English game faces fragile future after financial crisis

For doomed dotcoms read English soccer's second and third divisions.

The job prospects of a player in the lower echelons of English soccer look as fragile as a career in the turbulent world of the internet after a week which has seen the bubble burst in British football's television rights market.

The financial problems of pay-TV firm ITV Digital, which owes the English Football League $258 million from a deal for match broadcast rights, have left an estimated 30 of England's less glamorous clubs in danger of going bust.

Like the world of websites, which promised to produce an array of millionaires a few years ago but has left many people out of a job, English football faces almost certain redundancies in the next year if the League fails to get the rights money to provide vital income to the clubs.

NEW TECHNOLOGY

In both cases new technology -- the internet and digital television -- has fascinated the world but most firms have struggled to make serious money from it. In both industries, the boom times were short-lived.

It was poignant that when Tessa Jowell, Secretary for British Culture, Media and Sport, attended an international conference on sports business this week she talked about the role of government in helping players who have lost their jobs, and stressed that the taxpayer cannot rescue football.

Lower division soccer, which has seen money pouring into its coffers in the last year, is suddenly being talked about like a doomed industry.

"What is absolutely clear as we look across Europe is that the bubble has burst in relation to the huge income that football can earn from television rights," Jowell said. "And in the medium term football is going to have to adjust to that.

"There are going to be a number of players who are out of contract and those contracts will not be renewed. It is a clear role for government to help provide the opportunities for training and relocation for players."

Broadcasting consultant Richard Russell told the Sportbusiness 2002 conference: "ITV Digital, like a dotcom, struggled from the start. ITV Digital thought soccer would be crucial to their future but they struggled desperately to hit the saddle and paid over the odds."

LOWER SALARIES

Administrators put ITV Digital up for sale last Monday after failing to reach a deal with its biggest creditor, the Football League, over the rights. The League comprises the 72 clubs below the elite premier league.

The majority of the clubs need the television money to pay the spiralling salaries of their players.

According to a report by credit-scoring specialists Graydon UK there are 48 Football League clubs in the high risk category, of which 20 are in the second division.

"The second division seems to have more than its fair share of ambitious clubs who have tried to spend their way out of the lower league," said Graydon's managing director Martin Williams.

"On the other hand the third division is made up of smaller clubs that have never experienced top flight football and are more used to running on tighter budgets."

It is not only in Britain where clubs are struggling. Germany's Bundesliga sides have been forced to tighten their belts because of the problems of the media group Kirch which owns the television rights to the league.

The rising cost of players' salaries is a big problem and was a key issue at the conference.

"The fact that 90 percent of income is paid in players' wages is clearly something that has stretched the resources of many clubs beyond their means," Jowell added.

"It is the level of players' wages that has contributed to this crisis. Football recognises that these levels of wage settlements are unsustainable in the long run."

Some believe players in the top leagues may also face pay cuts.

"The issue is the wages cost," said Gerry Boon, a leading sports business consultant who believes that clubs should differentiate between players in terms of salaries.

The "stars" deserve the big money, he told the conference, but added: "Some guys are not worth what they are getting."

SALARY CAP

Leading clubs say a salary cap will not work because it could drive top players away from Britain.

The solution for the smaller clubs looks harder to find. Some have suggested their future may be as feeder clubs for the bigger sides while at the same time working closely with the local community.

"Why shouldn't a smaller club join forces with a premier league club?" Arsenal vice-chairman David Dein said. "We do not want to see football clubs go to the wall. It is important they survive for their community."

It is possible that English soccer will have to accept that it can only run two national leagues -- like other countries across Europe. But for now the feeling at the bottom of the game is shock, frustration and worry.

"I believe football will go through a difficult time," Dein said. "But it will come out better because of it."