David Conn: Clubs to dig in after 'final offer'

Players' union determined to hold out as chairmen are told that television payments have peaked

It was more than merely symbolic that the Premier League chairmen were holding an emergency meeting yesterday to discuss the looming prospect of a strike by players in the same week that ITV will screen its first night-time edition of The Premiership, the costly highlights package which has lost its 7pm slot to the charms of Cilla Black.

Insiders at yesterday's meeting said the chairmen had decided to make Gordon Taylor, the Professional Footballers' Association's chief executive, a final offer today of around £18m per year, half of the £36m – five per cent of the combined television deals – that he is demanding to fund the PFA's good causes. If Taylor refuses, the chairmen have resolved to fight, convinced that industrial action is illegal because the union's dispute is with the Premier League, not directly with the players' employers, the clubs.

But Taylor has his lawyers, too. He said: "Our advice is that the clubs effectively are the Premier League and this is a legal industrial action. We have widespread support and an unprecedented 99 per cent 'yes' vote from our members and we are prepared to take action."

If yesterday's meeting was a sign of impending crisis, ITV's move provides a chilling context: the end of the television cash bonanza itself. ITV, Sky and the BBC, who in June 2000 paid around £2bn for three years of domestic football, have all said publicly in the last month that they will not pay as much again.

Greg Dyke, the BBC's director-general, mocked ITV and Sky for overpaying for Premiership highlights and live matches, saying with characteristically blunt relish: "The gravy train for football is coming to an end."

Few words could terrify Premiership chairmen more. Their clubs – and, for many of them, their careers and personal fortunes – have ballooned predominantly on television money, around £2.5bn of it since BSkyB first captured the rights from Dyke's ITV in 1992. But clubs have failed to stem the rising tide of wages and despite the windfall, and 14 still make losses.

Even at Leeds United, profit-making and generally admired as successful and well-run under their chairman Peter Ridsdale, the wage bill has increased from £18m to £40m in three years and accounts for all the club's TV income. Ridsdale has warned that a strike could derail the gravy train because the TV companies, who already regret overpaying for rights, could try to renegotiate the current contracts downwards.

The TV companies will not confirm that, but given broadcasting and new media's wider financial problems, it is not unlikely. Brian Barwick, ITV's controller of sport, denied this week that The Premiership was a flop, saying he was "very pleased with the show". However, at 4.5m, its audience could not justify its "early peak" slot and life returned to normal last week when 7m people tuned in for another series of Blind Date. It happened so swiftly because ITV's advertising is down 17 per cent.

"This is the most difficult downturn in ITV's history," Barwick said. "With competition from the BBC, who played The Weakest Link against the programme, we couldn't continue. We'll now never know whether it could have succeeded if we'd been able to give it a season."

He added that ITV had effectively taken over BBC's Match of the Day's 4m audience, and added only half a million at 7pm: "We're not feeling we paid horrendously too much, but we did not pull in enough casual observers. The following programmes had too much ground to catch up."

All broadcasters are now viewing football's performance in a colder light. When Sky paid £1.1bn for the Premiership's live rights, ITV £183m for the highlights, and On-Digital, as it then was, £315m to the Nationwide League, the media industry was still booming.

That has changed quickly. Dominic Coles, the BBC's director of sports rights, put it succinctly: "The Premier League was fortunate to have negotiated the last deals at the absolute peak of the new media bubble. That will never happen again."

Since then, the dot.com collapse has been matched by problems in cable and digital television. Ntl, who 17 months ago was rivalling Sky for the Premiership rights, is now struggling – around £12bn in debt, they lost £1bn last year. Last month ntl sold its 9.9 per cent stake in Newcastle United for £4.3m, nearly £7m less than they paid 18 months before. Its stakes in Leicester, Middlesbrough and Aston Villa look similarly profligate.

ITV Digital, which inherited the Nationwide League deal, is making huge losses for its parent companies Carlton and Granada, and there is talk of them pulling the plug or at the very least renegotiating the deal.Viewing figures, such as 1,000 for Rushden & Diamonds v Lincoln City, have done nothing to strengthen ITV Sport's hand, but Barwick insisted that, with over 200,000 subscribers, it is performing well for a new channel.

Like Dyke, Barwick has effectively said football's TV bonanza is over. In a speech to last month's Sportel conference in Monaco, he said: "Free-to-air broadcasters are at the edge of where they can be in buying football rights." Earlier this month, Rupert Murdoch, BSkyB's chairman, said that TV payments for sport had "absolutely peaked".

In this climate, ITV moving The Premiership is highly significant. It marks the end of the idea, which has grown since football's renaissance after the 1990 World Cup, that the game has become mainstream family entertainment, rather than the province of fans. Now the TV companies are re-assessing football's worth. According to Coles: "We believed the Premiership highlights were worth £30m per year. ITV paid £60m. We would never pay that and I don't believe anybody will next time."

Key, though, is what Sky will pay next time. Whatever Murdoch says, the Sky empire has been built on making people pay to watch sport. Sky Sports' subscriptions are up to 5.5m, the absolute mainstay of BSkyB. "Sky still desperately needs football," said Marc Cutler, of the industry journal TV Sports Markets, "but how much they will pay depends on whether a competitor emerges to challenge them."

Officially, the Premier League is poo-pooing talk of a meltdown. A spokesman pointed out that clubs do not wholly rely on TV income and anyway international TV sales are growing – the Premiership is earning £178m from 152 countries, more than any other league. Privately, though, some chairmen are taking television's warnings very seriously. They are hoping competition will squeeze money out of Sky in 2004, but, if the deals shrink, there are fears that the big clubs could break away.

Players' wages are still increasing and contracts are still generally for five years. If TV income drops seriously, Premiership clubs could go bust.

This explains the Premier League's rising panic at the deadlock with the PFA. The authorities are desperate to settle but adamant they will not pay five per cent. Meanwhile, The Premiership's move, ushered off by Cilla, suggests loudly that this could be football's last big collective TV deal. And the clubs are ill-prepared for that.

davidconn@freeuk.com