It's been, what, two weeks without football? The withdrawal is already so bad that I gave in to the Football Manager 2020 free trial; after 12 years on the wagon I'm now obsessing about how to get Weymouth out of the National League South. Either I pay full whack for the game or I face being locked in my childhood bedroom for a week being fed nothing but pea soup. Choose life, choose a job, choose a career, choose '4-2-4 wing play custom route one'.
But my tremors and nightsweats are nothing compared to those of the people who actually run football clubs. Forget the crazy schemes like secluding Premier League squads in the midlands for a month to play matches behind closed doors in order to keep the nation from cracking each other's heads open to feast on the goo inside. It'll be fecking months before we're even allowed jumpers for goalposts again.
That's if, in the post-covid 19 world, there's actually any football to go back to. Given that giants such as Barcelona and Juventus are having to agree wage cuts/deferrals with players, what hope is there for Scottish clubs? Will they all have gone bust by the time we return to a semblance of normality?
The challenges they face are pretty similar: paying wages (and other outgoings like council tax) whilst having no income.
The sums involved are of course a bit more modest than those regarding Leo Messi and co. At one extreme end of the SPFL scale there is Celtic, whose staff costs for 2018/19 were £56.4m. Only Rangers and Aberdeen also have staff costs above £10m/year. Hearts and Hibs are not far off that, while most of the other Premiership clubs are under £5m/year. The smallest full-time sides, in the Championship and at the top of League One, are at closer to £1m or even less.
At the other end are the part-timers. Winger, teacher and blogger Danny Denholm, now plying his trade at East Fife, wrote in the December 2018 edition of Nutmeg Magazine that the average League One wage was between £100 and £300/week. There are some players *cough* Rory McAllister *cough* who will be on far more than that.
There's also the awkward situation with player contracts, many of which will expire in May or June at a point that is still some way away from a return to football. It's likely that FIFA and/or UEFA will agree a blanket move to extend contracts a few months. If this doesn't happen there will be a few clubs disadvantaged, as some players will surely take the chance to jump ship and join another club as per usual. Those however will be dwarfed by the number of players who are released to save money and who will find it very difficult to find another team until the footie actually starts again.
In one sense the smaller clubs might be better protected. The government's furlough scheme, which clubs should be eligible for, will pay 80% of wages up to a total of £2500/month. That should cover any player earning £3,100/month or less - which extrapolates to about £700/week, a figure that should be cover most players from the Championship (those not based in the City Of Discovery, anyway) down.
Maybe that's how Caley Thistle - not exactly awash with cash - can pledge to pay staff who earn under £24,000/year - essentially those who would be covered by the government scheme - in full with higher paid staff taking a 20% cut, and Partick Thistle can guarantee all staff wages up till the end of May.
Yet there's still Raith Rovers, one of League One's full-time clubs, starting a fundraising drive, while Peterhead, Montrose, Dumbarton and Elgin City are amongst the part-time teams whose players are taking wage cuts. The bottom line is that these clubs have very little cash in terms of cash reserves in the bank and are heavily dependent on gate money - even more so at this time of the season when season ticket cash has long been spent.
At the other end of the scale are Hearts, whose players have been asked to take a 50% pay cut or terminate their contracts. Defender Clevid Dikamona, who took the chance to return to his family in France but holds out hope of returning next season, is so far the only player to take the latter option. I may be being harsh but I feel like a business with an annual turnover of £15m should be more resilient. Then again, the Jambos were supposedly paying some players a crazy £6,000/week.
Most Premiership players will be on deals which, while not as daft as that, are more expensive than that covered by the government and therefore only a smaller percentage will be covered. So whilst no other top flight sides have yet commented publicly on wage cuts, it would be a surprise if it didn't happen sooner or later, possibly in agreement with PFA Scotland. After all, Aberdeen have admitted they'll lose £1.2m a month as it stands.
We're also coming into the period of the year where season tickets for next season normally go on sale. Some clubs are already cracking on as per usual, hoping fans won't mind paying full whack even when it's not clear how many games they'll be watching and when they'll be. You'd think that sales will be markedly lower both for this reason and because plenty of fans have their own money worries right now.
So which clubs should we be concerned about?
