Southampton have revealed pre-tax losses of £1million for the last financial year and are desperately seeking new investment.
The figure is an improvement on the £3.3million losses from 2005/6, but Saints remain in dire need of significant investment or face the possibility of going into administration.
The Championship club made a loss despite selling Gareth Bale for an initial £5million to Tottenham, and the board have admitted further players may have to be sacrificed in January.
In his chairman's statement, Ken Dulieu said: "The anticipated investment post the June 2006 PLC board changes, sadly, did not materialise and subsequently your board have worked tirelessly these past 12 months to secure new investment from alternative sources.
"We have also experienced further changes at both PLC and football club boards but, despite these off-field distractions, I report an improved financial performance.
"However, we are now some five months into the current financial year and we have still to secure new investment. This presents serious financial challenges which impact on both our football team and the wider business."