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SAINTS ON THE BRINK – 1/7/09

The Pinnacle Group, the consortium fronted by Matthew Le Tissier, has formally withdrawn from the race to take over Southampton. The administrator, Mark Fry, is now scrutinising two new bids from abroad as he desperately seeks new owners, but the club could be just days from collapse. One of these new bids comes from a Swiss group. The consortium fronted by businessman Marc Jackson had already withdrawn its interest. Pinnacle blamed their withdrawal on difficulties with the Football League over an appeal against the club's ten point deduction. Le Tisier said, 'With the ongoing issues with the Football League persisting, our backers have simply refused to provide the requisite funds to complete the takeover.' However, doubts had been raised about the resources available to one of the key figures in the bid.

USMANOV'S NEW ARSENAL PLOY – 28/6/09

Russian oligarch Alisher Usmanov has written to the Arsenal board saying that he is prepared to underwrite a £100m rights issue. Usmanov, who is the second biggest investor in the club and is being advised by Lazards, claims that he wants to work with the board. His stated intention is to help address Arsenal's debts and provide money to use during the summer transfer window. The board is expected to discuss the letter at its meeting this week. Usmanov is known to want to have a greater influence over events at Arsenal. Despite his 25 per cent stake in the club, his investment vehicle (Red and White Holdings) is not represented on the board which takes the view that using large sums to buy players could be risky. Red and White believes that the club's £350m debts have made it uncompetitive on the pitch, This is denied by the board who want to pursue what they describe as a 'sustainable business model'. They will not allow the club to borrow money it might struggle to repay, making it reliant on a benefactor. The Arsenal Supporters' Trust has mixed feelings about a rights issue. It does not want money 'frittered away' in the transfer market, but thinks there would be benefit in a capital injection that had no impact on ownership and enabled the current debt to be reduced.

CONFERENCE TV RIGHTS FOR SALE – 28/6/09

The Blue Square Premiership is confident about selling its television rights after the collapse of its five year £12m deal with Setanta, although whether it will raise as much money remains to be seen. Martin James of Sport 360, the Conference's official advertising agency, commented, 'We're not talking Top-Up TV or anything like that.' A free to air bidder is a possibility. Setanta's deal guaranteed all Blue Square Premier clubs a minimum of £70,000 a year from the league's central funding, with a further £8,000 for the home side and £3,000 for the away team featured in a broadcast match. Step 2 sides received £15,000 a year. The sum paid out to Premiership clubs represents anything between 15 and 25 per cent of most clubs' budgets. For example, Cambridge United made around £135,000 from Setanta last season. There has been speculation that live attendances have been dented by awkward match nights such as Thursdays, but the evidence suggests little consistent impact on attendances. There is little hope that extra fans returning will cover the shortfall, so the Conference needs to negotiate as good a deal as it can.

NON-LEAGUE CASUALTIES – 28/6/09

Folkestone Invicta, themselves a 'phoenix' club that arose from the ashes of the financially troubled Folkestone, could go into administration on Monday unless they find the £70,000 they calculate they need to start next season. The Ryman South club have an outstanding tax bill of nearly £100,000. The directors are continuing their fight to reduce the HM Revenue and Customs bill. They fear that the club's debt could rise to £300,000 by this time next year. Invicta are still reeling from the loss of their main sponsors over the close season. Recruitment agency HR GO and brewers Shepherd Neame have withdrawn their financial support as the credit crunch hits home.

It's already curtains for Unibond Premier club Newcastle Blue Star who have been officially wound up. Blue Star met with the Football Association and the Football Stadia Improvement Fund (FSIF) last week to see if they could reduce the £61,500 grant repayment they were required to make, but the Unibond claim the money they owe is nearer £150,000. The Aristocrats moved in with Newcastle Falcons two years ago - but failed to inform the FSIF of their switch to Kingston Park having been given the cash to upgrade their Druid Park home in 1999.

Farsley Celtic's existence in hanging by a thread after the Blue Square North club's £200,000 debt to the taxman (yet again) was called in. They are due in the High Court in Wednesday to hear if the club will be closed down after a winding-up order was sought against the 101-year old Villagers. The club had hoped to pay off its debts by selling land adjacent to the stadium for £2m. However, Leeds City Council refused to grant planning permission for building and the plot is now worth less than £500,000. In any case, they could not get hold of the money until October at the earliest.

Stafford Rangers are another financially challenged Blue Square North club. They need to raise £50,000 to pay debts after their bank refused them credit. The club has launched a scheme, linked to a draw, to get 250 fans to loan the club £250 for a period of one month to five years. The club is also selling raffle tickets at £50 a time for stadium and stand naming rights. One anonymous supporter has already bought 125 of the loan slots for £25,000.

OFCOM THREATENS ACTION AGAINST SKY – 28/6/09

BSkyB's status in the pay-television market has come under threat after Ofcom outlined plans to force it to offer premium channels, including live football, to operators on rival platfoms. The regulator also indicated that it would seek to toughen competition controls over auctions for rights to broadcast Premiership football. Ofcom proposes to force BSkyB to sell on the content of its premium channels to rival broadcasters at regulated prices to ensure competition. The plan could save Virgin Media, the only broadcaster that buys the content, up to 30 per cent. Since the wholesale market represents only 4 per cent of BSkyB's revenue, some analysts believed this would not have a dramatic effect on its business model. At the very worst, the proposals could shave £30m off earnings annually, according to Deutsche Bank. But some analysts believe that BSkyB could see higher revenues if Virgin Media sold more of BSkyB's premium programming. Under Ofcom's plans, the premium channels could become available on platforms such as Top-Up TV, BT Vision or other businesses.

The regulator also wants to ensure that the next Premiership auction complies with competition law. But the entrance of ESPN into the market has provided BSkyB with a potentially significant competitor. Richard Scudamore, the Premiership supremo, said 'We are surprised that Ofcom is seeking to revisit an issue that was addressed to the satisfaction of the European Commision. We will resist any measures that disincentivise media organisations from bidding for our rights.' The companies whose complaint led to the pay-TV review said this week's collapse of Setanta was proof of BSkyB's market power. BT Vision, Virgin Media and Top-Up TV said Setanta could not buy premium football rights at an affordable price because of competition from the satellite giant. But this argument cut no ice with Ofcom who said its role was not 'to enable weak entrants to earn short-term profits at Sky's expense.'

It could be argued that Ofcom's intervention represents a punishment for success. The Lombard column in the Financial Times commented, 'Sky emerged as a broadcasting powerhouse over the last two decades because it risked billions to acquire the rights to content such as Premier League football. It has since wielded these rights to good effect, using its superior programming to build its retaol subscriber base and keep lesser rivals such as the now-defunct Setanta, at bay.' However, the column goes on to note that Sky's argument that it should continue to be rewarded for its risk-taking and innovation only foes so far. Sky's 70 per cent share of the pay-TV market gives it an incentive to restrict rivals' access to premium content. The real threat to Sky is not from losing revenues from its tiny wholesale business, but the risk of losing profitable premium subscribers to rivals. To date, Sky has hung on its customers by offering them phone and internet services as well. As a result customer churn has fallen from 13.7 per cent in 2006 to about 10 per cent last year. Even so, the Ofcom intervention could lead to important changes in market structure.

