SPL clubs record a collective profit for first time in decade

THE latest financial review of Scottish football's top flight has revealed that elite clubs in the country remain on the steady road to recovery.

Eight of 12 Scottish Premier League clubs recorded positive earnings in season 2006/07 and for the first time in over a decade a collective profit of £3million was posted. This is an improvement on last year's combined loss of £9million, when just six clubs were shown to have made a profit.

The 19th Annual Review of Scottish Football Finance by accountants PricewaterhouseCoopers plots a more optimistic course for Scottish football than its corresponding review did in 2004. Then the game in Scotland looked to be heading towards meltdown, with over half of the clubs in the SPL technically insolvent. Combined debt also stood at a hefty £186m. The latest review shows this has fallen to £105m, although the sum is an increase of £10m on last year.

The rise is due to larger losses posted by Rangers and Hearts. The latter club bore the largest loss of just under £13m. This was mainly due to a £12.5m wage bill, which vastly exceeds the club's £10.3m income for the year.

Set against this is the rise in combined turnover from £170m to £175m, which is a three per cent increase on last year. Two clubs – Falkirk and Inverness Caledonian Thistle – are shown to be operating without debt. Standing out alongside Celtic, whose qualification for the last 16 of the Champions League helped turnover reach a record-breaking figure of £75m, are Hibs. The Easter Road club recorded a similar turnover to Hearts of £10m but reported a wage bill of just £4m. This figure represents a healthy 41 per cent wage-to-turnover ratio.

Hibs also turned in a profit of just over £7m, due largely to the sales of Scott Brown and Kevin Thomson to Celtic and Rangers respectively. Indeed, the review highlights an increase in the net gain on combined player transfers from £4m to £18.8m – a rise of 350 per cent. Almost half of this related to the sale of five players by Celtic, including Stilian Petrov's £6.5m move to Aston Villa.

David Glen, a partner with PricewaterhouseCoopers, concluded that the picture continues to look bright for Scottish Football. Many clubs are now displaying shrewd business acumen together with restraint in the transfer market. He predicted that the game was in robust enough health to withstand the effects of the credit crunch. "There's been steady progress from the stories of financial disaster which we saw even as recently as four years ago," he told The Scotsman. "There is a first collective profit for over ten years and, more significantly, eight out of the twelve clubs have individually made a profit. You could have the situation where Rangers and Celtic put in a significant result and it all looks rosy, but then beneath this things might not look so good. This is not the case here. These are modest profits, but nevertheless clubs have got to the position from which they can build a sustainable business model.

"Even those clubs who made a loss – Aberdeen, for example, posted £500,000, and Dundee United just under £1m – they are not ridiculous figures, It is really only Hearts who buck the trend. The club's debt peaked at £36m, which is more than the Old Firm combined."

Hearts owner Vladimir Romanov has since converted £12m of existing debt into equity, in the form of shares. Hearts have also sold Craig Gordon and Roman Bednar to Sunderland and West Bromwich Albion respectively within the last 12 months. These transfers were worth a combined £11.5m and will be represented in the next set of accounts.

Glen is cautious not to offer the impression that everything has been remedied after the instability evident in the years either side of 2000. Both Dundee and Motherwell spent time in administration when in the SPL. Although Gretna, who were promoted to the SPL in 2007, do not feature in this report, Glen felt the club's desperate experiences had to be noted. "Such a significant event as the complete financial annihilation of a club cannot be ignored," he said. He did, however, describe the Gretna situation as being "unique". Few clubs with such a meagre infrastructure have relied so heavily on one investor.

"Let's not think everything is cured here," pointed out Glen. "We still have debt of £100m, but that's quite a difference from £190m, which we have seen in years gone by."

"Clubs have all stopped trying to out-do one another," he continued. "What you have ended up with is a more competitive league. The power is beginning to merge."

Club-by-club

ABERDEEN

"Turnover (had] an 11 per cent increase to £7.5m, largely due to a combination of broadcasting income being up, the improved SPL position and corporate sales income increasing."

CELTIC

"An extremely successful season resulted in a 31 per cent increase (£17m) in turnover to a record breaking £75.2m, a first for any Scottish club."

DUNDEE UNITED

"A marginal 3 per cent decrease in revenues was characterised by their stagnant ninth-placed league finish and early cup exits."

DUNFERMLINE

"Turnover increased for the first time in four years to £5.1m. results were strengthened by the inclusion of their conference and hospitality business which was previously operated as a separate entity."

FALKIRK

"SPL consolidation enhanced turnover, up 21 per cent to almost £4m."

HEARTS

"Opposing factors resulted in a negligible rise on last year's record turnover of £10.3m, coupled with season ticket sales having to be capped at 13,500 for the season."

HIBERNIAN

"Turnover increased by 13 per cent (£1.1m) in the year to £9.8m, this being their second successive season of strong growth. To underpin the healthy figures Hibs achieved record season ticket sales, up by 11 per cent to 10,500."

INVERNESS CT

"As Inverness filed abbreviated accounts, no information in regard to turnover was available."

KILMARNOCK

"Appearance in League Cup final, in addition to enhanced match-day revenues, helped to increase turnover by £700,000 to £8.1m."

MOTHERWELL

"A disappointing SPL campaign saw Motherwell finish in the bottom six once again, and resulted in a trifling increase in turnover of 2 per cent to £3.7m."

RANGERS

"A drop in sponsorship and advertising revenue of £8.2m was a direct result of no Champion's League football, and highlights the importance of participation in this competition. Overall turnover fell by £19m from the record high of £61m in 2005/06, however £17.2m of this drop is attributable to the aforementioned discontinued operations."

ST MIRREN

"Return to the SPL for the first time since 2001 witnessed an unprecedented 74 per cent increase in turnover to £3m. This increase can be attributed to a combination of increased attendances, up 48 per cent, and higher ticket prices."