Scottish Football Clubs Under Pressure

As we have argued, football north of the border has taken a big hit from the credit crunch with proportionately more clubs under threat. The credit crunch came at a time when football clubs had finally started to make inroads into their debt. Most SPL clubs reduced their liabilities to some degree in the last financial year. Clubs had finally begun to budget properly and many of them had got back to break-even point. Now clubs face a new challenge from the credit crunch. Supporters perceive that they have less disposable income, or at least need to set more aside for a rainy day.

As we have argued, football north of the border has taken a big hit from the credit crunch with proportionately more clubs under threat. The credit crunch came at a time when football clubs had finally started to make inroads into their debt. Most SPL clubs reduced their liabilities to some degree in the last financial year. Clubs had finally begun to budget properly and many of them had got back to break-even point. Now clubs face a new challenge from the credit crunch. Supporters perceive that they have less disposable income, or at least need to set more aside for a rainy day. Corporate customers are even more constrained and even if they have funds are concerned about pushing the boat out when times are hard. They may therefore opt for cheaper hospitality options, something that is happening on both sides of the border. Clubs with high levels of historic debt could be in danger. These include Hearts with an estimated £25m debt, Kilmarnock with £11.5m and Aberdeen with £6.5m. Larger clubs benefit from season ticket sales, but the smaller provincial clubs that rely on people turning up on a game-by-game basis may be hit hard over the next few months. Even a club that loses 500 fans in the last six home games before the SPL split faces a loss of £60,000 and, in the Scottish context, that’s a lot of money.

Even Rangers are not immune from the downturn. Debts of £74m were reduced to £22m by last June, but failure to qualify for the Champions League cost the club in the region of £12m. Barely a week goes by without another rumour of Hearts entering administration. Smaller clubs like Livingston have complained about the extent to which they are the subject of speculation. The problems on both sides of the border are not so different, but Scottish football has less of a cushion provided by a big television contract to fall back on and no ‘trophy asset’ clubs on the English model.

CALL FOR SPL 2 – 15/1/09

Former Dundee chief executive Dave MacKinnon believes that the best option for the financial viability of full time football in Scotland is the formation of an SPL Division Two. He said, ‘The problem you have got is that, if you don’t remain full time, you will end up being relegated. Clubs like Morton, Dundee, St Johnstone and Dunfermline, have a fan base and ambition, and should be playing at a higher level. All fans want their club to play at the highest level … But that means they have to live beyond the income generated by gates and money from the Scottish Football League. That gap [between income and expenditure] can be anything between £300,000 and £500,000. The only way any First Division club can sustain full time football is by plugging that by investment from the board or a benefactor, by selling players or by income from cup ties.’

MacKinnon forecast, ‘If there are no changes in the SPL set-up for next season or the one after that, then I believe some First Division clubs will have to go part-time.’ That, McKinnon believes, would be very harmful to those clubs. ‘The gap between First Division and SPL clubs is big now. It would be huge if First Division clubs had to go part-time.’ The introduction of a SPL 2 would mean that what McKinnon terms as ‘community clubs’ in the third tier of Scottish football, who attract a few hundred fans and pay low part-time wages, would have to find their own level within the game. This might involve the introduction of a pyramid system on the English non-league model.