Football: Profits of doom

Interest has never been higher, TV income will explode from August, and the global market for English football is opening up by the week,with the big three of Manchester United, Arsenal and Liverpool heading up the advanced guard.

The 20 leading clubs may be considering borrowing Labour's last election anthem, adapting the words and chorusing: 'Things can only get bigger.'

But, bubbling below, the warning signals are unmistakable. With wages on an apparently ever-upward curve, huge income growth did not prevent the 20 Premiership clubs making a should collective loss of £34.5million last season, bill ing to England's Premier Clubs, the latest a vey by industry analysts Deloitte and Touche.

Almost half of the clubs are paying more than 70 per cent of their income in wages. In the long term, that is dangerously unsustainable. The extra freedom of movement and wage demands for star players that are guaranteed under the new transfer system agreed by the European Union two months ago will only add to the sures on clubs.

Salary demands such as the £63,000 a week which enticed Alen Boksic to Middlesbrough will become the benchmark, not the exception. Fans will demand that their clubs cough up to compete.

Yet, according to Gerry Boon of Deloitte and Touche, that is exactly the response football should not make. On current trends, the wage will exceed income by 2007. As Boon notes, fiscally tough stance may not be popular. It may be essential.

He said: 'There are signs that a few chairmen and managers are making a stand against player wage demands, but developments suggest salaries will continue to spiral.

'The effects of the new (£1.5bn) TV deal are becoming apparent, with players and their agents positioning themselves for contract negotiations. The EU ruling on transfer fees will cause further upward pressure, at least at the top end.

'Fans' expectations are high, but clubs must manage their business to the best of their abilities - and their fans' expectations.

'If this means sacrificing a new star signing to stay solvent, then these tough decisions have to be made.'

That will not be an easy step for any club. Boon anticipates that transfer fees will fall as the ramifications of the new system become evident, but that such a change will only see more cash going to the pockets of the players.

Even in 1999-2000, Chelsea - who maintain their total of £47m includes employees of the Chelsea Village hotel complex - United and Liverpool had club wage bills in excess of £40million, with the total for the clubs - excluding Bradford - standing at just over £470m, an increase of 20 per cent on the previous season.

The average Premiership player now earns £400,000 a year and the statistics suggest a clear correlation between wages and success. While transfer fees always represent a gamble, the better players, at the bigger clubs, earn more - and win more.

It is not uniformly depressing - the scale of interest in the Premiership product means that there are huge positives as well.

The phenomenal growth of the Premier League has seen income levels increase five-fold in the first eight years since its inception, and the new television deal will see income from broadcasters exceeding match-day cashflow for the first time.

Boon adds that the new deal will accelerate revenue growth compared to the other major European leagues as well, given that existing contracts in place in Spain, France, Germany and

Italy do not expire until 2003.

He said: 'The internet and worldwide television coverage make Premiership clubs as accessible in Sydney as in Surrey.'

But there is no point in having the money unless it is used wisely, and that remains the task facing every club. Strong management is the key. As Boon said: 'With the right players and management, clubs like Ipswich, Charlton, Sunderland and Leicester can come up and challenge for Europe.'

The onus is on football to ensure that competition remains as strong as the management which governs it.