Tuesday, March 19, 2019

Scottish football finances

Those of you who follow me on Twitter will know I'm a bit geeky about the financial side of Scottish football. That's partly because it is a simple way of judging who is over- and under-achieving, as well as being a pretty good indicator of which clubs are well-run and which aren't.

Moreover I increasingly worry that it is only a matter of time until another Scottish football club ends up in an administration event. Very few are self-sustaining. As I previously blogged it feels like most Championship clubs are getting by on donations and goodwill. Meanwhile the clubs at the lower end of the top flight are rather dependent themselves on a combination of overachieving (higher league positions and cup runs) and selling players. In fact, even Celtic and Rangers, despite having budgets that dwarf the rest, face their own challenges.

For comparison though, only three Scottish clubs - Celtic, Rangers and Aberdeen - have turnovers higher than the bottom end of the English Championship. Celtic's turnover is lower than that of all 12 Premier League clubs who have published figures for last season. Rangers' wage bill would put them in the bottom half of the Championship, and Aberdeen's is lower than all Championship clubs.

That's what Scottish football is up against.

So let's look at all the info we have on Scotland's top clubs...

(This is the point where I should really shout out to Kieran Maguire, whose analysis of football club accounts is invaluable reading when it comes to this)

TURNOVER: £15.4m (2016/17 - £15.3m)
LOSSES: £800k (2016/17 - profit of £500k)

Did Aberdeen really spend £1.3m on new players last season? Apparently so. Hopefully they'll be better value than Paul Bernard and Robbie Winters were. Despite posting a loss for 2017/18 the Dons seem to be in a perfectly decent position due to a turnover that is the third highest in Scotland. The question is how to increase income further - cup runs this season may help - and also how much prudence will be required in the coming years as the club (subject to about the gazillionth appeal by opponents) build a new stadium at Kingsford with the aim of moving there as soon as 2021.

TURNOVER: £101.6m (2016/17 - £90.6m)
PROFIT: £17.3m (2016/17 - £6.9m)

Celtic's status as an enormous fish in a small pond domestically, but as a relative tiddler in the continental ocean (oof, you've pushed that metaphor far enough - Ed) presents them with unique challenges. For a start, making the Champions League is worth a huge amount of money; missing out leaves a large hole in their finances...as seen in their interim results from the first 6 months of this season where turnover dropped by £20m compared to the same period of the previous year.

This gap in the past has been easily filled by selling a player (see: Fraser Forster, Virgil Van Dijk, Moussa Dembele). The quandary is whether to save money for those years where they miss out on the Champions' League, or to invest it to increase their chances of getting through qualifying.

From a domestic point of view however there is no comparison. Their turnover is roughly equal to the other 11 Premiership clubs put together.

TURNOVER: £4.6m (2016/17 - £3.9m)
LOSSES: £425k (2016/17 - £350k)

Dundee are in their sixth season since being taken over by FPS, their American backers led by John Nelms and Tim Keyes. The first five years have resulted in combined losses of £2.3m...despite about £1.3m from selling Kane Hemmings, Greg Stewart and Jack Hendry. Their wage bill is more than 70% of turnover, which is far from ideal.

This season is likely to follow that trend following the sacking of Neil McCann and a plethora of new signings for successor Jim McIntyre. Obviously there would be a huge problem if FPS stepped away, though there are no signs of them doing so even if the club are relegated this season. The bigger concern is if the stalled plans for a new stadium come to nothing, because that seems to be the key to the business plan going forward.

TURNOVER: unreported
RETAINED EARNINGS: £502k (2016/17 - £968k)

Accies don't report turnover, which only tells us that it is less than £6.5m. In reality it will be much smaller than that, the lowest in the top flight by a pretty significant margin. This was a dreadful year financially for Hamilton because of the Vishing scam in 2017 which cost the club £700,000. Even though they sold Greg Docherty and Mikey Devlin they have now ended up with £450,000 of bank debt that they didn't have before. Things should be better this year though with them still in the top flight and having sold Lewis Ferguson.

TURNOVER: £12.1m (2016/17 - £11.3m)
PROFIT: £1.8m (2016/17 - £2.3m)

Interpreting Hearts' situation is tricky given they got £2m donated towards the new stand and another £1m donated towards player costs. The previous year's profits came after £2.5m of donations. And they got another £3.25m of donations in the first quarter of 2018/19! Now the new stand is completed it'll be interesting to see where turnover is at going forward. Still, it's a far cry from the Romanov days...

