GILLINGHAM Football Club will be forced to slash operating costs by a quarter if it loses an anticipated £5.4 million from the collapse of ITV Digital. Club chairman Paul Scally said this represented 40 per cent of its total income.

He told members of Kent Thames-side and Medway Chambers of Commerce that the debacle will cost the First Division club £2.7 million this year and a further £2.7 million next year. The Football League is taking action against Carlton and Granada, joint owners of ITV Digital, to recover the money it claims it is owed, said to be £180 million plus millions more in compensation.

But Mr Scally said at a business breakfast in Priestfield's impressive new banqueting suite that if the Nationwide league clubs had no success through the courts or by other means, Gillingham would take a hit of £5.4 million. "If no one steps in to cover these monies, we will find ourselves having to reduce our operating costs by about 25 per cent," Mr Scally said.

Admitting it would be a blow, he went on to say that thanks to careful financial management, Gillingham would be less affected than many other clubs. "We are one of the few clubs in the country which has not only made a profit year on year but has invested its money not in players' wages but on these sort of facilities," he said. "We believe they will produce the underlying money to secure the future of the club."

He put these healthy finances down to a mix of foresight, luck and good management. The club had recognised that facilities like the banqueting/conference suite, and the Rock Café, would "underpin the requirements of Gillingham if we are to go forward".

The suite, which uses some of the lighting equipment purchased at knockdown prices from the Dome, was one of the best and largest in the south east, he said, "certainly comparable to West End hotels". Ten conference suites are under construction and the club is applying for a licence to hold weddings in the new facilities.