Football: Lesser lights hear warning of impending disaster

Although football is about to become a pounds 1 billion a year industry, fears are growing that 92 full-time clubs cannot be sustained
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ENGLISH FOOTBALL is set to become a pounds 1 billion per-year industry this season - but the gap between the richest and the poorest clubs has grown to such an extent that the country cannot sustain 92 professional clubs.

That, at least, is the opinion of Gerry Boon, the head of Deloitte & Touche's football section, which launched its annual review of football finance yesterday. The company has been producing reports and coming up with broadly similar conclusions for six years, but said yesterday it is only a matter of time before clubs start disappearing.

"I say every year that 92 clubs is too many," Boon said. "I do expect, long-term, to see clubs going bankrupt. There are a lot of clubs out there looking for funds and it's not as easy as it used to be."

The report launched yesterday covers the 1997-98 season, the last year for which full financial data is available. The combined income of the country's 92 clubs jumped 23 per cent to pounds 829.3m in that year. It is estimated to have climbed to pounds 950m in the 1998-99 season and Boon expects it to break through the pounds 1bn barrier by next May.

In the Premier League, which saw turnover increase 23 per cent from pounds 464m to pounds 569m in the 1997-98 season, 16 of the Premiership's 20 clubs generated operating profits and the combined operating profits of the elite were more than pounds 100m.

The combined turnover of the country's remaining 72 clubs was less than half that of the top 20, with the Football League's clubs suffering combined losses of pounds 52m.

Twenty-two clubs in the lower divisions generated less money in the year than Manchester United make on a single match day (pounds 1.4m excluding television money). The five biggest Premiership clubs in terms of earnings (United, Newcastle, Chelsea, Liverpool and Arsenal) had a combined income greater than all 72 clubs in the Football League.

So which clubs are in real danger of going under? One key factor that Deloitte & Touche considers when trying to see which clubs are spending beyond their means is what percentage of turnover is spent on wages. The lower the percentage, the healthier the situation is deemed to be.

In 1997-98, two First Division clubs (Tranmere and QPR), four Second Division clubs (Wigan, Fulham, Oldham and York) and nine Third Division clubs spent more than 100 per cent of their turnover on wages.

Deloitte considers 66 per cent to be a "danger" level so those sides spending 100 per cent are quite clearly on the road to ruin unless financed by a benefactor. In 1997-98 season, three Premiership clubs (Blackburn, Crystal Palace and Sheffield Wednesday) spent above the 66 per cent level, as did 14 First Division clubs, 12 Second Division sides and six Third Division sides. The spending was not even successful in most cases, as numerous relegations in the last 18 months - including Palace and Blackburn - have shown.

The growth in wages has shown little sign of abating. In the 1997-98 season, Premier League clubs paid pounds 294m to their staff, an increase of 35 per cent. There was a 36 per cent rise to pounds 119m in the First Division and, even in the Third Division, salary bills were more than pounds 1m per club per season, a rise of 10 per cent.

How much longer can football sustain the wage spiral that has led players such as Nicolas Anelka and Jimmy Floyd Hasselbaink to ask for up to pounds 60,000 per week and expect to get it?

Indefinitely, according to yesterday's report, which concludes that there will be exponential growth in transfer fees of "star players" and a continued increase in pay "for the few genuine match winners."

There is a ray of hope, said Boon, that some clubs are starting to introduce more performance-related elements to pay, and that some chairman, such as David Dein at Arsenal and Peter Ridsdale at Leeds, are starting to say "no" to huge wage demands.

"It comes back to football's classic dilemma," said Boon. "Success is measured by silverware, silverware is won by players and the best players cost a little more. Football has to break this cycle. A sustainable future depends on building a business."