All forty-two have at least cleared the first (admittedly, not very high) hurdle of paying March's wages, though some of the above-mentioned clubs may have implicated cuts as part of this. But we're only a fortnight into this. The situation will be far clearer in a month's time.
It is a bit simplistic but not entirely unreasonable to assume clubs who have a rich sugar daddy - the Dundee clubs, Ross County and Hibernian come to mind - have more resilience. And if you have £39million just resting in your account, you'll be fine. By the end of this, Peter Lawwell may be sleeping on a smaller pile of money, mind.
It might also be presumptuous to conclude Hearts are in trouble given their swift actions. Perhaps they're just the ones quickest off the mark. Or perhaps I'm being overly generous.
There's also the red, white and blue elephant in the room. It's only a few months since Rangers stated that they required £10m to get them through the season. Their Europa League run will certainly have helped there but it seems that hopes of significant outside investment have evaporated. There are still some very wealthy people involved there though who have not been shy of providing interest-free loans that end up as equity further down the line. And there's also a huge fanbase who will surely not hold back when season ticket sales commence.
So with a bit of common sense and a combination of prudence and government support, hopefully everyone will come out of this if not unscathed then only slightly wounded. Here's to hoping, anyway...
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
Tuesday, March 31, 2020
Wednesday, March 11, 2020
How coronavirus could affect Scottish football
In case you haven't noticed, Covid-19 (let's be a bit pedantic and call it that, since there are plenty of other coronaviruses of varying severity, including causes of the common cold) is coming. At the time of writing there are 27 cases in Scotland, but that number is going to increase impressively.
For what it's worth it seems to me (from my day job perspective as a GP) that the powers that be are dealing with things pretty appropriately at the moment. I'm not an expert in virology or epidemiology (or anything, really) but the advice they're giving right now makes sense to me. And the fact that said advice will change in the next little while as the number of infected people increases also makes sense.
It does now seems inevitable that some time soon the government will ban large public gatherings. Like, say, football crowds. After all, it's already happening in Ligue 1, La Liga and Primeira Liga. In Italy, where infection rates are higher than anywhere else in Europe, they've gone a step further; all Serie A matches have been postponed till the start of April.
It's not just the crowds that are the issue. The Premier League has postponed tonight's Manchester City v Arsenal game because Arsenal players have been exposed to someone with Covid-19 and are self-isolating. This will surely become a common issue and matches will have to be called off either one by one or probably en masse.
And if that's what the experts say should happen here, then so be it. Saving lives is rather more important than twenty-two men chasing a ball.
If/when that happens, there will be significant knock-on effects for Scottish football.
More than anywhere else in Europe, Scottish clubs are dependent on matchday income. Postponing matches means that they won't see that cash till further down the road. Playing them behind closed doors means no cash at all.
Football finance expert Kieran Maguire gave this take on how it will play out for English League One and League Two clubs, which is pretty comparable. By this time of year season ticket proceeds have been spent and clubs are dependent on what they can get from walk-up fans and away supporters, as well as food, programme sales etc. Not many have a rainy day fund to get through this sort of situation.
It's also possible that clubs will be obliged to refund season ticket holders for games they aren't allowed to attend. One would like to think that most supporters would take that on the chin, but you never know. Having to compensate them in any way would be extremely onerous.
It's certainly possible that a number of clubs who are already living hand-to-mouth - I'm mainly thinking of full-time teams in the Championship and League One - will be in a right fix. Will someone go bust? I hope not. But it must be a possibility.
The SPFL and SFA have already noted this. As it stands, their intent is to "endeavour to complete the season and fulfil their obligations under their broadcasting agreements". They said that a week ago. It seems wildly optimistic now.
If matches are to be postponed, when will they be played? Will they be played at all? What on earth will the SPFL do with the rest of the season? Here are the options that seem to be available. None of them are especially palatable...
SQUEEZE IN ALL THE POSTPONED GAMES BY THE END OF THE SEASON
Any matches that are called off are fitted in to the remaining available midweek dates. Everything finishes on time and it's all good.
The problems with this plan: the last day of the domestic season - the Championship playoff final - is 24 May, with the lower leagues finishing their 'regular season' on 2 May and the Premiership finishing on 17 May. If there is a significant fixture backlog, there aren't many dates available for catchup. And if call-offs start happening before the Premiership split, then that could cause a real headache for schedulers.
