Why clubs may risk millions for riches (original) (raw)

The stakes could scarcely be higher. With a £1.7bn pot of gold waiting at the finish line, the incentive to reach the Premiership has never been greater. The new Premier League television deal, ratified in May, means that the three teams to be promoted from the Championship will get their hands on a jackpot that will have chairmen drooling.

It has already prompted fears that the chasm between the Premiership and the Championship could become unbridgeable, with those left behind swimming against a tidal wave.

"It is positively unhealthy," said Joe McLean, football analyst and partner at the financial advisers Grant Thornton. Try telling that to the 20 clubs who will make up the Premiership at the start of the 2007-08 season.

The Premier League's agreement with BSkyB and Setanta, worth £600m more than the previous deal, will kick in and swell the coffers of each club by an average of about £28m a year. Those treading water in the league below stand to collect £1m over the same period, making promotion this season imperative.

"Unavoidably there is going to be a major push by probably six or eight clubs in the Championship, who are possibly going to overstretch themselves because they see the golden rainbow coming on to the horizon," said McLean.

"The play-off game at Cardiff this year got the usual publicity that it was worth between £30m and £40m. Next year's game will probably be worth a minimum of £30m for promotion followed by the two years of parachute payments which will take that game up to a value of £45m. The parachute payments will be greater for the two years ahead compared to the two years now.

"For that reason if clubs are short of a play-off position around Christmas time they will come under tremendous pressure from their supporters and internally, and they might find themselves saying we need to gamble £4m to £5m because there's £45m waiting for us. That in itself is quite unhealthy and could lead clubs to being seduced by what could be coming and take risks that they could later regret."

It is a worrying picture to paint. David Gold, Birmingham City's chairman, is not convinced "many" Championship clubs will spend money they have yet to bank, although he notes that the implications of the television deal are far-reaching.

He points out that having more money in the Premiership will make little difference against teams with the same revenue but the landscape would change dramatically in the Championship where promotion might become cut and dried.

"There is one serious major difference that nobody is looking at," said Gold. "Everyone is saying we have got to get up there because the money is huge. The major issue and the reason to get promoted now is to get relegated. The reality is that the real difference is that if you can be in the Premiership with this new money, the gap between the relegated teams and the others in the Championship becomes huge.

"Birmingham City will get an extra £1.5m in the second year of our parachute payments after we are relegated. That means that next season Crystal Palace will get nothing and Birmingham City will get the parachute payment plus an extra £1.5m.

"Imagine you are Sheffield United. If they get relegated they'll get the extra £1.5m for both years. What chance does someone like Coventry stand against Sheffield United? And that is the key to this whole thing: the parachute payments will be humongous. The most important thing is that now relegated teams will be, in my opinion, 50% more likely to get promoted than they were before."

Neil Warnock is thinking about anything other than relegation, however. The financial ramifications of beginning next season in the Premiership are not lost on the Sheffield United manager, who is already excited about the money he would have at his disposal.

"We know that if we stay up this year the funds next year with the new TV deal are unbelievable," he said. "Then we can be looking at the Jimmy Floyd Hasselbaink type of player, which is beyond us at this point in time because of his wages."

Others refuse to be distracted. Gold's thoughts on Palace, for whom the parachute payments end after this season, may resonate with their chairman Simon Jordan, but Peter Taylor is ignoring all talk of promotion windfalls.

"The target we are setting is to get promotion and then after that it's about trying to stay there," said the Palace manager. "I know how beneficial it would be to Crystal Palace if we were to get promotion but I can't honestly say it will make me try any harder because I'm trying as hard as I possibly can anyway."

How the TV pot expanded

Premiership

1992/3 - 1996/7

Five-year deal

£304m

1997/8-2000/1

Four-year deal

£670m

2001/2-2003/4

Three-year deal

£1.6bn

2004/5 - 2006/7

Three-year deal

£1.189bn

2007/8-2009/10

Three-year deal

£1.65bn

Football League

1992/3 - 1995/6

Four-year deal

£24m

1996/7-2000/1

Five-year deal

£125m

2001/2

Three-year deal

£315m*

2002/3 - 2005/6

Four-year deal

£95m

2006/7-2008/9

Three-year deal

£110m

*OnDigital deal collaped after one year after £136.5m paid for one year