a dedicated waitress, a matchday programme, teamsheet, their own TV, a free bar tab of up to £75 per match, attending the man of the match presentation, meeting ex-players and car parking. The club have also just installed outdoor heaters and TVs in each box.
And Palmer, who joined the club in July, has vehemently defended the Owls’ decision to raise the hospitality prices.
He said: “The price is higher for the boxes but the chairman is asking for support to help the club achieve a common aim which is to get into the Premier League. You ask any fan and they want to be back at the top again but it costs a lot of money.
“It is about changing people’s mentality throughout the Championship. Given the level of expenditure, we need to drive revenue.
“We knew the increase wouldn’t be popular with a lot of people but we believe it is the way clubs are going. Don’t forget, it’s one of the biggest leagues in the world. The gap in player’s salaries is closing on the Premier League, while revenues are stagnant, the gulf needs to be closed.
“You are going to start seeing the top clubs in the Championship increase their prices so we have to. There’s no two ways about it.
“We just can’t make enough money through TV, commercial sponsors and advertising. The income that you make is much, much less. You don’t get £10m shirt sponsors in the Championship. They don’t exist.”
Wednesday have 600 seats in their corporate boxes whereas promotion rivals Brighton and Hove Albion have five times more (3,300).
“It is very easy for people to look at the hospitality prices and think ‘these are astronomical’ but when you break it down match by match, the price is not huge,” said Palmer. “The club needs to be paid for at the end of the day.
“People want the boxes to be full but if it is costing you a fortune then there’s no economic sense in that.
“If, for example, we sold the boxes at £20,000, we would be making a loss so it would be better not to open them as they would be costing us money.
“Why would you do something that is going to cost you money?
“What people forget about is the matchday running costs. You’ve got your food and labour costs to consider, including chefs, bar staff, hostesses, waitresses, security guards, car parking attendants and the police. When you factor all of that in, you start to realise how close you are to being able to break even.
“There is then the salaries of the full-time staff on top of that so we have to put things into perspective. If you are pushing to get to the top, you have to make revenue elsewhere.
“We are not saying by increasing the prices we are going to make massive profits but we are going to be closer to breaking even.
“Was the price at the right level before? It wasn’t making a profit and it wasn’t breaking even. If you are operating in a situation where it is costing you money, you can’t continue like that. No business can operate when it is costing money to run.
“Don’t forget, if we are not closer to breaking even, that just eats more into what the chairman can spend. There’s only so much he can put in because of the rules.”
To raise additional funds, chairman Dejphon Chansiri recently confirmed he has sponsored the North Stand of Hillsborough.
Palmer said: “These things have to be done to make ends meet. People have to accept that that is the cost of having a top Championship club.
“If you breach FFP, you are looking at fines and embargos but we don’t want to go down that route.”