Wednesday count the cost of failure

Debts of nearly £18m at Hillsborough add to crisis at Yorkshire club now staring at potentially ruinous prospect of relegation

Still with only six points, five adrift of second-from-bottom Watford, Sheffield Wednesday, are embedded so far into the Premiership subsoil that their roots are almost visible in the Nationwide League. Off the field, recent comments from Dave Richards, the club's chairman, suggest that the crisis is even worse, with Wednesday in serious trouble, running up debts of nearly £18m, paying annual wages of £16m to Wednesday's collection of domestic journeymen and second-rank foreign players.

Still with only six points, five adrift of second-from-bottom Watford, Sheffield Wednesday, are embedded so far into the Premiership subsoil that their roots are almost visible in the Nationwide League. Off the field, recent comments from Dave Richards, the club's chairman, suggest that the crisis is even worse, with Wednesday in serious trouble, running up debts of nearly £18m, paying annual wages of £16m to Wednesday's collection of domestic journeymen and second-rank foreign players.

In an interview published last week, Richards effectively offered to quit if someone turned up to rescue the club. "If there is a Jack Walker out there," he said, "please come and look at Sheffield Wednesday. I've been searching for him for the last two or three years."

This call might be understandable coming from a jaded supporter - although the model of a single, deep-pocketed benefactor is thought to be flawed by most financial analysts, a view supported by Blackburn's current misfortunes. Coming from the club chairman, though, it seems an abject statement, particularly given that as recently as April 1997, Charterhouse, the City-based venture capitalists, paid Wednesday £15.6m for a 36 per-cent stake in the club, in a deal hailed then as an "innovative" means of securing the club's future.

However, that money has gone, drained away mostly on expensive signings and rising wages. Wednesday's latest accounts, to May this year, show an income of £19m, on which a small operating profit was blown by an £8.8m loss on transfers. Four summer signings took the wage bill from £13m to £16m, which now, according to Richards, accounts for 80 per cent of the club's income. The club has to wrestle, as all do, with the Bosman ruling; as clubs cannot demand a fee for players leaving at the end of their contracts, the tendency in football is towards ever-longer contracts.

"We need players on contracts long enough to protect us," says Alan Sykes, the club secretary. "But if contracts are too long, they can become a noose round our neck. It's a difficult balancing act."

With no players on "release clauses", if Wednesday are relegated at the end of the season, they will drop down to the First Division with a £16m wage bill around their necks to the altogether more straitened circumstances of the Nationwide League. Football's wealth gap, institutionalised since the 1992 Premiership breakaway, has now made relegation potentially a threat to a club's very survival rather than merely a footballing disappointment. While the Premiership's 20 clubs share £148m annually in television money alone, an average payment per club of £7.4m, the First Division's 24 clubs receive a basic TV payment of only £620,000. A relegated club can expect all other revenue to be hit significantly. Clubs relegated from the Premiership receive TV "parachute" payments, aimed at easing the drop, but they amount to only £1.7m a year for two years.

"We're not concerning ourselves with relegation," says Sykes firmly. "We're planning to stay up. But the difference in income is massive, and any club going down would have to work to balance the books."

Wednesday's plight has significance far beyond Hillsborough. Richards is a senior football figure, chairman of the Premier League itself since the controversial departures of Sir John Quinton and the chief executive, Peter Leaver, in March, and a senior figure at the Football Association, where he is expected to sit on the newly restructured main executive board. Yet his own club illustrates the widespread failure of football's governors and administrators - with exceptions - to harness the current satellite TV-fuelled financial boom for the good of all, not waste it on hyper-inflating players' wages.

Tom Burton, an insolvency accountant at Ernst and Young, who has handled financial crises at Brighton, Gillingham and, last summer, Portsmouth's administrative receivership, says, as a conservative estimate, that as many as 20 clubs are trading precariously and could go bust at any time.

"The gap between success and disaster in football is wafer thin," Burton said. "Wages are too high and the wealth divide too great."

Of Richards' call for a Jack Walker-type benefactor, Burton said: "The football community has to wake up. They can't keep expecting a fairy godfather to come to the rescue. They need to manage themselves soundly and properly."

This stark warning is a far cry from the optimism of only two years ago, when the City suddenly seemed to discover football, believing its ready BSkyB money and the "captive market" of loyal fans provided opportunities for rapid gains. Charterhouse Development Capital's £15.6m investment in Wednesday was planned to fatten up the club in preparation for a swift flotation on the Stock Market, following clubs such as Newcastle United, Aston Villa and, pre-eminently, Manchester United.

Now, with the money frittered away and the City disillusioned by football's generally poor management and the inconvenient unpredictability of the game itself, Wednesday supporters are worried about Charterhouse, which is by far the club's major shareholder.

"Their interest in football or Sheffield Wednesday is not the same as that of supporters," says David Coupe, the chairman of the recently formed and well-organised Shareholders Association. "They're a finance house, and they have to protect their investment."

Nobody from Charterhouse was available for comment this week. Coupe, along with many Wednesday supporters, is restrained in his criticism of Richards, who is regarded as a well-intentioned if autocratic chairman. The proprietor of a local engineering firm and a lifelong Wednesday supporter, Richards is seen as an old-style football club chairman, wrestling with the high stakes of the modern game; perhaps more comfortable as a steadying influence in the fractious politics of the Premier League than dealing with the intractable finances of Sheffield Wednesday.

A traditionalist, Richards supported the Premier League's pledge to invest five per cent of its next TV deal in grass-roots facilities, and this week acted firmly, with the new chief executive, Richard Scudamore, to order BSkyB to comply with Premier League rules by reducing its 11.1 per cent stake in Manchester United.

In an interview with the Sheffield Telegraph last week, Richards revealed a surprisingly acute cynicism about BSkyB's strategy of buying small stakes in various clubs. "It's a bit of a façade - they are looking to buy future rights for TV," he was quoted as saying, clearly dismissing Sky's assurances that the satellite broadcaster is acting only as agents, not buying influence.

Under his chairmanship, Sheffield Wednesday are edging slowly towards change, developing a more open engagement with the press and supporters, while glimpsing no realistic escape from financial crisis. A decade ago, the horror of the Hillsborough disaster unmasked failures at Wednesday and an abject performance on safety, which Lord Justice Taylor found to be shamefully repeated at football clubs across the land.

Now, in the very different era following the tragedy, with money which should be sufficient to safeguard the future of the whole game, Sheffield Wednesday seem destined again to highlight football's inadequacies - a widespread inability to manage money sensibly and spend it wisely, a depressing study of extravagance and waste. Heading downwards, to learn lessons the hard way.