THREATENED changes to the transfer-system could spark a "radical review" of York City's highly-cherished youth system after the latest balance sheet published by the club today revealed losses of nearly £700,000.

Chairman Douglas Craig issued the ominous warning as the club, just a year after announcing record profits of more than £1.25 million, revealed a deficit of £667,255 for the year ending June 30, 2000.

City were only kept in the black last time around thanks largely to the six figure sales of Richard Cresswell, to Sheffield Wednesday, and Graeme Murty, to Reading.

And but for the sale of Alan Pouton to Grimsby and the money raked in for Jonathan Greening's continued appearances at Manchester United, this year's figures would have been much worse.

City's actual operating loss stood at £1,029,917, an increase of more than £540,00 on last year's trading loss, as the City wage bill broke through the £1.5million barrier at the same time as gate receipts tumbled.

The figures confirm more than ever that City rely heavily on the cash generated from the sale of their brightest talent.

And yet as reported in the Evening Press, the current transfer system is under serious threat from Europe.

If it is drastically altered, City's future could not be guaranteed with its current rate of operating losses.

In his chairman's report, to be presented to the shareholders of Bootham Crescent Holdings (BCH) on December 21, Craig delivers an icy blast at Brussels and concedes City are in the midst of "difficult times".

He states: "You will be aware of the fact that a continuing theme of my reports over the years has been the need to foster a strong youth policy.

"Investment in such a policy has shown returns when young players brought on by the club have been transferred to clubs in higher divisions bringing fees into the club, thus ensuring its survival.

"Such returns are now under threat by the bureaucrats of Europe who have no knowledge of the delicate financial infrastructure of English football but who dogmatically seek to impose their views on employment rights on the game. The matter is still in the hands of the politicians, but if some concessions are not obtained which l Continued from Back Page

acknowledge the needs of clubs like ours who have to sell to survive then we facing a radical review to youth development and our attitude to players' contracts.

"As a board we are very concerned about these dangers and will take such action as may be necessary in the best interest of the club."

UEFA have admitted the December 31 deadline for the resolution of arguments surrounding the transfer system may have to be put back.

Representatives of the FIFA-UEFA Transfer Taskforce met with members of the European Commission this week to try to find an alternative which is acceptable under European law.

Competitions Commissioner Mario Monti indicated last week that he was unhappy with some aspects of a discussion document, which had been drafted by the Taskforce and handed to the EC on October 31.

But although the EC have imposed their own deadline, European football's governing body acknowledges that discussions may take place beyond that date.

"Everyone is working on the basis that we can reach an agreement by December 31," said UEFA director of communications Mike Lee.

"The quicker the uncertainty over the transfer system can be ended, the better it will be for everyone.

"But there are sensible arguments on all sides and even though we would prefer it to be dealt with by then, it could go on beyond December 31."