Chances of it happening: this is of course the ideal solution for everyone, but it seems increasinly unlikely circumstances will allow it.
FINISH THE SEASON EARLY
Bring forward the end of the season, and declare champions, relegation etc depending on positions at this point. Hearts strongly disapprove of this plan.
The problems with this plan: obviously there's an element of unfairness. It's also not clear how you would manage cup finals and playoffs in these circumstances. And clubs would miss out on income from their last few home matches.
Chances of it happening: there would be a significant outcry about 'sporting integrity' which would probably derail this. And the financial knock-on would also be a big problem. It is however the simplest solution, if not necessarily the fairest.
EXTEND THE SEASON INTO THE SUMMER
If matches aren't finished by the end of May, just keep playing into June...and onwards, if necessary.
The problems with this plan: for a start, plenty of clubs have players only contracted till the end of May or even a few weeks before that in the case of lower division teams. Broadcasting and sponsorship agreements also expire around that time. There's also Euro 2020 (if it goes ahead as planned) and the need for players to get an appropriate break before the start of next season which would normally be scheduled for mid-July.
Chances of it happening: this would probably cause as many problems as it would solve. Perhaps an option if other countries were doing it, but it would require major changes in the calendar for next season.
LOTS OF PLAYOFFS
The Italians have mooted deciding the title and relegation via playoff matches. It would certainly make for good TV.
The problems with this plan: Celtic are never going to agree to a playoff for the league, given their current points advantage. And how do you decide what teams should go into the relegation playoffs in any given league?
Chances of it happening: can't see it.
CALL THE SEASON OFF
Declare the 2019/20 season null and void. Don't award the league title to anyone. Don't have promotion or relegation. Start over next season with clubs in the same divisions they are now. Hearts strongly approve of this plan.
The problems with this plan: who wants to volunteer to tell Celtic fans that nine-in-a-row is cancelled? There are also repercussions for clubs such as Dundee United, who would be stuck in the second tier for yet another year having spent significantly to get up to the top flight.
Chances of it happening: unlikely, unless the rest of Europe is doing the same thing.
CANCEL RELEGATION BUT ALLOW PROMOTION
Get around the idea of stopping the season early being unfair on clubs at the bottom of the table by announcing relegation would be scrapped, but allow promotion to take place anyway so no-one is disadvantaged (much). Obviously it would be sensible to promote the team currently second in the Championship since the playoffs wouldn't happen (wink, wink).
The problems with this plan: you'd end up with having to deal with a 14 team top flight for at least a season, which would be a whole new issue.
Chances of it happening: pretty much zero, since only a half-crazed Caley Thistle-supporting blogger would even think of it, let alone support it.
In conclusion, this is going to be a real headache for Scottish football - and for football in general - to deal with. For us, it'll probably be a case of doing what England and other countries do. Normally I would grate at that, but in this case following everyone else's lead is probably the best way forward. That's assuming of course that everyone else agrees on a way to go forward.
And most importantly, if this is the price to pay for helping the country and the world get through this crisis, then so be it. Remember that Bill Shankly quote - "Some people think football is a matter of life and death...I can assure them it is much more serious than that."? Bear in mind that he was joking.
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
For what it's worth it seems to me (from my day job perspective as a GP) that the powers that be are dealing with things pretty appropriately at the moment. I'm not an expert in virology or epidemiology (or anything, really) but the advice they're giving right now makes sense to me. And the fact that said advice will change in the next little while as the number of infected people increases also makes sense.
It does now seems inevitable that some time soon the government will ban large public gatherings. Like, say, football crowds. After all, it's already happening in Ligue 1, La Liga and Primeira Liga. In Italy, where infection rates are higher than anywhere else in Europe, they've gone a step further; all Serie A matches have been postponed till the start of April.
It's not just the crowds that are the issue. The Premier League has postponed tonight's Manchester City v Arsenal game because Arsenal players have been exposed to someone with Covid-19 and are self-isolating. This will surely become a common issue and matches will have to be called off either one by one or probably en masse.
And if that's what the experts say should happen here, then so be it. Saving lives is rather more important than twenty-two men chasing a ball.
