Some of the most illustrious names in the English Football League were pushed a step closer to extinction yesterday when ITV Digital was put in to administration. From Nottingham Forest to Notts County, Swindon Town to Swansea City and in dozens of towns and cities from Exeter to Chesterfield, the fabric of the national game threatens to unravel.
Doomsday scenarios have between 30 and 50 professional clubs going bust if ITV Digital does not honour its £315m, three-year agreement with the Football League. Some £178.5m is still owing, in two instalments, and if it is not forthcoming, the consequences could be dire. Football clubs are famously resilient in the face of such warnings but the current crisis makes the latest more resonant than ever.
The economics are simple enough. ITV Digital promised £315m to the League, which was planning to distribute to the 72 non-Premiership clubs over three years, until summer 2004. The clubs, on the expectation of receiving the money, formed business plans to spend it.
In most cases, the income was taken for granted as part of the money available to pay wages. Player contracts were signed and therefore the money was in effect spent before it had been received.
The deal was worth up to £3m per season for First Division clubs, and between £300,000 and £450,000 for Second and Third division sides. For a few well-run clubs with big turnovers, the television income is relatively unimportant. For most it is crucial.
The degree of harm that the collapse of ITV Digital will do to individual clubs will depend on their overall financial position. It is wrong to say that loss of this one contract is the sole reason for problems. In the madhouse economics of the contemporary game, many clubs have lived beyond their means for years. But few expected Carlton and Granada to allow ITV Digital to fold and leave them on the brink.
Hence clubs such as First Division Nottingham Forest, twice winners of the European Cup under Brian Clough in the late Seventies and early Eighties, face loss of revenue just when their finances debts of £10m-plus and losses of £100,000 a week can least cope. Clubs recently relegated from the top flight but contracted to pay massive wage bills, such as Coventry City and Sheffield Wednesday, face similarly serious problems.
Swindon, who re-entered administration yesterday, are also at risk, as are the likes of Queen's Park Rangers, Bury, Chesterfield, Swansea, Port Vale, Northampton and Exeter.
The list goes on.
Gordon Taylor, the chief executive of the Professional Footballers' Association, said: "For the lower division clubs it could be the difference between life or death, it's that serious."Reuse content