GLF 58: Graham looks at the latest review of the money facts in Scottish football.
FOOTBALL FINANCES
Recently the annual review of Scottish Football finances was published by PriceWaterhouseCoopers, and looks back at the state of affairs at the end of 2003/04 and, strange as it may sound, it makes some quite interesting reading.
One of the best statements in the introduction is ,“ The cold fact, is that Scottish football does not generate the sort of revenues needed to support our ambitions. ”.It then follows up this by saying, “ Putting some very crude numbers on this, outside of the Old Firm the SPL generates revenues of £46m. A sustainable wage bill would represent 55% of this number, ie £25m or £2.5m per club. Assuming a squad size of 25 players, this would support an average employment cost of £100000, or just under £2000 per week.”
This must surely put into perspective the ambition of football fans outside the Old Firm where,unless you have a Russian sugar daddy,wages will never attract players of the quality that some think we should.When you compare £2000 per week to some of the wages paid in the bottom half of the Championship in England ( or even League Two where David Partridge went ) you can therefore see who we are competing against.Whereas the Old Firm are competing against the middle to bottom half of the Premiership.
It’s also worth noting that the £2000 per week figure is an average for the 10 teams but it needs to be remembered that we are towards the bottom of the turnover table therefore our 55% will be much smaller than this!Our turnover for the period was reported as close to £3m, therefore a 55% wage bill would be £1.65m, giving us an average wage of about £1300 per week, showing what an outstanding job Terry Butcher is doing against clubs with higher wage bills.
The report also shows that our wage bill was closer to £2.1m, a decrease of £70k, but sitting at 70% of turnover. This actually means that to get the %age down to 60% we would need to reduce the wage bill by £638k!Or an additional £1.3m in revenue needs to be generated to get maintain the same salary bill.
It is even more remarkable when you think that we finished sixth in the table with the 11th highest turnover, with only Partick having a lower turnover than us.
On administration the report concludes that “For all the clubs concerned this has been a painful process but Administration has served its purpose.It has allowed the club’s to survive and come out the other end leaner and healthier.”
It did stop short of recommending administration as the
route for all clubs to follow.
There was also good news for Partick Thistle, “they topped the financial league having generated a profit of £72k. Unfortunately they were relegated at the end of the season.”
Later in the report it mentions that our turnover had actually fallen by 5% to the £3m mentioned above, which it claims was down to reduced gate receipts and other income while revenue from TV and radio increased.
It also mentions that the defeats to Forfar in the CIS Cup and Inverness in the Scottish Cup also made a dent in the financial performance.This also shows the importance of last season’s run to the CIS Final and this season’s semi final.
This is a bit stranger as it indicates later in the report that our average attendance was up!But having said that, this would seem to support the move this season to increase gate prices given that the low prices that we have tried to persevere with has failed to attract many through the gate.
In business if the turnover falls there are two things to do, firstly cut costs and the major cost in football is wages, and there is no doubt that has been done at Motherwell.Secondly look at ways of increasing revenue, and increasing the gate price is one of them.So is filling more of your seats, and that leads to the tricky subject of giving the Cooper to Old Firm fans, but I am not going to stir up that hornets nest.
Some of the debt figures shown in the report are quite scary as well, with Rangers sitting at £74m at the time, although this has been reduced by £50m with Murray underwriting a share issue.
Everyone else apart from ourselves and Thistle had debts of over £7m!With Hearts at £20m, Aberdeen £9m, Dunfermline £9m and Killie £12m.Surely these are not debts that can be sustained for any length of time. The Dundee and Livingston figures have been reduced as they come out of administration.
I know the situation I would rather be in is the one that we are in,with no major debt and any debt owed to one of our own, John Boyle, whereas many of the above are also in debt to the bank who may not be as patient or as tolerant!
The report also stated, “There was negligible expenditure on transfer fees”, the real understatement of the whole report!
The major transfers actually saw money come into the country, with Rangers getting £10.5m for Amoruso, McCann and Barry Ferguson and then paying out £250k for Gavin Rae. The other big movers were ourselves with McFadden and Pearson brining us £1.5m which helped us come out of administration. One other major transfer was Larssen to Barcelona which netted Celtic no fee at all !!
The report comes to the conclusion that much hard work has been done to get Scottish football back on an even keel financially but still has a long way to go, and who knows what casualties we will see on the way!
Graham Barnstaple.
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