The Political Economy of Football V2

Scotland is to be restricted to one Champions League place from next season with additional places being awarded to Cyprus and Denmark. Football finance guru Kieran Maguire spells out the serious consequences for Scottish football which already faces financial challenges:  https://www.bbc.co.uk/sport/football/articles/clygvv8kqklo

 Hearts made a net operating loss of £400,000 in 2024/25 despite increased turnover and European football.  However, it should be noted that  the 29 per cent investment made by Brighton owner Tony Bloom, shows up on the balance sheet rather than the profit and loss accounts:  https://www.bbc.co.uk/sport/football/articles/c33p83vll0yo In any case the loss is relatively modest compared with some English clubs.

Hibernian’s 2023/24 accounts covered a season when the club finished in “a very disappointing eighth position”. However, they did somewhat better in the cup competitions, reaching the quarter-finals of the Scottish Cup and the semi-finals of the League Cup. This was the second time that Hibernian had finished 8th in the last three seasons, which is clearly below expectations. These are their worst finishes since 2013/14, when they ended up being relegated, spending three seasons in the Championship before returning to the top flight in 2017. The club has not been helped by frequent changes in the manager with four men being handed the reins after the sacking of Jack Ross in December 2021. Shaun Maloney only lasted four months, while Lee Johnson survived for more than a year before also exiting stage left. In terms of ownership, there was a lengthy period of stability after Sir Tom Farmer, the former Kwik-Fit CEO, bought the club and the stadium from the receivers in 1991.  ...

Losses of over £7m are worrying for a club of Hibernian's size and there are clearly some underlying problems at the club:  https://www.scotsman.com/sport/football/hibs/latest-hibs-news/hibs-grotesque-finances-leave-dark-stain-and-no-easy-fix-for-embattled-regime-amid-ps71m-loss-4 980975 The finances have deteriorated over the years and the club is frank about the challenges that it faces:  https://www.heraldscotland.com/news/24919757.hibernian-football-club-accounts-lay-bare-deterioration/ One issue is that players appear to have been overpaid in relation to performance.   The wages to turnover ratio is at a high and worrying level for Scotland.

When I was at Strathclyde University taking a MSc in 1968/9 we were discussing the rise of Scottish Nationalism and the sources of Scottish identity.   The tutor was expecting us to come up with the conventional answers: education system; legal system; Church of Scotland.   I knew that the Celtic Supporters Club was the largest student organisation at Strathclyde (reflecting the then composition of the student body).  I suggested that the national team -  together with the separate national competition - reinforced a distinct identity in a nation that was fitba’ crazy. The tutor, who was from Missouri, asked what hypothesis I would advance to test the relevant importance of football compared with other sources of identity, a methodologically impossible task.   However, I did know that his American colleagues were sneaking into Old Firm matches when they could.    They simply had nothing like it back home.     (English expats tende...

St.Johnstone have reported a small profit after losing £2,2m the previous year with cost controls put in place:  https://www.thecourier.co.uk/fp/sport/football/st-johnstone/5157013/st-johnstone-financial-profit-annual-accounts/ The smaller Scottish clubs do generally manage to more or less break even, or if they fail to do so troubles can mount.

Aberdeen’s 2023/24 accounts covered a season that was a bit of a mixed bag. As chief executive Alan Burrows said, “The 2023/24 campaign wasn’t without its challenges. We finished seventh in the Scottish Premiership and had to change managers mid-season, which is not where any club ever wants to be.” On the other hand, the club played in a European group stage for the first time in fifteen years, though they did not progress to the knockout stages of the Europa Conference League. In 2019 Dave Cormack, an Aberdonian and lifelong Dons fan, replaced Stewart Milne as chairman after 22 years. Major League Soccer side Atlanta United acquired a minority stake (less than 10%) as part of a strategic alliance between the two clubs. This group provided £5m, which helped finance development of the training ground, and significant funding since the initial investment. Largely due to the European group stage football and domestic cup runs, Aberdeen’s revenue shot up by £7.8m (50%) from £15.8m...

