The appointment of Kevin Keegan as England coach led to a significant increase in the Football Association's operating expenses last year, according to figures released this week.

Keegan, who is preparing his side to face Brazil at Wembley on Saturday, quit his job as Fulham manager to replace Glenn Hoddle in February last year.

To help lure Keegan away from Fulham the FA agreed to pay him nearly £1m a year. If England are successful during next month's European Championships he could be offered a new four-year deal worth £6m.

Employing Keegan and his coaching team led to a massive jump in staff costs at the FA. Hoddle was on only £350,000 a year when he was sacked but was paid around £500,000 compensation for the remaining two years of his contract.

Costs were also affected by the dismissal of chief executive Graham Kelly in January last year over an unauthorised £3.5m loan to the Welsh FA. Although Kelly was on wages of £150,000 a year he was paid £400,000 compensation.

His replacement, former Saatchi and Saatchi chief executive Adam Crozier, is believed to earning around £300,000 a year.

Although the FA's annual report released to the general public does not list specific staff costs they have increased considerably from their £5m level in 1997.

The report, approved at the FA's annual general meeting on Monday, said: 'On the adverse side there was a significant increase in staffing costs as a result of changes made to the international management team.'

That increase in staff costs was offset, however, by an increase in the FA's turnover, which allowed them to put record levels of cash back into the game.

Improved broadcasting revenues, which came mainly from a new radio deal, and a 26 per cent rise in sponsorship increased turnover by 31 per cent from £65.7m in 1998 to £85.9m in 1999.

Those figures were also boosted by the decision to move the third round of the FA Cup from its traditional date in the first week of the New Year to the middle of December. That meant £4m of revenue from broadcasting, ticket sales and gate receipts could be included in last year's accounts even though crowds were down as a result of the switch.

Gate receipts from full England internationals at Wembley increased from an average of £1.1m to £1.5m and ticket sales at Under-21 games also went up.

The improved turnover to the year ended 31 December 1999 meant £18.3m was filtered back into the game - 21.3 per cent of turnover compared to 11.5 per cent in 1998.

The report said: 'This money will be used to assist in the funding of mini-soccer, facility and ground improvement work, county football association developments and other grass root initiatives.'

Wembley National Stadium Ltd, a wholly-owned subsidiary company of the FA from January last year, is also included in the accounts for the first time.

The true effect on Lancaster Gate will only begin to be felt next year when officials finalise a £355m loan to pay for the redevelopment of the national stadium.

Around £8m has already been set aside to help cover costs while the stadium is rebuilt. It is due to close after England's World Cup qualifier against Germany in October and is not likely to re-open until 2004.

Despite that, Wembley still made an operating profit of £100,000 on a turnover of £24m in 1999.