If/when that happens, there will be significant knock-on effects for Scottish football.
More than anywhere else in Europe, Scottish clubs are dependent on matchday income. Postponing matches means that they won't see that cash till further down the road. Playing them behind closed doors means no cash at all.
Football finance expert Kieran Maguire gave this take on how it will play out for English League One and League Two clubs, which is pretty comparable. By this time of year season ticket proceeds have been spent and clubs are dependent on what they can get from walk-up fans and away supporters, as well as food, programme sales etc. Not many have a rainy day fund to get through this sort of situation.
It's also possible that clubs will be obliged to refund season ticket holders for games they aren't allowed to attend. One would like to think that most supporters would take that on the chin, but you never know. Having to compensate them in any way would be extremely onerous.
It's certainly possible that a number of clubs who are already living hand-to-mouth - I'm mainly thinking of full-time teams in the Championship and League One - will be in a right fix. Will someone go bust? I hope not. But it must be a possibility.
The SPFL and SFA have already noted this. As it stands, their intent is to "endeavour to complete the season and fulfil their obligations under their broadcasting agreements". They said that a week ago. It seems wildly optimistic now.
If matches are to be postponed, when will they be played? Will they be played at all? What on earth will the SPFL do with the rest of the season? Here are the options that seem to be available. None of them are especially palatable...
SQUEEZE IN ALL THE POSTPONED GAMES BY THE END OF THE SEASON
Any matches that are called off are fitted in to the remaining available midweek dates. Everything finishes on time and it's all good.
The problems with this plan: the last day of the domestic season - the Championship playoff final - is 24 May, with the lower leagues finishing their 'regular season' on 2 May and the Premiership finishing on 17 May. If there is a significant fixture backlog, there aren't many dates available for catchup. And if call-offs start happening before the Premiership split, then that could cause a real headache for schedulers.
Chances of it happening: this is of course the ideal solution for everyone, but it seems increasinly unlikely circumstances will allow it.
FINISH THE SEASON EARLY
Bring forward the end of the season, and declare champions, relegation etc depending on positions at this point. Hearts strongly disapprove of this plan.
The problems with this plan: obviously there's an element of unfairness. It's also not clear how you would manage cup finals and playoffs in these circumstances. And clubs would miss out on income from their last few home matches.
Chances of it happening: there would be a significant outcry about 'sporting integrity' which would probably derail this. And the financial knock-on would also be a big problem. It is however the simplest solution, if not necessarily the fairest.
EXTEND THE SEASON INTO THE SUMMER
If matches aren't finished by the end of May, just keep playing into June...and onwards, if necessary.
The problems with this plan: for a start, plenty of clubs have players only contracted till the end of May or even a few weeks before that in the case of lower division teams. Broadcasting and sponsorship agreements also expire around that time. There's also Euro 2020 (if it goes ahead as planned) and the need for players to get an appropriate break before the start of next season which would normally be scheduled for mid-July.
Chances of it happening: this would probably cause as many problems as it would solve. Perhaps an option if other countries were doing it, but it would require major changes in the calendar for next season.
LOTS OF PLAYOFFS
The Italians have mooted deciding the title and relegation via playoff matches. It would certainly make for good TV.
The problems with this plan: Celtic are never going to agree to a playoff for the league, given their current points advantage. And how do you decide what teams should go into the relegation playoffs in any given league?
Chances of it happening: can't see it.
CALL THE SEASON OFF
Declare the 2019/20 season null and void. Don't award the league title to anyone. Don't have promotion or relegation. Start over next season with clubs in the same divisions they are now. Hearts strongly approve of this plan.
The problems with this plan: who wants to volunteer to tell Celtic fans that nine-in-a-row is cancelled? There are also repercussions for clubs such as Dundee United, who would be stuck in the second tier for yet another year having spent significantly to get up to the top flight.
Chances of it happening: unlikely, unless the rest of Europe is doing the same thing.
CANCEL RELEGATION BUT ALLOW PROMOTION
Get around the idea of stopping the season early being unfair on clubs at the bottom of the table by announcing relegation would be scrapped, but allow promotion to take place anyway so no-one is disadvantaged (much). Obviously it would be sensible to promote the team currently second in the Championship since the playoffs wouldn't happen (wink, wink).