RBS WRITES TO LIVERPOOL FANS – 27/6/09

It is perhaps symptomatic of the importance of finance in modern football that the Royal Bank of Scotland (RBS) has taken the unprecedented step of writing to Liverpool supporters to justify its continuing financial support of the club's American co-owners. The bank has been flooded with emails from Liverpool fans calling for the plug to be pulled on Tom Hicks and George Gillet's £350m debt. Discussions on refinancing the loan have been proceeding well and the sending of the e-mail is virtual confirmation the loan will be refinanced. The message from RBS says the bank has 'a long-term relationship with the club, and we look forward to this continuing for many years to come. In our view and that of the executive management of the club, it is financially healthy and able to service comfortably its debt obligations from cash flow generated by its playing and commercial activities. It is in our commercial interest to support the club so that it can continue to perform successfully on and off the pitch.'

George Gillet Jr. has moved to ease the club's financial troubles by agreeing to sell his majority stake in the Montreal Candiens ice hockey franchise. It is expected that the refinancing of the £350m credit deals with RBS and Wachovia will require more than £185m in personal guarantees from the American co-owners. Molson has agreed to buy Gillet's 80.1 per cent stake in the Canadiens for about £330m. The brewing company, which owns the remaining 19.9 per cent share, sold Gillet the controlling stake in the franchise eight years ago for about £165m, but was prepared to buy it back for double that amount. As part of the deal the Molson family will acquire the Bell Centre where the Canadiens play. Liverpool could receive another boost if the other co-owner, Tom Hicks, manages to offload about half of his 95 per cent stake in the Texas Rangers baseball team. The Rangers are valued at about £245m.

Carlsberg is running out of time to negotiate a new shirt sponsorship deal with Liverpool as the club hold out for a bumper contract amid interest from a host of leading international companies. Liverpool are looking to strike a deal similar to the £80m, four-year arrangement that Manchester United secured this month with American insurance giant Aon, but Carlsberg is offering only about half that sum. The Danish brewer has been Liverpool's main sponsor since 1992. The club's American co-owners believe that the club has been undersold commercially for too long and want a deal that reflects their position as one of the most recognisable brands in world fooball. The present deal with Carlsberg is worth £7.2m a year and expires next summer. Carlsberg has until the end of July to negoriate a new contract. Liverpool believe that United's agreement with Aon has set the benchmark they should aspire to.

SAINTS PLIGHT IS 'GRAVE' – 27/6/09

Saints administrator Mark Fry has issued a 'grave' warning that he might have to start winding up the club if he can't sell it by next Friday. Fry told the Southern Daily Echo, 'The end of next week is a key tipping point in this. It's the gravest its been in the period of administration. There was a very short timeframe from the point we got involved. We stretched that as far as we can possibly stretch it and a deal really needs to be completed.'

The man who is supposedly the financial backer behind the Pinnacle Consortium that is trying to take over Southampton is emerging as something of a mystery figure. 32-year old lettings agent Michael Fialka lives with his parents in London. According to neighbours, his father was a cab driver and his mother, Sandra, owned a lingerie store called Pretty Things in nearby Cockfosters.

MAGPIES TAKEOVER NEAR – 25/6/09

Two groups are leading the bidding for Newcastle United and it is expected that a takeover will be completed by the end of the month. Up to four groups - one of which is fronted by former chairman Freddy Shepherd - have been involved in substantive negotiations but two are understood to have moved ahead of the others in terms of demonstrating their financial strength. A deal needs to be done soon as the players return for training in less a week. The delay in sorting out Alan Shearer's appointment has also caused great frustration among long suffering Newcastle fans. But an end to this depressing saga may be in sight.

SKY COMFORTABLE WITH ESPN – 24/6/09

ESPN is owned by Disney whose market value beats BSkyB's parent News Corp by $42 billion to $26 billion dollars. Yet analysts are saying that ESPN could be an easier opponent in the Premiership live television rights stakes than might appear to be the case at first glance. The game could even turn out to be a friendly. While BSkyB will be cautious of the threat posed by the Disney backed company, it could have been worse. Tony Syfret of Enders Analysis commented, 'I think Sky will be quite happy, because ESPN look like they are looking for a partnership with them, acting as wholesalers for Sky, rather than taking over as a dominant force. Because they don't have their own platform [satellite or cable] the only way they could be really dominant would be to do what Setanta tried and be a retailer of this programming, gaining their own subscriber base. That doesn't fit in with the culture of Disney and ESPN.' It was also a path that Setanta tried to follow without success. Having inherited the halving of games that caused Setanta so many problems, ESPN face disappointing their customers in their second full season. But one analyst commented, 'This surely indicates that ESPN are playing a long game, looking to be in UK football well beyond the end of the deal in 2013.'

Setanta has finally gone into administration and its programmes in Britain went off the air. Administrators Deloitte are closing the business in Britain while its small Irish and international units are likely to be sold. There is money to refund subscribers who paid in advance. Sky could not resist a last swipe at Setanta. Their chief operating officer, Mike Darney, accused his rivals of 'cheap opportunism' and said that Setanta 'ran into difficulties because it tried to grow too fast and failed to control its costs.' If you add in the failure to generate a subscriber base sufficient to make the business viable, that just about sums it up.

MERTHYR SAVED FROM THE BRINK – 24/6/09

Merthyr Tydfil FC have been saved from extinction after the supporters' trust forced the club into administration. And the trust, Martyrs to the Cause, will now step up their efforts to take control at the club by making an offer to the administrators. The decision to call in the administrators is a major victory for the trust in their long and bitter battle with owner Wyn Holloway. Despite debts of around £600,000, Holloway had refused to enter administration, preferring to see the club liquidated. But the trust were able to go over his head as they had loaned the club £1,700 and were officially listed as a creditor. Merthyr were due to be wound up today by the Inland Revenue, but are now protected from creditors. It had been rumoured that millionaire Cardiff City director Annis Abraham was behind the trust's bid for the club, but apparently this is not the case and he is no longer interested in putting in a bid and linking Merthyr with Cardiff City.

ESPN DEAL SAVES PREMIERSHIP'S BACON – 23/6/09

ESPN, part of Walt Disney, has bought both the packages of live games forcibly relinquished by Setanta. It has acquired both the two packages for next season and the one package that runs for three years from 2010. ESPN intends to retail them through the Sky platform and hopefully also through Virgin Media and BT. It has not yet been announced how much they paid for the packages with various figures floating around but it is thought that they probably paid less than Setanta had for next season's two packages (for which it was generally agreed Setanta had paid over the odds in their desire to build their business). In any case, the Premiership have not made a significant loss that will affect payments to clubs as Premiership sources have indicated that any shortfall can be balanced by payments made up front by Setanta which they are entitled to retain. The Scottish Premier League are in a less happy position. They are negotiating with BSkyB, but it is thought that they may receive substantially less than Setanta paid, perhaps as much as £35m down.

SAINTS BID IN TROUBLE – 21/6/09

After talk last week of Kevin Keegan being brought in as manager, the Pinnacle consortium bid for Southampton is in trouble. Pinnacle's 21-day period of exclusivity ended on Friday with no deal being completed. The Matt Le Tissier-backed consortium refused to accept that they will be barred from appealing against Saints' ten point deduction should their takeover bid go through. Lawyers told the Pinnacle group that it was worth appealing against the deduction. As Pinnacle insisted that they wanted to appeal, the League did not issue them with a licence to play in the 2009/10 season. A rival consortium says that it has the cash in place to buy Saints should the Pinnacle bid collapse. Moreover, Dorset businessman Marc Jackson who is fronting the bid also claims that he has lined up a current international manager for the team.

