SCOTTISH football clubs have bounced back from pandemic lockdown losses with record results, but are now bracing themselves for a harsh winter as the energy crisis and cost-of-living crisis continue to bite, and new financial challenges emerge.

The loyalty of investors and fans is the bedrock of Scottish clubs such as Rangers FC, according to one of the country’s leading economists, but fresh pressures from planned legislation threaten “grave consequences”.

In day one of our three-part special series, we look at the wider headwinds but also at the financial resurgence of Rangers, with the Ibrox club posting accounts that show revenues rising from £16.5 million in 2015 to a record £86.8m in 2022, boosted by £4.25m compensation for manager Steven Gerrard’s departure to Aston Villa and a significant haul of European prize money and earnings.

Last year, notching second place in the SPFL also, there was an operating profit of £5.9m, swinging from a £27.6m operating loss from the year before, and with a net profit on the horizon.

In 2019, pre-pandemic, revenue for the year was £53.2m, a 63 per cent increase on the previous year.

HeraldScotland: Rangers performed well on and off the pitch, at home and in EuropeRangers performed well on and off the pitch, at home and in Europe (Image: Getty)

Also in 2019, gate receipts and hospitality were £32m against £23m the year before, and in 2020 this was £36m. Gate receipts and hospitality hit £42m last year against £18m in 2021, and compared to £12m in 2015.

There was also a record commercial revenue of £28.4m for the year to June 30, 2022, which “eclipses” a previous high of £15.2m, Rangers said.

Professor Graeme Roy, of the Adam Smith Business School at the University of Glasgow, said football clubs will be impacted by energy costs and cost-of-living pressures, with potential “nervousness” at some clubs.

Investors as well as fans play a key part in supporting football, he said, and they continued to move to support the Ibrox club, which posted loans including £10.32m from vice-chairman John Bennett, and £1.9m from non-executive director Julian Juul Wolhardt.

Recessionary times

Prof Roy said that clubs “are facing increased energy costs, increased costs in terms of food costs, hospitality, travel costs to get to games, so you cannot think of football clubs as being different from all the others affected by this huge spike in inflation”.

He said: “One of the challenges will be managing through huge increases in their costs and how they navigate through that.”

Is support from investors finite in recessionary times?

The professor said that “people don’t buy or invest in football clubs in the short-term, [and] will probably expect ebbs and flows, similarly with season tickets and sponsorships or broadcast deals, they tend to be multi-year”.

HeraldScotland: Professor Graeme Roy said there is the potential for 'nervousness' at some clubsProfessor Graeme Roy said there is the potential for 'nervousness' at some clubs (Image: Newsquest)

He said it is also “the potential knock-on spend that might have happened in the local area not just at the club but in bars and restaurants around there”.

Rangers’ revenue rise of 82% was driven by three factors, said club chairman Douglas Park.

“The loyal support of the fans with over 45,000 season tickets and over 1,400 seasonal hospitality places sold,” said Mr Park. “The run to the UEFA Europa League Final in Seville, which generated £30.5m across UEFA prize monies and matchdays; and finally a record £28.4m generated by the commercial business.”

Neil Doncaster, chief executive of the Scottish Professional Football Association, underlined separate pressures.

“These remain very challenging times for all businesses and football clubs are no different,” said Mr Doncaster. “Scottish clubs showed great resilience during the trials of the pandemic and are working hard to continue their recovery from what was a once-in-a-generation disruption to their business model.

“Welcoming back crowds, who make up a far higher proportion of the annual revenue in Scottish football than elsewhere, was a very welcome development, as are the new broadcasting deal with Sky Sports and our agreement with title sponsors cinch.

“However, a number of major challenges remain, not least the Scottish Government’s proposed ban on alcohol sponsorship, which would have extremely grave consequences for the finances of many sports, including ours.”

Read more:

In part two tomorrow: Celtic and analysis from one of the businessmen who helped save the reigning Scottish champions