RANGERS and Celtic support more than 3000 jobs across Scotland and contribute pounds-118m annually to the economy, according to a report.

The first study of the impact of Glasgow's premier clubs reveals that the annual economic impact is triple that brought in by the Edinburgh festivals.

The research carried out by Strathclyde University's Fraser of Allander Institute found the Old Firm created 3056 jobs in industries such as hotels, pubs and catering, including the 876 staff directly employed by the clubs.

It showed they generated pounds-118m additional income in 2003/04 through wages, sponsorship and profits. The figure includes the cash spent by fans attending matches on accommodation, food and travel.

The net income from the Edinburgh arts events for August 2004 was around pounds-38m, with employment of 2900 people.

Professor Kim Swales, who led the research, said: "This underlines just how important the Old Firm is to Scotland.

"There is a big net gain to Glasgow and to Scotland from the Old Firm and this comes through their activities and through related tourism expenditures.

"Imagine a factory closing with the loss of over 3000 jobs.

That is what would happen if the two clubs ceased to be."

The study was commissioned by the Glasgow City Marketing Bureau to identify what new money was being brought into the economy through the existence of the Old Firm and to establish the value of tourism expenditure in the city and country as a result of fans attending matches.

The economic benefit analysis took into account whether money spent on football was being taken away from other areas of consumer spending, like shopping.

It found that 75-per cent of total expenditure by fans was in Glasgow, with 63-per cent of this going to the clubs and 37-per cent going on food and drink, travel and hotels.

Rangers and Celtic fans living in Glasgow spent pounds-15m as a result of matches compared with the pounds-57m spent by supporters from the rest of Scotland.

Supporters living south of the border spent pounds-22m and made up 23-per cent of supporter expenditure.

Peter Lawwell, Celtic's chief executive said: "We are pleased the study confirms the positive impact of the Old Firm and demonstrates the huge contribution which both clubs make to the Scottish economy."

Martin Bain, Rangers' chief executive, added: "This report demonstrates both clubs are institutions and have a huge influence on society, not just in terms of finance but also in wider terms in the community."

The Fraser of Allander Institute sent questionnaires to 200 suppliers and 4000 season ticket holders to find out more about Old Firm supporters' expenditure and its effects on local economies.

Some 26-per cent of respondents lived in Glasgow, 66-per cent were from the rest of Scotland, and 8-per cent lived elsewhere.

Mr Swales indicated that the impact may be even greater if such a large proportion of the club's income was not being ploughed into the high salaries of a small number of players who are likely to save a higher proportion of their incomes.

He also rejected reports that if the Old Firm dropped the SPL for the English Premiership, it would cost the Scottish economy pounds-40m and that the study did not examine those issues.

He believed the losses through their lack of presence around Scotland could be largely offset by new money generated by large numbers of travelling fans from English clubs.

MAIN FINDINGS OF STUDY The Old Firm supports more than 3000 jobs across Scotland.

The clubs contribute pounds-118m annually to the economy.

Some 75-per cent of total spending is in Glasgow.

An estimated 63-per cent of spending goes directly to the clubs.

Some 37-per cent of expenditure is on food and drink.

Fans south of the border made up 23-per cent of supporter spending.