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Saturday, May 05, 2007

The Costs of Relegation - Richard Murray

So even Pards' is thinking it now. "Certainly, it is not the end of the world if we go down, we will be strong and we will bounce back if the worst happens - but the top priority is staying up this season."

And in the guardian Richard Murray also has his say and reflects on exactly what could be in store.

"This is the most costly time to drop out of the Premiership," said Dan Jones, who leads the Sports Business Group at Deloitte, City accountants. "In terms of the difference between being in the Premiership this year and the Championship next year it's the biggest relative gap there has been. The working figure I would use for the cost of going down, in terms of the revenue difference between being in the Premiership and in the Championship next year, would be £25m-£30m."

Parachute payments payable over two seasons, climbing from £7.5m to £11m a year, should cushion the fall into the second tier but dramatically reduced television revenue - each Championship club will receive less than £1m next season compared with £30m in the Premiership - is a conclusive factor.

Richard Murray revealed that "many of our players will take a reduction if we get relegated" and admitted, "You have to say many of our players will probably leave the club", but he also said that there would, in some cases, be a need to honour Premiership pay deals. "If you have been in the Premiership five years and you go and sign another player from a Premiership club on a four-year contract they are not coming to you assuming you are going down."

Murray, none the less, is encouraged by the £11m promise. "It makes a big difference. What it does mean is that we are able to keep quite a few of our better-paid players, which you couldn't even consider to do without it. On one hand, with a Championship hat on, you would have to say that it's a bit unfair that the three clubs get that benefit, but I can assure you you just can't get your costs down in one year or even two years to what they were."

"I think the differential in television income between a parachute payment and a team ending up in the bottom half of the table [next season] is going to be around £20m. You will lose that to start with and you will lose all your sponsorship and other things which you may not get as much of in the Championship as you do in the Premiership, and then the extra load that many clubs have to bear is that their lenders, ie the banks, do not consider you to be such a good risk."

"Banks don't like to take too many risks anyway in football, but you are considered a much better risk in the Premiership. In our case, I think we have to try to reduce our overdraft at the same time as coming to terms with the reduced income. But I think one area that we are going to be OK is with attendances. We are pretty innovative with our season-ticket offers, where we have offered a free season-ticket if we go down and come straight back up again."

"As far as reduced wages for non-football staff, it will be more a case of not reducing the wages but losing some people," he said. "I think the footballers don't see that side. They are obviously disappointed if they get relegated but they don't realise that a receptionist goes."

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