Football: Wages `threaten ruin' of leading clubs

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FOOTBALL CLUBS are facing financial ruin if players' salaries continue to escalate, according to William Davies, football analyst with stockbrokers Capel-Cure Sharp, who claim most clubs cannot sustain the rapid growth in wages.

The latest figures reveal that the total wage bill in the Premiership and Football League for 1996-97 was pounds 361m, which was 25 per cent higher than the previous season.

There were 70 Premiership players estimated to be earning pounds 1m a year compared with just two in 1993.

Davies feels only the top 10 or 12 Premier League clubs will be able to survive in this new climate.

"Given the relative small size of football clubs as companies, their salary bills are vast," he said.

"It's a huge financial outlay for a club to hand a player a four-year contract worth pounds 1m a year.

"It's true that there is more money coming into the game at the top end with television revenue, pay-per-view due to kick in soon and the enhanced revenue from Europe.

"The very top clubs will be able to continue to pay these wages. The trouble is going to come with the clubs below them.

"Already in the First Division most clubs are operating at a loss and most cannot sustain their current salaries.

"A club like Birmingham has pushed the boat out in the hope of winning promotion to the Premiership, but even if they do go up will they then be able to survive?

"That situation is going to get worse for all clubs outside the top 10 or half dozen in the Premiership. To survive the others will increasingly have to look to generate capital from selling shares or players."

Davies reckons the day is fast approaching when a Premier League club will go bankrupt.

"It's long been the case that football clubs have been run at a loss over the years by optimistic owners or boards who are gambling on the likelihood of the club being successful," he said.

"Whereas before, four or five businessmen running the club could afford a loss of, say, pounds 1m a year between them now they are looking at losses of pounds 10m, which is a far greater burden.

"It's OK for clubs like Blackburn, who have Jack Walker to support them, but there are not many benefactors like him around."

Davies does see one ray of hope for those clubs outside the elite. He feels if the Office of Fair Trading wins its case against the Premier League to allow clubs to negotiate their own television deals this could open the door for several media companies to purchase teams.

"What could help them is if the OFT wins its case against the Premier League," he said.

"What could happen then is that local media companies might buy clubs and screen their games in the local area.

"For example, Central TV might buy Birmingham and it will need something like that for clubs to survive in the future."