Scottish thrift finally rewarded in healthy SPL financial report

The combined bank balance of SPL clubs broke into the black for the first time in a decade last year, leaving them well-placed to weather the uncertain economic times ahead, a report published yesterday found.

In its 19th annual financial review of the Scottish football premier league, accountants PricewaterhouseCoopers found the league had clawed its way back from the "financial despair" which hit crisis point in the 2002/03 season and tipped Dundee and Livingston into administration with huge levels of debt.

Thanks largely to a reduction of transfer fees, wages and debt levels, the 2006/07 season - the subject of the report - saw a collective profit of £2.8m, with eight out of 12 SPL clubs recording a profit.

This represents a notable improvement on the £9.4m loss recorded in the previous season and an even more impressive result compared to 2002, when the SPL recorded a combined loss in excess of £60m.

David Glen, a partner at PricewaterhouseCoopers, said the latest financial overview of the SPL revealed "shrewd business acumen" and an ability to trim the squad sizes, wage bills and transfer fees which contributed to a total debt level of £186m at the time of Euro 2004, when half of Scotland's top-flight clubs were "technically insolvent".

"The picture continues to look bright for Scottish football, with many clubs now displaying shrewd business acumen and even restraint in the transfer market, with trading over this period recording a net gain of £19m. The clubs also demonstrated improved use of assets such as stadiums for corporate and hospitality events and strong strategies to tackle debt," he said.

But in addition to savvy financial planning, the PWC report also reflects the importance of success on the pitch in determining the health of clubs' bank balances.

The success of 2006/07 was largely driven by Celtic, which, buoyed by their progression into the last 16 of the UEFA Champions League and pre-season trips to Japan, Poland and the USA, recorded a surplus of over £15m.

At the other end of the scale, Hearts recorded a loss of just under £13m, largely due to its £12.5m wage bill which was far in excess of its £10.3m income for the year. This was despite the club seeing its biggest attendance in 33 years, for a pre-season friendly against Barcelona at Murrayfield.

Turnover among SPL clubs increased overall by 3%, to £175m, the report found. However, Rangers saw total revenue fall by 32%, although this was principally due to a licensing deal with JJB which means the club no longer operates retail stores and so lost a substantial income pot.

Attendance levels appeared healthy, with an additional 28,000 fans attending matches in 2006/07. Increased attendance also contributed to a turnover increase of 77% at Dunfermline which, despite being relegated at the end of the season, saw a Scottish Cup Final appearance. St Mirren also saw a 74% increase in turnover after a return to the SPL.

Net gain on transfers increased by £4m to almost £19m. Celtic gained most from this, making an overall gain of £9.6m from the sale of players including Stilian Petrov and Shaun Maloney. But the total wage bill in the SPL increased by 7% to £100m, with the Old Firm accounting for more than half of this.

Despite the positive assessment, Mr Glen warned that the credit crunch may yet prove dangerous to Scottish football. "Potentially one of the biggest impacts in 2008/09 will not be a decline in ordinary supporters buying tickets - many are expected to continue juggling finances to ensure they don't miss any matches - but in the corporate sector where sponsorship and support is discretionary and may be cut back if budgets have to be prioritised or shareholders pile on pressure," he said.

"This year's mantra is really steady as she goes,' with clubs finally consolidating their position, ensuring they are strong enough to weather the economic turbulence felt in the UK and further afield, and developing strategies for growth in what is a tough marketplace."

Largest loss was posted by Hearts, of just under £13m
Most profitable club was Celtic with £15m surplus
Seven clubs brought down their level of debt, with Falkirk and Inverness Caledonian operating with no net debt
Net gain on player transfers goes from £4m to £18.8m, with half the rise accounted for by the sale of five players by Celtic
Aberdeen enjoyed an 11% increase in turnover to £7.5m, largely due to a rise in broadcasting income and corporate sales increasing by 9%