SETANTA'S PREMIERSHIP CONTRACT CANCELLED – 21/6/09

After Setanta failed to make a £10m payment to the Premiership, it lost its rights to broadcast football fixtures next season. The Premiership said it was with 'considerable regret' that Setanta had been unable to meet its obligations and that the licence agreement between the two had been 'terminated with immediate effect.' The 46 UK live matches available for the 2009-10 season will now be auctioned off. ESPN, the US sports channel owned by Walt Disney, is expected to bid for these rights. However, if there are no bidders, the Premiership may not be able to recoup all the money it would have received from Setanta.

Setanta now faces a wave of subscription cancellations and is expected to appoint Deloitte as administrators. Setanta had been locked in survival talks with potential investors all last week and had explored the possibility of a merger with TopUp TV, the pay television company. Len Blavatnik, TopUp TV's owner with about a 70 per cent shareholding, approached Setanta offering £20m for control of the company. TopUp TV, with more than 100,000 subscribers, is likely to come under pressure as it is dependent on the revenue it receives from Setanta to distribute the broadcaster's sports channel to its digital terrestial television subscribers. However, the deal could not be done. The underlying problem is that Setanta was unable to attract enough subscribers to make its model viable.

THE BIG LOSERS FROM SETANTA COLLAPSE – 21/6/09

The Scottish Premiership, English non-league clubs and possibly the FA stand to lose the most from the prospective collapse of Setanta. The Scottish Premiership may be able to negotiate another deal. But Scottish Television had been hit by the downturn in advertising revenue like all ITV companies and would not be able to offer a fraction of the amount provided by the Setanta deal which has nearly five years to run. Setanta were prepared to pay over the odds for Scottish top flight football as part of their effort to build up the business. Now the rumour mill is suggesting that as many as three SPL clubs could be in danger of going into administration.

One of the clubs thought to be most at risk is Kilmarnock. They are a club with high debt, meagre gate receipts and no benefactor. Television accounts for a quarter of their income. Liabiliies total £11.4m, around 130 per cent of typical turnover. Attendances have dropped by almost 1,800 in the last three years, and last season were around the 5,800 mark. Former guarantor Jamie Moffat, having sold his travel company A T Mays, has stepped back from the lifelong passion of his late father. The club has substantial non-football assets in the form of a hotel and a health club but they have added to its debts. Kilmarnock have only been able to post profits in the last two years because of an outflow of players.

The sums that English non-league clubs receive from Setanta are not that large, but they are still an important part of their income. Each Conference club gets a minimum of £75,000 a year and the more successful clubs receive around £100,000. Blue Square North and South clubs get £15,000 each. There has been some whistling in the dark in non-league circles about Setanata surviving in a lower cost format with a mixture of Scottish premiership, English non-league and rugby but that would be unlikely to yield enough subscribers. It is estimated that the television money could yield 10 to 25 per cent of the budget of Conference clubs. There are also substantial indirect benefits in terms of higher profile and commercial sponsorship. On the other hand, without television gates could be boosted as clubs would no longer have to play attractive games on a Thursday night which is regarded as a football graveyard.

The FA faces a provlem because Setanta holds the rights to England home friendlies, the FA CUp and the Community Shield as part of a £425m four year deal with ITV that runs until 2012. The FA said that it had reached a solution with Setanta overtheir contract, but it had been contingent on the Premier League also finding an agreement with the broadcaster. 'We are very disappointed with the news,' said FA chief executive Ian Watmore. Under the terms of ITV's deal with the FA it would pick up eight England friendlies between now and 2012 if Setanta collapses. The FA would try to resell its other rights, including England Under-21 matches, to different broadcasters but would struggle to attract the same price in the current economic climate.

'BIG BROTHER' FIRM ENDEMOL COOLS ON SETANTA DEAL – 15/6/09

Production company Endemol has been considering taking a share in troubled sports broadcaster Setanta. But earlier plans by Endemol, one of the world's largest television production companies, to be an equal partner in Setanta with Access Industries have been scaled down. Access, the investment vehicle of Russian-born US billionaire Len Blavatnik, said last Friday that it had offered Setanta's board £20m in return for a 51 per cent stake. That move seems to have played a part in Endemol's cooling attitude. It is understood that Endemol was interested in going in with Access as equal partners and taking the whole of Setanta over, but they are less interested in taking a minority stake in Setanta. An alternative might be to take on some of Setanta's sports production businesses. Endemol has a small sports production house, but is best known for reality formats such as Big Brother. There are historical ties conducting Setanta and Endemol. When he was a partner at Balderton, Ynon Kreiz, chief executive of the Netherlands-based production company, helped set up the private equity funding for Setanta. That turned it from a small-scale operator into a potential challenger to BSkyB.

Setanta was facing administration as early as tomorrow because a £35m instalment of its £392m three year contract with the Premiership was due and the company had little cash with which to pay it. The Premiership showed no appetite for patience with Setanta. However, after Mr Blavnik appeared as a potential rescuer, the Setanta board released £10m to the Premier League. It is believed that a re-scheduling of the rest of the payment has been agreed. Setanta now has until Friday to finish discussions with Access and then pay another £10m, with the balance due within a month.

POMPEY DEAL: 'NOT ME GUV' SAYS THAKSIN – 15/6/09

Thaksin Shinawatra, the former owner of Manchester City, has denied that he has a financial interest in the proposed takeover of Portsmouth. The Premier League had indicated that it would veto the sale of the club to Dr Sulaiman al-Fahim if reports of involvement on the part of the former Thai prime minister were confirmed. After being convicted of corruption and sentenced to two years in jail, even the Premier League would not want to claim that he was a fit and proper person to be involved in a club. Peter Storrie, the Portsmouth executive chairman, had admitted that he was introduced to al-Fahim by Pairoj Piempongsant, an associate of Shinawatra, but denied any knowledge of Shinawatra's possible involvement.

The process of due diligence, which has involved up to a dozen lawyers and accountants scrutinising Portsmouth's books, is not expected to be completed until the second week of July. That could leave the club struggling to field a competitive side in next season's Premiership. While most clubs started refreshing their squads when the transfer window opened on June 1st, Pompey are already two weeks behind. If any nasty surprises are discovered in the books and the takeover does not occur, the club will be back to square one with half a team, no manager, an owner who has admitted he cannot invest any more and Standard Bank of South Africa wanting its money (£30m) back.

TERRAS IN TROUBLE – 14/6/09

Blue Square South side Weymouth may be forced into liquidation after they had their overdraft cancelled by Barclays. Relegated from the Conference, the club need £50,000 over the close season if they are to survive. They are being pressed by former owner Malcolm Curtis for repayment of money he says he loaned the club. Pledges of financial support the club received when it was saved from the brink three months ago appear to have disappeared. The club has a legacy of debt and a schedule of payments that must be made. The Weymouth board, facing crippling debts of around £500,000 after years of mismanagement, are walking a tightrope with creditors who are far from happy about their four year plan to pay back what they are owed. The club cannot borrow any money because the collateral in the form of land has gone. The underlying problem is one of excessive ambition that often afflicts such clubs. Rather than being content with Conference status, those running the club thought that they could push towards the Football League and now the club has lost its place in the top of the non-league pyramid.