TURNOVER: £9.5m (2016/17 - £7.6m)
PROFIT: £214k (2016/17 - losses of £263k)

On returning to the top flight, Hibs posted the fifth highest turnover in Scotland and finished an excellent fourth in the league. It's interesting to note they spent £500,000 in transfer fees for players during 2017/18. . Given the club's wages/turnover ratio is a solid 56%, things have come a long way since seven figure losses during the 2013/14 relegation season and the subsequent campaign. The sale of John McGinn will make this year's filings look quite decent.

TURNOVER: £5.1m (2016/17 - £5.1m)
LOSSES: £180k (2016/17 - profit of £960k)

Killie's increased success on the pitch came at an increased cost as the wage bill went up by nearly £1m; some of that may be to do with the dismissal of Lee McCulloch. (Of note, this increase came after several years of costcutting. Wages and income are still lower than five years ago) It's curious that turnover was static despite finishing three places higher in the league. The increased optimism - and crowds - at Rugby Park this season should make this season's figures more impressive.

TURNOVER: £6.8m (2016/17 - £4.2m)
PROFIT: £1.7m (2016/17 - losses of £181k)

Two cup finals, you say? Decent fees for Ben Heneghan and Louis Moult, you say? It all added up to a bumper year for Motherwell. Staff costs were the sixth highest, but a wage/turnover ratio of 57% is sustainable enough. That said, this campaign's turnover is bound to dip because of a lack of cup income - Motherwell's gate receipts had more than doubled last year - though the sale of Cedric Kipre will cover some of that. And luckily the £1.7m of ongoing interest-free loans show no signs of being called in.

TURNOVER: £4.5m (2016/17 - £4.1m)
PROFIT: £343k (2016/17 - £97k)

Thistle had broken even for years, and last year managed a nice wee profit on the back of larger gates - they played Celtic and Rangers twice at home despite finishing bottom six. Relegation is an expensive business though and they were quick to wield the axe and cut costs - so much so that the outcome is that they are now in danger of dropping to League One, which would be catastrophic. But if they stay up they should be in reasonable nick going forward though this year's results are likely to be impacted further by the need to dismiss manager Alan Archibald.

TURNOVER: £32.7m (2016/17 - £29.2m)
LOSSES: £14.3m (2016/17 - £6.7m)

*Opens can of worms* Rangers, on the face of it, remain a financial basketcase. An optimist would say that now the whole Takeover Panel thing is out of the way and there appears to be a settled management team things should finally improve. And the interim results for the first 6 months of 2018/19 showed a healthy profit.

The flipside is that said profit was almightily dependent on European qualification, and at the same time last year they claimed they had broken even up to that point...and finished the year £14m in the red. Add in the estimate in the 2017/18 accounts that they would need a £4.6m cash injection just to get through the year and yet another loan from financial house Close Brothers last week and it seems that things are not rosy yet. But as much as many fans of other clubs are hoping for it, there are no signs of an administration event in the near future.

TURNOVER: accounts not filed yet (2016/17 - £3.8m)
PROFIT: accounts not filed yet (2016/17 -debt of £1.4m forgiven)

County's situation is unique amongst the clubs on this list, given they have the unconditional support of Global Energy mogul Roy MacGregor, one of Scotland's wealthiest men. With his ongoing input, County don't really need to worry about money.

TURNOVER: not reported (2016/17 - £4.9m)
LOSSES: £258k (2016/17 - profit of £49k)

St. Johnstone noted in their annual accounts that their losses pretty much reflected the consequence of missing the top six for the first time in years; These were the poorest financial results since Steve Brown became chairman in 2011, but this can probably be forgiven it was a season of transition for Tommy Wright's side. And, you know, they're not too bad, really - there's still £2m in the bank! The Perth Saints are the model example of what a well-run small club in Scotland can accomplish.

TURNOVER: £3.2m (2016/17 - £3.5m)
LOSSES: £219k (2016/17 - £1m)

Thank goodness for the new American owners. United sold their training ground for £1m and made £1.4m from the sell-on clauses of Andy Robertson and Stuart Armstrong and still ran at a loss. That's after losses of £2.5m over the previous two seasons. United would be in a proper help-ma-boab situation had Mark Ogren not completed his takeover.

TURNOVER: £2.7m (2016/17 - not reported)
PROFIT: £140k (2016/17 - losses of £300k)

Falkirk arrested a run of loss-making seasons partly by closing their youth academy, having reasoned that they couldn't pay for it unless they made £400k of transfer income annually. One suspects the dismissal of Paul Hartley and the fine for tapping up Ray McKinnon will badly affect the balance sheet for 2018/19

TURNOVER: £2m (2016/17 - £3.6m)
LOSSES: £810k (2016/17 - £400k)

Relegation hit Caley Thistle like a sledgehammer. Turnover nearly halved and despite dramatic costcutting and loans from directors totally around £400k they still made a high six-figure loss. Whilst there has been further pennypinching since then and the run to the Scottish Cup semi-finals will be a welcome boost, that's still a heck of a hole to fill.

