English game hits cash crossroads

English football has been warned it has one last chance to salvage its future, otherwise the game as we know it could be destroyed.

The annual Deloitte & Touche report on football finance confirmed yesterday that the game is richer than ever before and on the verge of breaking through the £1 billion sterling mark in annual turnover.

However, with most of the money going towards players' wages or to foreign clubs, the report's authors warn that new money from the sale of television and Internet rights, particularly by the Football League, must be distributed sensibly to ensure that clubs are prevented from going out of business.

The report found that only five football league clubs out of 72 made an operating profit during the 1998-99 season.

The Football League's new £380 million television and Internet deal, signed in June, is seen as a way of saving the country's less profitable clubs in an era where economic disparity is a common feature of the game.

Gerry Boon, the report's editor, said: "The new TV deals offer Football League clubs a once-in-a-lifetime opportunity to stabilise their financial condition once and for all - to create a business that can break even or even run at a profit on a sustainable basis."

Boon added that the money needed to be distributed in a way that would help ensure the future of the existing league structure, and not go just to the bigger clubs.

"The Football League has done a fantastic television deal," he said. "It presents a great opportunity, because running a football league club has been an unprofitable activity. If the money is distributed right then it could save many clubs in all three divisions."

In total, the report found that football's income across all 92 professional clubs in 1998/99 rose 10 per cent to £951 million, and that by the time results are reported for last season and the new television deals taken into account, the entire football industry will be worth more than £1 billion.

However, the biggest threat to the game is the growing gap between rich and poor, brought about mainly by television money. The next Premiership television deal is worth around £2 billion, but the bulk is expected to go on wages and transfers, mainly to foreign clubs, resulting in even less revenue for football league clubs who once relied on the sale of players to balance the books.

The no-win situation many of the less fashionable clubs find themselves in meant that in 1998/99 only five of 72 football league clubs registered an operating profit, compared to 14 of 20 Premiership clubs.

The bulk of money within the game will continue to be spent on wages and transfers. In 1998/99, English clubs spent £316.9 million on transfers, compared to £227.9 million the season before; £142.2 million (compared to £70 million the season before) went abroad, while the Premiership spent £27.5 million on transfers from Nationwide League clubs.

"The £100,000-a-week contract will be here sometime during the 2001-02 season," Boon said. "If you look at the new television contracts and other commercial ventures taking place at the moment, you can see it coming.

"Robbie Williams and Julia Roberts earn those type of figures in their industries, so why should footballers not get the same amount? Hopefully though, there will not be too many of them.

"The top stars will always be able to command the top salaries, but it is when the average players are receiving only 20 per cent less that the wage bills really begin to rise."

Boon warned that it was becoming increasingly hard for First Division clubs to secure promotion to the Premiership. Topflight clubs will earn £23 million a year from the new television deal while a First Division club will receive £13.5 million.

With money less likely to filter down the leagues, and with players and agents already preparing new wage demands, Boon claimed that a new structure to English professional football was already emerging.

At the top of the new structure are the established Premiership clubs, who because of television money, extra matchday revenue and merchandising are able to generate huge sums of money. Clubs in the First Division will look to consolidate their position, while a third group of clubs will "yo-yo" between the top two divisions.

"In a few years' time, division one clubs will need around £25 million for a promotion push," Boon said. "The gap is widening. For the majority of our 92 league clubs, playing in the Premiership or in Europe will always be a dream."