USUALLY around this time of year, the thoughts of football fans turn to their team’s preparations for the forthcoming domestic season.
Conversations in pubs and on social media revolve around transfer targets in the hope that the next season will be different, no matter what recent history suggests. It is the hope that kills you, as football supporters lament wryly.
A key difference this close season, of course, is Covid-19, and more precisely, what the fall-out from the pandemic means for the finances of our football clubs.
In one respect the season just passed could be seen as a phoney war in the battle against coronavirus. This time last year, clubs were buoyed as loyal fans bought season tickets in healthy numbers even though there was little prospect of them walking through the turnstiles, so keen were they to support their teams during this most-awful crisis.
Coffers were boosted as fans paid to stream matches live on club websites (in many cases this was “free” to season ticket holders) and replica strips were snapped up, while the furlough scheme and relief packages from sporting bodies and the Scottish Government would eventually help ease the burden of wage bills.
They also benefited from a donation worth more than £3 million from James Anderson, the Edinburgh-based fund manager, which meant clubs could access grants worth £50,000 to help them through the crisis.
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As a new season approaches, however, can clubs realistically expect fans to dig so deep again? Will supporters commit to season tickets when there is still no sign of being allowed back into stadiums in Scotland, despite what appears to have been successful pilots at events such as the FA Cup Final in England? Moreover, what will be the impact when the emergency grants and relief that have been so critical to cash flow come to an end?
Such questions will no doubt be taxing minds in boardrooms across the country as preparations for the new season gather pace, and budgets for playing squads are being drawn up.
A useful indicator of the state of the game’s finances came this week with the publication of the annual Football Distress Survey by insolvency specialist Begbies Traynor.
In an echo of recent statistics on general business insolvency levels, which remain at low levels largely because of continuing government support, the report pointed to a veneer of stability.
None of Scotland’s 42 senior clubs were found by the report to be showing signs of significant distress, having been supported last season by grants, furlough support and rates relief.
However, the report pointed to this being a “deceptively rosy picture” as it referenced the short-term funding mechanisms that have helped keep clubs going in the last 15 months.
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That funding will not last forever. Government support in the shape of the furlough scheme will be wound down in the coming months, and debts that have been deferred will have to be paid. It is also likely that some clubs will have borrowed more, often in the shape of soft loans from directors or owners, to tide them through the crisis.
Against this backdrop, it was perhaps no surprise to see the Begbies Traynor report, which analyses company accounts and “red flags” such as actions being taken against clubs over debts, note a significant rise in the number of Scottish clubs showing the early signs of distress.
According to the report, the number of clubs indicating the “red flags” of early financial problems rose by 33 per cent. Twelve of the 42 clubs in the Scottish Professional Football League displayed early signs of distress, the report found, compared with nine when the previous survey was carried out in May 2020.
Ken Pattullo, who heads Begbies Traynor in Scotland, told The Herald that the current health of clubs is “testimony” to the external support provided from government and bodies such as the National Lottery, as well as the actions of the clubs themselves. But he cautioned that the number of clubs showing early signs of stress was a concern.
“Scottish football appears to have survived, [but] I wouldn’t say unscathed because there has been a slightly worrying increase in the signs of early levels of distress which has been highlighted by our report,” he said.
Clubs such as Motherwell appear to have shown great resilience in managing their finances, while also recognising the loyalty of their supporters. The Lanarkshire club rightly won plaudits when it announced last month that it would offer free season tickets to everyone who bought one last season, with prices frozen for those returning or buying one for the first time.
Such fan-pleasing gestures are only possible because of tight financial controls. Mr Pattullo said Scottish football clubs on the whole have been run more “prudently” in recent years, which looks to have been to their benefit during the recent crisis.
That kind of fiscal discipline will continue to be essential in the difficult months to come as short-term support dries up, with still no sign as to when fans will be allowed to return. It could be some time before clubs can count on matchday income such as sales from catering.
In addition, many fans will be enduring difficult financial situations of their own because of the economic implications of coronavirus. The forecasts for peak unemployment when the furlough scheme ends may no longer be as grim as they were earlier in the crisis, but the UK is still nonetheless facing a huge rise in the number of people who will find themselves out of work.
For clubs, this could mean less income from season tickets as supporters make decisions over how to make ends meet.
Mr Pattullo said it is “hard to tell” if the appetite for season tickets is going to be as strong as it was last season.
He noted: “One would hope you would see, if not the sort of level of season ticket applications you have seen in the past, enough to keep the clubs on an even keel financially. I think going forward that is all we can hope for, at least in the next 12 months.”
For Mr Pattullo, it is encouraging that the signs of distress signalled by his firm’s report are still early, rather than critical. But the journey ahead will be far from smooth. “Unless things take a real turn for the worse financially, then I don’t think we are likely to see the insolvency of any club but it is impossible to rule any of these things out,” he said. “This whole Covid pandemic has proved to be such a constantly moving target.”
It is to be hoped that, for the good of Scottish football, clubs keep their shooting boots on, and ensure they keep hitting the financial stability target.
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