TURNOVER £2.8m (2016/17: £2.4m)
PROFIT £77k (2016/17: £15k)

How much does promotion cost? Well, St. Mirren only made a profit because they sold Stevie Mallan and Lewis Morgan for £700k.

As for the other 2017/18 Championship clubs, Dunfermline made a very small profit but admit to being dependent on £300k of annual donations. Queen of the South made a £200k loss despite having a tiny squad and relying on local businessmen to pay the wages of Stephen Dobbie. Livingston haven't filed their accounts for last season yet, but the previous ones contained a going concern as liabilities were worth £700k more than their assets. Promotion will certainly have helped things though. Dumbarton's accounts were hard to read but it seems like they made a significant loss (correct me if I'm wrong). There wasn't much info to note on Morton's accounts, and Brechin City don't seem to publish any.

Lawrie Spence has ranted and spouted his ill-informed opinions on Narey's Toepoker since September 2007.  He has a life outside this blog.  Honestly.

Tuesday, March 12, 2019

You can't take your eyes off the Scottish Championship

I know I keep banging on about it, but the Scottish Championship really is a compelling league. As we enter the final quarter of the season, all ten clubs have something to play for.

Inconsistency has been the dominant theme as teams go from periods where everything goes in to ones when they seem to have smashed a mirror over a black cat whilst walking under a ladder, or vice versa. The table is so tight that some teams who were in the promotion playoff hunt a month ago are now looking over their shoulders with trepidation, whilst others who appeared set for a relegation dogfight are now dreaming of nicking a top four spot.

The latter group include Dunfermline, who in mid-February lay seventh, just three points above bottom spot in a total mess following Allan Johnston's departure. Luckily for them his replacement, Stevie Crawford, has proven the most unlikely saviour since the disciples went to the wrong stable at the start of Life Of Brian. It also helps to have a centre forward in form; step forward Aberdeen loanee Bruce Anderson, clearly scarred for life by his parents' decision to give him a name that it is impossible to say without putting on a dodgy Australian accent. Young Brucie, as surely everybody must refer to him by law, is taking his revenge on society, or at least that part of it that stands between goalposts in Scotland's second tier.

An in-form striker can only take you so far though, particularly when the rest of the squad is so thin that home fans at Palmerston have started taking their boots with them in case they are required on the bench. I give to you Queen of the South, who as recently as the end of January bodied Dundee out of the Cup on the back of Stephen Dobbie's goals. It's tough enough for any forward to score more goals than his age; for a 36 year old one to do so two months before the clocks change is mental. A fifty goal campaign for the veteran wasn't just a possibility at that point, it was odds-on.

And then it all went, er, south. An extraordinary 4-0 demolition of Ross County in mid-January has been followed by seven straight league defeats; Dobbie's last league goal came in the first of those seven. Saturday's loss at home to Caley Thistle was marred by goalkeeper Alan Martin giving home fans the bird when the half-time whistle went. He was substituted at the break because "of a back injury" according to manager Gary Naysmith. Aye. Sure.

So the Doonhamers have essentially swapped places in the table with Dunfermline. The problem is that, at the business end of things, there are now teams directly below them that have form and momentum. Falkirk and Partick Thistle are both finally reaping the rewards of their 'sign an entirely new team for our entirely new manager strategy'. If they haven't quite reached Dunfermline's Lucy In The Sky With Diamonds levels of giddiness, those two have at least moved into It's Getting Better territory, though with the duo set to clash next weekend somebody is going to suffer a rotten climbdown.

There are exceptions to the incredible ups and downs that has permeated this division, all of which seem to exist north of the Tay. Caley Thistle are so determined to become the definition of mediocrity that physicists are concerned the universe could implode with shock if they moved either above fourth or below sixth in the table. They last won consecutive league games in September and have mastered the unfortunate habit of playing up to strong opposition and down to weaker ones. The trouble is that whilst they could argue that they have deserved at least a draw in all six league games they've played against Ross County and Dundee United, they haven't actually won any of them. They have knocked both out of the cup at least, so if John Robertson manages to drag them into the playoffs after all - by no means a certainty if Dunfermline keep going like this - and cons the players into thinking it is a knockout competition, they might pull off a miracle after all.

