Football clubs across all the English Leagues are having to juggle their finances to stay solvent in the current economic climate, according to an in-depth survey of football club finance directors published by PKF Accountants & business advisers.

PKF's eighth annual survey, Staying on the ball - how clubs are responding to the credit crunch, shows that all leagues are suffering from the recession, but in different ways.

Philip Long, head of corporate recovery at PKF and football sector specialist, said: "Given the cataclysmic financial and economic events over the last 12 months, it is not surprising that the results of our survey reflect the predominant themes affecting the UK economy. More clubs are finding it harder to raise funding, more are digging deep into their overdraft facilities to keep going, and fewer expect to make a profit this season.

"Finance directors are also clamping down on the size of the squads and trying to curb both player salaries and transfer fees - although the recent EPL signings suggest that the big clubs are still immune from some of the financial pressures on the smaller leagues."

Merchandising and corporate hospitality show the largest falls in the last year - for both, 38% of clubs reported reductions of greater than 5%.

For the year ahead, three quarters of the EPL respondents are anticipating a reduction in income of between 5% and 20% for corporate hospitality, but appear largely confident that match and season ticket sales will hold up. The EFLC, however, is concerned about match and season ticket revenue, while the FL1 is most concerned about a fall in merchandising revenue.

At the same time, more than a third of clubs are under more pressure from their banks - an overall increase from 24% last year - and half of all respondents envisage using more than 90% of the bank overdraft facility in the year ahead - up from 41% in 2008. But the league under the most financial pressure appears to be the EFLC with more than three quarters of its respondents intending to use more than 90% of their facility this year - up from 44% last year.

Philip Long added: "Arguably, it is clubs in the EFLC that have the biggest gamble, do they spend to try to reach the EPL (the Holy Grail) or spend to avoid relegation?

"Either way, the price of failure could be catastrophic. Clubs must plan for all eventualities and unsuccessful speculation using bank debt could be a one-way ticket to insolvency.

"What is surprising and moreover, concerning, is that across each revenue stream around a third of clubs do not believe the credit crunch will have any impact on their operations. In my view this is wishful thinking. Clubs must appreciate that the continuing economic uncertainty and rise in unemployment will affect their supporters' ability to spend over the coming season."

Finance directors' control over player costs tightened again this year. Nearly two thirds (62%) plan to have a smaller squad size this year compared with 35% in 2008 and just 25% in 2007.

Only 12% are planning on increasing the size of the squad while 27% of the total sample - but 75% of EPL respondents - are budgeting for the same size squad as last year.

Half the respondents will also be spending less on the first team payroll next season - compared with just 19% in 2008. This is the first time that the trend for increasing the payroll costs has been reversed.

The EPL clubs' restraint on squad size, however, does not extend to payroll costs with 75% budgeting for a larger payroll perhaps indicating a strategy to concentrate on quality rather than quantity.

Stuart Barnsdall, Audit Partner, Football Industry Group said, "The overall trend appears to be that clubs are cutting down on the size of their squad in order to spend more on their 'star' players. In particular, none of the EPL respondents are increasing the size of their first team squad but three quarters of them will be spending more on their payroll.

"Again, the product is everything with only the EPL bucking the downward trend which indicates that the financial gap between the haves and have nots is widening. The EPL is the promised land with everyone wanting to be there."