North East’s elite outfits fear a fate as ‘next Leeds’

WITH every week it looks increasingly likely that one, perhaps two, North East football teams will be in the Championship next season.

Newcastle, Sunderland and Middlesbrough are all staring relegation in the face. But that could be the least of their problems, as Stuart Rayner reports

WITH every week it looks increasingly likely that one, perhaps two, North East football teams will be in the Championship next season.

A terrible weekend for Newcastle United, Middlesbrough and Sunderland saw the Magpies drop into the bottom three, the Teessiders drift further from safety and the Black Cats squander another opportunity for much-needed wriggle room.

Relegation from the top flight used to be an embarrassment. Then came Rupert Murdoch. Since Sky TV’s millions were poured into the English game, red faces are the least of a relegated club’s problems – the spectre of financial meltdown looms.

While the thought of arduous trips to unglamorous locations like Plymouth’s Home Park or Cardiff’s Ninian Park might have supporters scrunching their faces up, the “L” word sends them into a cold sweat. What they most fear is “doing a Leeds”.

Leeds United famously chased the dream and fell flat on their face, a monument to mismanagement lurking in League One as a warning.

It was the story of the talented manager and the chairman with the ambition to turn a top-half Premier League team into title contenders. At first it went well, very well. Young, hungry players were bought, the establishment got nervous and before long the Whites were playing in Uefa Cup, then European Cup semi-finals.

Then it went wrong, horribly wrong. Within three years they were in the Football League, £103m in debt. Two years later they reached the Championship play-off finals and lost. Cue administration and another relegation. Instead of competing with Lazio and Valencia, they are in a dogfight with Scunthorpe United and Oldham Athletic to make the League One play-offs.

Leeds are the most horrifying example, but there are plenty of others. West Bromwich Albion, Sheffield United and Birmingham City are some who took their medicine and kept their heads above water. So which category would a relegated Newcastle, Sunderland or Middlesbrough fall into?

As the chairman appointed to fight the fires at Elland Road in 2004 and an expert in football finance, Gerald Krasner is better placed than most to answer.

“The trouble is what contracts you have, because you have to honour them,” he cautions. “You’d have to know what each club’s contracts are to know how damaging relegation would be to them.

Niall Quinn last week revealed Sunderland’s players have clauses which trigger a 40% wage cut if the club is relegated. You would expect no less from the Black Cats, who have had their fingers burned before. In 2003 they went down with £26.6m of debt forcing them to make 83 off-pitch staff redundant and shed 15 players and a plc chief executive. “If you’re attracting top-class players they’re not going to agree to that,” says Krasner, a partner with business rescue firm Begbies Traynor.

“If I was Michael Owen and you asked me to sign a contract with a clause cutting your wages if the club was relegated, I’d say if that’s the limit of your ambition, I’m not signing it. No agent worth his salt would let a top player do that.” All three clubs will have a queue of players anxious not to hamper their development by playing at a lower level, and in many cases will be happy to oblige. But it is often easier said than done.

“They say there’s pressure at the top at the moment but there’s much, much more at the bottom – especially when it’s three local clubs fighting one another to avoid relegation,” says Krasner. “If you go down, a lot of your top players will want to leave, but it isn’t easy finding someone prepared to match their wages. If you have a player on £60,000 a week, you might find nobody is prepared to pay that. They might be willing to pay £30,000 a week.”

Professor Tom Cannon, an expert in football finance at Buckingham Business School, agrees. “The wage bill is the biggest single problem,” he says. “Those clubs with big superstars are most at threat.

“If you’ve got players on big contracts, they can be hard to sell because of their age, especially in the current climate.

“If you lose two or three key players and have changes in management too, you have quite a bit of rebuilding to do, so you’re fortunate if you win promotion at the first time of asking. On the positive side, it looks like there might be some quite big clubs getting promoted, like Wolves and Birmingham.

“They get big crowds and might be able to afford big players. Some of the smaller clubs might not be able to attract the bigger players even if they wanted to.”

In an attempt to soften the blow, relegated Premier League clubs receive financial support for each of their first two seasons outside the top flight – Reading received £11.2m this season and that annual figure could rise to nearer £15m after next term as higher TV revenues kick in.

Without making clubs immune to financial catastrophe, it sets another clock ticking, with most chairmen demanding promotion before the cash dries up.

“Parachute payments don’t compensate for the loss of revenue,” Cannon warns. “It has worked in the past but it’s not always a one-year bounce-back.

“There might only be one of last season’s relegated teams (Birmingham City) who bounce back this year and it’s averaging out as one a year. So there’s a 66% chance you will not come straight back up.”

Those clubs who have thought big only to produce small points tallies are most at threat.

No one in the North East thinks bigger than Newcastle United, who expect a standing to match their gates. At the opposite end are Middlesbrough, shorn of the prima donnas and self-styled superstars of the Bryan Robson era, and with a youth system ready to fill the gaps.

Cannon sees a case for all three punching their weight if the worst happens.

“Steve Gibson is Middlesbrough’s great asset,” he says. “Newcastle have a great stadium and a great support base.

“Sunderland have a great support base and a good stadium, although there are question marks over their ownership because of the restructuring taking place.

“They all have assets, the one thing they don’t have is points!”


David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer