Chairman's warning

CLUBS without parachute payments or benefactors willing to invest cash from outside the game will increasingly struggle to compete for promotion to the Premiership in future, Ipswich Town chairman David Sheepshanks warned yesterday.

By Duncan Brodie

CLUBS without parachute payments or benefactors willing to invest cash from outside the game will increasingly struggle to compete for promotion to the Premiership in future, Ipswich Town chairman David Sheepshanks warned yesterday.

Speaking as the club announced a loss of more than £3million for last season, when they narrowly missed out of promotion through the play-offs, Sheepshanks said that Championship levels of income alone would not support wage bills equal to those of clubs promoted in recent years. However, he said that while the Town board was open to the possibility of an outside investor, the club's finances were under control and were on course to remain so.

“The club's finances are stable, under control and there is no financial pressure to sell any players this season,” said Mr Sheepshanks. “Although it is never pleasing in business to report a loss, supporters should not be alarmed by the headline figure reported today. Twelve months ago we alerted shareholders to the fact that the financial year to June 2005 would be a tough one.”


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Besides the end of the club's parachute payments following relegation in 2002, last season also saw the club continuing to carry the cost of some players on Premiership levels of pay, although these contracts had now all come to and end. Despite this, he said, income in excess of that budgeted for under the terms of the club's company voluntary arrangement with creditors had been used to strengthen the squad.

“Buoyed by extra income from loan note holders and increased gate revenue, the club invested in strengthening Joe Royle's squad as we pushed for promotion,” he said. “In the end though, as we all know, we narrowly missed out.”

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The extra income resulted in a player wage bill for last season of £7.2m, compared with a figure of £5m budgeted for under the CVA. This year, the bill is project to fall to £5.3m which, said Mr Sheepshanks, was less than that of any club promoted to the Premiership in the last four years. All of these clubs had benefited during their successful campaign either from parachute payments following relegation from the Premiership or from a benefactor.

Parachute payments had originally been intended to help clubs adjust to relegation in the days when player contracts involved a fixed level of pay, regardless of which division the club was in. These payments were usually not enough to cover the loss of income resulting from relegation and in some cases, such as Ipswich, Derby County and Leicester City, not nearly enough, resulting in acute financial problems. However, with Premiership clubs now tending to have some or all of their players on contracts with pay subject to league status, a parachute payment - worth £7m this season - was a clear advantage.

Mr Sheepshanks denied that the Ipswich Town board was seeking to hold on to power and to obstruct any outside investor. However, he said the directors would be “very discerning” in judging whether a proposed investor was the right person for the club. This would include putting substantial money into strengthening the squad, in addition to the widely quoted figure of £6million required to gain control of the club, he added.

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