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Jaggernaut

Which Clubs Might Fold (If Any)?

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There has been a lot of talk, speculation, and dire warnings that a few or even many professional football clubs in Scotland might not survive the Covid-19-related shutdown and what looks like a prolonged delay before "normal", pay-to-go-and-see matches resume.

But so far there have been no reports of any club being in a truly dire or more critical state than, say, just six months ago, back in the days of what passes for normality. As some folk have pointed out, there are clubs that might simply go into hibernation (or maybe to be more accurate, estivation), sit it out with next to no players and other staff on their books, and basically mothball their entire operation (including stadium) until "better" times return. In other words, cut running costs to the absolute minimum. I would guess that in these extraordinary circumstances most clubs would receive offers from supporters volunteering for odd jobs that might be done without breaking any social distancing guidelines, as well as financial help, however little, from supporters and other benefactors. Of course there are limits to goodwill, but it's just possible that it might kick in and ensure survival of the vast majority of clubs. Or am I being too optimistic, for once?

So, which specific clubs do people seriously think might disappear from the professional scene, and why?

Edited by Jaggernaut

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You have read my mind to some extent!

i have started pulling together a liquidity table ranking the teams as to who would appear most in danger based on last years accounts!  

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The other thing to factor is who would pull the plug ? Normally it is HMRC who hit the final nail in the coffin due to unpaid tax, but that is highly unlikely in the current circumstances. Often it is the board themselves who are the ones that lend the most money

The only possible one I can see is Rangers, who have one of the biggest overheads and allegedly are in a poor financial position and that is before they have to pay out hefty fines and anything that might come from SPFLgate. I still can't see who would actually kill them off

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22 minutes ago, Dick Dastardly said:

The other thing to factor is who would pull the plug ? Normally it is HMRC who hit the final nail in the coffin due to unpaid tax, but that is highly unlikely in the current circumstances. Often it is the board themselves who are the ones that lend the most money

The only possible one I can see is Rangers, who have one of the biggest overheads and allegedly are in a poor financial position and that is before they have to pay out hefty fines and anything that might come from SPFLgate. I still can't see who would actually kill them off

Rangers needed cash from investors throughout this year just to get through the season. That’s per their audit report last year. The initial tranches cane in during November an December but since then, nothing. Whilst of course someone does need to put them down, the cash flow could kill them first. 

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The top flight clubs and a few championship ones probably who are willing to get themselves into unsustainable debts in order to attain the big pay-days of premiership matches are the ones who are likely to be less willing and capable of re-jigging their finances to cope with the new realities. They're the ones, in my opinion, less likely to survive. So I look forward to seeing jaf's liquidity table.

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5 minutes ago, scotty said:

The top flight clubs and a few championship ones probably who are willing to get themselves into unsustainable debts in order to attain the big pay-days of premiership matches are the ones who are likely to be less willing and capable of re-jigging their finances to cope with the new realities. They're the ones, in my opinion, less likely to survive. So I look forward to seeing jaf's liquidity table.

It’s today’s job! 

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If it was just Rangers it would solve several problems:

- 12-10-10-10 could be maintained 

- All top teams promoted

- No relegation

- Brora and Kielty get their play-off 

- There would be no Rangers any more

Actually though, I hope all clubs survive. Even them.

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1 hour ago, jaf said:

It’s today’s job! 

Well done great idea. I think such a table will be very informative. 

I will especially be interested in seeing the results for Raith Rovers and Dundee Utd. 

The Chairman of Raith said prior to the now infamous vote that if they didn't get their "prize" money the doors would close by October.  Wonder if the liquidity table will support this?  In respect of Dundee Utd it could be argued they 'bought' the Championship Title with a wage bill equivalent to 130% of turnover compared to the recommended level of 60/70%.

Anyway will be interesting to see the comparisons. 

