Dunfermline Athletic

A new dawn for fair play

Tuesday, 13th Aug 2013

Scottish football facing further financial difficulties

Scottish Football has a future
 
Almost two thirds (60%) of SPL teams believe their financial situation could be better while a further 20% state that their finances are in need of attention according to the latest annual football survey by accountants and business advisers BDO LLP.  This compares to 48% and 17% respectively among all of the leagues.
 
The survey, entitled 'A new dawn for fair play', questioned the finance directors of 66 teams from the Scottish Premier League (five out of twelve teams in Scotland participated and the survey was conducted before the leagues became the SPFL), English Premier League, Football League Championship, and Football Leagues One and Two.

East End Park by photographer Craig Brown

SPL clubs are the most optimistic in terms of predicting profitability for the coming season with 60% believing they will make a profit after player trading and depreciation. Just 42% of EPL clubs believe they will be profitable with an average of 29% across all leagues.
Charles Barnett, professional sports group partner at BDO, commented:
"After a year in which both Hearts and Dunfermline Athletic fell into administration it is welcome news that a large proportion of SPL clubs believe that they will be profitable in the coming year.  It is also interesting to note that, when compared with other leagues in the UK, revenues of SPL clubs have not been adversely affected by the loss of Rangers.  Last year many observers, including this survey, felt that SPL clubs might experience a decline in income due to the loss of Rangers.  However, this hasn't happened over the last season."

Rangers v Dunfermline

There are welcome signs that Scottish football has absorbed some important management lessons with 80% reporting they use the wages to turnover ratio as a key performance indicator of the club's financial health compared to just 44% across all leagues. However, of concern is that just 20% meet the recommended ratio below 55% with the remainder coming in under the maximum accepted level of 65%. In the EPL 33% operate below 55% although, of greater concern, 29% operate above 66% .
 
Charles continued:
"It is encouraging that almost all clubs recognise the need to use key performance indicators in assessing the finances of their club. There are signs that clubs are making an effort to control wage costs but they still have some way to go. No Scottish teams reported they would increase the size of their first team squad in the coming season with 40% stating it would be the same and 60% stating it would be smaller. In actual wages 20% said they would spend the same with 80% stating they will spend less. The fans never like this but it must be the way forward if Scottish football is to remain viable in the future."

Tynecastle

This year 40% (down from 67% last year) of SPL clubs said they were dependent on principal shareholders to finance annual revenue shortfalls or operating losses. This improvement is interesting although it is also noteworthy that 20% of owners are considering an exit within a year to 18 months and 40% reported formal or informal approaches from external parties interested in taking an equity stake in the club.
Charles explained:
"Football clubs appear to be as attractive as ever to external investors. This is both a strength and a weakness for the future financial security of football in general. Interested parties who invest enthusiastically often want out after a few years when the financial realities of running a football club hit home. It is good that individuals and organisations are enthusiastic but this should always be tempered with a degree of financial reality."

TV Camera

The biggest financial concern for Scottish clubs over the next 12 months was falling attendances due to the current economic climate with the potential fall in TV income second. Inflexible players' salaries; loss of income from relegation; the ability to raise new capital; and the ability to attract sponsorship were all rated equally as a financial concern. One fifth (down from 33% last year) of SPL clubs reported being late on more than one occasion with payments of taxes which includes corporation tax, PAYE/NIC or VAT.

Dens Park Dundee

The greatest impact of the economic conditions on revenue streams has been on match tickets with 60% of clubs reporting a fall in income. Forty per cent reported falls in sponsorship, season ticket sales, match day catering and corporate entertaining. However, there is optimism for some clubs with 60% believing that the coming season will see improved season ticket sales, match day ticket sales, merchandising and match day catering making the SPL the most optimistic of all the leagues surveyed for improved revenue streams.

Directors dafc web

Charles commented:
"We don't yet know what financial impact there will be for clubs from the change in the structure of Scottish football to the SPFL or, indeed, of the arrival of BT as a newcomer into the broadcasting market. There is also the issue of sponsorship for the SPFL which remains undecided. This may provide a welcome financial boost in the future but, equally, it is of great concern that, with the season already started, there appears to be limited interest in sponsoring Scottish football. Hopefully this will be resolved soon and provide some additional funding and welcome stability for the SPFL."

Main Stand Fence Pic

Charles concluded:
"There are clearly some deep rooted difficulties in Scottish football which may take some years to work through. The excesses of the last decade or so are still working their way through the Scottish football sector. Wages which were allowed to grow beyond any realistic ability to fund them and owners refusing to cut costs despite falling revenues due to the declining economy have left many clubs facing insurmountable debts which they are barely able to service.
 
"With gate receipts subdued and revenue streams limited it is clear that many clubs continue to exist on a financial precipice where generating funds from the sale of a star player will save a club but an unexpected additional expense might push them over the edge. We are at a crossroads for Scottish football but there is one fundamental positive outcome of the last year. The fan base for many clubs remains fantastically loyal and, as can be seen at both Dunfermline Athletic and Hearts, will rally round to support their club at whatever cost. This means that Scottish football, despite the controversies and the difficulties, has a future."
 

Hampden Park

 



Views : 2,465


Advertisement :
/files/SHOP_WEBSITE_5832.jpg
Premiership Play Off
SPFL Premiership play-off quarter-final, 2nd leg v Raith Rovers. Saturday 8th May 2021, kick off 3.00pm at Stark’s Park
  • /files/youngpars_2016_9593.jpg
  • files/00661250_SGV_Test_&_Protect_110x149mm2_8647.jpg
  • /files/pstwebsitead_0172.jpg
  • /files/KiltCompany_280_2285.jpg
Archives
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1991
1986
1979
1968
1965
1962
1961
1960
1957
1949

To top