The problems with this plan: you'd end up with having to deal with a 14 team top flight for at least a season, which would be a whole new issue.
Chances of it happening: pretty much zero, since only a half-crazed Caley Thistle-supporting blogger would even think of it, let alone support it.
In conclusion, this is going to be a real headache for Scottish football - and for football in general - to deal with. For us, it'll probably be a case of doing what England and other countries do. Normally I would grate at that, but in this case following everyone else's lead is probably the best way forward. That's assuming of course that everyone else agrees on a way to go forward.
And most importantly, if this is the price to pay for helping the country and the world get through this crisis, then so be it. Remember that Bill Shankly quote - "Some people think football is a matter of life and death...I can assure them it is much more serious than that."? Bear in mind that he was joking.
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
Thursday, March 5, 2020
Scottish football finances - 2020 edition
On the one hand, it must be noted that these figures are essentially a year old, as they are for the 2018/19 season. There can also be pretty legitimate reasons for clubs either losing money or not making as much as expected, such as investment in infrastructure.
On the other hand, we now have access to the 2018/19 season accounts for eighteen of Scotland's twenty-two full-time SPFL clubs (assuming no-one is counting Airdrie as full-time yet). We also have an idea of what's to come in two other sets. Of those twenty clubs, just eight turned a profit last season. Most of those eight come with a caveat of sorts as well. The rest were in the red, and in a number of cases spectacularly so.
That can't be healthy.
Today let's take a closer look at the twelve clubs that were in the 2018/19 Premiership. If I get round to it, I'll put up a further post looking at the state of play in the lower tiers.
SOME THOUGHTS FIRST
There's nothing to suggest that any of these clubs are in imminent financial distress (though as explained in the link further on the situation at Rangers is complicated to say the least). There are two areas of concern that I can see.
The first is what it takes for clubs to run a profit, full stop. It seems that, if a club finishes in the league position one would expect given their budget, only gets through a round or two in the cups and doesn't sell a player for at least a high six-figure fee - a realistic outcome, basically - they will lose money. I can't see how that is a good thing in the long-term. It also means that clubs are running to stand still, in that they are having to budget higher than they really should just to keep themselves at the level they are at, in the hope that they hit the jackpot in one of the above areas every so often.
The second is the potential effect of relegation. The experience of recently demoted sides is that turnover falls by about a third on going down. Long-term player contracts are not all that common at all but the biggest Scottish clubs so often a rapid cut in the playing budget is possible, but that in itself is rarely sufficient to deal with such a rapid drop in income. Those clubs struggling to break even as it is would face proper trouble if they ended up in the Championship.
(addendum - almost at the same time as this blog was published, this story about the potential effect of coronavirus on Scottish football clubs went up. Given the high dependence of gate receipts, I can absolutely believe this would cause significant problems.)
Onwards...
IN PROFIT
CELTIC
TURNOVER: £83.4m (2017/18: £101.6m)
PROFIT: £8.7m (2017/18: £17.3m)
Celtic made a profit of £11m on transfers in 2018/19, which meant they were still profitable despite their turnover taking a big hit from missing out on the Champions League. That's the way of it for them at the moment - either get to the Group Stage or make up the shortfall by selling a player, as they have done again this season with Kieran Tierney. The club also spent a decent amount of cash on infrastructure, such as (shudder) disco lights. With £39m in the bank as of last summer, they are in rude financial health.
HEARTS
TURNOVER: £15.1m (2017/18: £12.1m)
PROFIT: £1.6m (2017/18: £1.8m)
Hearts' staff costs for last season were £8.2m, which puts them fourth in Scotland. Whilst their profit looks impressive, they received £3.25m in donations and Ann Budge described it as "a challenging year on and off the pitch".
HIBERNIAN
TURNOVER: not known yet (2017/18: £9.5m)
PROFIT: £2m (2017/18: £214k)
That profit looks juicy for Hibs, who haven't yet published their accounts but had their AGM at the end of February. But it comes off £2.8m of profit in the transfer market thanks to the sale of John McGinn. New owner Ron Gordon said himself that "without the McGinn money, the club would have made a significant loss".