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Top tier

- Rangers for cash flow, but they will have the numbers to rally through this

- Accies? A lot of cash flow comes from usage of their faculties on a daily basis, which has all stopped

Championship

- Dundee, always on the edge

- Caley, already close to admin

- QOS, IF I remember right had cash issues

1st division & 2nd Division 

- Us

- Every other club without a chairman with big pockets (Queens park, Cove Rangers)

 

 

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58 minutes ago, allyo said:

If it was just Rangers it would solve several problems:

- 12-10-10-10 could be maintained 

- All top teams promoted

- No relegation

- Brora and Kielty get their play-off 

- There would be no Rangers any more

Actually though, I hope all clubs survive. Even them.

If this Rangers go under, they will re-emerge as Rangers no 3, but this time the Premiership clubs will vote to re admit them to the premiership 

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Meant to add that given the increase in tensions since the SPLs refusal to consider reconstruction  and the response from affected clubs including our Board should any Championship Clubs fail don't count on the Jags retaining their Championship place! 

With regard to the SPFL words like spiteful, malicious and vindictive come to mind. 

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2 hours ago, jaf said:

It’s today’s job! 

Be interesting to see if some of the rumours I've heard re. the current condition of certain clubs is reflected in the table. 

It's been suggested in conversation that the four teams most at risk are Livi, Raith, Clyde and Dumbarton.

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One other thing @jaf...will your table take the results of recent fundraising initiatives, mitigating action taken by clubs (i.e. furloughing players), club statements and projected season ticket sales into account? Or will it be based solely on accounts?

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1 hour ago, Norgethistle said:

Top tier

- Rangers for cash flow, but they will have the numbers to rally through this

- Accies? A lot of cash flow comes from usage of their faculties on a daily basis, which has all stopped

Championship

- Dundee, always on the edge

- Caley, already close to admin

- QOS, IF I remember right had cash issues

1st division & 2nd Division 

- Us

- Every other club without a chairman with big pockets (Queens park, Cove Rangers)

 

 

I might be wrong but when Queens Park changed from amateur status did Willie Haughey not come on board and the rumour was he was putting in good money (for that level) hence how they could sign Craig Slater (I imagine he would not be there if he had to take a large wage cut).

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1 hour ago, Norgethistle said:

Top tier

- Rangers for cash flow, but they will have the numbers to rally through this

- Accies? A lot of cash flow comes from usage of their faculties on a daily basis, which has all stopped

Championship

- Dundee, always on the edge

- Caley, already close to admin

- QOS, IF I remember right had cash issues

1st division & 2nd Division 

- Us

- Every other club without a chairman with big pockets (Queens park, Cove Rangers)

 

 

Would not shed any tears for Dundee for obvious reasons. 

Not over the moon in favour of Accies or Rangers but the former were in favour of reconstruction and Rangers do, with the Celtic association, bring much needed sponsorship to the Scottish game.  Whether such sponsorship  monies are worth the baggage that comes with the 'old firm' is another matter. 

From a footballing perspective take Rangers out of the picture and what do we have left - Celtic + others! 

If this happened, please take Celtic out of the picture as well! 

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29 minutes ago, Fawlty Towers said:

I might be wrong but when Queens Park changed from amateur status did Willie Haughey not come on board and the rumour was he was putting in good money (for that level) hence how they could sign Craig Slater (I imagine he would not be there if he had to take a large wage cut).

I think that is what he is saying. Queens Park and Cove are safe as they have chairmen who have big wallets

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The Stranraer chairman, altho' talking about his specific club, made a point that I assume could be appropriate to most part time clubs. Admittedly his club have the cushion of a bumper Cup return but he pointed out that part time clubs don't have players on two year contracts and expenditure during the closed season is minimal. I imagine most part time clubs will in effect be mothballed.

DP mentions Clyde might be in bother. Could that be because they don't own their ground and may be due rental? That and if they've contracted players into next season could be a major factor re their liquidity. 

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22 minutes ago, Dick Dastardly said:

I think that is what he is saying. Queens Park and Cove are safe as they have chairmen who have big wallets

Sorry, looking at the post again I see what you mean.