Dundee United have announced a £2.8m loss for the year they were in the Scottish Championship, but are more sustainable in the top flight:  https://www.footballtradedirectory.com/dundee-united-announce-loss-for-last-financial?cat=3077

The 2023/24 Hearts' financial results were adversely impacted by failing to get beyond the play off round of the Europa Conference, where they were eliminated by Greek team PAOK.   Hearts’ loss last season was their first for nine years, when they won the Championship (Scotland’s second tier). So they have been profitable in eight of the last ten seasons, which is pretty good going in the cutthroat world of football. Looking at Scotland’s leading clubs over the last five years, we can see that Hearts have broken even, which places them between Celtic, who made £53m profit, and Rangers, who posted £65m losses. Aberdeen, who are arguably Hearts’ closest equivalent, had £7m of losses in this period. Hearts figures have “benefited enormously” from exceptional items, including £5.5m of donations in 2023/24, split between benefactors £4.0m and the Foundation of Hearts (FOH) £1.5m. In stark contrast, Rangers booked £3.4m of charges, covering legal costs and contractual settlement...

Congratulations to Aberdeen FC on being transparent about their finances and reporting a record revenue up by 49 per cent:  https://www.afc.co.uk/2024/11/23/aberdeen-fc-reveals-record-breaking-turnover-in-latest-accounts/ As they claim, they look like a we ll-run, financially sustainable club.   A somewhat different story in my ancestral city of Inverness.

 Rangers currently do not have a chief executive nor a director of football operations, while the chairman is only a temporary appointment. Since Steven Gerrard was tempted by the riches of the Premier League, moving to Aston Villa in November 2021, Rangers have had three different managers, which has not helped matters, as they have all had their own playing styles, requiring much turnover in the squad. Rangers legend Ally McCoist gave a damning assessment of last season’s financial results, “Those figures are really, really concerning. They’re trying to put a positive slant on it, but those losses, man, dear me.” Ranger’s pre-tax loss shot up from £3.1m to £17.3m, despite revenue rising £4.5m (5%) from £83.8m to a club record £88.3m, as profit from player sales dropped from £23.6m to £5.6m.   Rangers’ revenue growth was largely driven by higher gate receipts amd hospitality, which rose £4m (10%) from £40m to £44m, though there was also an increase in commercial, up £...

Celtic’s financial results for 2023/24 were very good, as they posted a £17.8m pre-tax profit (£13.4m after tax). That said, this was down £22.9m from the previous year’s huge £40.7m profit, though in fairness that was a record for Scottish clubs. This was mainly because 2022/23 included a couple of material once-off items, amounting to £13.5m, made up of a £10m business interruption insurance claim and £3.5m compensation received from Tottenham for Ange Postecoglou. In addition, profit from player sales more than halved from £14.4m to £6.6m, though revenue rose £5m (4%) from £120m to £125m, which was a new record for the club (and indeed Scotland). However, operating expenses increased by £9m (8%) to £117m. Celtic have managed to grow their revenue by £41m (49%) since before the pandemic, up from £83m in 2018/19 to £125m. In fact, they have set a new club record in each of the last two seasons with decent growth in all three revenue streams.   The expectation is that Celtic’...

The appetite of US investors for football clubs does not stop at the Anglo-Scottish border.  Motherwell are the latest club to make progress with an offer:  https://www.motherwellfc.co.uk/2024/04/03/agreement-with-us-based-investor/

Hearts have come a long way since the club was placed into administration in 2013, when they were deducted 15 points and then relegated to the Scottish Championship. Much of the credit is due to Ann Budge, who took ownership in June 2014 in partnership with the Foundation of Hearts, following the misguided Romanov regime. In August 2021 Budge signed over 75% of her shareholding to the Foundation, making Hearts the largest fan-owned club in the UK. The club described this as “Heart & Soul Day”.   This approach has served the club well, though the model going forward is likely to still require the support of benefactors. Hearts once again posted a pre-tax profit, though this dropped from £1.7m to £0.3m. Revenue rose £6.2m (42%) from £14.6m to a new club record of £20.8m, but this was more than offset by £7.4m (38%) growth in operating expenses. Hearts’ record turnover was driven by their involvement in the Europa Conference League group phase. This led to increases in both ...

