 Monday, February 14, 2005
Some pointers for Celtic Interim results
The last set of financial figures we will see before August will be released this week. These will tell us how Celtic have performed in the first six months of the season and will act as a guide as to what resources will be available in the summer.
I am hoping that turnover hits £38million and that operating profit comes in around £5million, anything better than this will indicate that recent cost control measures are beginning to hit the bottom line.
With no European income, the last six months of the season will be down on last season, though not by as much as the fantastic £10million I have seen reported in more than one place.
It will also be interesting to see what effect renewing the contracts of Sutton, Thompson and Hartson has on the amortisation figure (which will determine not only profitability but also spending potential).
There is a remote chance we will break even after amortisation and interest for the six months, though I expect a small interim loss. Either way we will incur another significant loss for the season as a whole.
56 Comments:
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It'll be interesting to see what comes from the interim figures. Would anyone care to hazard a guess at what the debt figure is likely to look like come the end of year accounts?
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I'll be interested to see our salary bill, if that's included in these figures. I'd imagine it will be higher than most people envisaged a year or so ago. The expected decrease doesn't seem to be materialising.
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can someone make it clear to me exactly how our old kit deal effected our income stream i.e was it a large percentage of our income ? will the new nike deal make a significant impact in our spending power or in our ability to turn a profit ?
Thanks
(and apologies as i have no accounting experience )
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The Nike deal will increase income by £3million a year before any of the non-disclosed bonus’s kick in Xavier.
Take a look at an article in posted back in August Celtic income ready for an £8m liftThis was before the Nike deal was announced, but gives good background on Celtic merchandising revenues as well as Rangers.
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Paul are we still on track for the big summer spend that you seem confident about??
I'm not too clued up on all of the financial jargon but read and enjoy your site regularly and from what i gather you seem pretty sure it's all go for the summer. Will these results make any difference??
Yours
Tarmac
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the only league that matters is the Champions League.
Why don't the SFA create a 16 team top division and open tender to any british club who wishes to play in it?
At the moment, there are English clubs playing in Scottish divisions. Why not have more?
Sunderland, Reading, Sheffield Wednesday etc, might fancy their chances of winning an SPL and gaining entry to the CL.
These clubs would also earn more meony TV wise.
These English clubs will never play in the CL. This would be their only hope.
It would be more attractive to C&R than playing Partick Thistle etc. It would also inject enthusiasm back into the Scottish game, for clubs like Hibs, Aberdeen, Motherwell etc.
If David won't go to the mountain, bring the mountain to David.
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Tarmac, the financial results from this season will significantly determine how much money is available to spend in the summer. We will have a better idea after these results, I’ll do a budget forecast shortly after the results are out.
What we do know after Bellamy is that there are millions to spend and that millions will be spent. Whether they give the whole five year budget to MON up front again is another question.
Timetales, I had to smile at your suggestion that Uefa tender for entry to the leagues. Can I suggest they put all the places onto eBay and we will all be able to bid and watch the other bids come in :-)
Your point that the clubs mentioned could gain financially from moving to the SPL is valid. We are likely to see some fluidity in the leagues one the first moves takes place, which I suspect will be Celtic moving to England.
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Paul67
you are predicting a small interim loss and a large loss at the end of the season.
Will the bank just not refuse to fund us again ala after seville, and just tell the board to reduce costs and debt further?
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The Board must have something up their sleeve i.e. move to the EPL imminent or they are allowing the club to accelerate into debt. I'm not great on the financial side, but i can't grasp how we can survive making continual losses?
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Celtic Ultra
After this season we will be into a new financial reality without the legacy amortisation we have been carrying since 2000 and before. This will mean that we are able to spend again in the summer, the bank will be up for it.
CambuslangisaReality, excellent name.
I think you are right that the board have something up their sleave. In terms of surviving while making such losses we have been cutting it fine. Makes you question the motives of some who call them prudent.
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Paul67, I saw your link to a previous posting so had a wee look. I have a charity sponsored credit card and they receive 25p per £100 spent plus £5 when opened and £5 peryear or so thereafter. I spend about £4000 on my card through the year so they must make around £15 per year from me. I assume Celtics would be at least the same. 50000 season ticket holders x £15 would get us Robbie Keane's left leg or something but its better than a kick in the teeth. As you say, it would be better if the club came out active and informative on things like this. They may be surprised at the response.
Can I add one thing. That last debate started by NeilR I think was excellent. Note though that as more people put in names instead of leaving as anon the debate improved and although still heated some really good points were covered in a really civilised manner. Serious debate like that will definately drive our club forward. Lets keep it that way. Well done everybody.
Hail Hail
thedominie
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Me again sorry. Cambuslangareality your name just reminded me of something. About 1991 there was an interview with Terry Cassidy when he talked about looking across the city and seeing Ibrox and knowing that one day we would have a bigger stadium with 50000 season ticket holders. Thats when we had the farce of the seats in the jungle etc. At that time his article seemed laughable as Rangers were a mile ahead and we were on a massive slide. Point is, the change in fortunes between then and now is nowhere near as great as now and WHEN we are in he premiership.
the dominie (having trouble with the login)
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the dominie,
I think i'm one of the minority in the Premiership Debate. I think at some stage we will be playing in a different league set up, but i don't see moves like this happening in the next 10 years. Nor do i go along with some of the kneejerk opinion flying around - that Dermot Desmond will go to UEFA in 2007, when the premiership TV deal expires and quote the Treaty of Rome Act (freedom of trade)- blah blah blah. My view is that this will be a long journey of discussuions with FIFA/UEFA/EFA/SFA and maybe say in 12 years or so we'll see moves.
