David Conn: Palios feels the heat as beautiful game shows its ugly side

FA's new chief executive finds accountancy skills is not a preparation for being plunged into centre of Ferdinand row

Watching the new Football Association's chief executive, Mark Palios, tremble in front of a press corps ravenously feeding on the Rio Ferdinand affair, called to mind Harold MacMillan's old explanation about why he never completed his plans for the country. "Events," the prime minister famously murmured. "Events". Since joining the FA in July, Palios' steady approach earned him general pats of approval from his many bosses. The spin for his appointment made a great deal of his career as a water-carrying midfield player with Tranmere and Crewe, but his true qualification was having been an accountant with PricewaterhouseCoopers specialising in financially troubled companies. His immediate task, it was spun, was to pull the FA out of the financial black hole bequeathed by his predecessor, Adam Crozier.

Palios, used to being parachuted into companies to carry out urgent remedial work, was immediately in his element at Soho Square, knuckling down to the finances. He made the right noises about toughening and speeding up the FA's disciplinary procedures - which were revealed this week to have holes nobody spotted before - supporting grass roots programmes and the FA's wider work, but admitted he needed time to understand the issues thoroughly. He implemented a wholesale review of the FA's activities, with all departments effectively told to make their own case, practical and financial, justifying the work they do.

As for the black hole, the FA's accounts for the year to last December, a period mostly under the stewardship of Crozier, who was forced to resign in October, show the FA with huge income of over £184m, that the governing body distributed around £28m to the grass roots, but £142m is lumped in as costs and expenditure without a detailed breakdown. They made a profit, £12m. Yet the talk seething from the Soho Square boardroom, peopled by representatives from the Premier League who wield the real power, was that expenditure was out of control under Crozier and Palios had to financially troubleshoot the organisation back to health. In a redundancy programme, 42 staff were laid off across all departments. A £130m bond from the American bank Bear Sterns was being lined up, steered, it was said, by Dave Richards, the Premier League chairman and FA main board director, to stave off the impending financial doom. Crozier, according to the accounts, was given a £750,000 pay off.

But almost the first thing Palios did once he had his feet under the table was to call off the bond. The proposed national football centre at Burton upon Trent was put on hold and while officially Palios is canvassing opinion on the project, the indications are that it won't happen, at least for some years. The FA's only immediate problem was a £20m downpayment due from the FA to complete its direct £148m investment into building the new Wembley, and Palios arranged a bridging loan from Barclays Bank to cover that.

That was the supposed howling crisis, dealt with. Palios himself acknowledged the black hole had been overstated, saying: "The perception and reality were quite different." Several of the 42 people sacked, some escorted summarily out of the building, have complained they were clumsily or ruthlessly treated, offered deals which in some cases did not even provide for paying compensation they were legally entitled to. A great deal has been made about the extravagance of salaries at the FA, which last year averaged £77,000 per employee annually, but for all the pain caused by the sackings, the saving to the FA was around £2m per year. Within the FA, people are now asking whether the cash crisis was exaggerated, by those who wanted Crozier out because he was standing up against the encroachment and demands of the rich Premiership clubs.

Before Palios arrived, the payments from the FA Cup were slashed too - but only to small clubs. The £30m investment was trumpeted last year by Crozier for redistributing money "across every level of the game", but some £6m has been cut, solely from the earlier rounds. Last season, the 101 non-league clubs winning a First Qualifying Round tie received £7,500. That has been reduced to £2,250. The second, third and fourth round qualifying awards have all been similarly reduced, as have the First Round proper winnings, reduced from £20,000 to £12,500, and the Second Round: halved from £30,000. But as soon as the Premier and First Division clubs join, in the third round, the payments stay the same as in last season's year of plenty. So, at the cash-strapped governing body, desperate enough for savings that 42 decent, loyal staff had to be lost, not one penny could be shaved from awards to the big clubs in later rounds - a total of £4m to the winners, Arsenal, a mere slither of the £50m they made from television overall.

An FA spokesman said this week that despite the cuts, the organisation is largely unchanged: "Besides Burton, no activity has been scrapped. There is nothing we are not doing which we otherwise planned to do." Work at the grass roots, on facilities and development, an area which the FA is trying to make more effort to celebrate, has continued and begun to bear fruit, with 160 development officers nationally, and £100m spent through the Football Foundation on rejuvenating battered municipal facilities.

Until this week, Palios had made many of the right noises, as Crozier did, about fulfilling the FA's duties to all levels of the game, restoring football's image, helping clubs sort out their finances, and tightening up disciplinary procedures. But as he admitted himself, however long his experience as a player, it takes time to understand football's intense politics, how the game functions or fails to, how the FA links with the leagues and other bodies. His review is designed to inform him on the detail and the decisions which need to be taken.

Then, Rio Ferdinand failed to give a sample, inconveniently close to an England fixture and suddenly Palios was ripped from his steady desk work into the naked glare of football's messiest affair for years.

While the balance of public opinion came down as contemptuous - and not a little resentful - of the players, and supported Palios' stance, in fact the players, backed by the PFA and Manchester United, did have valid grounds for complaint. The FA, as the governing body, is all about rules, and upholding them. Its doping procedures, are, as in all other sports, sanctioned by UK Sport - which pays with taxpayers' money for 250 of the FA's 1,250 tests per season. The system was first introduced in the 1994-95 season with the agreement of the Professional Footballers Association and others, and, crucially, does not provide for a player to be omitted from an England squad, or sanctioned in any way, until his case has been heard, which in Ferdinand's case will be after the Turkey match. There is, too, a guarantee of confidentiality throughout, which the England players claimed had been breached by the decision not to play Ferdinand, even if Palios and the FA didn't actually leak his name.

The FA justified the decision by saying that playing for England is an honour, and a "moral stance" was taken, although that was somewhat undermined by the suggestion that had England played and beaten Turkey with Ferdinand in the side, Turkey might have had grounds for appealing to Uefa - a thoroughly pragmatic approach. Whatever, for all the emotion generated by the powerful brew of doping, millionaire players and three lions on the chest, the players argued that the FA had not followed its own procedures, and the FA was forced to allow the players to state publicly that the governing body had seriously let them down.

Support for the players and the world's richest club came from further down the leagues this week. Ralph Rogers, a Fellow of the European College of Sports Science, of the US College of Sport Medicine, and Walsall's club doctor, said: "I am completely against doping in sport, and a great supporter of the FA's testing programme which I believe to be robust. But here, the FA did not follow their own procedures, so they screwed up."

This week, one insider described Palios as, at times, "like a rabbit caught in the headlights". But he was referring to his general struggle to comprehend football's structure, long before the events of this week, when Palios, a little-known accountant before June, was dragged by events to face the nation's top players, the world's press and the frightening realities of his new job.