The fall of an English football giant

"Lot No.1. Paul Robinson. Aged 23. A promising young goalkeeper expected to become England's long-term successor to David Seaman. We'll start the bidding at £4m. Do I hear £4m? Thank you Mr Wenger. Any advance. Yes, £5m from Sir Alex Ferguson. Do I hear £6m? Mr Keegan?"

Impossible. Maybe so in the modern age but only because an agent, rather than an auctioneer, will be the go-between. Back in 1919 this was the reality at Elland Road.

On 4 October Leeds City, the predecessors of Leeds United, were expelled from the Football League having failed to produce their books in response to a charge of making illegal payments. The club were wound up with the players sold at auction for a total of £10,000. One, Billy Kirton, ended the season scoring Aston Villa's extra-time winner in the FA Cup final having gone under the hammer at £250.

Eighty-four years on, the prospect of a third Leeds team folding (City having been formed out of the ashes of Hunslet) is a real one. At around £80m the current debt is so crippling that relegation could send the club into administration. Under proposed Football League rules that could mean starting next season under the handicap of a 12-point deduction.

With only matches at Highbury tomorrow, and at home to Aston Villa, who have a good record at Elland Road, to come, Leeds' survival may have to rely on West Ham's own inadequacies to survive the drop. Yet staying up is only the first step to survival. With the first payment on a £59m securitisation loan due in September next year the current debt has to be reduced to a manageable level.

There is a grim irony in Leeds' fate. Having been built on the wool trade the city has reinvented itself as England's biggest financial centre outside London attracting Harvey Nichols, Malmaison and a string of fashionable restaurants. Yet its flagship sporting organisation has been brought to its knees by gross financial mismanagement. In "living the dream" Peter Ridsdale evoked a nightmare but the blame cannot be laid at the former chairman's door alone. Though sympathy is muted for a man who walked away last month with a pay-off of £383,000 the players, coaches and other board members all share responsibility. The board, which included such respected City figures as Allan Leighton, the chairman of Royal Mail, and the new Leeds chairman, Professor John McKenzie, should have kept closer rein on Ridsdale. The two previous managers, David O'Leary and Terry Venables, should have done better with the resources they had and the players should have performed better.

With the transfers of Rio Ferdinand, Robbie Keane, Robbie Fowler, Jonathan Woodgate and Lee Bowyer, and the loaning of Olivier Dacourt, it is sometimes imagined that the Leeds squad has been stripped bare.

Yet every member of the Leeds team which started Saturday's home defeat to Blackburn Rovers, plus the substitutes Nigel Martyn and Lucas Radebe, played in the Champions' League campaign which culminated in a European Cup semi-final against Valencia two years ago this week. That such a squad is fearing relegation is ridiculous, especially when they were being talked of as championship contenders as recently as September.

How many of these players will be around next season is open to doubt.

Should Leeds go down, a fire sale is inevitable with Robinson, Harry Kewell, Mark Viduka, Alan Smith and Danny Mills the most likely departures. If Leeds stay up, McKenzie has said leading players would only be sold as a "last resort". Leeds fans heard similar pledges with depressing regularity from Ridsdale but McKenzie, if he is to retain credibility, will have to keep his word. That said, the club might not try too hard to dissuade players requesting a move. Already Mills has complained that his international chances are being hindered by Leeds' Premiership form while "a source close to Robinson" (usually tabloid-speak for an agent) has claimed the goalkeeper would "go anywhere". Negotiations to extend Kewell's contract, which expires in 2004, are still at the exploratory level after more than four months of talks. Jacob Burns, the only player out of contract, will be released but Dacourt, unless Roma can raise £4m, will return.

No decisions can be made until Leeds' Premiership fate is determined and a permanent manager installed. Reid is unlikely to get the job unless Micky Adams (currently at Leicester) and Paul Hart (Nottingham Forest) both turn it down. Gordon Strachan (Southampton) cannot be ruled out but the fifth name on the shortlist, Martin O'Neill (Celtic), probably can.

In the meantime McKenzie, assisted by experts seconded from Ernst & Young, has been seeking ways to reduce losses, currently running at nearly £3m a month, in preparation for a restructuring of the club's debt. Cuts saving £5m a year are to be implemented immediately. Nearly £1m a year, in salary and benefits, has been saved with the departure of Ridsdale and the senior executives Stephen Harrison and David Spencer. Redundancies in middle management will further slash a wage bill which was twice the size of Newcastle's despite similar staffing. Other economies include cutting the 75 company cars to 42, but parsimony has not yet extended to the level once reached under Peter Swales at Manchester City when every other light bulb was removed in the corridors.

The aim is to show Leeds can break even on a daily basis and so persuade the City that the club is a going concern, not a basket case. If they succeed there are reasons for optimism. The club own Elland Road and half of the adjacent acres which are used for match-day car parking. It is still hoped that, in conjunction with the council (who own the other half) and retailers, this site will eventually give rise to a redeveloped stadium and shopping complex.

The club also own Thorp Arch, the training ground in North Yorkshire, which has had £6m invested in it. This is not for sale, not least because it continues to nurture the young talent which can be expected to form the backbone of the club within a couple of years. James Milner has already caught the eye but there are also high expectations of fellow striker Simon Johnson, defenders Frazer Richardson and Matthew Kilgallon, the Scottish midfielders Jamie Winter and Martin Woods, and a 16-year-old winger spoken about in Rooney-esque tones, Aaron Lennon. In addition, the emergence of goalkeeper Scott Carson should enable the club to cash in on either Robinson or Martyn. Finally, there is the support. Despite the club's implosion and shocking home form, attendances have remained close to 40,000 this season, above those of the Revie years.

These are assets many clubs, impoverished or flush, would envy but if the new board and incoming manager are to build on them Leeds must stay up.

A glance across Yorkshire, and the sight of Sheffield Wednesday sliding into the lower divisions, confirms the danger of failure.