Bristol City have announced losses of £11.45m for the year ending May 2011.
"It is a big problem," chairman Colin Sexstone told BBC Radio Bristol. "It's a lot of money over three years.
"Wages in the Championship are far too big and at Bristol City in particular they are just too much."
He added: "We've certainly got too many players. Keith Millen [former manager] thought that and I'm sure Derek [McInnes, current manager] does too, and some of them are earning too much."
Nearly half of City's first team are out of contract next summer, including striker Nicky Maynard, and Sexstone hinted that several players could be on their way out of Ashton Gate.
"I have no doubt that some players we will want to keep on but there are some we might not," he told BBC Points West.
"That decision will be down to Derek. But it is an opportunity for us to replace some of those players with some on lower salaries.
"We want to remain competitive and by definition that means you don't want to sell your best assets. But we all know how football works - if a top club comes in and wants to buy a player then it makes it very difficult to retain them."
After struggling in the relegation zone at the start of last season, and losing manager Steve Coppell after only four months in the job, Millen led the side to a 15th-place finish in the Championship.
But they again found themselves languishing in the drop zone at the start of this campaign, although the arrival of new boss McInnes has seen the side go five games unbeaten.
Off the pitch the club's proposed £92m development of a 30,000 seater stadium at Ashton Vale has been hit by severe delays.
"We've faced a couple of difficult years and the income has dropped as well," said Sexstone.
"There's a feel-good factor at the moment and it shows you how quickly things can change. Having a 16,500 crowd makes a big difference.
"In most businesses if you want to reduce your wage bill you have to pay redundancies. In football that's not really possible - you have contracts that need to be honoured.
"That's why it takes time but we will turn this around."