Begbies Traynor Group

Scottish football stuck in ‘financial doldrums’ as one in ten clubs face financial distress

Date Published: 23/05/2014

The latest report into the financial health of Scotland’s football clubs shows a picture of financial stagnation and declining match attendances, with gloomy economic prospects for one in ten of the clubs in the top three Scottish divisions.

The Begbies Traynor Red Flag Alert Football Distress Report provides six-monthly snapshots of financial distress among Scottish football clubs. The report’s latest figures reveal that three clubs in the top three Scottish divisions are suffering from critical financial distress. The figure represents a decrease from the four clubs in serious financial trouble last time Begbies Traynor carried out the survey in October 2013.

A further 16 clubs, half of the 32 clubs included in the report, are showing early, less serious signs of financial distress.

The survey also highlights the depleted attendance figures and subsequent ticket revenues, which have continued to decline since the economic downturn.

League One, which has been boosted by the inclusion of Rangers and its relatively super-sized fan base, has seen a drop of 16% in average attendances since October 2013, while Championship games are also attracting 8% fewer supporters than they were six months ago.  Overall attendances across all four top Scottish Leagues were down by 6%.

“It’s good news that one of the top level clubs, at least, has managed to clamber back from the financial precipice since the start of the season, and Hearts’ future also appears brighter, with the club recently sold out of administration in a fan-based buyout backed by a local benefactor,” said Ken Pattullo of Begbies Traynor in Scotland.

He added: “However it is worrying that three clubs are facing grave financial pressure and that the early symptoms of financial distress are affecting 50% of the clubs in Scotland’s top three divisions. The wettest winter in decades has also done its bit to dampen fans’ enthusiasm and declining attendance figures may prove to be the final nail in the coffin for some clubs already locked into a cycle of distress.”

Pattullo believes that as cash continues to seep out of Scottish football and club benefactors struggle to make the increasingly heavy investments required, a step change towards community and fan-based ownership of Scottish clubs is emerging as a positive new trend.

“Annan Athletic, Ayr United and Motherwell are the latest clubs to take steps towards an ownership model based on the fans who have tirelessly supported them through thick and thin and who offer a sounder prospect for building a secure future than the whim of the mythical wealthy benefactor.

“We can expect to see this movement towards an alternative business model gather momentum in the coming months as the community interest company (CIC) proves its merit and offers a real prospect of salvation for financially weaker clubs.”

About The Author

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Ken joined the Glasgow office of Begbies Traynor in 2003, before overseeing the firm's expansion into further offices in Edinburgh, Dundee, Aberdeen and Belfast. He previously worked at KPMG, Ernst & Young and PricewaterhouseCoopers in Scotland. He has a broad range of experience in Corporate Rescue and Recovery, as well as in turnaround and restructuring, corporate and personal insolvency, investigations and IBRs.

Specialisms: Licensed trade, haulage, property investment/development, construction, agriculture engineering/manufacturing.

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