But Gordon has paid off the club's mortgage and invested a seven figure sum that leaves them with £5.5m in the bank. That looks like a pretty decent platform to build from. He has made it clear that he intends Hibs to be profitable going forward...but they all say that, don't they?
KILMARNOCK
TURNOVER: £6.6m (2017/18: £5.1m)
PROFIT: £126k (2017/18: loss of £180k)
Given Killie finished third in the table, I expected profits to be higher than this; if they had come fourth, they would have posted a loss. They do seem to have spent a fair bit on infrastructure - not least the laying of a new artificial pitch, and the wages to turnover ratio is fine. Apparently the budget was increased for this season, which means it will be interesting to see what effect a lower league finish and the binning of Angelo Alessio has on finances going forward.
LIVINGSTON
TURNOVER: not known yet (2017/18: £1.4m)
PROFIT: not known yet (2017/18: £46k)
I'm told by Livingston fans that Chief Executive John Ward has recently said the club made a small profit in 2018/19, but accounts have not been filed yet. Their turnover will have jumped spectacularly after their promotion to the Premiership
ST MIRREN
TURNOVER: £4.1m (2017/18: £2.8m)
PROFIT: £99k (2017/18: £77k)
It's notable that the Buddies made £1m from 'profit on disposal of player registrations' which in fact is their share of the fee for John McGinn's move from Hibs to Aston Villa. Without that, they wouldn't be in profit. That said the Buddies had to pay off Alan Stubbs too. And with the McGinn money coming in early in the season it's likely that it was added to the budget.
Promotion meant nearly half a million more in gate receipts and £600,000 more in prize money. The total wage bill for staff leapt from £2m to £3.2m which pretty much tied up the whole of the extra income. But they do have nearly £700,000 in the bank for rainy days. The club continues to plan for Fan Ownership, perhaps as soon as 2021.
LOSSMAKING
ABERDEEN
TURNOVER: £15.9m (2017/18: £15.4m)
LOSSES: £1m (2017/18: £800k)
The Dons increased their turnover, but increased their losses as well. That's due to a combination of another increase in the wage bill from £8.5m to £9.2m and finishing lower in the league. The good news is that new chairman Dave Cormack has brought in considerable new investment. On the other hand, the move to a new stadium at Kingsford could be delayed till 2023.
DUNDEE
TURNOVER: £3.9m (2017/18: £4.6m)
LOSSES: £1.8m (2017/18: £425k)
Eek. Dundee have run a loss every single year since Tim Keyes took over the club, and its just as well he doesn't look like turning off the money tap any time soon. Getting rid of two different managers, along with pretty much bringing in an entirely new squad for Jim McIntyre, cost a fortune. Relegation will only reduce income further, and their accounts explain that significant losses are expected for this season and the next, with Keyes underwriting those. That said, with several million quid spaffed up against a wall since 2013, your guess is as good as mine as to where the cash for their proposed new ground will come from.
MOTHERWELL
TURNOVER: £4.6m (2017/18: £6.8m)
LOSSES: £436k (2017/18: profit of £1.7m)
2017/18 wasn't as successful on the park as 2016/17, and it showed. The wage bill stayed the same but with no cup runs, reduced prize money and reduced player sales (which still totalled £700k, mind) turnover dropped by a whopping 35%. They also spent a significant amount of the previous year's profit on infrastructure. Going forward, 'Well have now paid off loans to John Boyle and Les Hutchison, which leaves them with only £80k in debt now. But its no surprise that the accounts state "it is imperative to the good health and sustainability of Motherwell" that the club continues to do well out of selling on players; hopefully that big fee for David Turnbull will come after all.
RANGERS
TURNOVER: £53.2m (2017/18: £32.6m)
LOSSES: £11.3m (2017/18: £14.3m)
I wrote about Rangers' financial situation when these were published a few months ago.
ST JOHNSTONE
TURNOVER: not reported (2017/18 - not reported)
LOSSES: £149k (2017/18 - £258k)
Chairman Steve Brown has been a right sad sack in recent weeks, claiming the club has the sixth highest wage bill in the country (I dispute this) and suggesting losses for 2019/20 will be much higher. St. Johnstone still had £2m in the bank as of last summer which should protect them from any problems in the immediate future.
