Beleaguered Bradford may face expulsion from Football League

Insolvent First Division club's chairman and administrators grapple with debts of £23m as players remain unpaid

Captivating as it is, the World Cup is to the domestic game just a happy summer interlude, a distraction from its main business, which is how on earth it can clamber out of the gigantic financial mess it has managed to fashion out of 10 years of boom. Nowhere is this more succinctly embodied than at Bradford City. Every fan's fondly regarded second club when they survived in the Premiership in 2000 through a last-minute last-game goal by the defender David Wetherall, the club, under the chairmanship of Geoffrey Richmond, is now in administration with debts of £23m. Wetherall, meanwhile, is prominent among 19 senior professional players abruptly sacked a fortnight ago to cut a wage bill running at a preposterous £20,000 per day.

The sacking of the players, many of whom found out only after their dismissals were announced on the club's website, have been furiously contested by the Professional Footballers' Association. The Football League's policy when clubs are insolvent is that "football creditors", including other clubs and players' wages, have to be paid in full before clubs can be allowed to continue in the Football League. The League has emphatically maintained that policy in the face of a recent fledgling campaign for clubs to be allowed to sack players and not pay them in full.

The League's chief executive, David Burns, wrote to all clubs last month following the sackings, emphasising that Bradford's very membership of the League depends on paying the players. "The League," his letter said, "will require those obligations to be met in full. Failure to honour those obligations would result in... a loss of League status."

The rationale for so absolute a position has become established since Bristol City became the first of many football clubs to flop into administration in the early 1980s. Besides the PFA's determination to preserve hard-won security for players, the League recognised that its competition would be undermined if clubs were allowed to spend money they did not have on exotic, talented players, then dump them unpaid at the first sign of trouble. Bradford's list of sacked players includes several signed to keep them in the Premiership. Benito Carbone, Wetherall and Ashley Ward among them, as well as servants of the club like Stuart McCall, whose contract was terminated five weeks before it was due to end anyway, at the end of this month.

Gordon Taylor, the PFA's chief executive, said: "We're resisting these sackings, and are very pleased the League has taken a firm stance. There are very strong reasons for the requirement that players' contracts be paid in full and we are determined to see it maintained. "

The insolvency policy, though, while institutionalising loyalty to players, puts the clinical sacking of other "ordinary" club employees in a cruel light. While the likes of Carbone's £4m, two-year salary must be paid in full, 39 people working in Bradford's ticket office, administration and shops in Dewsbury and Wakefield have been made redundant with no protection at all. Their minimal statutory redundancy pay will be picked up by the Government, as happens in all insolvencies. The administrators, Kroll Buchler Philips, did not confirm the figures, but it is unlikely the modest annual wages of the 39 amount to three months' pay for Carbone alone. Even within the League, senior figures are now concluding that the policy of favouring football creditors, while understandable and valid in terms of competition, morally stinks.

The administration is a personal embarrassment for Richmond, the chairman who took the club from the Second Division to the Premiership only four years after disposing of Scarborough to take control at Valley Parade. Richmond and his son David own almost half of the parent company, Bradford City Holdings; the other half is held by David Rhodes, a professor of electronics at Leeds University, whose hi-tech Bradford company, Filtronics, makes defence equipment including radar shields for US stealth bomber aircraft. Rhodes and his son Julian bought 49 per cent of the shares for £3m in 1997. The Rhodes and Richmonds have substantially bankrolled Bradford's spending, including the development of Valley Parade and ambitious player signings, personally guaranteeing millions of pounds of bank loans.

They have, though, been paid plenty as well. In 2000 and 2001, Bradford City Holdings, still a private company, paid dividends of £3.88m and £3.3m – a total of more than £7m, most of which was split by Richmond, Rhodes and their sons. In both years, the payments pushed the club from making a small profit into losses close to £3m. The £3.3m dividends in 2001 were paid when the club had debts of more than £20m. Many supporters, who credited Richmond for steering the club to prominence, were taken aback.

"I'm realistic enough to realise that shareholders can be entitled to a reward for money invested," said Dave Pendleton, editor of the City Gent fanzine, "but to take money out on that scale at that time was absolutely disgraceful." The PFA has specifically made an issue of the dividend payments; its solicitors wrote to the administrators yesterday with a list of pointed questions, including whether the dividend payments could be justified, given the club's financial position at the time.

Supporters' opinion is divided, though; some argue that the dividend payments were understandable because the shareholders had put in, and stand to lose, more than £3m. The administrators said the club's debts are around £15m, but this appears to ignore a longer-term £7m mortgage on the new stand. The total debts, according to management accounts included in the administrators' own sale pack for the club, stand at nearly £23m. Major creditors include £7m owed to Lombard Finance, mortgaged on the new stand, and £4m to GE Capital, secured on the "parachute" payments paid to Bradford to compensate them for relegation from the Premiership. There are also millions owed to a company, REFFS, which provides a kind of hire-purchase arrangement which allows the club to pay for players in instalments.

Richmond and Rhodes have, according to the administrators, personally guaranteed a "substantial" proportion of the debts. Richmond, who made his money selling Ronson, the cigarette lighter company, could now lose a chunk of his fortune on the ill-fated attempt to keep his football club where, in the divided English game, the money is.

Within weeks of being relegated last season, Richmond was looking to salvage more out of the relatively poorer Football League by discussing a First Division breakaway to the so-called Phoenix League. More recently he has been prominent in attempts to invite Celtic and Rangers to join the English League.

After ITV Digital's collapse in March, an idea began to circulate that the League's insolvency policy of protecting football creditors should be reversed, allowing "mass administration", whereby all clubs could sack their players, then not pay up their contracts or, alternatively, renegotiate them on lower terms. On 3 May, the day before the FA Cup final, David Buchler, an insolvency practitioner and senior partner of the firm now appointed as Bradford's administrators, presented to Football League clubs at a meeting at Birmingham City his view that the League should change its policy, which would allow clubs to sack their players without paying the remainder of their contracts in full.

None of this has washed with the League's board, which reiterated its stance on Thursday, ahead of what promises to be a full and frank annual general meeting in the Tara Hotel in Kensington today. "The League board reviewed its insolvency policy," Burns said, "and once again concluded there is absolutely no reason to change it, that it would not be good sense or practice to do so."

Richmond refused to comment on the administration this week. Professor Rhodes, from his Filtronics offices in the converted former textiles village, Saltaire, also declined to talk.

Bradford experienced over two centuries the rise and fall of the cotton industry; now it has seen football boom and bust in only five years. The administrators say there is some genuine interest in buying the club, and will look for a "solution" with the League and PFA to ensure the club comes out of administration shortly and stays in the League. While around the globe, hordes of people are feasting on the football action from Japan and South Korea, back home the profound challenge is to introduce some stability, and sanity, into the mad economics of the world's most popular game.

davidconn@freeuk.com