Tony Mowbray is blamed as Celtic pay the price of failure with £2m loss

CELTIC have seen their debt rise to almost £6 million, the first time it has increased in six years, as they count the cost of Tony Mowbray's brief but ill-fated tenure as manager.

• Tony Mowbray: Unhappy spell

The financial picture did not stop Celtic from adding to their squad yesterday, with the acquisition of Swedish international defender Daniel Majstorovic. But the club's annual accounts for the period ending on 30 June this year revealed a worrying loss of 2.13 million, compared to a profit of 2 million made 12 months earlier.

Exceptional costs of 3.14 million, incurred mostly by early termination of the contracts of Mowbray and his assistants Mark Venus and Peter Grant in March, contributed to the turnaround from profit to loss according to Celtic chairman John Reid who described last season as "simply not good enough".

Failure to reach the group stage of the Champions League last year was the major factor in Celtic's turnover slumping by 15 per cent to 61.72 million, the lowest figure since their last absence from the tournament back in 2005-06. The bank debt of 5.85 million, up from 1.51 million last year, is the first rise recorded since 2005.

Reid also cited the investment of 13.64 million in new players under Mowbray, compared to 8.53 million in Gordon Strachan's final season in charge, as a reason for the adverse figures. He does not see the level of debt as a cause for undue concern, however, as Celtic look to Neil Lennon to avoid a repeat of the failures suffered under Mowbray.

"The debt is sustainable, it's not out of control or anything of that nature," said Reid. "We are prepared to spend money and get into debt if it is sustainable and doesn't put the club into danger.

"It's public knowledge that in hiring a new management team and parting with the new management team, there are costs involved. If it weren't for those costs, we would have equalled last year's figures.

"We invested significantly in the playing squad, particularly in January. The unacceptable results on the football pitch meant that a change in the football management team was needed. It was simply not good enough for this club and those who support it.

"It was to be a new beginning last year, but it was a false start and I accept responsibility for that. The board accepts responsibility and, as chairman of the board, I accept responsibility. At the time, especially among the fans, it was seen as a good appointment. But we have moved on from that.

"I also accept responsibility for the appointment of Neil Lennon. Whoever is appointed as manager of a club like Celtic, there is a gamble attached to it. But in Neil Lennon, we have a potentially great manager at Celtic.He's a motivator and a leader, he knows the club."

Celtic's elimination from this season's Champions League in the third qualifying round at the hands of Braga earlier this month means that they will face an additional financial shortfall in the year ahead. With season ticket sales down from over 54,000 in 2008-09 to 48,000 last season, Reid anticipates a further drop this year.

"Our financial strength and management of resources has stood us in good stead to date and we aim to ensure that remains the case," he added. "But the general picture of a constrained economic environment places a further premium on success throughout our scouting, sports science and academy development.

"In the coming year, our trading will also be put under greater pressure than has been the case for some time and the performance of our football management team and players will be placed under even more scrutiny that normal."

Celtic's accounts do not include the sale of Aiden McGeady to Spartak Moscow for a reported fee of 9.5 million and Reid reiterated that Lennon