Clubs facing disaster from TV revenue loss

Many of the Nationwide League's 72 clubs face imminent financial turmoil, and in some cases bankruptcy, because ITV Digital has offered £50m instead of £180m for the two remaining years of its broadcasting contract with the Football League.

Senior executives from Carlton and Granada – which co-own ITV Digital – held secret talks last week with the League's chief executive, David Burns, and its chairman, Keith Harris. Their aim was to renegotiate ITV Digital's three-year deal with the League, which is worth £315m (or £105m a year). The broadcasters paid £47.25m up front when the deal was signed in 2000, and paid one of three further installments of £89.25m last August. Two more installments of £89.25m are due this August and in August 2003.

ITV Digital, which screens League games on its ITV Sport channel, has been making huge losses, however, and sources close to the company say Granada and Carlton could let it go bust if the deal with the League is not renegotiated dramatically downwards. ITV Digital is understood to have offered the League £25m this year instead of the contractually agreed £89.25m, plus the same again next year.

The first public admission that ITV Digital's parent companies want a re-negotiation of the deal came yesterday from Steve Morrison, the chief executive of Granada, who suggested that ITV Sport could be closed unless ITV Digital pays much less than agreed for its football rights. "If I was considering [re-negotiation of the contract], I would say: 'Is it better we get a more realistic position going forward [by paying less] than one of the sports channels closing down? Which benefits us and the clubs more'?" he said. "In the future they would want competition for their rights. Therefore they need as many platforms as possible."

One League source responded last night by saying: "It's a game of brinkmanship." The source added that ITV Digital simply wants to save itself some money. Few observers, inside or outside football, now disagree that the broadcaster paid over the odds. None the less, senior League officials are seriously concerned.

ITV Digital's offer of £50m will be discussed at a League board meeting at lunchtime today in London. A plan of action will be formulated, including possible legal action against ITV Digital and/or its parent companies. Legal action would be a last resort because of the time and money it would take to resolve.

The television deal at it stands is worth around £2m per season for each First Division club, while Second Division clubs receive around £200,000 per year each and Third Division clubs around £150,000. If the League is forced to accept ITV Digital's new offer, and the subsequent income to clubs is slashed pro rata, many will find it impossible to cope, not least with their wage bills.

Many players' contracts were agreed on the expectation of the television income. A doomsday scenario could see some of the most vulnerable clubs go out of business entirely, while hundreds of players could see their employers defaulting on their contracts or be unable to find work when their current contracts expire.

"Since 1992, both TV income and player wages have increased by 600 per cent, but now there's considerable worry in Nationwide football about future television income. The present ITV deal has two years to run. Nationwide football is then going to be faced with considerably-reduced TV income, Geoffrey Richmond, the chairman of Bradford City, said.

"The boom in player wages over the last 10 years has been fuelled by TV income – but it is over now and players in the Nationwide will have to be very much more realistic in their contract expectations. From now onwards, clubs will not have the money to sustain the present wage levels in new contracts and will almost certainly be looking at smaller squad sizes.

"The vast majority of every club's income goes on player wages and if TV money drops, what clubs can afford for players will drop. There could be up to 1,000 players released by clubs this summer, many of whom won't get fixed up somewhere else."