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ccording to the "money buys success" philosophy, Real Madrid should have won against Mallorca by a scoreline of 675-nil in Spain last weekend.

Instead, Madrid, who spent 270 million on squad strengthening last summer, only won 2-0 against a club that parted with just 400,000 ahead of this season's campaign in La Liga.

What was remarkable, however, was the fact that it came as a surprise. Mallorca's players turned in a flat performance and disappointed La Liga-watching neutrals who had tipped them to cause an upset.

After a stunning run of home form, Mallorca started the day in fourth place in the league, two places behind their hyper-wealthy opponents.

It is utterly preposterous that Mallorca should have been in that position: this is a club which was described recently by one football journalist as being "a financial, social and institutional wreck".

Over the last two seasons, Mallorca has been through four presidents in a week, had countless would-be owners (including two English millionaires) walk away from the potential investment and has been dogged by accusations that its current owners have been draining money from the club's accounts for personal use.

It sells off their best talent and this season there has been reports of players' salaries going unpaid for months on end.

A leaked financial report recently put the club's debt at 40 million.

Yet, thanks to the genius of coach Gregorio Manzano, they could well qualify for Europe (and increased revenue) next season.

Mallorca's good "football health" right now is in marked contrast to that of another European club that has struggled to put money into its players' bank accounts lately. Over in the English Premier League, Portsmouth are bottom of the league and heading for disaster.

Last month, they were late paying their staff for the third time this season. They have massive financial problems and are facing a winding-up order from the government.

This week they went to the High Court to argue the Value Added Tax portion of their tax debt is too high at *7.5 million.

Little wonder then that a former owner of a Premier League club has warned that one BPL club could collapse this year.

David Sullivan, who last year sold his stake in Birmingham City to Hong Kong businessman Carson Yeung, described the state of football's finances as "frightening".

Sullivan and his business partners have been looking to reinvest their profit in another club (West Ham United seemingly a favorite choice), but he admitted he had been scared by what he had seen.

"We have looked at 20 clubs since we left Birmingham," Sullivan said. "The state football's finance is frightening and there's a possibility one Premier League club could go.

"Many, many clubs have pre-sold their Premier League income, television money. They have borrowed against one, two and three year's season-ticket money. They've borrowed against everything.

"But there's not a lot of money out there to buy players at the moment."

Speaking of which, the day before Sullivan uttered his gloomy comments, Red Football Ltd, Manchester United's holding company staged a "road show" in Singapore as it launched a bond issue aimed at raising some *500 million, with a view to reducing its huge debt load of *699 million.

United's great rivals Liverpool also made the headlines this week after a spat between co-owner Tom Hicks' son Tom Hicks Jr. and a fan over the club's financial direction. Against this backdrop, here is a bold prediction for the year ahead in football: it will be the most significant one in the two decades since the BPL came into existence.

Yes, Sullivan's depressing forecast could come true and we may well see an EPL club go into administration or even fold entirely, but we will also find out which financial model will best serve the giants of the English game.

Come May, if Chelsea or Manchester City win the league, we will know that the "wealthy benefactor" approach to club ownership will most likely dominate in the short term.

If Manchester United or Liverpool can keep their debt from impacting on results on the pitch, and either club wins the trophy, then we will know that borrowing-based investment in football is still worthwhile.

But what if Arsenal lifts the trophy? Clearly mindful of legendary investor Warren Buffet's observation, "Only when the tide goes out do you discover who's been swimming naked", Gunners manager Arsene Wenger has long preached fiscal prudence.

Rather than operating in the transfer market, he re-signs players (15 have renewed contracts since May 2009) in an effort to keep the nucleus of his team together.

He keeps wages-as-a-proportion-of-expenditure to about 60 percent compared with 80 or even 90 percent at Chelsea and he stresses the importance of continuity in the "brand" of football his club plays, much as Ajax did in the 1970s.

He says his policies should be judged in 10-12 years, but the coming months could be highly educational. Watch this space, but also keep half an eye on Spain and Real Club Deportivo Mallorca.