The Football Association of Ireland (FAI) had myriad reasons to duck a parliamentary grilling this week.

Years of greed and dysfunction at the heart of Irish football have come to head. The organisation is broke. Sponsors are dropping out and the government is withholding funding. Redundancies and cutbacks loom. Public anger is mounting and there are threats to staff. Many wonder if the FAI can – or should – survive.

Little wonder the board backtracked on a promise to attend an Oireachtas sports committee hearing on Wednesday that would have interrogated the debacles.

In a statement the board said it cancelled the showdown with lawmakers in Dublin in order to focus on a restructuring package to “guarantee the future” of the association and safeguard jobs. “The board remains committed to appearing before the committee on a date when the appropriate representatives are available,” it added.

Many politicians and football fans remain unconvinced the FAI has a future or deserves one after it belatedly published a set of damning accounts last Friday that exposed ruinous finances – liabilities stand at €55m – and bizarre corporate practices.

The backlash has taken a sinister turn with threatening letters sent to the organisation’s Abbotstown campus headquarters in west Dublin. Security has been bolstered and Gardai are investigating.

It is all part of the legacy of John Delaney, a flamboyant former chief executive who reigned supreme from 2005 until his resignation as CEO in March. He clung on in the newly created position of executive vice-president until September and then quit before all the grisly fiscal details emerged.

Shane Ross, the minister for sport, told RTE on Thursday that the FAI needed “a total clean-out” and to show clear signs of reform before the government will engage in a meaningful way.

He said the organisation had a “black hole” in its finances and the government would redirect its €2.9m in funding to the FAI directly to grassroots groups.

Ross added that he could not understand the FAI’s reluctance to appoint independent directors, a new chairman and an independent CEO.

In a media briefing earlier this week Stephen McGuinness, the general secretary of the Professional Footballers’ Association of Ireland (PFAI), warned of a “lost generation” of potential talent.

“A generation of players are going to feel the pain for what’s gone on here …. The mismanagement has led a generation of players, now and in the next 10 years, to pay for this. I worry about parents who will look at the sport and send their kids elsewhere.”

Ireland’s domestic football is anaemic, victim of chronic underfunding and competition from other sports. Rather than nurture local leagues the FAI has focused on the national team, which enjoys intermittent glory thanks partly to British clubs that nourish Irish talent.

The PFAI general secretary, Stephen McGuinness, says: ‘A generation of players are going to feel the pain for what’s gone on here.’ Photograph: Ryan Byrne/INPHO/Shutterstock

A Sunday Times scoop in March that Delaney had lent his employers €100,000 prompted a stream of revelations about strange practices, missing records and poor governance, leading to Delaney’s departure and last week’s publication of revised accounts.

The figures shocked observers. Instead of healthy profits, as previously claimed, the FAI revealed a €2.9m loss in 2017 and €8.9m loss in 2018. Instead of liabilities of €21.1m in 2017, as reported last year, the true figure was €57m, a debt load since reduced to €55m.

Unanticipated professional fees as well as payments to revenue commissioners and lavish pay and benefits to Delaney accounted for much of the red ink. The former chief would have been due almost €3m over three years, but his exit package ultimately dwindled to €462,000.

The FAI’s shirt sponsor, Three Ireland, said it would not renew the deal upon expiry next year. Another big sponsor, SSE Airtricity, will reportedly discuss its deal with officials this week. The FAI’s 200 staff have been told to expect cutbacks.

Harry McCue, a former Irish professional footballer who worked as an FAI educational development officer for 16 years, told the Guardian he feared for employees’ jobs and the fate of grassroots programmes across Ireland.

McCue, who won League of Ireland championships for Dundalk and managed Drogheda United, said the two board members who had stepped down must be followed by the rest of the board. Staff had lost confidence in the board, he said.

“They are furious because this crisis was not of their making and … will impact not only on their jobs but also all the really good work going on at grassroots level. There are league and community programmes that are at risk.”

Sport Against Racism Ireland, a grassroots group, suggested detaching the League of Ireland from the FAI and merging it into a new all-Ireland league structure.