Princes of prudence face kings of cash

Steve Wharton is a careful chairman. Success is all well and good, but Scunthorpe United's progress in League Two means extra bonus payments, taking the annual wage bill for his playing staff to around £950,000. When he meets Roman Abramovich at Stamford Bridge before their FA Cup third-round tie this weekend, Wharton may win some sympathy. If Chelsea carry on winning, the annual wage bill their owner will have to foot for just one player, Frank Lampard, could approach £5m - five times what Scunthorpe pay their entire squad.

The Cup's appeal has always been the meeting of clubs from different ends of the spectrum, but never has there been such a gap between the élite and the game's middle ground. Scunthorpe, second in League Two and reaping the benefit of nearly eight years of continuity under their manager, Brian Laws, could move within two divisions of Chelsea this summer, but in other respects they could be on another planet.

The last time Scunthorpe bought a player was when they paid £20,000 to Southend United for Martin Carruthers four years ago. The team that will play Chelsea cost nothing because Steve Torpey, the only current player for whom they have paid a fee, is suspended. Chelsea, meanwhile, spent more than £90m last summer, including a club record £24m for Didier Drogba.

However, there is one crucial similarity between the two clubs: they do not have any major money worries. "The Iron" have a reputation as one of football's best run clubs, a remarkable achievement considering that in the last 37 years they have spent just three seasons out of the League's bottom division.

In last year's "Football Rich List" published by FourFourTwo magazine, Wharton was placed joint 62nd, alongside Michael Owen, Ken Bates, Ron Noades and Maurice Watkins, with a personal fortune estimated at £30m. The company founded by his grandfather owns a 200-acre private port complex on the River Trent. Scunthorpe, however, are not successful because of the chairman's wealth. He is the controlling shareholder and the team train on a pitch owned by his company, but the only loan he has outstanding is the £50,000 he provided to get through last summer.

The club's greatest benefit is Wharton's business acumen, which, unlike some of his counterparts elsewhere, he did not leave behind when he joined the board. Indeed, Wharton believes that watching his father run the club in the 1950s and 1960s - Scunthorpe joined the Football League in 1950, rose to the old Second Division but dropped back to the League's basement in 1968 - was a business education.

Wharton said: "If we had gates of 11,000, my father would always say: 'If only we had 13,000 gates. We can't make any more cutbacks.' A year later we would have 9,000 gates and he would say: 'If only we had 11,000 gates.' As it went down and down I remember saying to him: 'You said that we couldn't cut any more, but if you'd cut to where you are now two years ago you would have been in profit last year.' I've always told people: 'Don't tell me you can't cut any further.' People only cut until it starts to hurt. Sometimes you have to take more pain."

Scunthorpe work on a simple principle: spend no more than you earn. For example, they spend less on players' wages than five years ago, thanks to the collapse of ITV Digital and the transfer market.

"We used to receive between £270,000 and £300,000 every year from the sale of players," Wharton said. "Since the collapse of ITV Digital there's been virtually no money for clubs like ours from transfers. In some respects that makes our youth scheme even more vital, because it's a source of good players. At the moment we have four first-team players who came through our YT scheme and one of them, Andy Butler, is absolutely outstanding. That sort of thing's important for the community feeling of a place like Scunthorpe. The fans love to see a young local boy doing well."

Wharton would not want to stand in the way of a youngster with the chance to progress, although he is still occasionally reminded of the time his father sold Barrie Thomas, the club's star player, in January 1962. Scunthorpe were riding high in the old Second Division - Thomas had scored four goals against Leeds United on Boxing Day - and some fans felt the sale of Thomas to Newcastle United for £45,000 cost them promotion.

"We were struggling financially and our gates were falling, even though we were doing well on the field," Wharton said. "I've worked out what £45,000 in today's money would be and it's about £1.8m. The club couldn't turn that down then and we certainly couldn't today."

Of Scunthorpe's annual £2m income, £330,000 comes from the Football League (including TV money) and £700,000 from League gates. Average attendances are more than 1,000 up on last season's 3,800, but Wharton admits Scunthorpe cannot compete with the likes of nearby Hull City. "The other night Hull had a 24,000 gate," he said. "I remember one Tuesday night our gate income was just over £20,000 and on the same night their gate income was £250,000."

Scunthorpe budget for £200,000 from the cups, though last year's run to the FA Cup fourth round helped bring in £450,000. Wharton says the Chelsea match alone could earn £300,000. Scunthorpe sold their allocation of 6,000 tickets within days. "If we want to pay decent wages and have a decent squad then we need a cup income to help subsidise it," Wharton said.

The club has always been innovative commercially. Scunthorpe built the first new League ground since the war when they sold the Old Showground and moved to Glanford Park and only recently became the first club to take advantage of rules allowing sponsorship on players' shorts.

Given Scunthorpe's prudence, Wharton was pleased by the Football League's introduction of a points deduction for clubs going into administration. "A lot of clubs have been wholly irresponsible," he said. "It grieved me that time and time again clubs went into administration with huge debts - like Hull, on our own doorstep - and came out of it with all their debts cleared and competing with us again, having paid vast wages they couldn't afford and having owed the Inland Revenue vast amounts."

Nor does Wharton believe that money buys success. "If it did, a lot more clubs would have been successful," he said. "If somebody has unlimited resources, as Mr Abramovich seems to have, then maybe it can work, though if it is just a question of money I can't help feeling it takes the fun out of it."

For richer, for poorer

Club facts and figures

Scunthorpe United

Formed: 1899

Joined Football League: 1950

Ground: Glanford Park (8,900 capacity)

Honours: Division Three (North) champions (1958)

Best League finish: Fourth in Second Division (1962)

Best FA Cup seasons: Fifth round (1958, '70)

Admission prices: £10 to £14 (adults)

Season ticket prices: £202 to £368 (adults)

Season tickets sold this season: 1,078

Record transfer fee received: £350,000 from Aston Villa for Neil Cox (1991)

Record transfer fee paid: £175,000 to Bristol City for Steve Torpey (2000)

Cost of current squad (transfer fees): £175,000

Playing staff (inc coaches): 37

Playing staff wage bill: £950,000.

Full-time staff: 52

Total club wage bill: £1.6m

Chelsea

Formed: 1905

Joined Football League: 1905

Ground: Stamford Bridge (44,449 capacity)

Honours: League Cup (1965, '98), European Cup Winners' Cup (1971, '98), European Super Cup (1999).

Best League finish: First Division champions (1955)

Best FA Cup seasons: Winners (1970, '97, 2000)

Admission prices: £38 to £48 (adults)

Season ticket: £480 to £815

Season tickets sold this season: 23,500

Record transfer fee received: £12m from Rangers for Tore André Flo (2000)

Record transfer fee paid: £24m to Marseilles for Didier Drogba (2004)

Cost of current squad (transfer fees): £204m

Playing staff (inc coaches): 43

Playing staff wage bill: £70m

Full-time staff and total club wage bill: Not known