David Conn: Premiership's conflict of interest adds to crisis at FA

Game's governing body struggles with financial problems and sense of uncertainty after departure of chief executive

So the Football Association is in crisis, a financial black hole left by the once celebrated former chief executive Adam Crozier, according to sundry leaks from its Soho Square headquarters and Ken Bates, Chelsea's self-styled swashbuckling chairman. Bates, a former FA director during Crozier's time and a former chairman of Wembley – the project which is by far the FA's biggest cost – has blamed the FA's desperate search to cut costs on Crozier's "terrible legacy".

Constituted to be the non-profit making governing body of the whole game, from schools football to Manchester United, the FA has recently borrowed £130m to cover the financing of Wembley and the new National Football Centre in Burton-on-Trent, on which work has now recommenced.

The headline conclusion from that screams that Crozier went crazy with "grandiose schemes", according to Bates. Nic Coward, who rose without trace under Crozier and is now the joint acting chief executive in his absence, told a meeting of staff that there were no guarantees of job security, because of a "lack of financial planning" in recent years.

The reality of the FA's pickle is more complicated and awkward. It is very difficult to see what has changed since Crozier was shuffled out of the door on 31 October last year with blandishments, a nice pay-off and a confidentiality clause. His brief had been to make the FA commercially successful, and he did that, although he took rather too much credit for the £400m, three-year television deal negotiated in 2000 by the former commercial director, Phil Carling, just before the end of the media-rights boom. When Crozier left, the leaks claimed his "family" of sponsors was about to fall apart, but they all came through. The last one, Pepsi, has just signed up.

Crozier did move the FA to the white-walled, pine-floored Soho Square offices, but he could hardly make a decision like that alone. Staff costs, according to the FA's most recent accounts, to December 2001, did mushroom: 314 staff paid a total of £16m in 2000, average salary £51,000 a year; 244 paid £19m a year later, at an average salary of £78,000.

But the problem for those FA directors, former directors like Bates, or members of management shovelling blame on to Crozier, is that they were all there during his regime. Crozier's paymasters, the main board which includes four men from the Premier League, two from the Nationwide and six from the National (amateur, participatory) Game, awarded Crozier a 35 per-cent pay rise from £418,000 in 2000 to £567,000 in 2001, which might have led him to think he was on the right lines. Bates, himself, even admitted recently that the board was "passive in the past".

But this seems to have led neither him, nor any other FA decision-maker, to take responsibility themselves. Instead, Bates said the board "must now act ruthlessly to stop the rot, cutting [staff] numbers and costs". The staff at Soho Square are genuinely bemused about the reason. Income is the same; nothing changed the day Crozier was pushed out. Many staff believed themselves that Crozier's FA was extravagant, but it was all sanctioned. Yet they are now expecting 15 per cent to be cut from the wage bill, and it remains to be seen whether the pain will be felt by the outlandish earners or the more ordinary administrative staff still burrowing away because, for all the game's warts, they love football. Crozier, ex-Saatchi and Saatchi, did like his press and marketing people and with 24 in the Internal and External Affairs Division and 27 in marketing, many Soho Square observers expect a cull there.

The FA's worthiest and smallest projects are now being examined for cuts: the Football Foundation has not received £16m of the £20m due from the FA in December – although both bodies say the money will definitely be paid; Coward's fellow acting chief executive, David Davies, said the £75,000 paid to Kick it Out for fighting racism might be at risk; the English Schools FA is now expecting a third of the £750,000 annual funding it was hoping for to run national schools football.

Wembley, not a sudden black hole, is at the heart of it – a Bates legacy, although they could not raise the money in his time as chairman. Crozier's financial director, Michael Cunnah, whose planning was implicitly criticised by Coward, has not left, but he has become the chief executive of Wembley.

The figures with which he must now plan are frightening: £757m to build the stadium altogether, including £433m borrowed from a consortium led by Germany's Westdeutsche Landesbank. Due to to be repaid after 12 years, annual interest is £36m. The FA orginally had to put £100m up front, but that increased to £156m. It has found £10m, so owes a further £46m, which produced the cry for cash and prompted the £130m, 15-year financing deal with the American bank Bear Sterns, which includes financing the National Football Centre and working capital until the next TV deal.

Nick Barron, a spokesman for Wembley, insisted that the FA will build a superb stadium, to a prudent business plan, although it is heavily reliant on 15,000 "premium", corporate seats, ranging from £2,000 to £15,000 a year each – a fair whack for watching Sven's England play friendlies. But Barron said: "We're not budgeting for the stadium to be full every time, but a conservative 60 per cent. The promotions experts, IMG, are confident with the premium seats. We believe Wembley will not be a drain on financial resources but prove to be a very good investment." The FA's figures predict a profit on Wembley, £15m in the first year, rising to £50m annually once the debt is repaid.

On that reading, the root of the problem is cash flow, because £156m had to be found up front. However, the wider context explained by Coward in his meeting with staff is fear over future income. The FA is very publicly preparing itself for a drop in its next TV deal, which begins in 2004. Crozier's regime is understood to have applied a contingency of 25 per cent; now the hysteria argues this is not enough.

The puzzle with that is why the Premier League representatives on the FA main board – Bates said Dave Richards, the Premier League chairman, is doing most of the work – do not harbour similar fears for their own finances. The FA's main deal is with BSkyB, as is the Premiership's. But while Richards, his Premiership colleagues David Dein of Arsenal, Robert Coar of Blackburn and Southampton's Rupert Lowe, crawl all over the FA staff looking for cuts and ruthlessly inspect grass-roots programmes because of worries over future income, they continue to claim their own next TV deal could equal the unprecedented £1.5bn the Premiership was handed from 2001-2004.

The real crisis at the FA is embodied by the very make-up of the board now conducting the review, dominated, as Crozier warned, by the Premier League. Its members' conflict of interest, with their first duty being to their day job at clubs facing their own financial problems, means the FA is a fundamentally confused body. Many staff, including senior people, have never even met these directors.

Crozier's actual weaknesses were more basic, along with much that was hailed at the time as practically revolutionary. He talked a lot about the grass roots, but took too little personal interest. The National Game Division now fears cuts to decent much-needed investment which is only now starting after decades of neglect. Coward himself has admitted that many professional clubs have a major problem accounting for cash, yet very little has been done to enhance the FA's regulatory role. The most fundamental problem in English football is the concentration of wealth at the top, but the main board of the FA is stuffed with people in whose interest that works who would never countenance any discussion about more equal distribution.

Whoever is appointed the new chief executive, whether it be Mark Palios, the corporate restructuring accountant, or any of the others interviewed recently, will be told to cut costs, just as Crozier was told to boldly maximise income. But as the FA rocks from one extreme to another, it is incapable of addressing the identity crisis at its heart: whether its role is to be a governing body for the whole of football, or a big-league property developer, speculating on the future.

davidconn@independent.co.uk