Credit crunch taking its toll on Scotland's leading clubs

SCOTLAND'S top football clubs are feeling the effects of the credit crunch, according to research by leading accountants and business advisers PKF.

The firm's annual survey of football club finance directors, entitled 'Under Pressure', found that SPL teams were suffering from a decrease in ticket sales, merchandising and corporate entertaining as a result of the current financial climate.

The three main sources of income for SPL teams remain ticket sales; TV and radio deals; and sponsorship.

Charles Barnett, PKF partner and author of the report, explained: "This year's survey shows clear signs that the credit crunch and the overall economic downturn is starting to have an impact on Scotland's football teams. SPL teams are stating that the credit crunch has had an impact on ticket sales, merchandising and corporate entertaining.

"A quarter say that they are under increasing pressure from their banks and are finding it more difficult to source finance.

"Yet pressures from the fans remain for improved performances on the field despite projected lower revenues to pay for it all. There are clear indications in the wider economy that belts are being tightened and people are looking around for bargains. Football teams have great difficulty in reducing their ticket prices because of long-term trends in player's wages which make up half to 60 per cent of overall costs of running a team.

"Therefore there is a potential collision ahead as teams attempt to maintain performance amid falling revenues and pressure from lenders to manage debt.

"We are clearly in unusual times where we are facing difficult challenges and football is not going to be immune from the current economic downturn. The teams in all leagues need to monitor their finances and ensure they are fit to survive the next couple of years and be ready to benefit when the economy starts to pick up."

Half of SPL clubs said their sponsorship revenue had not increased while a quarter claimed to have been under more pressure from their bank in the last year and three quarters said they were finding it harder to source finance.

A quarter of Scotland's top-flight sides admitted they have had to look at downsizing their first-team squad as a result of the troubles. while half of the clubs said their payroll costs for the first team would be higher.

According to the survey, however, the financial uncertainty has not been responsible for a slowdown in transfer activity as every SPL club insisted their transfer budget would remain the same..