Welcome to the Football League of the late 1990s. While the Premier League is booming - in August, the accountants Deloitte & Touche declared it the richest in the world - the rest of England's professional game is struggling to cope.
It is not just lower division clubs - Chester in administration, Hull's new consortium yet to prove it can pull the club back from the brink - fighting for survival. First Division Portsmouth yesterday announced they have been forced to ask the Professional Footballers' Association for a pounds 150,000 loan to pay wages. Oxford United, with debts estimated at pounds 13m, are in trouble and trying to sell players to balance the books. Numerous club owners, according to an Independent survey of the Nationwide's 72 sides, are looking for buyers.
Kenneth Booth, the chairman of Rotherham, fourth in the Third Division, gave a succinct summary of life in the basement. "It's a hard job just to survive: the gate money's not big enough, the wages are too big and there's no money trickling down.
"They [clubs in the lowest two divisions] are all skint, living hand to mouth," he added, and said Rotherham are in existence only "because I'm a silly bugger". Losses of "hundreds of thousands of pounds per year" are met from his own pocket. "Everyone is in the same boat," he said. Selling the club would be an attractive proposition, if only he could find a buyer. "I'd do it today."
Booth's views are replicated by many Third Division clubs. "It's very, very difficult," Don Rowing, Scunthorpe's chief executive, said. "People are working very hard to increase commercial revenue, but you do wonder what the future holds." Scunthorpe made a small profit to May, Rowing said, but that was due to pounds 100,000 transfer income and pounds 100,000 television money for a Littlewoods Cup tie with Everton. Rowing said most clubs at his level are bearing losses of pounds 180,000 to pounds 300,000 per season. "I don't see part-time football as an option, but some may be forced down that route."
One club forced down that route is Halifax. Relegated to the Football Conference in 1993 (where they remained until promotion this summer), Halifax went part-time to survive. Jim Brown, the chairman, said the years of non-League football helped the club to become more financially prudent.
"It gave us a new lease of life," he said. "We cut the cloth to suit and wound [our costs] down and down." Since returning to the League, the club has gone full-time again, but is operating on a tighter budget, that, for the first time, has no income from transfer fees factored into it. "We run a very tight ship," Brown said. Halifax made a small loss last year but will post a profit this season thanks to the pounds 350,000 sale of Geoff Horsfield to Fulham. Brown is optimistic about the future, and puts the club's financial success down to the fact that he has kept wages in check.
Barry Hearn, head of the Third Division chairmen's committee and chairman at Leyton Orient, sees pay as a key issue and is preparing a proposal that might see wage capping introduced into the Third Division on a voluntary basis from next summer. In the 1996-97 season, Third Division clubs had a total combined turnover of pounds 25.2m, more than pounds 17.7m of which (70 per cent, or pounds 700,000 on average) was spent on players' wages. In several cases, wages alone exceeded turnover. Hearn's proposals would see squads' total salary bills capped to around 60 per cent of turnover, possibly with a fixed absolute ceiling.
"It [wage capping] would have to be some form of voluntary agreement with an arrangement for fines as with rugby league," said Hearn. Rugby league clubs agree not to spend more than 51 per cent of their projected income on transfers or they forfeit income from Sky TV deals. The effect has been to restrain susceptible clubs from spending themselves to bankruptcy but has done little to bridge the gap between the richest and poorest sides. Hearn's proposals may work better if there is an absolute capping level, but also run the risk of being unacceptable to those clubs that survive through benefactors with aspirations as high as their pockets are deep.
In many cases in football benefactors are conspicuous only by their absence. For Southend and Plymouth, among others, long-term survival probably depends on someone investing heavily and building new stadiums. The same goes for Preston, Luton, Blackpool, Bristol Rovers and Colchester in the Second Division.
At Swansea, which has been owned by Silvershield plc since August 1997, the future is equally dependent on moving. "Should that [relocation] not happen, Swansea will join the other clubs on the market," Steve Hamer, the club's chairman, said. In the near future, Hamer, who is also a member of the Third Division's chairmen's committee, added: "I think that there may be one or two club whose supporters will no longer have clubs to support."
The Third Division does not have a monopoly on haemorrhaging money. In the Second Division, Wigan's losses are pounds 1m a year and Wycombe's pounds 1.5m. At Lincoln, manager-chairman Keith Reames said: "Our only ambition is to remain solvent. The distribution of television money to the Premiership clubs is having a knock-on effect and clubs like Lincoln simply can't compete."
