TALK is cheap, but it seems as if Scottish football is finally matching words with deeds as it steps back from the precipice of complete financial disaster.
For the first time since it was launched 16 years ago, the PricewaterhouseCoopers annual review of the Scottish Premierleague has positive news to relate. While the figures remain more red than black, the report published yesterday suggests SPL clubs
have come to their collective senses and stopped chasing the dreams which took so many of them to the brink of ruin.
David Glen, senior partner of PricewaterhouseCoopers which compiles the most detailed financial analysis of Scottish football,
said: "This is the first year where, almost across the board, the figures are starting to go the right way. Losses are down, debt is coming down, wages are coming down, no-one is spending any money on transfer fees and income is going up. So, in relative terms and compared to what we have been used to, it is good news.
"This is the first year where it is pretty clear that clubs are addressing the situation. There has been plenty of talk in the past, but we are now seeing definite signs of action."
The report is based on the financial performance of clubs in the 2003-04 season and reveals the net debt of the SPL was estimated at £130 million, a 41 per cent reduction on the previous year. Underlying SPL losses were reduced by £28 million to £25 million. Turnover rose by £19 million to £173 million.
It is a trend Glen believes will be shown to have continued over the past 18 months and he is intrigued by the possible financial consequences of a sustained challenge to the Old Firm duopoly by Hearts and Hibs. Celtic, who replace Rangers as the club with the biggest wages bill in the new report, have suffered this season with their early exit from the Champions League.
"Celtic are big enough that they get through one season like this and it won't have too dramatic an effect upon them," says Glen, "but where they would find trouble is if they missed out on the Champions League season after season, because that is how both halves of the Old Firm are able to afford the player pools they have.
"That's the interesting prospect with the Edinburgh clubs mounting a challenge this season. Let's say Hearts made it to the group stage of the Champions League, they would double their income overnight. They currently have a turnover of around £7 million and they would earn the same again from the Champions League, so that is a dramatic impact for a club like Hearts.
"The other side of that is that someone else would be losing out and that would be Rangers or Celtic. Therefore, that extra competition makes it more difficult for the Old Firm to predict their income year on year. So, if you are not going to gamble, then you have to cut back on expenditure even more."
Glen feels the SPL would be in a position to negotiate a more lucrative television deal if consistent and serious opposition to the Old Firm emerge. "The last-placed club in the English Premiership gets £14 million a year from the Sky television contract," says Glen, "while Rangers and Celtic get £1.5 million a year from the current Setanta deal. In future, I think it must make the SPL more attractive if it is more competitive."
The financial madness which engulfed Scottish football is perhaps best summed up by the report's revelation that Dundee employed 297 people in season 2002-03, reduced to 86 by the administrators the following year.
"Administration is a hard process to go through, but it has worked for Motherwell, Dundee and Livingston who should be stronger clubs because of it," says Glen. "It was a huge wake-up call to other clubs like Dunfermline, who last year were forced to halve their player costs almost overnight. Clubs now realise that speculating to accumulate is a hell of a gamble and can leave you in real trouble if it doesn't pay off."
The full article contains 730 words and appears in The Scotsman newspaper.
