Celtic revealed a 15 per cent drop in annual turnover yesterday along with an increase in bank debt of more than £4m – a financial performance partly attributed to "unacceptable results" on the field under Tony Mowbray.
The Parkhead club posted a loss before taxation of £2.1m after making a profit of £2m the previous year. Turnover dropped to £61.7m and net bank debt rose to £5.85m in the year to 30 June, according to the club's preliminary financial results.
Celtic's chairman John Reid claimed that the team's fortunes under the previous manager Mowbray, who departed in March after a 4-0 defeat at St Mirren all but handed Rangers their second successive Scottish Premier League title, were partly to blame for the financial downturn.
"The unacceptable results on the football pitch meant that a change in the football management team was needed," said Reid. "Some pride was then restored from an unbeaten run in the SPL at the end of the season, with Neil Lennon taking temporary charge. But that does not in any way compensate for the extreme disappointment and frustration we and all Celtic supporters felt last season.
"It was simply not good enough for this club and those who support it. Fortunately, the relatively strong financial position we have insisted on maintaining in recent years has enabled us to continue to rebuild even after last year's setback."
Reid continued: "Our turnover was well down on the previous year. This was predominantly the effect of participation in the Europa League rather than the Champions League but also due to a lower level of season-ticket sales, reduced merchandising revenues from one kit launch rather than two, and a drop in domestic media income following the demise of Setanta."
Reid revealed that operating expenses had fallen by more than £4m but that the extensive changes in the playing staff had contributed to the deficit over the year and the increase in the "sustainable" bank debt.
Celtic's wage bill decreased by more than £2m to £36.5m but that represented an increased ratio to turnover of 59.1 per cent.
Reid warned of further financial struggles ahead with season-ticket sales expected to fall again, placing manager Lennon under increased pressure to deliver on the pitch.
He said: "When considered in the context of the season that we had, and the changes that had to be made as a result of poor football results, this outcome, heavily influenced by exceptional costs, is not overly disappointing. But we must try to ensure that it is not repeated in the coming year.
"That will not be straightforward. Some of the major factors that are likely to affect our business, such as the economic environment and consumer confidence, are not within our control. The economic context of Scottish football obviously also has a direct commercial impact on the club and our supporters."
Lennon, meanwhile, has suffered an early-season blow after his summer signing Gary Hooper was ruled out for up to six weeks with a calf muscle tear. The 22-year-old sat out the opening Premier League victory over Inverness on Saturday after suffering the injury during a pre-season friendly against Blackburn.
The former Scunthorpe striker will be out for Celtic's Europa League play-offs against FC Utrecht and their opening group game should they progress. Hooper also looks set to miss the league matches against St Mirren, Motherwell and Hearts and could well struggle to make the following games against Kilmarnock and Hibernian. The injury to Hooper's left calf has disrupted a promising start to his Celtic career following the forward's move from Scunthorpe for around £2m.
The Essex-born striker scored in his first pre-season game against Lyon before marking his competitive debut with a goal against Sporting Braga in the Champions League third qualifying round. Lennon had high hopes for Hooper, who struck 50 times in two seasons for the Iron.
The manager's front pair at Inverness, Georgios Samaras and Shaun Maloney, both performed well but passed up a host of chances to make the 1-0 victory more convincing.