While English clubs shrug off the annual doom-laden analysis from financial commentators, Scotland's elite have been assessed as even flakier. Ken Gall reports on some alarming figures

Recent evidence would suggest that the required reading for Scottish Premier League chairmen during the close season would be a well-thumbed Guide to Who’s Cheap and Available Around the Second Div­isions of Europe. However, following the publication in April of the remarkable sets of accounts by all SPL clubs, they would be well advised to pick up instead a copy of JK Galbraith’s The Great Crash, in which the eminent Harvard economist describes how speculation, profligacy and unsustainable financial practices led to the Wall Street crash of 1929.

The suggestion that Scottish football might be head­ing for a Great Depression of its own was magnified by the accounts – collated and analysed by the Scottish Business AM website – which hinted at styles of business management in SPL boardrooms that would make Professor Galbraith tear up his own notes and stuff them in his mouth.

For example, 11 of the 12 clubs had spent more than 50 per cent of their revenue on salaries; a practice which, if maintained – according to accountants Deloitte & Touche – could lead to one or all of them go­ing out of business. Only Celtic had managed to keep below the recommended 50 per cent level, and it seems possible that Henrik Larsson’s forthcoming mon­umental pay deal might tip even the Celts over the edge. The rejection this year by the club chairmen of SPL chief executive Roger Mitchell’s proposal to cap the salary percentage at 50 per cent suggested that tur­keys, after all, were entirely capable of voting not only for Christmas, but for cranberry sauce and stuffing too.

Scottish football financing has always seemed to be a weird reflection of normal good business practices. It’s a world in which Rangers’ David Murray is reg­arded as some kind of financial Merlin while presiding over a loss last year of £25 million and in which Hearts can turn an £8 million investment from the Scottish Media Group into something approximating thin air in a couple of seasons.

At Ibrox, Murray’s main money-raising wheeze over recent seasons has been the sale of large tranches of the club’s shareholding to organisations such as ENIC – now also involved with Spurs – and cable company NTL. This might be described as the Dean Martin school of business. The singer, it might be recalled, sold off percentages of himself to various shady agents and backers until well over 100 per cent of Dean Martin was controlled by third parties.

But Murray looks like a Govan version of Alan Greenspan in comparison with the activities of some of his counterparts elsewhere. Hibernian’s story this season has been one of almost unmitigated success on the field, but a wage bill that accounts for 89 per cent of the club’s income suggests short-sightedness bordering on mania on the part of the club’s directors. Russell Latapy and Franck Sauzée have been sensational signings in recent years, but such players do not come cheap.

Motherwell, whose chairman John Boyle made a sig­nificant sum from the sale of his travel agency bus­iness, are in much the same position. Boyle’s astute business sense, while undeniable, has not been transferred to his club, which gambled and lost on high profile and heavily salaried players such as Andy Gor­am and John Spencer. With the writing on the wall – Well were spending a mighty 86 per cent of revenue on salaries – Boyle has ordered what looks like a cull of any player earning above the minimum wage at Fir Park.

While Dundee were one of only three clubs to re­duce the salary percentage in the period covered by the survey – the other two being Dunfermline and, re­markably, Rangers – their story may turn out be the most interesting of all, as a club which had previously turned poverty into an art form began to spend mon­­ey like Elton John at the florist’s. Un­for­tun­ately, the per­iod cov­ered by the accounts does not in­clude their various big-mon­ey sign­ings, of whom Claudio Caniggia was on­ly the most note­worthy.

Speculation that Dun­dee chairman Peter Marr had, in the manner of the Beverly Hillbillies, found an oil well at the bottom of his garden might have ex­plained Dundee’s sudden riches. Press reports – strenuously denied, it must be said – that Caniggia’s con­tract was owned and re­munerated by a group of “unnamed South American businessmen” ensured that, in any event, next year’s accounts from Dens Park would make for interesting reading.

Blair Nimmo of accountants KPMG, one of the main players in the Airdrie story described in WSC 170, responded to the survey with the wise comment that: “Even financially aware people seem to have difficulty grasping the finances of football clubs.” Nimmo, a realist in a world of dreamers, made it clear that the big-time amibitions of clubs such as Hearts, Hibs and Aberdeen were likely to be thwarted by continuing falls in turnover.

There was even a sobering note for those deluded Celtic fans who believe that their club ranks among the big players in European football. Despite vast attendances, huge merchandising opportunities and their most successful season in years, Celtic’s turn­over placed them at roughly the same financial level as those well-known Champions League contenders West Ham United. Far from be­ing the “big bus­iness” described by the slavish local tabloids, Scottish football re­mains resolutely small-time.

Roger Mitchell’s response to the seem­ingly grim financial picture was that most SPL clubs were now run by reasonably hard-headed individuals who would not allow a club to “bleed to death”. The cost-cutting regimes at Aberdeen, Motherwell and Hearts would suggest that realism is indeed starting to permeate the Scottish game. However, as JK Gal­braith could explain, a chairman flush with Sky tel­e­vision payments can very quickly go from lighting his cigars with fivers to winding up the business and locking the doors forever. It is to be hoped that all chairmen heed the warnings they have received.

From WSC 172 June 2001. What was happening this month

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