In the First Division, the pressures are different but equally intense. "It's a catch 22," Ian Fleming, Grimsby's chief executive, said. "If you pay your players less, you lose matches and ultimately go down and lose market share. But we even have to compete for players with some of the bigger clubs in the Conference who are paying considerable wages."
Geoff Richmond, the chairman of Bradford - one of the League's most astutely run clubs - is of the same opinion, but at least admits some damage is self-inflicted. "Ninety per cent of most clubs' expenditure is related to players. As chairman we are all guilty of it. But I've never had a player or a player's agent holding a gun to my head."
While rising costs are forcing many owners to think of selling, and investors only seem to be attracted by clubs that offer commercial (often property- related) development opportunities, some of the most senior people in the game see a need for struggling clubs to simply cut costs and start being more professional in their business dealings.
"The Football League has to move away from the begging bowl culture into a help yourself culture," said David Sheepshanks, who is Ipswich's chairman, and had been, until last month, the chairman of the Football League for two years. "That said, it is very tough," he added, pointing out that unless football clubs act collectively for the good of the game, there will be serious repercussions. The Premier League's court case with the Office of Fair Trading [which will decide whether individual clubs have the right to make their own television deals and hence effectively give a few clubs the majority of television money] starts in January.
Sheepshanks pointed out that Premier League attendances are around 11m people per season (or 29,000 people per game) and - with Premiership clubs receiving around pounds 8m each from television - average profits in the top flight are pounds 4.5m per club per year. In the First Division, where attendances are 8.5m (or just over 15,000 people per game), clubs receive under pounds 800,000 each from television and make average annual losses of pounds 1.5m. Half-size attendances are rewarded with one-tenth of television revenues and ultimately lead to losses. The lower down the League you go, the bigger the divide becomes.
Richard Scudamore, the chief executive of the Football League, said the OFT case is "singularly the most important issue facing football right now. TV rights are the most significant source of revenue and if we're not allowed to negotiate collectively, equality of wealth distribution will never happen."
That said, smaller clubs must still learn to run themselves better, he said. "There are plenty of well-run clubs in the conference so I think we'll see a 72 club League for some time to come," he added, signalling that although times are hard, there is to be no room for the weak or sentimental. Football's minnows should survive without having to make a mint.
Additional reporting by Alaric Nightingale and Joe Morris
THE FAMILY SILVER: HOW SELLING IS BECOMING A MATTER OF SURVIVAL
Gareth Barry: The income Third Division Brighton will receive from the sale of the 17-year-old defender to Aston Villa will transform the Seagulls' finances. Depending upon appearances, the fee could rise above pounds 1m - nearly a season's wage bill at Brighton.
Matthew Upson: When Luton sold the 19-year-old defender to Arsenal last year, the pounds 2m fee covered the average budgeted loss of pounds 1.6m. The Hatters still need a few more Upsons to pay for the stadium on which the chairman says the future depends.
John Aloisi: Portsmouth announced yesterday that their finances are so bad, money is being borrowed from the PFA to pay wages. Australian striker Aloisi, once rated at pounds 2m, could be sold off for as little as pounds 500,000 in an attempt to balance the books.
Joey Beauchamp: Oxford's 27-year-old midfielder is on the market for around pounds 800,000, but even his sale would go little way to clearing debts estimated at pounds 13m. United's plight is typical - sell players and be damned by lack of talent or don't sell and go under.
Geoff Horsfield: The 25-year-old striker was a Conference player with Halifax in the Spring, but his talents persuaded Fulham to pay pounds 350,000 to lure him from The Shay. The income will help Halifax show a profit in their first season back in the League.
Steve Bywater: The 17-year-old goalkeeper's sale by Rochdale to West Ham could keep the Lancastrians in profit for years. Depending on appearances, the deal could be worth pounds 300,000 to pounds 2m. Rochdale's losses are usually hundreds of thousands a year.
LIFE IN THE NATIONWIDE LEAGUE: A CLUB-BY-CLUB GUIDE TO THE FINANCIAL HEALTH OF THE 72 MEMBERS
Turnover Wages Profit/ (96-97) (96-97) (loss)
Barnsley 3.7m 2.6m 0.3m Thrifty when in Premiership, budgeted for relegation. Relatively stable.
Birmingham 7.6m 4.9m 1.1m
Bankrolled by David Sullivan. Managed well financially by Karren Brady.
Bolton 7.7m 6.2m (3.3m)
pounds 17m in the red but have assets, including old ground Burnden Park.
