Celtic 'the proverbial big fish in a small pond'

The authoritative Swiss Ramble reviews the latest accounts of Celtic.

The club swung a from £0.1m pre-tax profit to £11.5m loss (£12.6m after tax), as revenue fell £9m (13%) from £70m to £61m and profit on player sales fell £15m from £24m to £9m, partly offset by £5m other income (business interruption coverage) and £9m (9%) reduction in expenses.

The pre-tax loss in 2020/21 is the first since 2014/15, breaking a sequence of five profitable years in a row. In fact, they have generated profits in seven of the last nine seasons, amounting to a net £42m gain over that period, despite last year’s £11m deficit.

Celtic mitigated revenue losses by “tight cost control” with lower wages, down £4.5m (8%) from (restated) £56.2m to £51.7m; player amortisation, down £0.4m to £11.8m; player impairment, down £2.1m; and other expenses, down £1.7m (8%). Includes £0.6m for Neil Lennon departure.

Clearly, the pandemic has had a major impact on the financials at all clubs with the cumulative revenue loss for Celtic over the past two years estimated as £24.7m (2019/20 £9.4m and 2020/21 £15.2m), mainly due to playing games behind closed doors.

The profit on player sales fell £14.8m from £24.2m to £9.4m, though still by far the highest in Scotland.  Player trading is “fundamental” to their self-sustaining business model with an impressive £68m profits delivered in the last four years (excluding this summer’s sales). Money earned also includes sell-on fees from past sales, e.g. van Dijk from Southampton.   In the last nine years they have generated £112m profit from player trading.

They are the proverbial big fish in a small pond. In 2019/20 the Scottish Premiership generated £221m revenue, miles behind England £5.1 bln and Germany £3.2 bln, but also below the likes of Austria £266m and Switzerland £229m.

European qualification is extremely important for Celtic, who have earned €98m from Europe in the last five years, €69m more than Rangers €29m. Champions League is the real differentiator with Celtic receiving over €30m in both 2017 and 2018, when they reached group stage.

Match day revenue is particularly important for Scottish clubs, given the low TV deal. According to Deloitte, this accounted for an incredible 48% of total revenue in Scotland in 2018/19 (pre-pandemic) with the next highest being significantly lower, i.e. Belgium 26%.