NOT KNOWN
HAMILTON ACCIES publish truncated accounts, as is their wont because of their low turnover. My understanding (which may be wrong) is that they lost nearly £500,000 in 2017/18, mostly because of a vishing scam. The 2018/19 accounts should be better, especially with £240,000 from Aberdeen for Lewis Ferguson.
I hope this information is useful...and most of all I hope it is right! Please let me know any errors and I'll amend them.
PS Kieran Maguire, to be found on Twitter at @PriceOfFootball, is the place to go for analysis of club accounts and finances, and covers Scottish clubs just as keenly as English ones.
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
On the other hand, we now have access to the 2018/19 season accounts for eighteen of Scotland's twenty-two full-time SPFL clubs (assuming no-one is counting Airdrie as full-time yet). We also have an idea of what's to come in two other sets. Of those twenty clubs, just eight turned a profit last season. Most of those eight come with a caveat of sorts as well. The rest were in the red, and in a number of cases spectacularly so.
That can't be healthy.
Today let's take a closer look at the twelve clubs that were in the 2018/19 Premiership. If I get round to it, I'll put up a further post looking at the state of play in the lower tiers.
SOME THOUGHTS FIRST
There's nothing to suggest that any of these clubs are in imminent financial distress (though as explained in the link further on the situation at Rangers is complicated to say the least). There are two areas of concern that I can see.
The first is what it takes for clubs to run a profit, full stop. It seems that, if a club finishes in the league position one would expect given their budget, only gets through a round or two in the cups and doesn't sell a player for at least a high six-figure fee - a realistic outcome, basically - they will lose money. I can't see how that is a good thing in the long-term. It also means that clubs are running to stand still, in that they are having to budget higher than they really should just to keep themselves at the level they are at, in the hope that they hit the jackpot in one of the above areas every so often.
The second is the potential effect of relegation. The experience of recently demoted sides is that turnover falls by about a third on going down. Long-term player contracts are not all that common at all but the biggest Scottish clubs so often a rapid cut in the playing budget is possible, but that in itself is rarely sufficient to deal with such a rapid drop in income. Those clubs struggling to break even as it is would face proper trouble if they ended up in the Championship.
(addendum - almost at the same time as this blog was published, this story about the potential effect of coronavirus on Scottish football clubs went up. Given the high dependence of gate receipts, I can absolutely believe this would cause significant problems.)
Onwards...
IN PROFIT
CELTIC
TURNOVER: £83.4m (2017/18: £101.6m)
PROFIT: £8.7m (2017/18: £17.3m)
Celtic made a profit of £11m on transfers in 2018/19, which meant they were still profitable despite their turnover taking a big hit from missing out on the Champions League. That's the way of it for them at the moment - either get to the Group Stage or make up the shortfall by selling a player, as they have done again this season with Kieran Tierney. The club also spent a decent amount of cash on infrastructure, such as (shudder) disco lights. With £39m in the bank as of last summer, they are in rude financial health.
HEARTS
TURNOVER: £15.1m (2017/18: £12.1m)
PROFIT: £1.6m (2017/18: £1.8m)
Hearts' staff costs for last season were £8.2m, which puts them fourth in Scotland. Whilst their profit looks impressive, they received £3.25m in donations and Ann Budge described it as "a challenging year on and off the pitch".
HIBERNIAN
TURNOVER: not known yet (2017/18: £9.5m)
PROFIT: £2m (2017/18: £214k)
That profit looks juicy for Hibs, who haven't yet published their accounts but had their AGM at the end of February. But it comes off £2.8m of profit in the transfer market thanks to the sale of John McGinn. New owner Ron Gordon said himself that "without the McGinn money, the club would have made a significant loss".
But Gordon has paid off the club's mortgage and invested a seven figure sum that leaves them with £5.5m in the bank. That looks like a pretty decent platform to build from. He has made it clear that he intends Hibs to be profitable going forward...but they all say that, don't they?
KILMARNOCK
TURNOVER: £6.6m (2017/18: £5.1m)
PROFIT: £126k (2017/18: loss of £180k)
Given Killie finished third in the table, I expected profits to be higher than this; if they had come fourth, they would have posted a loss. They do seem to have spent a fair bit on infrastructure - not least the laying of a new artificial pitch, and the wages to turnover ratio is fine. Apparently the budget was increased for this season, which means it will be interesting to see what effect a lower league finish and the binning of Angelo Alessio has on finances going forward.
