The financial crisis in Scottish football

Abstract

First paragraph: Individual clubs in Scotland have experienced financial crises on several occasions in the past. But to many observers what we are witnessing at present is a systemic crisis in Scottish football: a common set of problems afflicting all clubs with negative financial implications for all, the crisis in one club or group of clubs threatening to damage the financial stability of other clubs (Rimini Group 2004). As of March 2004 a quarter of Scottish Premier League (SPL) clubs are in administration. The playing staff at another SPL club were obliged to accept substantial pay cuts to avoid the same fate, while the board of another club is seeking to sell its stadium to meet its debts, moving its home matches (average attendance 12,521) to Murrayfield Stadium (capacity 67,500). The combined debt of the twelve SPL clubs is estimated at £190m, some £30-40m higher than the clubs' combined turnover; in the last three seasons only one SPL club has reported a pre-tax profit. The annual turnover of two clubs (the Old Firm of Celtic and Rangers) equates to about 70% of the total turnover of the SPL. Unsurprisingly this dominance is also apparent on the field: no club outside the Old Firm has won the title since 1984/85. Yet, if any SPL club is in administration on 31st May 2004, it will begin season 2004/05 with a tenpoint deduction. Thus any semblance of genuine sporting competition is further threatened by the very real prospect of a quarter of the SPL beginning next season 10 points adrift from other clubs. To those not familiar with the business of Scottish football these facts may be quite extraordinary. The explanations of how Scottish football ended up in this situation are perhaps no less so.