England's Football League
clubs on the brink

England's Football League has warned of widespread bankruptcies if the backers of ITV Digital pull the plug on their pay TV venture, but it is nothing new for clubs to be in financial turmoil.

Running a football club has never been an easy business to be in, often falling foul of poor management or simply, certainly in the case of smaller clubs, not attracting enough supporters to make it economically viable.

It is surprising that so many clubs have survived for so long and often it is only the love of a wealthy diehard fan coming to the rescue that has prevented some going under.

Many of the 72 clubs that make up England's three divisions below the premier league have run up mounting debts as they struggle to survive in a business where costs and player wages have spiralled out of control, often outstripping revenues.

Bury, one of England's oldest clubs, may count Manchester United among their more illustrious neighbours, but, unlike the world's richest club, will fold if they fail to find 400,000 pounds ($570,300) by the end of April.

The second division club earned a stay of execution last week after raising 140,000 pounds through its "Buy a Seat" campaign where fans paid to sponsor a seat at the stadium.

Nottingham Forest, champions of Europe just 20 years ago but now mid-table in the first division, are, like Bury, in the hands of administrators and have been in talks with a major shareholder over a rescue plan.

The stockmarket-listed club's cause has been helped recently after selling player Jermaine Jenas to the premier league's Newcastle United for a total of five million pounds.

Meanwhile the third division's York City, which had been put up for sale, has been fortunate to find a buyer in motor racing tycoon John Batchelor who has a solid business plan involving the sale of their valuable city centre ground.

The Professional Footballers Association has also been there to help clubs, bailing out over 30 of them in the last 10 years, according to one senior executive.

"We already help clubs that are in financial difficulties...so it is not without precedent," Barry Horne, senior executive at the PFA, told Reuters.

"We have loaned around one million pounds in last 12 months and a large part of that has been repaid by clubs once their cash flow has improved," he said.

ALREADY SPENT

The main issue facing clubs if the television money is withdrawn is that many have already spent the funds due to them.

"We are very reliant on this money -- it is money that has been budgeted for," said Paul Bradley, chairman of third division Lincoln City.

The pay-TV channel, owned by broadcasters Granada and Carlton, was due to pay the Football League 178.5 million pounds over the next two years after agreeing in June 2000 a 315 million three-year deal, which came into effect at the start of this season, for the rights to screen matches.

But ITV Digital, itself in a financial quagmire, has said it cannot afford to meet payments and is offering a reduced sum of 50 million pounds for the remainder of the contract.

That was rejected outright by the Football League, who said if the contract is not honoured "there will be widespread bankruptcies in many local communities and our national game will be left devastated."

West Bromwich Albion chairman Paul Thompson, who was involved in the League's decision on Thursday, told Reuters the the consequences for football would be "absolutely disastrous" if the TV channel did not meet its obligations.

WBA itself would be short of six million pounds if the deal fell through and the whole business cycle in the league would be upset as nobody would be able to pay for players others were trying to sell to solve their financial shortfall.

"So selling a player to get out of trouble would not be a great option," Thompson said.

Players wages would have to be cut by half and those not in contract at the end of season would be scrambling to find a club, he added.

The premier league, known for its riches, is unlikely to come off unscathed either, as Arsenal manager Arsene Wenger pointed out last week.

"The premier league is the elite and the lower divisions are the base of the game in this country. If one dies the other dies too."

SIGNS THERE

Despite the headline reaction to the row the situation should come as a surprise to nobody, as the signs were there months ago.

ITV Digital firstly overpaid for the match rights, observers say. Bidding at the height of the dotcom madness in 2000 they ended up paying four times the value of the previous contract.

Then there was a poor take up to the sports platform -- despite a hugely popular advertising campaign featuring comedian Johnny Vegas and a monkey -- as well as derisory viewing figures for some matches.

One match last September between Nottingham Forest and Bradford City of the first division attracted only 1,000 viewers.

With a cost of 1.2 million pounds for the match it would have been cheaper to transport each viewer to the match, pay for them to stay in a five-star hotel and give them each 500 pounds pocket money, according to some reports.

The Football League is, said weekend reports, threatening to sue ITV Digital for up to 500 million pounds if it does not honour the contract and according to one media article was ready to launch its own television channel.

But these things can take a while and in the meantime clubs must find an answer to their immediate money problems -- can there be enough fans out there with more money than sense to save their clubs this time around?