LIVINGSTON
TURNOVER: not known yet (2017/18: £1.4m)
PROFIT: not known yet (2017/18: £46k)
I'm told by Livingston fans that Chief Executive John Ward has recently said the club made a small profit in 2018/19, but accounts have not been filed yet. Their turnover will have jumped spectacularly after their promotion to the Premiership
ST MIRREN
TURNOVER: £4.1m (2017/18: £2.8m)
PROFIT: £99k (2017/18: £77k)
It's notable that the Buddies made £1m from 'profit on disposal of player registrations' which in fact is their share of the fee for John McGinn's move from Hibs to Aston Villa. Without that, they wouldn't be in profit. That said the Buddies had to pay off Alan Stubbs too. And with the McGinn money coming in early in the season it's likely that it was added to the budget.
Promotion meant nearly half a million more in gate receipts and £600,000 more in prize money. The total wage bill for staff leapt from £2m to £3.2m which pretty much tied up the whole of the extra income. But they do have nearly £700,000 in the bank for rainy days. The club continues to plan for Fan Ownership, perhaps as soon as 2021.
LOSSMAKING
ABERDEEN
TURNOVER: £15.9m (2017/18: £15.4m)
LOSSES: £1m (2017/18: £800k)
The Dons increased their turnover, but increased their losses as well. That's due to a combination of another increase in the wage bill from £8.5m to £9.2m and finishing lower in the league. The good news is that new chairman Dave Cormack has brought in considerable new investment. On the other hand, the move to a new stadium at Kingsford could be delayed till 2023.
DUNDEE
TURNOVER: £3.9m (2017/18: £4.6m)
LOSSES: £1.8m (2017/18: £425k)
Eek. Dundee have run a loss every single year since Tim Keyes took over the club, and its just as well he doesn't look like turning off the money tap any time soon. Getting rid of two different managers, along with pretty much bringing in an entirely new squad for Jim McIntyre, cost a fortune. Relegation will only reduce income further, and their accounts explain that significant losses are expected for this season and the next, with Keyes underwriting those. That said, with several million quid spaffed up against a wall since 2013, your guess is as good as mine as to where the cash for their proposed new ground will come from.
MOTHERWELL
TURNOVER: £4.6m (2017/18: £6.8m)
LOSSES: £436k (2017/18: profit of £1.7m)
2017/18 wasn't as successful on the park as 2016/17, and it showed. The wage bill stayed the same but with no cup runs, reduced prize money and reduced player sales (which still totalled £700k, mind) turnover dropped by a whopping 35%. They also spent a significant amount of the previous year's profit on infrastructure. Going forward, 'Well have now paid off loans to John Boyle and Les Hutchison, which leaves them with only £80k in debt now. But its no surprise that the accounts state "it is imperative to the good health and sustainability of Motherwell" that the club continues to do well out of selling on players; hopefully that big fee for David Turnbull will come after all.
RANGERS
TURNOVER: £53.2m (2017/18: £32.6m)
LOSSES: £11.3m (2017/18: £14.3m)
I wrote about Rangers' financial situation when these were published a few months ago.
ST JOHNSTONE
TURNOVER: not reported (2017/18 - not reported)
LOSSES: £149k (2017/18 - £258k)
Chairman Steve Brown has been a right sad sack in recent weeks, claiming the club has the sixth highest wage bill in the country (I dispute this) and suggesting losses for 2019/20 will be much higher. St. Johnstone still had £2m in the bank as of last summer which should protect them from any problems in the immediate future.
NOT KNOWN
HAMILTON ACCIES publish truncated accounts, as is their wont because of their low turnover. My understanding (which may be wrong) is that they lost nearly £500,000 in 2017/18, mostly because of a vishing scam. The 2018/19 accounts should be better, especially with £240,000 from Aberdeen for Lewis Ferguson.
I hope this information is useful...and most of all I hope it is right! Please let me know any errors and I'll amend them.
PS Kieran Maguire, to be found on Twitter at @PriceOfFootball, is the place to go for analysis of club accounts and finances, and covers Scottish clubs just as keenly as English ones.
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
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