Football League loses £132m court claim against ITV

The Football League lost its court action yesterday to force the television networks Granada and Carlton to pay £132m owed by ITV Digital, their collapsed and co-owned pay-TV venture.

The High Court in London ruled that the companies were not liable for a broadcast deal signed with the League in summer 2000 by ITV Digital, which shut down in April this year because it could not pay its bills.

The judge said that neither Granada nor Carlton had guaranteed the contract. "In my judgment the Football League's case falls at this first and fundamental hurdle," Mr Justice Langley said.

The outcome of the case is likely to lead to a long-term restructuring of football clubs' finances. The League has said that up to 30 of its 72 clubs could go bust, but this is extremely unlikely. Certainly many will struggle to meet their wage commitments, which are often huge and became inflated by a decade of lucrative TV deals.

There will also be a continuation of redundancies at clubs and cutbacks in squad numbers below the rich, élite Premiership, which is unaffected by yesterday's ruling. But even if more clubs are forced into administration, as several have been this summer, the chances are they will emerge on the other side with more realistic pay levels.

First Division Bradford City, for example, indebted to the tune of £34m, yesterday managed to do a deal with its creditors to ensure its survival. If that club can go on, many others are likely to manage as well.

One person who may suffer is David Burns, the League's chief executive, who has come under fire from some club chairmen for his handling of the affair. He was not responsible for the non-guaranteed deal because he was not in post at the time. The man who oversaw it, a League spokesman said yesterday, was the League's former commercial director, Brian Phillpott, who is now working for the Premier League.

But some chairmen feel that Mr Burns, whose background is in commerce, not football, has failed to handle the situation well.

Insiders at the League say he has no intention of quitting.

The League issued a statement saying it was disappointed at the judgment and would consider an appeal. It thanked fans around the country for support. Granada and Carlton said in a joint statement that they welcomed the court decision, which came after four days of hearings.

The case has evoked strong emotions. The chairmen of dozens of clubs – including the chef and Norwich City director Delia Smith – have picketed the broadcasters' London offices. "For football it's a very, very, very sad day," said Paul Scally, the chairman of First Division Gillingham. "They [the TV companies] have basically shafted football and they've shafted it good and proper."

Since the collapse of ITV Digital, the League has re-awarded the contract to BSkyB, which already has the rights for live coverage of the Premiership. The new deal will bring in £95m over the next four years and provides a lifeline to some clubs. But the new agreement falls well short of the £315m ITV Digital contract. The court action sought the balance of the original deal minus the amount of the new deal with BSkyB.