Driving up the M6 from Coventry last night and there was an interesting discussion on 5 Live regarding EFL club finances. It maybe available on podcast and worth a listen. Much of it is relevant to our situation, however there were several points worthy of note.
Firstly, as a business football is a strange case, Essentially the main revenue stream (matchdays) is only open for business for about 30-35 days a year. Creating revenue from the primary assets from the other 330 days is the problem that chairmen need to solve. You can tinker with "improving the match day experience", but you need to generate income away from match days.
It is a slow process to build your customer base. Essentially you need to attract your customers aged 5 or 6 and then keep them for the next 70 years. Loosing customers is much easier.
A couple of EFL chairmen completely dismissed the idea of bringing on players as a sustainable way to improve finances from the bottom 2 English leagues there were only a handful of players who left for any significant amount. In most cases the clubs would not recover the cost of their player development.
On the budget deficit (they were discussing why no Championship side made any profit) they compared the finances to a lottery ticket. In Scottish Championship terms, there are 10 tickets available, 2 of which have the chance to double or triple their income for next season (promotion). The odds of holding a winning ticket are improved (but never guaranteed) by increasing spending on playing staff. Looking at the risk/reward analysis, the rewards are so high that it is worth the risk, so everyone does it to the point where if you don't, then you end up being relegated.
Relegation is not always a bad thing. Ipswich have increased their attendances with the supporters looking forward to travelling to new grounds and actually winning some games.