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SBD Global/August 14, 2013/Finance

Scottish Football Clubs Look To Cut Wage Bills As Majority Face Financial Struggles

Scottish football is "continuing to operate on the edge of a 'financial precipice' despite a growing realisation and acceptance that clubs must cut their wage bills," according to Stephen Halliday of the SCOTSMAN. A survey by accounting firm BDO has revealed that 80% of Scottish top-flight clubs "either believe their financial situation could be better or are in need of attention." BDO warns of "'deep-rooted difficulties' which will take several years to solve, but on a more optimistic note conclude that the continuing commitment of supporters provides a platform for a more sustainable future." In "a sign that Scottish clubs are learning the lessons of recent turbulent times, with the demise of Rangers and the subsequent financial crises at Hearts and Dunfermline," 80% of those surveyed said that they "now use a wages-to-turnover ratio as a key indicator of the club’s financial health." So far, however, only 20% of them come "under the recommended ratio of 55 percent," while the remainder come in under the maximum accepted level of 65%. BDO professional sports group partner Charles Barnett said, "No Scottish teams reported they would increase the size of their first-team squad in the coming season with 40% stating it would be the same and 60% stating it would be smaller. In actual wages 20% said they would spend the same with 80% stating they would spend less. The fans never like this but it must be the way forward if Scottish football is to remain viable in the future." Forty per cent of SPL clubs said that "they were dependent on principal shareholders to finance annual revenue shortfalls or operating losses," down from 67% in last year’s BDO survey. A fifth of club owners are "considering an exit within a year to 18 months and two-fifths reported formal or informal approaches from external parties interested in taking a stake in the club." Barnett: "Football clubs appear to be as attractive as ever to external investors. This is both a strength and a weakness for the future financial security of football in general" (SCOTSMAN, 8/13).
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