Dark days ahead for debt-ridden Scottish clubs
Dunfermline the latest club under threat of administration as the SPL encounters massive financial hardship
Friday 13 February 2004
Sponsors, whether on club shirts or trophies, come and go. The Bank of Scotland, however, may yet rue the day that it put its name to the Scottish Premier League.
Soon, the bank's sponsorship agreement with the SPL will come to an end. The only question is not about the deal being renewed, but if there will be a league left for it to sponsor.
Like others leagues across Europe, the SPL is facing severe financial problems. Television money has dropped by 60 per cent and attendances are down. The only thing going up is the number of clubs in administration: the figure stands at three, but it could rise to four very soon if the players of Dunfermline Athletic refuse to take a wage cut.
The grim statistic of 25 per cent of clubs in the 12-team league currently being run by accountants will hardly help sell the SPL to potential sponsors. However, sponsorship is the least of its problems: survival is far more important.
A collective debt of £190m hangs over the SPL. Clubs got into that black hole by paying exorbitant wages on the back of a television deal that is no longer around. Now it is the fans of Motherwell, Dundee, Livingston, and possibly Dunfermline, who are picking up the tab as their once solid clubs are close to the wall with no saviours in sight.
"Anything is better than going into administration," said the Dunfermline manager, Jimmy Calderwood, whose own salary will be reduced by 30 per cent.
Livingston are pursuing the same idea. Six players were sacked on Tuesday by the administrator and another six have been asked to take a drop in wages. Other clubs had already embarked on pruning their wage bill last summer by making take-it-or-leave-it offers to those fortunate few deemed worthy of having their contracts renewed.
It may be unpalatable medicine, but it is less severe than administration, as Dundee and Motherwell have discovered. There were 15 players sacked when Dundee took that step in December after running up debts of £20m; Motherwell were the first to go down that road, in April 2002 after their millionaire owner, John Boyle, called time on losses of £11m.
Motherwell's wage bill, which had been hijacked by big earners such as the former Scotland players John Spencer and Andy Goram, had reached 97 per cent of turnover before it was trimmed back from £5m to £900,000 by the administrator. Terry Butcher, the manager, has turned to the club's youth system, but two of the brightest talents, James McFadden and Stephen Pearson, were sold to Everton and Celtic respectively.
However, there seem to be plenty of clubs waiting to take their place. Hearts owe £17.6m, despite Craig Levein jettisoning almost every high-earner in recent seasons and selling Colin Cameron and Antti Niemi, transfers which netted £3.5m. The only way out, the board claims, is to sell Tynecastle to cash in on Edinburgh's high property values and rent nearby Murrayfield, a barn of a place with 67,000 seats. Hearts fans do not want to move. Chris Robinson, the chief executive, and public enemy number one, insists: "If we don't leave Tynecastle, this club will die."
Across the city, Hibernian have taken action to trim their wage bill. They sold their car park for £10m, which will reduce a £14.5m debt. Kilmarnock owe £10m, with turnover barely half of that, but they built a hotel on their nearby training pitch to add £3m to their turnover.
Rangers began the domino effect with the heavy spending on transfers and wages in Dick Advocaat's reign. Record debt of £68m has been exacerbated by the collapse of the transfer market. Celtic's debt of £17m is tied up in loans to rebuild their 60,000-seat stadium, but with turnover of £60m, the club's recent policy of not spending heavily on transfers has helped.
For the only model of prudence, you have to head back across Glasgow, but to Firhill, not Ibrox. Partick Thistle have debts of £300,000, but the lowest wages of the SPL (of just £500 a week) are reflected in their bottom place in the table.
Where did it all go wrong? In 1998 when the SPL was launched the combined debt was barely into double figures. Scotland's top tier actually made a profit in 1995-96. By 1999-2000, the debt had risen to £44m. A year later, it was £132m. Things were about to get worse. The SPL rejected Sky's offer of another £45m, four-season deal, expecting a better offer that never came. It had to make do with £18m from the BBC over two years.
"The amount paid to players is a huge factor in the problems," Lex Gold, the chairman of the SPL, said. "The clubs did that based on a certain level of television income."
However, there is little sympathy for misguided chairmen. "We cannot bail out insolvent clubs," David Taylor, the chief executive of the Scottish Football Association, said. Fraser Wishart, the secretary of the Scottish Professional Footballers' Association, is equally dogmatic: "We must get a licensing system where you must have enough money to cover your budget for the season. We must never get into this mess again."
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