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What Relegation From The SPL Means


The impact of relegation from the English Premiership is a familiar story, but what about the implications of being relegated from its Scottish counterpart? The absence from the fixture list of matches against the Old Firm can create a serious financial shortfall for relegated clubs. Relegation leads to an almost immediate loss of £1.5m. Relegated clubs are provided with a £250,000 parachute payment by the SPL during their first season in the First Division, followed by £125,000 the following year. Contrast this with the situation in the English league where there are parachute payments of £11m for two years. If a club goes up for just one year and is then relegated, the additional income can amount to over £50m. If the club does not splash the cash on new players, outgoings will increase by a relatively small amount. In the Scottish league's recent history, only Dunfermline (in 1999) have been capable of dropping down and coming straight back up. Paisley's St.Mirren took five years to get back after being relegated in 2001. This absence almost destroyed the club financially and led to the sale of the Love Street ground to Tesco for £15m. With this money the club was able to clear its £2m debt and finance a new 8,000-capacity stadium at Ferguslie Park which should be available in 2009-10.

The club that finishes last in the SPL will receive a maximum of £720,000. This prospect is causing alarm at bottom-of-the-table Aberdeen, although the bookies favour Hamilton Accies to go down. Average attendances at Pittodrie, a stone's throw from the North Sea, were 12,000 last season, but for the quartet of Old Firm matches they went up to 16,547. Last year's accounts showed a 11 per cent increase in turnover to £7.5m, a figure that is expected to nudge £8m when the latest accounts are published. The last operating profit was a modest £62,000, following on two years of substantial losses and the club remains heavily indebted. The Dons hope to build a new ground on a greenfield site adjacent to Loirston Loch or at the King's Links. Last year's estimates of Pittodrie's worth as development land have taken a big hit since the spring. But Aberdeen is a prosperous city and the club could clear its debts if a joint venture with the city council to build a new stadium acquired fresh momentum. Banks which are partially nationalised may find it hard to turn their back on popular football clubs with lots of supporters who are also voters.