Aberdeen’s better results in 2022/23 on the pitch also helped with their finances, as they swung from a £2.2m net loss to a £1.1m profit. Profit from player sales shot up from £1.0m to £7.5m, which more than offset a £6.3m operating loss. Revenue rose £1.9m (14%) from £13.9m to £15.8m, but operating expenses were up by even more, increasing by £2.8m (15%) from £19.2m to £22.0m. Two of Aberdeen’s revenue streams grew: gate receipts were up by more than a third (£1.1m) from £3.0m to £4.1m, while commercial also rose £1.1m (15%) from £7.3m to £8.4m. On the other hand, broadcasting dropped £0.3m (8%) from £3.6m to £3.3m. Not all clubs have published accounts for 2022/23, but Aberdeen’s £1.1m profit is currently the second best financial result in Scotland for last season, albeit miles below Celtic’s record-breaking £33m profit. In general, Scottish clubs tend to run a tight ship, so almost all of them were in a narrow range between £2m profit and £2m loss, i.e. effectively break-ev...

Celtic’s pre-tax profit  in 2022/23 surged from £6.1m to £40.7m, a record for Scottish clubs, though chief executive Peter Lawwell pointed out that this included “some material items of a one off nature” which amounted to £13.5m. This was thanks to a £10.0m business interruption insurance claim and £3.5m compensation received following Big Ange’s departure. Revenue rose £31.7m (36%) from £88.2m to £119.9m, another Scottish record, though profit on player sales more than halved from £29.0m to £14.4m. The main reason for Celtic’s revenue increase was participation in the Champions League, as opposed to the prior season’s Europa League. This resulted in healthy growth in both broadcasting, which more than doubled from £13m to £31m, and match day, up £8m (18%) from £43m to £51m.   To complete the “financial treble”, commercial also rose £6m (18%) from £32m to £38m. Celtic have posted profits seven times in the last eight years, the only exception being the COVID-impacted los...

The Brown family want to sell St. Johnstone after 37 years in charge and are looking for foreign investment.   Mover and shaker Jez Moxey is overseeing the sale:  https://www.thescottishsun.co.uk/sport/football/10790901/st-johnstone-want-next-wrexham-american-investment/

Ross County lost over £1 million in 2021/22, representing £1 for every £4 of income. Losses would have been higher had it not been for a related company writing off £234k of loans. Ross County spent £800k cash more than the club generated from day to day activities in 21/22. It covered this outflow by borrowing £850k in the year. Staff numbers were up, wages down. Wages £75 for every £100 of income.     RossCounty did not sign any players for a fee and the whole squad cost £0 in 21/22.

The authoritative Swiss Ramble reviews the 2021/22 accounts of Hearts:  https://swissramble.substack.com/p/hearts-finances-202122 Hearts have come a long way since the club was placed into administration in 2013, deducted 15 points and then relegated to the Scottish Championship. Much of the credit is due to Ann Budge, who took ownership in June 2014 in partnership with the Foundation of Hearts, following the misguided Romanov regime. This culminated in Budge signing over 75% of her shareholding to the Foundation in August 2021 , making Hearts the largest fan-owned club in the UK. The club described this as “Heart & Soul Day”. This approach has served the club well, though the model going forward is likely to still require the support of benefactors. Hearts once again posted a pre-tax profit, though this fell slightly from £2.0m to £1.7m. Revenue shot up by 90% from £7.7m to £14.6m, as the club returned to “business as usual” following the significant impact of COVID, fur...

The authoritative Swiss Ramble reviews the 2020/21 accounts of Hearts. After Ann Budge transferred the shares to the Foundation of Hearts in August 2021, Hearts became the biggest fan owned club in the United Kingdom. It is difficult for any Scottish club to compete financially with Celtic and Rangers, but Hearts seem to be on the right track Hearts 2020/21 accounts, when they increased pre-tax profit from £0.4m to £2.0m, despite the impact of relegation and COVID, which reduced revenue from £12.3m to £7.7m, mainly thanks to £6.4m donations. Hearts reported the largest profit in Scotland with £2.0m, albeit only because of their “very generous” donations of £6.4m. In contrast, both Rangers and Celtic made large losses with £24.2m and £12.6m respectively, followed by Aberdeen £2.3m. The last loss Hearts reported was £0.9m in 2015, when they also won the Scottish Championship. Since promotion, they have been profitable 6 seasons in a row, though the £27m profit in 2014 is a bit misl...