9:06am Friday 12th April 2013
By Chris Flanagan
THE importance of tomorrow’s home game against Derby has been underlined after a football finance expert warned that salary cap issues would leave Blackburn Rovers ‘between a rock and a hard place’ if they dropped into League One.
Rovers dropped into the Championship’s relegation zone for the first time with defeat at fellow strugglers Sheffield Wednesday at the weekend.
They now have only six matches remaining to avoid the drop, even if one is a game in hand at Millwall, and back-to-back home fixtures against Derby and Huddersfield could now be pivotal to their survival.
Operations director Paul Agnew and global advisor Shebby Singh have both recently stressed that Venky’s remain committed to Rovers for the long term.
But Tom Cannon, a professor from Liverpool University, has warned that the club would face significant financial challenges if they went down – even with the owners’ presence.
Cannon said: “Relegation would leave the club between a rock and a hard place.
“The Football League’s financial fair play rules are coming in before UEFA and are more restrictive.”
League One’s financial fair play rules, limiting clubs to spending only 60 per cent of their turnover on player wages next season, would potentially make the club’s current squad unsustainable in the third tier – regardless of whether Venky’s were still prepared to bankroll it.
Rovers’ total wage to turnover ratio – including all staff salaries – was 92.2 per cent according to the last accounts published, for the year ending June 30, 2012.
The club’s turnover has since been hit by relegation from the Premier League, but Rovers have handed out a number of large salaries to bolster their squad throughout the current campaign.
Many of those players still have contracts for next year, which would leave Rovers having to find ways of cutting their wage bill to fall in line with the salary cap if they went down.
Clubs that do not fall in line are hit with a transfer embargo, with Swindon briefly falling foul of the regulations this season.
“If the wage to turnover ratio was already near 100 per cent, then it would be well over that next year,” added Cannon.
“There are three options, the first one is to put relegation clauses in players’ contracts, but given that two years ago no-one was thinking about dropping into League One, maybe they don’t have that.
“The second option, if they have players on Premier League wages for the next year or two, is to buy out contracts if Venky’s are prepared to do that.
“That is quite rare but is becoming more common. They would have to pay out money to do that, but some players would be quite happy to have their contracts bought out because they might not want to play in League One.
“The third option is to delay payments or go into administration.
“This is the risk of having a high wage to turnover ratio. Clubs buy the dream but you can’t pay the bills with the dream.”
Championship financial fair play rules do not come into full effect, complete with sanctions, until 2014.
And Cannon says Rovers at least are at no risk of losing their Premier League parachute payments, even if they go down.
They are due £16m next season and then £8m for each of the two seasons after that.
“They would still get the parachute payments and that would be a major advantage, because although some clubs do go from the Premier League to League One they are in the minority,” he said.
“But the Football League money is divided up as 80 per cent in the Championship, 12 per cent in League One and eight per cent in League Two, so it’s a big reduction in television money.
“The second element is that crowds, which are already well down, would drop even further.
“Then the other element is merchandise and sponsorship, because in League One you would get seconds on television compared to minutes in the Championship.
“You would be getting about half the income you would get in the Championship.
“The parachute payments will offset that, but obviously they would get those anyway if they stay in the Championship.
“Relegation is never good news.”
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