Palace and Saints in same boat as City

Norwich City's perilous financial status is mirrored by the clubs relegated with them from the Premier League at the end of the 2004-05 season.

The drying up of the Premier League parachute payments has left Southampton and Crystal Palace in exactly the same situation as the Canaries - needing to sell players to balance the books.

City chief executive Neil Doncaster revealed this week that the accounts for the end of the 2006-07 season showed a £90,000 profit, despite this figure including the final £7m parachute payment.

But Norwich are not alone in this predicament as other Championship clubs struggle to make ends meet with the gap between the Premiership and Championship getting bigger and bigger.

The lesson for other clubs is that if you are relegated from the Premier League then you better make sure you get back within the two years of the parachute payments.

Neither the Canaries, Crystal Palace nor Southampton have achieved this and all are now paying the price.

Indeed the Saints found themselves in such a poor financial state that the sales of Gareth Bale and Chris Baird, to Tottenham and Fulham respectively, had to be made simply to plug the yawning gap that had opened up thanks to failure to gain promotion.

They will not be able to do that every year.

Adam Leitch, reporter for the Southampton Echo, explained that the Saints had banked on getting some outside investment when they handed manager George Burley a £7m transfer kitty last summer.

"After the first season there was a change in the boardroom and they gave Burley £7m to spend in the summer with the idea being that they could afford to do this as they would be able to find investment from outside to cover this spending," said Leitch.

"This gamble did not pay off and the investment never came, meaning they had to sell off a number of assets last season.

"The real question next summer is where they are going to make up this shortfall from the Premiership parachute payments once again. You cannot sell a Gareth Bale every summer and there really aren't that many other assets for the Saints to sell off."

This is where the problem lies for the Canaries. They sold off Robert Earnshaw and Dickson Etuhu in the summer but the reality is there are not many current City players coveted by other clubs.

Manager Peter Grant will be desperate for the likes of Chris Martin and Michael Spillane to progress but if they perform well in the first team then Norwich will be forced to sell - that's the reality for not just Norwich, but any Championship club.

Sam Mokbel, Crystal Palace reporter for the Croydon Guardian, said the Eagles were forced to sell off their crown jewels in the summer to balance the books. Gary Borrowdale was sold to Coventry while Jobi McAnuff joined Watford for £1.75m with the Hornets'parachute payments already burning a hole in manager Aidy Boothroyd's pockets.

"The loss of parachute payments has had a massive effect on Peter Taylor's spending power and the club has had to make a number of cutbacks, particularly on the playing side," said Mokbel.

"He wanted to keep Borrowdale and McAnuff but at the end of the day, they had to be sold to balance the books. He does not have to sell any more players for the moment and is actually looking at bringing players in - but only ever on loan."

One way to close the financial gap is to encourage investment from an outside party. Wolves and Leicester also failed to bounce back within two seasons and have had to rely on Steve Morgan and Milan Mandaric, respectively, to come to their rescue.

Queen's Park Rangers have also taken this route with Formula One Renault boss Flavio Briatore taking over at Loftus Road.

Ipswich Town are desperate to find investment as they, like the Canaries, squandered the parachute money and manager Jim Magilton has been forced to shop in the bargain bin.

Town chairman David Sheepshanks has steadied the ship but for the club to establish a healthier financial footing then outside investment is essential.

Norwich directors realised City needed investment to cover the parachute shortfall and Andrew and Sharon Turner answered the call to the tune of a £2m interest-free loan. However, a lot more cash is needed from this pair if City are genuinely going to compete in the Championship. Investment is needed to make up for the loss of parachute payments but whether the Turners are willing to risk more of their personal fortune on the Canaries is open to question. If they aren't then other backers must be found . . . and quickly.