As for their neighbours, "County have been crap for months" bewailed one Staggie friend of mine recently...with his team sitting top of the league. The thing is, the concept of form doesn't seem to have actually reached Dingwall. If football is indeed a results business, Ross County have got it down to such an extreme art form that Tracy Emin is nodding with approval. It's not that they haven't been playing well at times, it's just that it seems that ninety per cent of the time it doesn't matter. After an hour and a half of football each weekend, it turns out they've won. It's just one of life's certainties and there's no point fighting it.

You just know that every single person in the country put Ross County 2-0 Greenock Morton on their pools coupon last weekend, though part of that is because Jonatan Johansson is so risk-averse away from home that even Jose Mourinho would accuse them of being too negative. They've actually scored more than once in only three of the Finn's twenty-four league games in charge. Boring your way to survival is certainly a bold strategy, Cotton. We'll see if it pays off.

And then there's the tangerine-coloured elephant in the room. While many of the other Championship clubs have more highs and lows than the characters in Trainspotting, Dundee United fans are the ones most likely to be found on the Scottish moors lamenting the hand life has dealt them. "It's s**** supporting United! We're the lowest of the low! The scum of the f***** earth! The most wretched, miserable, servile, pathetic trash that was ever s*** into civilization! Some people hate Dundee. I don't. They're just w*****s. We, on, the other hand, are a division below w*****s."

Win, lose, draw or whatever, United seem in a state of perpetual crisis regardless. Given that Rangers: The Banter Years has dropped markedly in quality during its seventh season, we should be grateful that its Tayside-based spinoff continues to trundle along nicely despite yet another overhaul of the cast. Replacing Csaba Laszlo with Robbie Neilson was expected to result in a change of direction but the decision to stick with the tried-and-tested formula has proved a ratings hit.

The games United do win seem to be mostly the result of collective embarrassment, as if the players' own self-respect forces them to occasionally perform somewhere close to their potential. However the shame wears off after a while and then it's back to their baseline, which appears to be to play as if everyone is still at the stage of needing nametags so that their teammates remember what their name is.

To be fair, Neilson did sign eleven players - literally a new team - in January. But six weeks on from the end of that window one is entitled to suspect a degree of coherence. Instead United fans have been 'treated' to two weekends of watching their team toil for an afternoon, somehow against all reason find themselves in a drawing position, only for the football gods to take offence to this and part their central defence like the Red Sea to gift first Caley Thistle and then Partick Thistle deserved injury-time winners.

Whereas Partick made a plethora of signings because they gutted their squad after relegation, and Falkirk brought in a gazillion new players to replace the donkeys that Paul Hartley had rounded up, United's squad is striking for the number of players under contract who have in the past few years been very competent at this level or above, but who have been discarded by Neilson in favour of new recruits. The temptation to spend those shiny American dollars was maybe too much to resist, but it might not have been unreasonable to look to the new coach to coax these players back to their best, rather than chuck them on the scrap heap.

And sure, it might be that a Govan Witch Doctor cursed Tannadice in 2015 so that any player that wears the strip instantly becomes a haddie, but it's more likely that Mark Reynolds lost a yard of pace a couple of years ago and can't manage without it, and that Mark Connolly was only good when Manu Pascali babysat him through games at Killie. Neither have improved on United's previous options in central defence; after they were schooled by the just-out-of-retirement Scott McDonald at Firhill there was sufficient evidence to suggest they are actually a downgrade.

Meanwhile further up the pitch United added to their attacking options with Cammy Smith, Aiden Nesbitt, Peter Pawlett and Osman Sow. All players with a bit of pedigree, but how do you play all four in the same team? Your guess is as good as Neilson's, which tells you that not nearly enough thought was put in to the recruitment drive.

At least having new American owners means they probably don't need to worry about the financial implications of a fourth successive season at this level, but whilst a playoff place is pretty much a certainty getting through them is another matter. There's still the enticing prospect of a final between them and their struggling rivals from along the road, where we can be certain that the most positive thing that could be said about the victors would be 'that they were the least crap'.

Neilson still has eight games to mould United into a decent unit and to build up enough confidence to put them in good stead for the postseason. But as it stands Arabs have good reason to fear they're headed for another year in this particular circle of hell, or at least for two more trips to Dumfries, which is pretty much the same thing.

For the rest of us, it is compelling viewing, even if it is in the same way that you can't take your eyes off a crashing car. And if that doesn't sum up the Scottish Championship then I don't know what does.

Lawrie Spence has ranted and spouted his ill-informed opinions on Narey's Toepoker since September 2007.  He has a life outside this blog.  Honestly.