SPL aims, shoots and scores to net historic financial goal

23/06/2009

The Scottish Premier League (SPL) has scored its largest ever recorded profit, collectively generating £23m during the 2007/2008 season, according to the Annual Review of Scottish Football Finance by PricewaterhouseCoopers LLP.  The news caps an exciting year for the SPL, which saw the Old Firm titans, with only one point between them, taking the title race to the last day of the season. 

Following a decade of losses and despite the tough economic environment, the positive action taken by clubs has resulted in eight clubs reducing their debts, two operating with no debt, and all but one recording either a profit or a near break-even position¹.

While the turnaround has been remarkable, the clubs are by no means out of the woods, as David Glen, partner at PricewaterhouseCoopers LLP, explained:

“The clubs have certainly shown some shrewd business acumen, for example in terms of player transfers which generated a gain of £28.8m, a dramatic rise of 53% year on year, however, there have also been some significant one-off factors including the sale of St Mirren’s Love Street ground, and solid performances in Europe. 

“These factors have helped to mask growing financial pressures most notably from the impact of rapidly diminishing corporate hospitality and sponsorship levels on club coffers as the corporate sector continues to tighten the reins on their discretionary spend.

“Next season the impact of the credit crunch could be even more severe.  As the recession tightens its grip, the clubs will be anxiously waiting to see if there is a decline in ordinary supporters buying season tickets.  Coupled with the possibility that they may loose their broadcast deal as Setanta’s future remains in jeopardy, or have the value significantly reduced, the next season will undoubtedly be a challenging one – and for some it will be a fight to survive.

“We may even see a number of firsts in 2009/2010, with clubs forced to take more drastic moves to keep their finances on an even keel such as reducing team sizes, exercising tougher transfer decisions, and perhaps even cutting player’s wages.  Fans may not like it, but with banks no longer willing or able to plug funding gaps as they have in the past, this is how it may have to be for the foreseeable future.”

 Pay to view

Setanta’s much publicised struggle to stay solvent and retain its broadcasting deals for the English Premier League and SPL was dealt a further blow as it missed the latest EPL payment deadline (22/06) and a potential deal with Access Industries fell through.  With the current SPL contract worth £13m per season, or close to £1m per club, and the forthcoming deal anticipated to have been in the region of £31m per season, the loss will be a bitter blow – particularly to smaller clubs as the current deal represents 20-30% of their income.  If Setanta is not able to fulfil its contract, the SPL will need to act fast to plug both the broadcasting and funding gap.

While 2007/2008 saw a 3% rise in spectators, last season saw levels fall by the same amount with average attendance at matches in Scotland pitched at 184,297.  While two thirds of the SPL had fewer people through the turnstiles - in particular Hearts, with a drop of 2,636 per match that could be partly attributed to the club’s early exit from the Tennents Scottish Cup - others did buck the trend, most notable Dundee United and Motherwell.

Credit before the crunch

The report reveals a positive trend with a rise in combined turnover from £196m to £170m (15% increase year on year) and an overall profit for the second season in a row of £23.4m (2007: £2.6m).  This is in stark contrast to the SPL’s free spending days at the turn of the century, during which it generated losses approaching £65m.  The total wage bill, however, increased by 16% to £112m with the Old Firm teams of Rangers and Celtic responsible for over half of this.

Meanwhile Aberdeen's finances – which saw a 71% rise in turnover to £12.9m, the highest ever recorded by the club - were partly driven by a 61% increase in gate receipts, primarily due to their impressive European run and their success in reaching both domestic semi-finals.  They were also commercially astute, increasing sponsorship and advertising levels by 55% on the back of their European performance.

Under the watchful eye of Walter Smith, Ally McCoist and Kenny McDowell, Rangers increased its turnover by an incredible 54% to record breaking £64.4m, partly driven by an increase in gate receipts and hospitality from £10m in 2006/07 to £35.9m.  The club not only reached its first UEFA Final in 36 years, but they won two domestic cups and participated in the lucrative Champion’s league.

David Glen, partner, PricewaterhouseCoopers LLP, commented:

“The next year will undoubtedly be tough for the SPL clubs as the recession continues to inflict damage. If the clubs are to keep their heads above water, there must be no room for complacency.  

They will need to work hard if they are to build on recent successes and safeguard the long term future of the SPL.”

Read The 20th annual financial review of Scottish Premier League football

Contact details
Email: Lynn Hunter
Tel: +44 (0)141 355 4015

Email: David Glen
Tel: +44 (0)141 242 7255