In the year 2002, debts of more than £30million - not helped by the fall of ITV Digital and the payment of Premiership wages to players like Benito Carbone - forced City into administration and they were reputedly just ten minutes from being forced out of business. However, despite their financial problems, the club completed the Division One schedule for the 2002-03 season and survived again.

Law was dismissed in December 2003 with City battling against demotion from Division One, and with financial problems once again putting the team at risk of closure. Bryan Robson took over on a short-term contract but was unable to prevent demotion and made way for his assistant Colin Todd after the club's relegation had been confirmed.

Todd had established the Bantams as a competent League One club in his two years at the helm, but he was expected to mount a promotion challenge this season. Towards the end of the 2005-2006 season, Bradford City mounted a good run together, which saw them take 13 points out of a possible 15 at home at the termination of the season before finishing in 11th position. In the final game of the season they denied Nottingham Forest the opportunity to go into the League One Play-Offs after a 1-1 draw in front of a crowd of over 15,000. Nottigham Forest's Julian Bennett equalised in the 88th minute after Dean Windass opened the scoring in the 20th minute with his 20th goal of the season.