Bury 1.9m 1.3m (0.9m)
No comment from the club. Are finding First Division more expensive than Second.
Bradford 7.6m n/a 1.7m
Well run, capable of profits. Would like to share facilities with rugby league club to increase profitability.
Bristol City 2.3m 2.0m (0.4m) Lost pounds 300,000 to May. Surviving by benefactor chairman. Want new stadium.
Crewe 1.4m 1.1m 0.3m Wage spiral having a big effect. Relegation would exacerbate problems.
Crystal Palace 7.9m 5m (0.5m)
No comment from club. Chairman Mark Goldberg overseeing revue of club's finances. Tramp Group Limited, an oil company, announced "substantial sums" available for the club on Sunday.
Grimsby 2.2m 2.0m 0.5m
Making small profits but looking to relocate to achieve growth.
Huddersfield 3.7m 2.3m (0.2m)
Lost pounds 300,000 to May. Will lose same again this year. Currently negotiating a sell-out to millionaire local businessman.
Ipswich 6.2m 4.3m 1.1m
Loss of pounds 1.4m to May this year, but generally stable.
Norwich 6.3m 3.8m (1.2m)
Made pounds 1.2m operating profit to May 1998 due to transfers. Stable.
Oxford Utd 2.2m 2.3m (1.9m) pounds 13m in debt and most in danger in First Division of going under.
Portsmouth 4.4m 3.3m (2.1m) Losing a lot of money, chairman might sell. "Everything has a price," said spokesman.
Port Vale 2.7m 1.9m 0.9m Construction of pounds 4m stand underway as a means to increase income.
QPR 7.5m 6.7m (7.1m) No comment from club. Ground sharing (Wasps rugby) one measure for cost cuts.
Sheff Utd 5.1m 3.6m (3.1m)
Lost pounds 6m to May. New plc chairman, Carlo Colombotti, took over last week.
Stockport 2.9m 1.8m 0.3m Commercial activity and community ventures have led to small profits.
Sunderland 13.4m 5.7m 3m
No comment. Healthier than most due to substantial support. Might survive better in Premier League next time if promoted.
Swindon 4.7m 3.3m (0.3m) Reliant on youth players and selling. Low support may cause future problems.
Tranmere 3.5m 3.3m (0.7m) Doubts about future persist due to arguments over who owns the club.
Watford 3.0m 2.4m (0.9m)
Bankrolled by benefactors. Cutting costs by sharing with Saracens RUFC.
West Brom 6.1m 3.1m (0.2m)
Listed company, attempting to cut costs to stem small losses.
Wolves 11.4m 7.2m (6.2m) Owner Sir Jack Hayward wants stringent cuts to stem continuing losses. Typical of a club aiming for the Premiership.
Turnover Wages Profit/ (96-97) (96-97) (loss)
Blackpool 2.4m 2.0m (0.8m) Losing pounds 500,000+ per season. Want new stadium (doubtful). May sell otherwise.
Bournemouth 1.1m 1.0m (0.5m)
Tight ship run by fans' co-operative. Bankers insist club runs in the black.
Bristol Rovers 1.4m 1.5m 3,000
Losing pounds 400,000-500,000 per season. Want new stadium to secure future.
Burnley 3.7m 1.7m (0.8m)
No comment from club.
Chesterfield 3.2m 1.0m 1.2m
Profits in 1996-97 due to sale of Kevin Davies to Southampton and FA Cup run.
Colchester 0.9m 0.8m 18,000
pounds 250,000 loss projected this year. Low wages already. Relying on new stadium.
Fulham 2.1m 1.5m (0.8m)
Losing millions, but Al Fayed has deep pockets. Self funding in five years is the optimistic plan.
Gillingham 1.9m 1.0m 28,000
Keep wages low to manage costs. Looking at alternative income sources.
Lincoln City 1.0m 1.1m (0.3m)
"Our only ambition is to remain solvent." Losses of pounds 2m per year. For sale.
Luton 3.0m 2.8m (0.1m)
Budgeted loss pounds 1.6m. Chairman wants new stadium. Will sell otherwise.
Macclesfield Figures not disclosed
Would consider selling, despite saying "our heads are above water."
Man City 12.7m 7.2m (3.9m)
No comment from club. For sale to the right buyer. Losing money.
Millwall 4.1m 4.1m (2.9m) Chairman Theo Paphitis has cut losses, but his future involvement uncertain. May sell if offer came in.
Northampton 1.6m n/d (98,000)
"Who would want to buy this club?" said spokesman. Surviving in post- administration era.