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1 hour ago, Dark Passenger said:

One other thing @jaf...will your table take the results of recent fundraising initiatives, mitigating action taken by clubs (i.e. furloughing players), club statements and projected season ticket sales into account? Or will it be based solely on accounts?

Whilst our fundraising attempt has been great. In the grand scheme of things it’s 1% of our yearly turnover, or Dundee United visiting Firhill (1400 tickets). 
 

We will need to cut spend and try (somehow) to maximize revenue, but short term ensure we have cash in bank to ensure we aren’t put out of business by cash flow issues

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If our wage bill is 60% of turnover (3 million)

then even paying 20% of furloughed wages is £30k a month. That’s before standard bills (Electricity, insurance etc)

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2 hours ago, Dark Passenger said:

One other thing @jaf...will your table take the results of recent fundraising initiatives, mitigating action taken by clubs (i.e. furloughing players), club statements and projected season ticket sales into account? Or will it be based solely on accounts?

That all becomes subjective but I have added notes, I think we can only deal in the known facts and then adjust either way for our known knowledge

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1 hour ago, Norgethistle said:

If our wage bill is 60% of turnover (3 million)

then even paying 20% of furloughed wages is £30k a month. That’s before standard bills (Electricity, insurance etc)

The longer this goes on i think the players will need to be asked to take a wage cut or be without, i think most sensible players would see some take home pay is better than none for however long the closedown lasts.

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See google doc link below for anyone interested

Limitations :

This cannot be perfect as we do not have the up to date data.

I can only use historic data which is one year out of date, however it illustrates the liquidity clubs had at that time - the liquidity of clubs these days does not change much so its a useful guide

Generally liquidity of more than 1 is good, and as you fall below 1 it becomes more and more problematic. This is the current ratio - cash and assets that its easy to turn into cash less amounts due out. It excludes fixed assets and long term loans.

It is also flawed because of soft debt, and I might try to do a column with soft debt extracted to aid comparison but I need a break first!  The clubs with soft debt, their actual position is better than stated as the accounts show a liability but in reality its not going to require repayment any time soon. Morton is a great example of that.

General observations :

Much has been made of us being debt free.

However it has become apparent hardly any clubs in Scotland have external debt that requires servicing. Most debt is friendly soft debt from directors/shareholders normally with no repayment profile and no interest, therefore having the debt has no related cash cost.

Therefore, us being debt free, whilst a good thing is not really the competitive advantage many believe it to be

PTFC observations :

On the basis of last years accounts we are positioned well. Unlike most clubs, we however have no financial support from our owners/board and so need to be entirely self sufficient.

There are unknowns in this year namely the costs of removing Caldwell, and the January business. Plus of course the Covid impact. 

However, there should still be many clubs in trouble before us, and if that's not the case its because we have spurned a good position. 

In some ways, crazy as this sounds, our weakness is being debt free. Because an owner or director of a club who has money invested in that club might have to follow on his money to chase getting his original sums back. We have no access to cash via our board to my knowledge.

Clubs I admire the finances of :

Arbroath, Stirling, Cowdenbeath, St Johnstone, Hamilton

Clubs I fear for most :

Albion Rovers, Raith Rovers, Peterhead, Alloa, Hearts, Rangers

Clubs with missing or late info :

Stranraer, Airdrie, Annan, Brechin

 

https://docs.google.com/spreadsheets/d/1IbG4YDhH2dxcczYvUIivMiyfYRJgeYt88UylxUW5-B4/edit?usp=sharing

 

 

Edited by jaf

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3 hours ago, Dark Passenger said:

Be interesting to see if some of the rumours I've heard re. the current condition of certain clubs is reflected in the table. 

It's been suggested in conversation that the four teams most at risk are Livi, Raith, Clyde and Dumbarton.

Raith and Dumbarton for sure

Clyde if they have spent heavily this season

Livi - don't see it with them unless the soft loanholders exert pressure, which the accounts suggest will not happen

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