Letter from America

... or from Flint to Foster City (or thereabouts)

I don't know if any of you saw the latest annual report by football accountants Deloitte and Touche earlier this month? I did - and it makes depressing reading for football fans of Nationwide league clubs like Wrexham. The report confirms what we've all known for some time - that the financial gap between clubs in the Premiership and Nationwide leagues is getting wider.

Deloitte and Touche's football industry team reported that in the 1998/99 season the 20 Premiership clubs made a combined operating profit of £69 million, while all 72 Nationwide League clubs made a combined operating loss of £69 million! That single statistic, above all others, brings into stark focus the growing gap between the footballing "haves" and "have nots". In addition, it also reports that in the 1998/99 season 14 Premiership clubs recorded an operating profit, while only five of their Nationwide League counterparts did the same. (Three of which were Preston, Gillingham and Walsall).

So what does all of this mean in the long run? Well, to quote Gerry Boon, the head of Deloitte and Touche's football industry team: "Wage restraint, or more importantly managing the costs against incomes, is now more critical than ever before. Provided a club's board and management team is approaching the task in a sensible, business-like manner, then fans, journalists and everybody else involved in club football should seek to support the Chairmen and managers in this increasingly difficult task. Too many clubs over-extending themselves in pursuit of one of the coveted spots in the Premier League cannot result in a healthy situation for football. Wages in the lower divisions are far too high for long-term financial strength and survival. A gamble to break into the Premier League may cripple clubs with long-term commitments to expensive players if it fails to pay off. We're seeing polarisation within the leagues where top-paying clubs are able to outpay the low payers four and a half times over. Any club with a wage-turnover ratio of 50% or less is being carefully managed and will be financially strong for the future. Anything over 66% is unlikely to be sustainable in the long term".

The report also states that 80% of all clubs now have a wage bill exceeding two-thirds of their income, compared to 60% of clubs in the 1995/96 season. In fact, only four clubs in the 1998/99 season had a wages-to-turnover ratio of 50% or less, and they were Manchester United, Sunderland, Aston Villa and Leeds United. (By the way, Wrexham [with a wage-to-turnover ratio of 79%] are lumped in with the 80% of clubs whose wage bill exceeds two-thirds of their income. That's doing pretty well by the way, because some clubs like Darlington and QPR had a wage bill much bigger than their total income!)

In the long run Deloitte and Touche predict that there'll be six or seven "yo-yo clubs", while the rest will be stuck where they are now, with little hope of ascending the league pyramid as the likes of Swansea and Wimbledon did in the past. Therefore, Deloitte and Touche are advising smaller clubs to ensure that any extra TV revenues are not spent on increasing player wages, or transfer fees but, instead, on taking a "golden opportunity" to safeguard their financial futures and to stave off the threat of insolvency.

So in summing up, I'd say that this report underlines the need for Wrexham's '2000' Initiative to be a success. Talking of the 'Wrexham 2000' initiative, I noticed that on the club's official website there's now an online form for fans to submit to the club enclosing their views on the initiative. This is a most progressive move and something that the club should be applauded for.

Cheers

Gareth Collins