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SBD Global/November 26, 2013/Finance

One In Eight Scottish Football Clubs Facing Financial Failure, Study Finds

A report says several Scottish football clubs are in financial distress.
A new report by corporate rescue and recovery specialists Begbies Traynor reveals that four football clubs in the top three Scottish divisions "were facing 'critical' financial pressure at the end of last month," according to the SCOTSMAN. The Football Distress Survey also found that a further 16 clubs, half of those in the report, "are showing early, less serious signs of financial distress." The report warned that many clubs were "stuck in a 'cycle of distress' and suggested they revisit their business models and look at measures like fan-based ownership." The survey also reported "static average attendance and season ticket revenues across the four divisions of the Scottish Professional Football League." The report also found that "Rangers' brief stay at the bottom of the league has benefited the other clubs in League Two, with only two of the clubs in that division showing signs of distress after enjoying a massive increase in average attendances during the last season." Rangers' promotion to League One "has seen a huge recent spike in attendances, with a 700% boost to average gates so far this season." As of Oct. 13, the average attendances for the season "range from just over 10,000 in the Scottish Premier League to less than 500 in League Two." The report "did not name the four clubs said to be facing 'critical' financial pressure" (SCOTSMAN, 11/25).

FIXING THE PROBLEM: The BBC reported Begbies Traynor's Ken Pattullo "eyed one remedy." Pattullo said, "Structures, such as community interest companies and fan-based ownership, may well become an increasing part of the solution. It is hard to see what, aside from a big investment, will save these clubs from facing administration, unless they completely revisit their business models and make some fundamental changes." Celtic's finances have "again been boosted by their progress to the Champions League group stages and future Scottish champions could earn" an extra £7M ($11.3M) per year once BT Sport takes "exclusive live rights to show matches" in the U.K. starting in '15. Though Premiership rivals Hearts "are presently in administration, Dunfermline have just emerged from a similar plight that led to relegation to League One, while Championship outfit Livingston have warned in recent weeks that they came close to going into administration for a third time." BTG Financial Consulting's Alistair Dickson said, "The majority of troubled clubs in Scotland can no longer rely on wealthy benefactors swooping in as white knights. The community club model has been shown to work all over Europe, from the amateur ranks all the way to the mighty Barcelona and is an integral part of German football. The model has a real future in Scottish football" (BBC, 11/25).
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