HOW WILL UNITED SPEND THE MONEY? – 14/6/09

En route to a football workshop in Amsterdam last Thursday, I was diverted into the Sky News studios at Isleworth to give my views on how Manchester United might spend the money they have obtained from the £80m deal to sell Ronaldo to Real Madrid. Whilst United has very large debts, it is able to service them from its still growing revenue stream. That stream depends on continued success on the pitch so a good proportion of the money will be spent on players, in particular on up-and-coming players with potential whose value can be developed. United have subsequently made it clear that some of the money would go towards interest payments which amount to £69m a year to service a £699m debt mountain. However, in part this a question of managing expectations. United don't want potential sellers of players to get the idea that they will be willing to meet ridiculous valuations.

Uefa president Michel Platini predictably weighed in to condemn the deal. 'It is very puzzling at a time when football faces some of its worst ever financial challenges,' he said in a statement to wire services. 'These challenges are a serious challenge to the idea of fair play and the concept of fnancial balance in our competitions.' Normally reliable sources have told us that a luxury tax is flavour of the month with Platini. Clubs would be able to buy whoever they wanted, but would pay a tax on purchases that took them above a certain percentage of their turnover with the money distributed to all clubs. UK sports minister Gerry Sutcliffe also weighed in saying that the government was 'concerned about the sustainability of the game.' By moving from England, Ronaldo will escape the British Government's new top 50 per cent tax rate and will be entering a tax regime where the so-called Beckham Law enables foreign earners working in Spain to pay only 25 per cent in tax. It is thought that his salary may go up from £125,000 a week at United to £180,000 at Real Madrid.

SETANTA IS SAVED – 14/6/09

Access Industries, a company run by billionaire businessman Len Blavatnik, will pay £20m for a 51 per cent stake in Setanta to help it to avoid administration. Setanta run into financial trouble when it lost half its Premiership live games from 2010-11, leading to fears of a mass exodus of subscribers from the already loss-making company. The crisis revived memories of the collapse of ITV Digital in 2002, when the operator went under owing Football League clubs £180m with serious financial consequences for some of them. It had been thought that ESPN might use acquiring Setanta as a way of breaking into the live rights market, but it distanced itself from any deal last week. Blavatnik is a Russian-born American who has invested in Russian oil. He also owns TopUp TV, which operates pay television on Freeview, a stake in an Israeli channel called Sport 5 and a stake in Perform Group, a digital sports rights business with clients including the Premiership and some of its other clubs. Other investors are also expected to take a stake in Setanta to help rebuild the company.

SETANTA TRIES TO SELL STAKE – 10/6/09

Setanta, the sports broadcaster on the verge of administration, has tried to sell an equity stake to companies including BT and ESPN, Disney's sports business. Faced with the need to raise £100m to stay afloat, Setanta was seeking offers in a range of £30m to £50m for an equity stake of an unknown size. It is thought unlikely that BT would be interested. ESPN is a likelier prospect, but has declined to comment. In April Setanta held talks with private equity firms, including Carlyle, in an unsuccessful attempt to raise up to £100m. Setanta appears to have closed down its online and telephone subscription sales lines. Crunch time could well come when Setanta faces a £30m payment to the Premiership next week. If Setanta does go into administration, its investors which include global investment bank Goldman Sachs may table separate offers for the company. Pressure is mounting on Ofcom to conduct an inquiry into Sky's dominance of the football rights market. The regulator said last September that it would conduct such a review 'if there is a material change in circumstances, such as a major shift in the competitive landscape'. It is being argued that the collapse of Setanta would represent such a material change.

WILL BANKS TAKE THEIR BALL AWAY? – 9/6/09

Football was a banker's playground for much of the last decade. But have banks now reached a point where they will take their ball away and end the game? Banks have done well out of deals with Russian oligarchs, Middle Eastern royalty and American hedge funds. Banking consortia were put together to fund the takeovers of Manchester United and Liverpool, and the stadium financing for Arsenal. From the clubs' perspective, it was reasonable to believe that banks would continue to roll over their loans given the reputational damage they would incur for allowing such high-profile community assets to descend into financial crisis. That view may prevail since banks would be left selling clubs as distressed assets. But Premier League clubs' debts are running at £3.1bn. Any chance of another Liverpool-style debt-finance deal in the Premiership looks remote.

One view of the future is that put by a football club adviser to the Financial Times, 'Football clubs are not easy assets to own and control. That's not the game banks are in.' The buying market for clubs may continue to look thin, but that does not necessarily mean panic stations for banks. Their argument is that football looks a lot more solid than some other sectors, such as retail. One banker told the FT, 'Football clubs, at least at the top end, are reasonably robust in a downturn.' Certainly, the recent Deloitte football finance report emphasises how resilient football has been so far in the recession.

PREMIERSHIP TAKE TOUGH LINE ON SETANTA – 9/6/09

The Premiership are taking a tough line on ailing sports broadcaster Setanta. A Premier League insider told the Financial Times, 'If people can't run their businesses properly and enter into relationships they can't fulfil, that's not our fault.' Others think that the new management that has been in place for six weeks should be given time to come up with a solution, although one does not seem to be readily available. It is arguable that the aggressive bidding policy of Sky placed Setanta in its current position in the first place. The price of rights for the Premiership have risen because of BSkyB's interest in maintaining its audience appeal. However, if Setanta goes under, it would add weight to the arguments of those at Ofcom who argue that BSkyB has too much market power and needs to be restricted. Within a fortnight, Ofcom will rule on whether it should force BSkyB to sell on its rights to its competitors and, if so, at what price. In a worst case scenario for BSkyB, the sudden collapse of Setanta could trigger a stronger reaction from Ofcom. It could add a study of the sale of Premiership rights to its pay-TV review.

MIDDLE EASTERN BID FOR NOTTS COUNTY – 9/6/09

League 2 Notts County are the target of a takeover bid from the Middle East. A consortium of Middle East investors is on the verge of pouring millions into the oldest club in the world, known as 'The Pies'. Apart from giving a new angle on the terrace chant 'Who ate all the pies?' the move by Munto Finance Ltd. illustrates that interest from the Middle East in UK footballing assets has not been dimmed by the economic downturn. Harry Philp, financial adviser at Hermes Sports Partners, commented 'There are a lot of wealthy individuals in the Middle East looking at this. They see a real estate play in some of these smaller clubs, pretty attractive grounds and city-centre locations.' Othere are more sceptical. One banker told the Financial Times 'A lot of potential purchasers are making sure they have sufficient capital to ensure their other business interests are covered rather than invest in any new venture.'

WEST HAM CHANGES HANDS – 9/6/09

West Ham changed owners yesterday in a deal orchestrated by Icelandic bank Straumur-Burdaras to head off the threat of foreclosure and a damaging points deduction. The club has been sold to CB (Claret and Blue) Holding, a consortium of four Icelandic banks led by Straumur. Former owner Bjorgolfur Gudmundsson, who bought the club for £85m in 2006, has stepped down as chairman. Straumur, which it itself insolvent, is a major creditor of Mr Gudmundsson, who saw his fortune wiped out in the Icelandic financial crisis. It will hold 70 per cent of CB Holding, with the balance held by Byr Savings Bank, MP Bank and state-owned Landsbanki. The move protects the club against the threat of any creditor of Mr Gudmundsson's Hausa investment vehicle seeking a forced liquidation of its assets, the most prominent of which is West Ham. Court papers issued in December by Hausa suggest that it was seeking the sell the club for up to £250m, although a price tag of £100m would be more realistic. The club's latest accounts for the year to May 2007 show that the club's bank borrowings were £36m on turnover of £49m. However, they noted that the club was in the process of agreeing extended facilities of £47m.

