Finally, it has happened. After years of excess inflation, the football bubble has burst in spectacular fashion. And the ramifications are being felt throughout Europe, writes Graham Hunter

Across the Continent, managing directors, chairmen and coaches are sitting nervously in empty counting houses, surrounded by "for sale" signs that pepper their expensive squads.

But no one wants to buy.

The transfer market, if not dead, is in a critical state, and some of Europe's most famous clubs are struggling to offload the debts they have recklessly amassed over recent seasons. Arsene Wenger, whose club Arsenal is on a sounder footing than most, this week compared the situation to a head-on road crash - "and the car has already hit the wall".

In Italy, there are even growing fears that the new Serie A season may have to be delayed to give teams time to get their finances in order.

Before kick-off, clubs must prove that they will be able to complete the campaign - and few, at present, can. "I don't think it is possible to sort out everything for September 1st," said the Roma president, Franco Sensi. "The championship could be postponed by one month."

Closer to home, debt-ridden Leeds yesterday agreed a £9 million fee with Liverpool for the controversial midfielder Lee Bowyer, but such multi-million transfers are the exception among the Premiership's leading clubs this summer.

Manchester United, Chelsea and Leeds have spent almost nothing, while Arsenal's investment has been limited to this week's £2.1 million signing of French defender Pascal Cygan.

Chelsea, like Leeds, are struggling to rein in massive debts and their Italian manager, Claudio Ranieri, may yet have to start the new season without his star striker Jimmy Floyd Hasselbaink - if the Chelsea board can find anyone willing to pay upwards of £15 million for the Dutchman.

"In England, the crisis is all still about the flop of the [ITV Digital] television system," Ranieri said. "However, in Italy, my feeling is that it is much worse. Some clubs have spent the money they are due to be earning in something like 2010 . . ."

In his native country, the spectre of Fiorentina looms large - the club that in recent seasons beat Manchester United and Arsenal in the Champions League now languishes in Serie B on the point of bankruptcy.

As a result, even the likes of Internazionale have tightened their belts significantly - resulting in their recent, slightly surreal securing of an option on the out-of-contract Coventry defender Gary Breen.

While that has since run out, six players have arrived at the San Siro this summer and not one has been paid for.

"We saw Breen during the World Cup, investigated his background and found him to be an impressive man with a professional attitude," confided one Inter board member. "Just what we were looking for."

Such humility from the Italian giants is an indicator of the searing nature of the recession afflicting European football. The cost of salaries - driven up by a series of record-breaking transfers during the fool's-goldrush years of pay-per-view television - is crippling the game's elite clubs.

Not even the biggest possible shop window, the recent World Cup in Japan and Korea, has tempted the majority of clubs in England, Spain, Italy, Germany and France to shell out on players.

Instead, they loan them, swap them, even give them away like bubblegum cards in a playground. Above all, they will try to renegotiate their wages - downwards.The Italian players' union yesterday agreed to flexible, performance-related contracts including automatic salary cuts after relegation.

Lazio are working double-time simply to make the payments on a number of recent transfers. If they got a good offer for the club mascot or Sergio Cragnotti's furniture at his training-ground office, they would give it serious thought. The cupboard is bare and they are not alone.

Even the Butch Cassidy and Sundance Kid of the European transfer market, Real Madrid's president Florentino Perez and sporting director Jorge Valdano - who broke the world-record fee for Luis Figo and Zinedine Zidane in consecutive years - have not yet spent a cent this summer, and are instead desperate to offload Steve McManaman among numerous others.

There is, too, little hope for any change in the near future. In Spain, Germany and Italy, just as in England, the pay-per-view television negotiations for the next couple of years herald drastic cuts.

Both in Spain and Italy, the competing digital companies (Via Digital and Canal Satelite, and Telepiu and Stream) are merging to stamp prices back down.

In Italy, television revenue is expected to drop by 50 per cent when the new deal comes into force in 2003, while Germany's clubs have signed with KirchMedia for £160 million less than their previous £600 million deal.

As Wenger highlighted this week, faced with such bleak figures clubs are taking desperate measures. "Recently, I have been offered players that haven't been paid for five, six, seven months," said the Arsenal manager.

"Not in England, but from foreign countries. And once you stop paying the players any more, there is a deep problem."

Guardian Service