Football's fat cats cream off cash

THE PREMIER League is now the world's richest domestic football competition but many clubs in the lower divisions of the English game face an uncertain future, according to a report published yesterday.

"The Premier League is the richest in Europe, and, by implication, the world," said Gerry Boon, of the accountancy firm Deloitte & Touche, as he presented the group's annual review of football finances in the 1996- 97 season.

He added, however, that the riches were not evenly spread. "The financial divide between the Premier League and the Football League is turning from gap, to chasm, to abyss," he said. "Worse still, the desire to bridge that abyss is tempting many Football League clubs to live beyond their means, often with disastrous consequences if the gamble doesn't pay off."

Mr Boon added that between 10 and 15 of the poorest clubs from the lower divisions were "in imminent danger" of collapse. He said that since 1986, 15 of the league's 92 clubs had gone through some form of insolvency procedure, and although most had survived, the economic climate was becoming harder for them.

The English game's income as a whole climbed 31 per cent to pounds 675.7m in 1996-97, and made a much reduced pre-tax loss of pounds 42.6m, compared with a pre-tax loss of pounds 98.2m on turnover of pounds 517.2m the previous year.

However, the figures illustrate the divide between the haves and have- nots - showing that Premier League clubs alone generated operating profits (before transfer spending) of pounds 86.3m while the Football League Divisions One, Two and Three combined to lose pounds 27.9m. The Premiership's 20 clubs made a small overall loss of some pounds 4m after tax and transfer spending but the 72 league clubs lost a total of pounds 38m.

One of the most startling figures in the report showed English clubs spent over pounds 100m on foreign players in the 1996-97 season, an increase of almost 2000 per cent on the pounds 5.1m spent four years previously. Although fans of top English sides have warmed to big-name foreign players such as Arsenal's Dennis Bergkamp and Chelsea's Gianfranco Zola, there is a down side to their fees going abroad. Only pounds 14.5m in transfer fees moved from the Premier League clubs to the lower Football League teams in the survey period. "In the old days this transfer income filtered through the English game and helped keep Football League clubs in business. Today, it's Italian clubs that seem to be rubbing their hands in anticipation," Mr Boon said.

The survey said rapidly increasing player wages also remained a concern, rising an estimated 27 per cent in the game as a whole, and 35 per cent in the Premier League. World-class foreign players such as Bergkamp, reputedly earning pounds 25,000 per week, are part of the reason, but English players such as David Beckham and Michael Owen can expect a basic wage of tens of thousands of pounds per week, such is their perceived value to their clubs. "Vast sums are coming into English football, but that money passes immediately out of the game in the form of ever increasing players' wages," said Mr Boon.

While other European countries are benefiting from English money, the Premiership can at least claim to have gained a dominant position in income. The average Premier League team earned pounds 23.2m, against pounds 20.9m for teams in Italy's Serie A, pounds 11.6m in the Spanish League, and pounds 10.5m in the French first division. English football finances have been bolstered as the full benefits of a lucrative new contract with BSkyB have begun to feed through. Again, however, it is the clubs at the highest level which have benefited most.

Mr Boon said "survival strategies" were needed to help smaller clubs to stay in business. These included small clubs merging (or at least sharing grounds and other facilities) and owners making more prudent business decisions. He also suggested the Football Association should perhaps consider changing its rules to allow business interests to control more than one club - leading to economies of scale - and even that big clubs such as those in the Premier League might buy out smaller clubs and use them as "nursery" clubs for home-grown talent.

An FA spokesman reacted with caution to the report's findings, but conceded that the flow of money out of the English game was of concern. "It is a problem and it can't be righted by regulation," he said.

But he was wary about claims that lesser clubs were on the verge of bankrupcy. "Who can tell? We've been able to maintain a 92-club league in recent times despite widespread doom and gloom, and have the biggest league in Europe."

Business Outlook, page 17