VOTING to place newco Rangers in the bottom tier of Scottish football opens a new chapter of uncertainty for the game north of the Border – but the club can survive.
The consequences for placing the newco into the Third Division could mean financial hardship stretching across the board for SPL and SFL clubs but if prudent measures are undertaken, the game can recover. It could also lead to a shake-up of the upper tiers of Scottish football driven by the SFA and the SPL.
The most important source of income for Scottish football clubs is ticket receipts. While SPL clubs will suffer the loss of revenue from visiting Rangers fans for one or two home games per season, this could be quickly negated if there was a small percentage increase in home fan attendance and/or an increase in ticket prices.
If home fans continue to back their teams, particularly in light of a more competitive SPL, it is not inconceivable that there could actually be an increase in club ticket revenue.
But there is the question of commercial sponsorship. Will Sky renew? Can a replacement for Clydesdale Bank as SPL sponsor be found for 2013/14 onwards? Add to this any impact on individual club sponsorship and merchandise sales should TV exposure decrease or attendances fall.
It would be logical to believe there could be a major loss of revenue in this area, at least until Rangers finds its way back to the SPL. Apart from Celtic, in the SPL, the financial impact could stretch to hundreds of thousands of pounds. Well-run companies, both within the sporting arena and the wider business world, need to be able to react to significant commercial shocks and live on. Clubs should be drawing up contingency plans, budgeting on the basis of worst-case scenarios and determining what financial actions they need to take.
With quick, appropriate actions, financial meltdown can be avoided. It should not need to result in widespread financial collapse of either SPL or SFL clubs. Life will be hard but the situation is capable of being addressed. Celtic will be hit the greatest by any fall in Sky money due to its larger take of the SPL prize pot, but it has the financial scale to be able to absorb this easier than the rest and may benefit from a clear run at Champions League qualification.
The financial story for the SFL clubs is similar. However, as Rangers progress through the divisions, clubs should get a benefit from the impact of visiting Rangers fans.
Neil Patey is an Edinburgh-based football finance expert who helped broker the deal that put Chelsea in the hands of Roman Abramovich in 2003. As told to Martin Williams
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