Promotion key to Blades funding

However, Birch – the man who saved Chelsea and Leeds United from financial ruin – has warned that failure to win promotion will result in further cutbacks next summer.

With just over a third of the season to go, the Blades are sixth in the Championship table and aiming for play-off qualification.

Yet Blackwell's squad has been dogged by injury problems and a pressure to balance the books has led to the sale of star players.

Birch said: "I feel desperately sorry for Kevin because I think the injuries we have had this season have been horrific. To still be in sixth place, with a team that has often had only three survivors from last season's play-off final and given debuts to 19 players should not be under-estimated.

"I have got the highest admiration for Kevin and think he is the right manager to lead the club," Birch added.

"The fact that he has shaped a team and achieved team spirit with that kind of turnover is testament to his ability as a team manager and people often overlook that."

Birch, who was appointed by chairman Kevin McCabe three months ago, spoke out amid a simmering sense of unease at Bramall Lane.

A section of supporters are still questioning the club's ambition and fail to understand why money is not available for major new signings.

Birch emphasised that the club was no longer in a position to call on McCabe for financial assistance and now had to live within its own means.

Lifelong Blades supporter McCabe and his companies have provided around 50m to the club during the last decade, either in loans or through the acquisition of shares and, while charging a healthy interest rate of 10 per cent on some of those loans, they have applied no pressure for full repayment.

"There are not that many chairmen who have offered that level of commitment and support into a football club other than headline foreign investors," said Birch.

"But Kevin has said there will be no further investment. He cannot subsidise this forever and is saying 'I have done as much as I can, it is now time for the club to stand on its own two feet.'"

Although West Ham United are paying 18m in compensation to the Blades over the well-publicised Carlos Tevez affair, Birch says the Blades would be unable to maintain their existing wage bill, an estimated 12m, in the Championship next season.

"We are running with a player wage bill that is probably second only to the parachute clubs (those receiving payments from the Premier League after relegation) and that creates a strain on finances," he said. "This is our first year without a parachute payment and there will be pressure to reduce that wage bill from next year onwards.

"The club has to stand on its own two feet. We will have to reduce that player wage bill. At the moment it is effectively being subsidised by the chairman.

"You only have to look at the losses for last year," added Birch.

"Although we recorded a 5m profit, it was underpinned by an 18m accounting entry from the Carlos Tevez settlement. That cash is on four or five-year repayment terms.

"That doesn't equate to cash. If you take the 18m away, it is a 12m loss."

Despite the problems, Birch insists there is no danger of the Blades slipping into financial freefall.

"There is no immediate danger to Sheffield United. If our loans were via a bank, it is a different issue, but it is in person. It is clearly identified in our accounts. The club has just over 20m of bank debt that is related to its property assets – effectively a 22m mortgage and assets which generate their own level of income to satisfy that debt – and 26m by way of soft loans from the McCabe family and the Scarborough Group.

"We have stabilised the position," he said. "Other clubs in our situation have gone into freefall but we are still competing in sixth place with every opportunity of making the play-offs.

"It is not a mess, this has been a very well-run company," he added. "It has also got massive potential. If we won promotion, the finances would radically change due to the media income. The minimum payment that clubs can expect next year is around the 50m mark. The total turnover for an average Championship club is around 16m-18m."

Blackwell, meanwhile, is currently looking for a new defender on loan to replace injured captain Chris Morgan.