Notts County 1.4m 1.6m (0.6m) pounds 2.5m loss, despite commercial income. Offered for sale earlier this year.
Oldham 3.1m 2.8m 0.4m
pounds 1.2m loss to May. Considering investment offer from local brewery.
Preston 3.8m 2.1m 0.1m
Relying on new 30,000-seat stadium being developed for growth.
Reading 3.3m 3.0m (0.5m) New stadium will help ease financial worries - if it can be filled.
Stoke 5.0m 2.9m (0.3m)
"We're in our worst case scenario," said spokesman on being relegated. Need immediate promotion to prosper.
Walsall 2.4m 1.7m 22,000
Well run club, many extra-football activities (including boxing) help small profits.
Wigan 0.9m 1.7m (1.8m) Losing pounds 1m+ per year. Low attendances. Surviving by benefactor chairman.
Wrexham 1.7m 1.4m 0.5m
Making small profits through tight budgets. Investing in a new stand to attract higher crowds..
Wycombe 3.2m 1.8m (0.4m)
"Existing from season to season," said a spokesman. Losing pounds 1.5m per year. Sell if good offer.
York 1.1m 1.0m (0.1m)
Benefactor chairman happy to meet yearly losses. "I'm still a nutcase."
Turnover Wages Profit/ (96-97) (96-97) (loss)
Barnet n/d n/d 0.4m
Losing pounds 5,000 per week, but make amends by selling players. Tight budgets.
Brentford 1.9m 1.0m 1.0m
Lost pounds 500,000 last season. Ron Noades will inject pounds 1.5m this year. Future hinges on new stadium.
Brighton 1.1m 1.1m (1.4m)
Back from near extinction. Small profit forecast (due to Gareth Barry sale).
Cambridge Utd 0.8m 0.8m (0.1m)
Budgeted losses of pounds 300,000 per year. Would consider selling.
Cardiff 1.2m n/a (0.2m)
Future "is all up in the air." Takeover soon?
Carlisle 2.8m 1.6m 0.2m
"Each year is getting harder." Small profits from tight budgets/player sales.
Chester 1.2m 1.1m (0.3m)
Currently in administration. Future bleak.
Darlington 0.8m n/d 0.3m
Nearly wound up five years ago. New owner two years ago. New stand. Tight budgets. Small profits.
Exeter 1.1m 0.6m 29,000
Have been in administration in past. Losing pounds 150,000 per year. Would sell "for the good of the club."
Halifax n/a n/a n/a
Expected profit this year. Tight budgetry controls after years in Conference.
Hartlepool 0.8m 0.5m (27,000)
Came back from brink four years ago. Taken over by oil company last year. Hope for small profits.
Hull 0.8m 1.1m (0.6m)
Recently on the brink, future dependent on money and will of new consortium.
Leyton Orient 1.5m 1.3m (0.7m)
Lost pounds 50,000 last season. Budgeted loss of pounds 200,000 this season. Surviving by benefactor, Barry Hearn.
Mansfield 1.0m 0.7m (0.2m)
No comment from club. Have had financial trouble in past.
Peterborough 3.5m 2.0m (0.1m)
All losses paid by chairman, Pizza Express restauranteur and fan, Peter Boizot.
Plymouth 2.3m 1.3m 0.5m
Projected loss pounds 340,000. Two offers for club last season fell through. Future dependent on new stadium.
Rochdale 0.8m 0.7m (0.2m)
Forecast small profit this year due to transfers. Directors normally fund losses of around pounds 300,000.
Rotherham 0.8m 1.1m (0.5m)
Surviving thanks to chairman. "I'm looking for a buyer, it's hard to survive."
Scarborough 0.8m n/d (0.2m)
"A mini-crisis at the moment," said chief executive. Future uncertain.
Scunthorpe 1.1m 0.9m (0.2m)
Profit of "a few thousand" to May 1998. Losses usual, paid by directors.
Shrewsbury 0.9m 0.8m (7,000)
No comment from club. Getting by.
Southend n/a n/a n/a
"Can't quantify" losses. Due to be taken over by property developer. Future dependent on new stadium.
Swansea 1.2m 1.0m (0.5m)
Losses pounds 400,000 per year. Taken over in 1997. If new stadium not possible, will be up for sale.
Torquay 0.8m 0.6m (23,000)
Solvent, but "for sale for the past two to three years." Would sell to "the right buyer."
Prognoses based on interviews with chairmen or club spokesmen unless stated.Reuse content