The decision leaves the club in financial limbo. CB Holding has a three-year plan to run the club, aiming to recoup the money it is owed by Bjorgolfur Gudmundsson. The club will be forced to balance their books in the meantime. CB Holding will want to maintain the value of West Ham and is unlikely to sell too many top players because it could risk relegation and therefore a drop in value. Equally, it is unlikely to invest much money in transfers. West Ham owe Sheffield United a minimum of £21m rising to £27m after the Carlos Tevez affair. A payment to the Yorkshire club is due on July 1.

CHAOS AT NEWCASTLE – 9/6/09

Chaos reigns at Newcastle United after the club was put up for sale on its website. Bidders for the relegated club were invited to contact an E mail address. Predictably, the club received some derisory offers and abusive E-mails from Sunderland fans. Putative manager Alan Shearer had hoped that Barclays Bank would extend the club's overdraft, making £40m available as working capital to buy players and pay wages, but he has heard nothing. The club is set to lose 120 members of staff. Mike Ashley has offered the club for sale at £100m, but despite it being talked up as potentially a top seven Premiership club, it is thought that he will be lucky to get £80m. That would represent a £164m loss on what he paid for the club and subsequently invested to reduce its debts.

PREMIER LEAGUE AND NBA DISCUSS TIE-UP – 8/6/09

The Premiership and the National Basketball Association (NBA) in the US are exploring a marketing and commercial tie-up that would draw on the strengths of the world's two most popular sports leagues as they expand into new international markets. Representatives from the football and basketball associations have met in London to discuss how they might work together. They have also compared notes on their respective rights strategies - particularly in Asia, which is a huge and still largely untapped market for western sport. Although a Chinese consortium is reportedly seeking a stake in the Cleveland Cavaliers, the Premiership has a better hit rate when it comes to attracting international investors from Russia, the United States and the Middle East. The two sports are, however, organised very differently. In the NBA, poorly performing teams are given priority when new players are 'drafted' into the sport. Each franchise must keep its cost within set budgets.

SETANTA CLOSE TO COLLAPSE – 6/6/09

Sports broadcaster Setanta is close to collapse. Research group Enders Analysis estimates that Setanta's annual losses in its UK business amount to about £100m. Accountancy firm Deloitte is on standby to put the company into administration. Setanta has 1.2 million customers, well short of the 1.9m it needs to break even. The broadcaster has until Monday to pay the Scottish Premier League £3m as part of its £31m a year deal. The Premiership is awaiting a £35m payment on June 15th. Disney company ESPN is understood to be interested in acquiring its rights, but would pay less for them. If Setanta did go into administration it would be a big blow to the Scottish Premier League which held an emergency meeting to discuss the situation last week. It has already decided to dip into its own reserves to make payments that are due to clubs. The situation is also worrying for non-league clubs in the Blue Square Premiership. Each of them receives up to £85,000 a year from Setanta, which is a significant sum for a non-league club.

PREMIERSHIP WAGES TOP £1bn – 6/6/09

Total wages in the Premier League have exceeded £1bn for the first time as England's elite football clubs take advantage of extra television rights revenue in a scramble for talent. The Premiership wage bill rose 23 per cent to £1.2bn in the 2007-08 season according to Deloitte's annual review of football finance. Chelsea comfortably topped the wages league, with Roman Abramovich's club spending £172m on salaries, compared with £121m spent by Manchester United, £101m by Arsenal and £90m by Liverpool. Premier League clubs' increase in total wages of £342m in the two years in 2007/08 is broadly equivalent to the £351m increase in broadcast revenue over this period repeating the experience of previous significant increases in broadcasting deals. Across Premiership clubs there is a relatively strong correlation between wages and league position. However, in the Championship there is no clear link which highlights the division's unpredictability and suggests that high wages are not a sure fire guarantee of success at this level. Championship wages went up year on year by 17 per cent, League 1 by 27 per cent and League 2 by 8 per cent.

TRANSFER SPENDING UP BY OVER A THIRD – 6/6/09

The latest Deloitte review of football finance shows that gross transfer spending across the top 92 professional clubs grew to £779m in 2007/08, up 35 per cent from 2006/07/. Over 85 per cent (£664m) was spent by Premiership clubs. The majority of Premiership clubs' transfer spending continues to be with overseas clubs, £351m or 52 per cent. However, the proportion of intra Premier League transfers has increased. Chelsea became the first club to report over £80m gross transfer spending in one season. Three others - Liverpool (£70m), Manchester City (£62m) and Portsmouth (£50m) - had gross transfer spend in excess of £50m. The net transfer movement between the Premiership and the Football League in 2007/08 was a net outflow from the Premier League of £59m, an increase of 69 per cent from £35m in 2006/07. Total transfer spending by Football League clubs has increased by 34 per cent to £115m with ten clubs recording transfer fees in excess of £5m.

LIVERPOOL'S AUDITORS ISSUE WARNING – 6/6/09

Liverpool's auditors have issued a warning about the club's ability to meet soaring interest payments. The club's latest accounts revealed that Liverpool paid £36.5m in interest on their debts in the financial year ending 31 July 2008. Auditors KPMG warned of a 'material uncertainty which may cast significant doubt upon the group's ability to continue as a going concern.' It is realised inside the club that not enough money is being generated to cover the interest payments of Kop Football (Holdings) Ltd., the club's holding company. This is in spite of the announcement of a record turnover of £159.1m and a pre-tax profit of £30.2m. Even so, the club's net debt - not including that of the holding company - almost doubled from £43.9m to £86m. Kop Football (Holdings) Ltd. made a pre-tax loss of £40.9m, with its net debt rising to £299.5m. It has not helped that the club's American owners made a poor call on the direction of interest rates, entering into fixed agreements between 4.3 per cent and 6 per cent as the Bank of England cut its rate to a record low of 0.5 per cent. The cost of exiting these hedging agreements would total £30.6m, prompting KPMG to describe them as 'potentially onerous contracts'.

The accountants' warnings come as Tom Hicks and George Gillett Jr. continue to look for outside investment and, in the more immediate future, to renegotiate their existing £350m loan. The Americans have until July 24 to refinance their credit deals with Royal Bank of Scotland and Wachovia. They are hopeful of securing at least a six month extension which would give them breathing space. Liverpool sources have trying to play down the KPMG comments, dismissing them as 'unduly alarmist' or seeking to explain them away as a standard statement when a company is negotiating a refinancing package. Nevertheless, the implications could be serious. Uefa, which runs the Champions League, demands that clubs provide detailed financial forecasts before it will issue them with a licence to compete in its competition. Hicks and Gillet are under growing pressure to sell the club, having failed to raise the finance to build a new stadium, which is vital to their plan for long-term growth.

