Thursday, August 11, 2011

SPL: Scottish Poundland League

If European exits weren't enough to depress us each summer we can always count on the annual Pricewaterhouse Cooper (PwC) report into the finances of the SPL to send our mood the way of the August weather.

Another year, another slap in the face for those of searching longingly for the fabled green shoots of recovery.

This year's report, Fighting for the Future: Scottish Premier League Football, shows the 2009/10 season delivered a small overall profit for the top flight clubs and a drop in the wage to turnover ratio.

Accentuate the positives?

Some will. But there's another tale to tell. Here's David Glen, head of tax for PwC, ripping off our rose tinted specs:

"Both Hearts and Kilmarnock results were boosted by related parties forgiving £8m and £1m of debt respectively, so the financial results posted don’t reflect the underlying performance of the club. While Rangers performance in the Champions League group phase turned a prior year operating loss of £8.5m into a £12.4m operating profit - a substantial £20.9m swing that is substantially down to their European performance.

"So by making reasonable adjustments for these two factors, the reality is that the SPL generated an underlying loss of around £16m. Adjusted turnover was around £156m, representing a fall of 6 per cent and the underlying operating loss was £6m, with only the Old Firm and Dundee United producing an operating profit – every other club was loss making at this level." (CA Magazine)

And what of the supporters? The report states:

"Overall, the average gate was down 10% this year, with a total of 347,000 fewer fans attending SPL games compared to last season, and I would argue that a fall of this magnitude is not solely due to the financial climate.

"Indeed, over the past four years attendances have fallen by over half a million fans a season, therefore other causal factors must be in play."

Neil Doncaster, the SPL chief executive, was quick to respond on his blog:

"The Clydesdale Bank Premier League is still the best supported league per head of the population anywhere in Europe, with 85,000 fans (ie one in 63 of the entire population of Scotland) attending matches each week."

Not to be sniffed at. But the 500,000+ figure suggests that around 10 or 11 percent of the population have skedaddled in the past five seasons.

Doncaster goes on:

"Over the same year, English Premier League clubs announced combined losses of an incredible £445million and Championship clubs of around £130million"

Shocking figures those. But tempered by a much bigger customer base and, crucially, much bigger TV deals.

And what's this from Mr D?

"Our best players and managers continue to remain desirable to the financial juggernauts of the English Premier League."

So we should be scrambling to the moral high ground to get a proper look at the big boys down south but at the same time we should be quite happy that our unsustainable business model is only sustainable if we profit from their unsustainable business model?

Welcome to Doncasternomics.

There's more:

"Indeed, early figures from Motherwell suggest that season ticket numbers are up around 10 percent so far this season."

Good. But knock me down with a feather if those "early figures" come close to being replicated across the rest of the league.

And another for luck:

"Early indications this season are that TV viewer numbers for SPL matches are well up on last year, which in turn showed a huge improvement on the year before."

Magic. Although "early indications" neccessarily measure games played without competitive football being played south of the border.

And while last year's TV figures increased by 35 percent this only represented around 9.7 million people. Across 60 live games that's an average of around 160,000 per match and I'll speculate that certain events might have artificially increased interest in the later Old Firm clashes of the season.

Those figures don't suggest to me that an SPL TV channel is sustainable or that a new deal with Sky and/or ESPN is likely to massively improve on the existing income.

That means the clubs will have to rely on matchday income and that, however it's spun, makes this year's PwC report another grim read.

Only last week I was writing:

"The normal rebuttal to this is that when quality returns on the pitch the fans will flock once more to our soccer citadels.

"That's a dangerously complacent attitude. People are annoyed. They're annoyed at what they see on the pitch, annoyed at ever increasing costs, annoyed that TV and incompetence rob them of games at 3pm on a Saturday afternoon, annoyed that the comforting repetition of home-away-home-away fixtures seems lost forever.

"There's a real risk, not just for Hibs, that when these fans disappear they won't come back. A bond is being broken that won't be easily repaired, a rift that will do long term damage just as much as it gives accountants headaches in the short term."

The other great hope is the world economy. Clearly our continued recessionary travails don't help matters but I'm not sure we should have complete confidence in a global financial recovery sparking a return to a Scottish footballing golden age. I don't see Gideon Osborne as a soccer saviour.

PwC seem to agree:

"When the economy starts to fully recover, there is no guarantee that fans will flock back to the turnstiles. There is a real danger of losing a generation of football fans; once you lose your customers, it’s hard to win them back."

As chief executive Neil Doncaster is almost duty bound to find the positives. He'll remember just fine what happened when Gerald Ratner started telling the truth. It's probably easier if, as he did yesterday, he says a lot without saying anything at all.

It still leaves us searching for answers though.

> The ever on the ball STV Sport website has a club-by-club run down of the PwC report

> The report itself can be downloaded (after free registration) here