CONCERNS are growing over the finances of Scottish football after it emerged that half of SPL clubs struggled to meet payment deadlines for HM Revenue and Customs last year.
A survey of club finance directors revealed many teams had difficulty in making statutory payments for VAT, corporation tax and National Insurance contributions.
The study, conducted by accounting firm PKF, also showed many clubs continue to operate under “excessive” debt levels, with 44% requiring shareholder or director guarantees for funding.
A fall in match attendances, television income and sponsorship were revealed as major concerns in the coming season and have resulted in fewer new players and smaller first team squads.
Charles Barnett, head of PKF’s Football Industry Group, said football clubs are in the “financial doldrums”.
He said: “It is clear this has been a tumultuous decade for the game and there remain many serious problems facing the financing of football in Scotland.
“The latest survey reveals that football, like any other business, is not immune to the continuing impact of the recession.
“When times are hard discretionary spending is reduced and it is perhaps inevitable fans will cut back on spending.”
The survey revealed around half of SPL clubs saw a drop in season ticket sales in 2010/11, with 40% expecting a further reduction in 2011/12.
Three-quarters of the clubs are also operating with a smaller first team squad, with the other quarter staying the same.
Mr Barnett said limiting spending on new players and using smaller squads were “sen-sible and practical” responses.
He said: “The fans may not like the fact only a handful of players were bought during the transfer window but clubs know to incur greater costs at a time when many are just keeping financially afloat makes no sense.
“The planned reduction in first team squad size and reduced wages in the coming year may be boring for the fans but it could be the difference between financial survival and failure.”
The results follow concerns over the finances of Rangers, who are in dispute with HMRC over unpaid tax liability.
The liability includes about £900,000 of interest on a bill of £1.9 million, stemming from deals conducted during Dick Advocaat’s reign as manager.
However, HMRC has also hit Rangers with a £1.4m late pay-ment fee, which the club is disputing, taking the total bill to £4.2m.
The club is also in dispute over another tax bill which could add up to £50m.
Andy Kerr, president of the Rangers Supporters’ Assembly, said he was “not surprised” by the findings of the PKF survey.
He said: “The financing of the Scottish game is coming under a lot of pressure in the general economic climate, particularly due to a lack of revenue from TV contracts.
“If you take what has been reported at face value, it’s clear that our fans have concerns.
“In the worst extreme, the tax liability could just about sink us completely, while at the other end we may struggle to meet day-to-day running costs.
“However, as much as Rangers have their individual problems, I’m sure there are many out there who are also struggling.”
An SPL spokesman added: “We all recognise the ongoing global recession has had a severe impact on football fans and clubs across the country. Our clubs have responded and are working to minimise the effects by strictly managing their finances and controlling costs.
“Clubs are working hard to do what they can to minimise the impact. Price freezes, innovative season ticket packages for families and a focus on how clubs can further enhance the match day experience are commonplace.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article