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The Championship

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The Credit Crunch and Football

How will the credit crunch hit football? The financial storm is not over yet, but at the moment, within the Premiership at least, the top clubs are sitting pretty, while smaller clubs in less prosperous areas are having to be more innovative in their response. Watching football at the top level either live or on television isn't cheap at a time when incomes are being squeezed. A Sky package costs around £400 a year and season tickets have gone up by almost 800 per cent since the Premiership was set up.

Wages and Transfer Spending Up

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.

Championship Revenues Show Steady Growth

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.

The Costs of Relegation from the Championship

Considerable attention is given to the costs of relegation from the Premiership to the Championship, but relegation from the Championship to League 1 can be equally traumatic. This is particularly the case if you have recently been in the Premiership and it is possible that all three clubs relegated tomorrow (Charlton, Norwich, Southampton) could be in that category. Relegation could cost Norwich City between £5 and £7m. There will be big reductions in television income and probably in gate receipts, although Norwich fans are known for their loyalty.

New Investment Fund For Clubs

At least six Football League clubs have begun negotiating with a City-based investment fund in the hope of borrowing money for the close season. The majority are believed to be Coca-Cola Championship clubs. Hero Global Football Fund has been set up to invest in football without taking equity in clubs. Backed by Emirates Bank, Hero plans to raise up to £100m based on minimum subscriptions of £100,000. The money will be made available for buying players and will be secured across the squad rather than against individual players.

Real Fears For Southampton's Future

Real fears are being expressed that Southampton Football Club may not exist by the end of the season. This is despite the fact that it has a new stadium and plays in a large and relatively prosperous city. The club's mountain of debt incurred as the result of building St.Mary's, which required continuing Premiership status to service it, makes the club unattractive to a potential buyer, even if there were any around. This is not a situation where a consortium of fans can easily bail out the club, although that may be what eventually happens.

Big Profit For Plymouth Argyle

Plymouth Argyle made a profit of £1m last year despite funding the highest wage bill in the club's history. Accounts for the year ending 31 May 2008 show the Pilgrims turned round a loss of more than £700,000 in the previous 12 months to £1.1m profit. The Pilgrims made £3.8m profit on the transfer market last year, enabling them to finance their highest ever wage costs despite their gate income becoming the fourth lowest in the Championship. Chairman Paul Stapleton was frank about the inevitability of transfer fees being used to bail out the club as a trading concern.

Where The Recession Hits Football

Recessions, even prolonged and deep ones, do not hit all businesses equally. Domino's Pizza is an example of a business that has been boosted by the recession as cautious consumers substitute a takeaway for a meal out. Cinemas have also been doing good business, although attendances may have boosted by the success of particular films. The supermarkets that compete on price rather than quality or service have also been doing well. On the other hand, the motor vehicle industry has been hit hard. And estate agents, never the most popular businesses, have also taken a pounding.

Plymouth Argyle Feel The Pinch

The credit crunch is making itself felt at Championship club Plymouth Argyle in terms of falling attendances - although some locals blame the standard of football on offer at Home Park. Chairman Paul Stapleton has revealed that cost-cutting measures are being considered, but he also believes that Argyle are better positoned than many Football League clubs to cope with the economic crisis. And Stapleton admitted that the money-spinning FA Cup third round tie at Arsenal on January 3 was coming at a very opportune time.

Mawhinney's Salary Cap Plan

Lord Mawhinney, chairman of the Football League, is proposing to extend the salary cap that already operates in Coca-Cola League Two. It is linked to the percentage of turnover. Thus, a club arriving from the Premiership with parachute payments, would have the best part of £12.5m to spend on wages, while the likes of Doncaster Rovers would have roughly £3.5m. So the three relegated clubs would very likely to be returned to the Premiership each season because the others are effectively handicapped.