CHAMPIONSHIP REVENUES SHOW STEADY GROWTH – 6/6/09

The Championship has resumed its path of steady growth, according to Deloitte's Football Finance report. It has achieved annual revenue growth of almost 12 per cent, while Leagues 1 and 2 have grown at around 10 per cent. 'In almost any other industry this would be lauded as outstanding,' the report notes. Championship revenues increased by about 2 per cent to £336m in 2007/08. Total revenues of the Football League clubs exceeded £500m for the first time. Operating losses for Championship increased from £75m to a record £102m despite increased parachute payments to relegated clubs, and the first solidarity payment to the rest of the Football League. The new improved Football League broadcasting deal which starts in 2009/10 provides a much needed opportunity to address the losses in the Championship. Championship clubs' total wage costs increased by £32m (12 per cent) in 2007/08, the second consecutive year of double digit growth. The increase in wages over the last two seasons has been over three times greater than the increase in revenue resulting in the wags/revenue ratio increasing to 87 per cent (2006/07 79 per cent; 2005/06, 72 per cent).

The Championship increased attendances by 5 per cent and is now the third best attended league in Europe. Net debt in respect of the 22 Championship clubs who reported results at the end of 2007/08 was £326m (2007: £298m in respect of 20 clubs). The report notes, 'In general, a Championship club can only hope to significantly reduce its net debt in the short/medium term via either promotion or the Premier League or an injection of equity funding from its owner. Below the top two divisions, managing a club's financial position remains a challenge from one season to the next. Legacy debt issues and the risks taken by some boards of directors will, without correction, inevitably lead to a continuing flow of insolvency cases in the seasons to come.'

UNITED SECURE BIG SHIRT DEAL – 6/6/09

Manchester United have once again demonstrated their financial pulling power by securing the biggest shirt deal in football history. They have secured a four year contract worth £80m with Aon Corporation, the American financial giant, which will replace AIG as the club's shirt sponsors from the start of the 2010-11 season. The deal comfortably eclipses the £68m four year agreement that Bayern Munich have with T-home, the telecommunications firm, and dwarfs United's existing £56.5m contract with AIG. It is believed that United received a strong bid from a betting company, which enabled them to drive a competitive race among three to four suitors, said to include Standard Chartered. Beyond the £20m a year rights fee, the deal provides for Aon to pay commissions to the club from the sale of insurance policies to its fan base plus match-related bonuses. This should yield an extra £5m a year. Greg Case, president and chief executive if Aon, said United's presence in Asia was important, just as it was for AIG. The deal is a first cry from United's first shirt sponsorship with Japanese electronics firm Sharp. Its initial five year partnership was worth £500,000. It hit the big money with a four year £30m deal with Vodafone struck in 2000.

PREMIERSHIP REVENUE TOPS £2 BILLION – 5/6/09

The publication of the authoritative and comprehensive Deloitte report on football finance is always one of the highlights of the year for those of us interested in the business side of football. We will providing further analysis from this year's report over the next few days. It shows that the new television rights deal sent the revenue of Premiership clubs soaring to £1.932m in 2007/8 and revenues are estimated to have reaching £2bn in 2008/9. In a sign of football's resilience to the economic downturn, Deloitte expects England's top clubs will continue to grow revenue in 2009/10, albeit at a slower pace. Dan Jones, a partner in Deloitte's Sport Business Group commented, 'The domestic and international popularity of the Premier League continues to generate remarkable growth. Between 1992 and 2008, revenues for the top 20 clubs grew at a compound rate of 16 per cent, compared with 5.4 per cent for the UK economy as a whole. Revenue increased by 26 per cent in 2007/8 and Premier League clubs generated £800m more revenue than their nearest rivals in the other "big 5" leagues'.

Jones admitted, 'It will, of course, be hard to maintain this pace in the immediate future. The new economic realities may lead to flat matchday revenues. While attendances continue to hold up well, many clubs have frozen or reduced ticket prices. However, the stepped increases in the current domestic broadcast deal and the new UEFA Champions League TV deal make it likely overall revenues will edge up.' The majority of the increased broadcast revenue has been spent on player wages and transfers. Wage costs in the Premiership increased by £227m (23 per cent) in 2007/8 to reach £1.2 billion, the biggest increase recorded by the Premiership. Spending in both the Summer 2008 and January 2009 transfer windows reached record levels with an estimated £675m investment in new players.

Alan Switzer, director in Deloitte's Sport Business Group, commented: 'Despite this increase in wage costs, Premier League clubs improved their wages/revenue ratio to 62 per cent and generated record operating profits in 2007/8 of £185m. However lower revenue growth in forthcoming seasons means clubs will have to focus on improving their cost control - both wages and other operating costs - if profits are to be maintained.' Paul Rawnsley, Director in Deloitte's Sport Business Group commented, 'While debt in the Premier League has risen, two thirds of the debt is in respect of just four clubs - Arsenal, Chelsea, Liverpool and Manchester United - and around £1.2 billion is non-interest bearing "soft loans". On the positive side of the balance sheet, these four clubs also had £1 billion of assets in respect of investment in stadia and other facilities and a further £450m investment in players. Debt is not necessarily a bad thing, so long as it is manageable within a club's finances and is sustainable and repayable.' This is becoming a challenge in Liverpool, another story we will cover over the weekend.

SUNDERLAND DOUBLES TURNOVER – 4/6/09

Sunderland has doubled its turnover in its first year in the top flight to over £63m. Losses fell from £13.6m in its last year in the Championship to £2.2m in its first Premiership season. TV revenue increased four-and-a-half times to £35.6m, sponsorship revenue doubled to £8.2m and gate receipts rose by 51 per cent to £13.6m. The accounts show that the shareholders, who at the time were the Irish-based consortium Drumabille, were owed £36.6m by their trading division the Sunderland Association Football Club Limited. It is estimated that new owner Ellis Short spent £15m buying the club, is likely to have spent further millions clearing off Drumaville's debts, plus money for transfers last summer bringing his total outlay to a reported £80m. The club's staff costs rose to £32.8m from £21m and the total number of full-time employees rose from 239 to 267.

FOOTBALLERS SEEK TO AVOID TOP TAX RATE – 2/6/09

Premiership footballers are hoping to avoid the new 50p income tax rate by asking clubs to pay their salaries as interest free loans. This would allow top players to pay as little as 2.5 per cent tax on some of their earnings. HM Revenue and Customes treat loans as a 'benefit in kind' and taxes only 5 per cent of the amount borrowed. If a future Conservative government cut the top rate of income tax back to 40 per cent, a club could write off the loan and it would be treated as income with the player ending up paying a rate of tax equivalent to 42.5 per cent instead of 50 per cent. Another scheme favoured by footballers including Wayne Rooney and Steven Gerrard has been to put money into film partnerships which allow wealthy investors to defer income tax and capital gains tax. The government, however, has watered down the tax breaks available in recent years.

NEWCASTLE - A SNIP AT £100m – 31/5/09

Mike Ashley is to offer Newcastle United for sale with a £100m price tag. This is £34m less than the price Ashley paid for the club two years ago. Since then he has put in £110m of his own money to reduce debts. He was initially seeking £400m for the club but its value has been slashed by relegation. There has been some interest from Nigeria and South Africa, but no firm offers.

SETANTA'S SITUATION GETS WORSE – 31/5/09

Second force Premiership television provider Setanta is seeing its financial situation deteriorate and the ultimate outcome may be less money for the Premiership, although its slots could always be bought out by a third party. Shareholders in the company have failed to stump up enough cash to keep it going. It even asked BSkyB for a £50m advance payment on a deal that would have seen Sky wholesale Setanta to its own subscribers. The proposal of an interest free loan, which was rejected, would have bridged the gap left by private equity backers which have so far offered to inject £50m into the company. Setanta, which has 1.2m customers, could yet be forced into administration. It has until June 15th to make a £35m payment to the Premier League.

