Wrexham could spend £70m and dodge FFP breach, ‘never seen anything like this’

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Wrexham’s recent summer spending spree has raised plenty of eyebrows, and EFL Analysis can reveal how the Welsh club are able to do so.

The Red Dragons, financially backed by owners and actors Rob McElhenney and Ryan Reynolds, dropped the third highest amount on players in the latest transfer window following their back-to-back-to-back promotions from the National League up to the Championship.

Wrexham brought in a number of established players including Conor Coady from Leicester, before spending £2million on Sheffield United’s Kieffer Moore. They also invested in young talent, splashing £7.5million on Manchester City’s Callum Doyle.

Wrexham had a net spend of £-23.7m in the recent summer transfer window after not making any profit on any players. However, EFL Analysis’ chief finance expert, Adam Williams, says this isn’t an issue for the club and has explained why.

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Wrexham’s commercial revenue means £70m could be spent before FFP breach

In the Championship, Financial Fair Play (FFP) rules allow for an allowable loss of £41.5 million over a three-year period to promote financial stability.

On Wrexham keeping within that remit despite their big summer spending, Williams said: “Wrexham’s spending this season has been sky-high, yes, but it has not been reckless by any measure. They can more than afford it – everything they do is backed up by the extraordinary commercial revenues that they are generating.

“They’re looking at revenues of £50m for the season in 2024-25. That would be one of the very highest in the Championship, excluding the clubs who have recently been relegated from the Premier League with parachute payments.”

If a club earns £50m, that’s £50m you can spend every season before you even have to think about PSR or having to go to the owners cap in hand. That means Wrexham can have a wage bill of £25m, spend £15m on transfers, and reserve £10m for other costs before going in the red.

“What’s more, the transfers they are making are amortised, which means the cost is spread out over a player’s contract length rather than hitting the bottom line all in one go,” Williams explained. “And because PSR is based on a club’s bottom line, that means only around £6m of the £30m or so they spent this summer will go towards their PSR calculation each year. Those aren’t exact figures, but it won’t be far out.”

Wrexham still have to account for the full transfer fee over a set period, but it gives the club much more grace with PSR in the short term, which is useful for the Welsh side who are obviously in a huge growth phase.

Williams continued: “Even when you get to a break-even point where amortisation, wages and other expenses have equalled your revenue, you can then spend another £13.5m without breaching PSR, as long as that excess is covered by the owners.

“And even after that, you can add back investment in infrastructure, the women’s team, the youth academy and so on, which are exempt from PSR. For Wrexham, that might be another £5m. So you’re quickly getting to a point where you can spend £70m per season without breaching PSR, though that would take you right up to the limit. This is all thanks to Wrexham’s commercial operation. How sustainable that is, I don’t know. In the short-term, however, they are golden.”

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Wrexham’s unprecedented rise puts them on track to match Leeds United

Williams compared Wrexham’s expected revenue to Leeds United’s, a club who have been in the Premier League twice in the last five years and had long, successful spells there previously.

He said: “For context, Leeds’ revenue in 2020, which was the last season they were both in the Championship and not in receipt of parachute payments, was £54m.

“If Wrexham hit £50m, they are going to be mightily close to that figure. Even accounting for the growth in TV revenue and so on since 2020, that is absolutely remarkable when you consider the relative histories of the two clubs.

“We have simply just never seen anything like this.”

Wrexham return to action in the Championship this Saturday as they host Queens Park Rangers.