The digital goal kick

Published on 29/04/2002 01:00

WHEN Prince Charles recently walked into a children's home in Puebla, Mexico, he was greeted by the sight of two boys dressed in Celtic strips. It was a reminder of the potency of Celtic and Rangers as world wide brands. Between them, the Old Firm boast annual turnovers of between £40 million and £60 million, while the others ten members of the disintegrating Scottish Premier League have an average of only £6 million.

Rangers and Celtic have given Glasgow much of its emotional life and identity, not all of it happy. But these days, the ancient sectarian feuds have given way to big business and another set of rivalries. Even twenty years ago, the idea of running football as a business seemed utterly bizarre. The beautiful game was simply a sport, with fans, players, managers - and financial benefactors in sheepskin coats. Today, clubs are listed on the stock market where their financial fortunes matter as much as their goals.

When he arrived in March 2001, Celtic’s new chief executive Ian McLeod declared that his job would be to hold down costs and boost revenue. He sounded just like the CEO of a high tech company or a bank. Not surprisingly because he was formaly chief merchandising officer of the British end of Wal-Mart, the world's biggest retailer.

But Celtic's success on the field last year was mirrored by a share price plunge of around 50 per cent over the same period. For the half year to the end of December 2001, Celtic posted a meagre 3.9 million profit. Old Firm rivals Rangers did little better. After benefiting greatly from the largesse of property developer David Murray, the club’s market value dropped 75 per cent after August 2000.

The reason for this odd state of affairs is the Television Game. Over 85 million was pumped into British football last year. But competition forced the clubs to shell out ever more of this sponsorship on expensive players rather than profits. Although he claimed financial prudence, Ian McLeod's first act at Celtic was to raise the weekly wage of striker Henrik Larsson to 40,000.

Now advertising has slumped and the television money has dried up - viz the collapse of ITV Digital. Result: in Scotland, Rangers and Celtic have shocked their SPL partners by ditching plans for a joint digital pay television channel in favour of going it alone. Regardless of the impact on Scottish football - which is a separate story - the move implies that the Old Firm are at last bent on entering the big time as global brands.

And that could be good for Glasgow, if nobody else. If the Glasgow clubs were part of a European League, it would go a long way to putting the city on the European map in a more permanent fashion, perhaps stimulating more direct flights from the city’s airport. According to McLeod: "We have a very strong international brand. Until now, it has been largely contained within the west of Scotland, so our job is to develop it across the world on the back of our success. I would like to see more tangible evidence of the Celtic diaspora."

Certainly, Glasgow’s public agencies are beginning to grasp the potential in sporting fixtures for boosting the visitor industry. Some 52,000 tickets have been sold for May's Champions League Final which is being held in Glasgow, most of them to non Glaswegians. Experts believe the Glasgow economy could benefit by as much as 22 million for the first European final in the city in 25 years, and the council is determined to turn the event into a "Festival of Football".

CELTIC

CELTIC’S most recent financial results show just how much results on the field matter for more than just the delight of the club’s fans.

A league championship and a first appearance in the lucrative Champions League have led them to a pre-tax profit of 3.1m in the six months to 31 December 2001.

The Parkhead club’s turnover was up by 50 per cent on the back of a rise in merchandising sales and as a result of this the club’s debt was reduced to 11.5m from close to 30m. However, chairman Brian Quinn has said that that figure will have risen over the six months since then as the club pays up instalments on some of its players purchases.

Manager Martin O’Neill has achieved great things at the club thus far but it is worth questioning how much further he can take the club without further monies, which do not look to be forthcoming.

RANGERS

RANGERS football club has made it clear it will have to cut its spending next season after it announced 13.2m pre-tax losses at the end of March. This is despite the fact that on the pitch the club had its best run in Europe for nine years, making it past Christmas before its exit from the UEFA Cup competition.

A black picture of the financial situation was painted earlier this year by Hugh Adam, a former chairman and managing director of Rangers Development and Rangers Pools. Adam made the shock decision to sell his 59,000 shares in the club after claiming that club chairman David Murray’s policies were driving their value down.

However, Murray dismissed this view. At the time of the results he said he was "happy with the situation" adding that he was confident Rangers would break even next year.