FATE OF MERTHYR IN BALANCE – 31/5/09

The fate of non-league club Merthyr Tydfil is in the balance, but it looks as if the club will go into administration tomorrow. A Welsh-Egyptian millionaire has been told that he can have the club for £1, but according to owner Wyn Holloway he has not made an offer. Annis Abraham is a Cardiff City shareholder and has pledged to bring league football to Merthyr. He thinks that the debts are nearer £600,000 than the £315,000 Mr Holloway states. Abraham claims that Cardiff City have already agreed to a link up which may see the club field Cardiff reserve players. He has said that the mooted move to Bridgend is off.

ACCRINGTON FACE WINDING UP ORDER – 31/5/09

Accrington Stanley have been issue with a winding up order by HM Revenue and Customs over unpaid debts, but remain hopeful they will survive. They face a High Court hearing on 10 June, but shareholder Ilyas Khan has pledged to stump up £250,000. He owns 15 per cent of the club, but has said that he does not want a seat on the board. However, he has expressed concerns about what other debts the club might have club given that things have to be serious before the Revenue takes action. Stanley resigned from the Football League owing around £60,000, returning 44 years later after reforming and climbing up the non-league pyramid to win promotion in 2006. Their main sponsor Fraser Eagle collapsed halfway through the season owing well over £100,000 to the club. Stanley also failed to get dispensation from the Football League to postpone having to install an extra 1,000 seats at a cost of £60,000. The club has the worst facilities in the league. However, they are not tested too much as the club's average attendance has dropped from 2,260 in their first season back in league football to just 1,414 for the season just ended, the lowest of all 92 clubs.

UAE'S SIR ALAN SUGAR BUYS POMPEY – 31/5/09

They may not be the most glamorous club in the Premiership, but Portsmouth now have a glamorous owner with deep enough pockets to help them achieve their ambitions. Dr Sulaiman al-Fahim is the UAE's Sir Alan Sugar, starring in an Arab version of The Apprentice television show. He has struck a provisional deal to buy the club for an undisclosed sum from its Franco-Russian owner, Alexandre Gaydamak who acquired Pompey for £30m from Milan Mandaric, now owner of Leicester, in 2006. Mr Fahim also brokered the purchase of Manchester City for Abu Dhabi's royal family, but is no longer involved with the club, clearing the way for his involvement with Portsmouth. The sale price remains unknown. However, Deloitte have estimated that Premier League clubs have typically been sold at an enterprise value of 1.5 to two times annual revenue. On this multiple range, Portsmouth, with a turnover of £70.5m for the year to 2008, would be worth between £105.7m and £141m. But the credit crunch has depressed valuations of Premiership teams and Portsmouth's debts, of £57m last May, would also weigh on its equity value. Mr Al-Fahim was reported to have inquired about buying Chelsea from Roman Abramovich in January as part of a consortium to have bid more than £700m. He should be able to wipe out Portsmouth's debts and proceed with redeveloping Fratton Park now that the plan for a new ground has been mothballed.

SUNDERLAND ARE LATEST AMERICAN OWNED CLUB – 31/5/09

Sunderland are the latest American-owned club in the Premiership after Irish-American businessman Ellis Short acquired the club. Short, who is the billionaire president of Lone Star Funds, now lives in this country. Short said, 'Sunderland is a very big club with a lot of fans, a big stadium, and a lot of revenue - and where you are in the position we are, where you are trying to improve things, it takes money.' Sunderland's battle against relegation this year was consistent with its reputation as a yo-yo club. However, Short has said that he does not want to ever go through a relegation battle again and is aiming at a top ten finish next season. He commented, 'It's a very well-run club, the scouting organisation, and the youth development programme are in place, so it's got all the pieces in place to be a long-term successful, powerful club.'

BID IN FOR SAINTS – 30/5/09

The Matthew Le Tissier backed Pinnacle consortium have entered an exclusivity period with the aim of completing a buy out of Southampton within three weeks. The group have paid the £500,000 non-refundable deposit that will allow the staff and players at the club to be paid their wages for May. They now have the opportunity to complete full due diligence before deciding whether to proceed with their proposed offer for the club, which has been given the seal of approval by the major creditors. They have beaten three other groups to the exclusivity period - a duo of Irish businessmen, a consortium led by businessmen Stuart Green and Marc Jackson and another group believed to be from Zurich.

LATEST INSTALMENT OF THE BURNLEY PHENOMENON – 26/5/09

In October 2008 I went to Turf Moor to watch Burnley play Hull and the chairman noted in the programme that 'One year in the Premiership would set Burnley up for 10 years.' He may have achieved his wish sooner than he could have dreamt of. After another visit to Burnley in March 2008, I wrote an article called 'The Burnley phenomenon'. Burnley will have the smallest population of any club represented in the Premiership and the area is far from prosperous. Yet the football club has punched well above its weight even before promotion to the Premiership. Now they face their biggest challenge. There is a fine line between not spending enough and being relegated and splurging all their new found wealth and ending up like a Leeds or Southampton. They probably need to spend about £20m to have a reasonable chance of staying up and in particular they need to increase the size of their squad so they have more strength in depth. If anyone can do it, Burnley can.

BLADES BLUNTED – 26/5/09

Having failed again to secure promotion to the Premiership through the play offs, Sheffield United face their first season in the Championship without a £11.2m parachute payment. They will be receiving compensation from West Ham over the Tevez affair. The exact amount has never been publicly disclosed and has been variously stated at £15m or £20m. It is believed, however, that it is payable over six years so it will not make a big difference to cash flow. However, the club's chairman, Kevin McCabe, who owns 75 per of the club which is no longer listed on Aim, may still be singing on his way to the bank. The property developer, who lives in Brussels, sold his Scarborough property business to the Australian group Valad for £865m in 2007.

RELEGATION HITS NEWCASTLE HARD – 25/5/09

Relegation from the Premiership is a big blow for Newcastle United's devoted fans. But it is also a big financial blow as well. The cost of demotion from the Premiership is usually estimated at £50m - £60m. Newcastle are calculated to have the fifth largest wage bill in the division and a fire sale of players is likely to follow. Magpies owner Mike Ashley put the club up for sale for £300m last September. He abandoned the sale in December saying he would have sold the club if it had attracted an offer of £250m. He bought Newcastle for £134m in 2007 and invested another £110m in the club. There has been speculation that a consortium led by US businessmen would be interested in pitching a more conservatively priced bid for the club if it had survived its relegation battle.

NON-LEAGUE CLUBS GO BUST – 24/5/09

As we have argued for some time non-league clubs are most likely to go bust in the recession. They are often dependent on smaller scale businesses as benefactors which are most likely to be hit by the credit crunch. Also many clubs have over spent in an attempt to compete. With the end of the season we are now seeing a flurry of clubs going into administration. Chester City went into administration after being relegated from the Football League. Northwich Victoria have entered administration for the second time in five years. The Vics have paid back £175,000 worth of debts that they inherited from the previous owner. With the taxman still owed around £400,000 and pushing for the club to be liquidated, the club had no choice but to go into administration. Vics also owe money to several former players and clubs in the north-west, but these will be paid out of the sale of a player.

