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League Clubs Facing Financial Disaster!
By: Bill Osborne
GRIMSBY TOWN will be hit hard by the new proposals of ITV Digital who are in secret talks with representatives of the Football League in an attempt to renegotiate their television contract.
The contract was for Â£315million over three years, with Â£180million due for the two years remaining. But ITV Digital are reported to have approached the League and offered just Â£50million for the remainder of the contract. The offer is expected to be discussed at today's meeting of the Football League board.
This shortfall of Â£135million, if the offer is accepted and it seems it will be, will send some clubs directly into administration as some have overstretched themselves in anticipation of receiving the TV money.
Already this season, the Professional Footballers' Association has stepped in to pay the wages at 12 clubs.
Grimsby Town chairman, Peter Furneaux, has been aware of this problem with theTV contract for some time and in previous statements has made it clear that Grimsby Town would not risk spending money in advance.
He has also ensured that the contracts of players do not run longer than the current ITV Digital contract. But even so a loss of one third of the TV income is still a major blow to the club who, this season, have had to rely a great deal on the financial support of the directors.
One of the main fears of the effects of the Mariners being relegated, was the loss of the first division TV money and if the Football League agree to the ITV Digital offer and Grimsby remain in the first division, they will receive less money than they would have got (under the current TV agreement) if they were to be relegated.
It appears that first division teams will get around Â£300,000 instead of the Â£1million+ they were expecting. That is, if the current distribution ratio to clubs remains intact.
ITV Digital is jointly-owned by Granada and Carlton Communications. Charles Allen, chairman of Granada, and Gerry Murphy, chief executive of Carlton, have held secret talks with representatives of the League and made the new offer.
Granada have also released a statement saying: "ITV Digital are now implementing a radical cost reduction programme. Internally, they have already reduced the number of employees by 600 and cut operating costs."
"Deloitte & Touche have been appointed to assist in reducing third party costs and meetings with all key suppliers are now being held. Resolving the future of ITV Digital is a top priority."
The League face a dilemma in that if they do not agree to the new offer, Carlton and Granada could close ITV Digital and the clubs would lose out.
If they do agree to it, then each club will have to cope with a major cash shortfall, which for some, could mean immediate closure.
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