Analysis: Case of hope for the best but plan for the worst
WHILE the SFL vote has resolved a significant question, it results in a period of financial uncertainty for clubs across the SPL and SFL.
The most important revenue stream for Scottish football clubs is ticket revenue. Although SPL clubs will suffer the loss of one or two lucrative home ties to Rangers, it would only require a relatively small percentage increase in average home fan support to negate this revenue loss.
Fans who have been strong to support their club’s stance on the Rangers newco position can now demonstrate that support through match attendance. Increased attendances can also be justified by a more competitive league.
As for SFL clubs, individual leagues will benefit from the Rangers visiting support.
The biggest potential shortfall in income lies in commercial sponsorship, with both Sky and the Clydesdale SPL sponsorship due for renewal next season.
Aligned to this will be ancillary sponsorship deals at a club level that could suffer.
On the face of it, one would assume revenues from these sources will suffer at an SPL level for the period of Rangers’ absence from the Premier League, and the impact at a club level could run to several hundred thousand pounds.
This level of loss will cause hardship, but it does not need to lead to the inevitable financial collapse of individual clubs.
Club boards need to make contingency plans now and plan for the worst-case scenario, ensuring they go into next season with an appropriate cost structure to reflect the reduced sponsorship money.
Squads will need to be rationalised, but this will ensure the financial stability of the clubs.
At an SFL level, the financial impact will depend on what, if any, restructuring of payments to the SFL the SPL may push through. It is here that perhaps the greatest uncertainty lies.
If the SFA and SPL pursue a league reconstruction that involves a tier-two SPL, the long-term financial implications for both current SPL and SFL club could be significant, depending upon membership of the newly created SPL structure.
• Neil Patey is a partner in the transaction advisory service at Ernst & Young in Edinburgh.
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