AFC Hornchurch from the Ryman Premier entered administration last week for the second time in three seasons. Blue Square South St. Albans City's holding company Verry Construction has run into trouble. Officially wound-up Fisher Athletic may finally see any last chance of saving themselves extinguished this week if they can't strike a last minute deal with the taxman. Lewes survived another winding-up order last week, but have said that administration cannot be ruled out. In a more direct hit from the credit crunch, Northern League Sunderland Nissan are to fold. The car manufacturer believed it was inappropriate to fund a football club when many of their workers are facing redundancy. Newcastle Blue Star ae pleading with the Football Association to intervene in their battle with the Football Stadia Improvement Fund. Blue Star are being forced to replay the £61,500 grant they were given in 1999 to upgrade their Druid Park home. The Aristocrats moved in with Newcastle Falcons two years ago - and failed to inform the FSIF of their switch to Kingston Park. However, there was good news for Blue Square North Hyde United who discovered they will have an additional seven weeks to settle their £200,000 debt.

Mergers are a common form of reorganisation for most businesses, but are unusual in football. However, it is the fate that faces Merthyr Tydfil who have debts of more than £315,000 and are unlikely to survive the summer. Merthyr chairman Wyn Holloway is talking to a businessman who is willing to pay £300,000 to merge the club with Bridgend. It is hoped that the merged club would take Merthyr's place in the Southern League while playing at Bridgend, who are currently in the Welsh First Division. Bridgend is 40 miles from Merthyr and Martyrs fans see the move as an equivalent of the MK Dons deal.

FOOTBALL LEAGUE WANTS A BIGGER SHARE OF THE POT – 23/5/09

The Football League wants the Premiership to increase its handouts to lower division clubs in proportion to wage rises at the top level. The League would like to receive a yearly income based on a percentage of Premiership clubs' total wages bill as part of the 'solidarity' payment that the top tier already contributes for youth and community development and as parachute payments to relegated clubs. Last season those were worth £31.8m. The idea forms part of the League's response to seven questions put to the football authorities by Andy Burnham, the Everton supporter who is Secretary of State for Culture, Media and Sport. Another concept floated by the Football League is that the League could bundle the sale of its television rights together with the Premier League when the next deals are due for renewal in about three years. In fact the Premiership offered the Football League such a deal 14 years ago, but it somewhat unwisely decided to go it alone.

The Football League would also like pressure to be put on Fifa to scrap the transfer windows for domestic moves. Since windows were introduced, League teams have taken a financial hit because Premiership clubs are buying fewer lower league players and clubs in need of a cash injection cannot sell players whenever they like. However, transfer windows were introduced as a part of a deal to give football exemption from EU competition law.

After another season in which several Football League clubs went into administration and suffered points deductions, clubs are expected to approve a proposal to tighten insolvency rules by placing a transfer embargo on those who fall behind in their tax payments to Revenue and Customs. The League also wants more information about clubs' tax liabilities so that it can provide an early warning system. League chairman Lord Mawhinney wanted to introduce a wage cap scheme that would constitute a fixed amount per division, with three players in each club exempt to allow better off clubs to splash out on big names, but the Championship clubs blocked the proposal.

In a statement Supporters Direct said that the League's response was the product of a lot of thought and many of their solutions were creative and deserved to be seriously considered. In particular, the supporters trusts organisation welcomed the proposals to control club spending by linking up with HMRC and the beefing up of the fit and proper person test.

FOOTBALLERS TO STRIKE BACK AGAINST 50p TAX RATE – 23/5/09

Premiership clubs are braced for a wave of pay demands from star players in anticipation of the new 50p tax rate on higher earners. Figures from HSBC Private Bank and tax experts Saffery Champness suggest that, if most Premiership players are in the £50,000-£70,000 a week bracket, players at the top end of the range face a £330,000 increase in their tax bills to £1.7m from next year. Manchester United's Christiano Ronaldo is reputedly paid £125,000 a week. If that is the case, he would face a 19 per cent increase on his tax bill under the new rate, equivalent to an extra £670,000 a year. An insider at one top club said the implications were a higher wage bill or a reduction in the ability to attract top talent, or both. Arsenal manager Arsene Wenger warned last month that the new tax rate and sterling's decline would be 'a financial problem for all the English clubs.'

Clubs say they expect agents and players to demand that clubs pay salaries net of the increases. The Premiership said that the payment of salaries net of tax was a common practice. Clubs fear that the more favourable tax rates in continental Europe could undermine the Premiership's appeal, despite a sizeable gap in salary levels. In Spain, under the so-called Beckham law introduced in 2005 to attract wealthy foreigners to work there, expatriates playing in La Liga for up to six years pay only 25 per cent tax. Germany has a top rate of 45 per cent, while Italy's is 43 per cent and France 40 per cent.

A common way for football clubs to get around high rates of income tax is to divert part of a player's salary into a company that promotes his image rights. These organisations are used to manage a sportsman's income from sponsorship, merchandising and other ancillary earnings. For players based in Britain, some of these companies are located in the UK, while overseas players will base their companies in low-tax offshore jurisdictions or their place of birth. 'You usually structure the deal so that the value of your overseas image stays offshore,' said David Lemon, a partner at Saffery Lampness. Despite a landmark sports image rights ruling in 2000 against Revenue and Custons, tax officials continue to probe their use. Dave Wgelan, chairman of Wigan Athletic, stated that Revenue officials have been pursuing several of the smaller Premiership clubs over image rights deals including his own club.

WIGAN TOP VALUE LEAGUE – 23/5/09

It's an unlikely honour, but Wigan are champions of the Premiership in a 'points for pounds' league that measures the extent to which season ticket holders are given value for money. ING Direct compares season ticket costs with the team's performance in the top flight. In the rankings, the Lactics are followed by Blackburn, Aston Villa, Manchester United and Liverpool. Newcastle finish last with Spurs and Portsmouth also in the bottom three. 17 out of 20 Premiership clubs have already announced a prize freeze or a reduction for next year. Research by ING shows that a small number of supporters have been forced to give up their tickets regardless of price changes. More than 1 in 20 Newcastle, West Ham and Spurs followers gave up their tickets regardless of price changes - although it should be pointed out that some fans leave each year for a variety of reasons regardless of the economic climate. One in four fans have already saved to buy next year's season ticket, which can cost over a £1,000 in the Premiership, while 38 per cent are forced to make serious financial sacrifices to afford their seat.

FORMER OWNER RESCUES DARLO – 23/5/09

Not so long ago it looked as if Darlington Football Club might fold. But now the club has taken the first steps to survival when the businessman who put the club into administration announced he had secured a funding lifeline. George Houghton said he planned to remain at the club for the forseeable future until 'a person can offer the club more than I'. The announcement still leaves a number of key questions unanswered. The club will remain in administration for the next couple of months. New owners sign an exclusivity agreement to put together a sale agreement and a company voluntary arrangement (CVA). The CVA is sent to creditors to be voted on, which takes 28 days. A further 28-day appeal process takes place. The Football League must also approve the process to return the league share to the club and pass any new owner under the fit and proper persons test. The news of a solution came as a result of discussions between administrators, Mr Houghton, the local council and MP Alan Milburn. Before the club went into administration the council had already agreed it would make land next to the stadium available for development. Discussions continued after the club went into an administration and an agreement has been reached as to how this land could be made available to any future owner of the club.

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