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Paul surely income will be down £10m with three less UEFA Cup ties and hardly anyone going near the club shops, last year we had post Seville and Larsson to keep the tills busy.
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Paul, I read an article in the Daily Mail a few weeks back that had MON quoted as saying that he doubted the finance would be in place to keep Bellamy. Now before you strangle my post to death, like any other newspaper the Daily Mail is of fond of selective quoting and working to the agenda that sells most. Do you have any info that would contradict this? Is MON bluffing to keep the agents away and or lower fans expectations
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Nothing like it Anon. Add up the potential revenue from 3 games, including TV income from 2 big ties, subtract vat and I would expect around £5million. They take off costs including bonuses and the net effect on the P&L will be around half this.
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I don’t know the quote you are referring to Brendan, but this contradicts everything else that has been said by MON and the board. I suspect mischief making.
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Sorry this is off topic but I have to get this off my chest, did anyone hear Radio Clyde last night, when Bill Leckie said that the antecedents of secterianism is to be found in the catholic education system.
I found that Bill Leckie’s comments on Superscoreboard of 14/2/05 with regards Catholic school education being the root cause of sectarianism in Scottish football offensive and totally lacking in insight into what is a complex problem. If this is the case why is there no sectarian problems in England where there are also denominational schools?
While he should have not been ‘feed’ the question by Derek Johnston in the first place, would he have been allowed to comment on racism in such a simplistic and one sided way?
Did the producer of this programme not pick up on this loaded remark and the lack of opportunity for a counter argument to be put in place?
Is this Radio Clyde showing it's real colours?
I have found myself increasingly unable to listen to this programme if Mr Leckie is on it, and after his biased comment I will not be doing so in the future if he is.
Time to Boycott Radio Clyde if Leckie is on it.
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Celticbhoy,
I heard a bit of Clyde 2 last night, but it was Iain King from The Sun that was on the show. Are you sure it wasn't Real radio?
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Celticbhoy, Leckie's a twat and I agree that Radio Clyde should be boycotted when he, DJ and Mark (err umm) Hatley are on. I also find it incredibly offensive that Setanta have Brown and Hatley "commentating" on our games. Anyone who thinks that sectarianism has anything to do with seperate schools has no knowledge of history and should be made to read the excellent "Celtic's Paranoia - All in the Mind" by Tom Campbell.
Anyway, I digress - Paul, I noticed a mention of Keith Harris in the previous thread (by Craigneukbhoy I think) is this the same guy who is mounting a challenge to Glazer at Man Utd? He seems to be working in the background on behalf of the small shareholders and has an in with Cubic Expression. He is former Chief Exec of HSBC and is Director of Wembley Stadium. (Don't be put off by the fact that he was Chief Exec of the Football league - the ITV Digital deal was done before he was appointed). His expertise is in mergers and take-overs!! Is he genuinely a non-exec at Celtic?? If so then this give huge credence to all of our arguements over the past few months!!
DavieL
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celticbhoy - you are totally correct my friend. But why where you listening to Clyde in the first place :-)
Keevans, Leckie, Provan, DJ, Chick Nick (im sorry), everyone of them a headline grabbing fool.
None more so than Provan who is the prime example of those ex-celts who like nothing better than making constantly negative remarks about the club for a few more dollars.
The boycott shouldve begun years ago mate.
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If that was the opinion voiced by Mr Leckie I find it an interesting one considering I went to school with his son and it was catholic through and through.
If he believes catholic schools are the root of such evils as sectarianism then why perchance would he choose to send his beloved offspring to one when there were three other perfectly good nondenominational schools in the area.
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Celticbhoy, couple of points to say on this matter:
Drop the words “Catholic schools”. Replace with “Christian education”.
Some people openly disparage Christian education and blame it for sectarianism in Scotland. This is of course, nonsense, and in itself a product of religious intolerance.
When tackled on the subject I often find “Oh I don’t mean all Christian education, only the Catholic type” tripping off the tongue before they realise what they are saying.
In no other country is a Christian education regarded as being sectarian.
Having said that, I really object to being drawn into this debate (Celtic that is). We should move on.
The more important subject; as Bobby Ewing said, why were you listening to this stuff in the first place?
We all know the agenda by now. They are there to sell advertising; they have lots of air/space to fill and will use any method necessary to draw listeners/readers.
While some will abhor what was said above, some will agree and listen more. Job done, and job done very well I may add.
Don’t blame the newspapers, radio, TV or web sites, they are very effective at doing what they are in business to do. It is you and I and all our friends who need to learn the lesson.
DavieL
I don’t know what Keith Harris is doing with Man U at the moment, but we have just appointed his as our stock broker. I agree with your assessment that his appointment sounds like a move towards what we have been discussing.
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Glad to see that Keith Harris is no longer singing "I wish I could fly" with Orville.
Any radio station that employs Hately for his radio 'skills', is not catering to the neutral or intelligent listener.
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Cambuslang and Paul
Your opinions?
Moving to the Premiership is of course what we as supporters dream about. Fixtures like Man Spew at home, Chelski away, humping the Scousers at Goodison etc.
BUT - How can FIFA sanction this?
What would stop Juve applying for a move to La Liga? Precedent would be set. That's just one example. Monaco or Ajax to Serie A?
I just don't see it.
What is very tasty however is the revenue. Imagine handing our Blessed Martin £20m+ in additional revenue. Beggars belief!
C'mon the Hoops.
B
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Regarding your original post Paul, I am thankful that we were able to retain proven senior players; the prospect of transfer fees on untried players with huge salaries would not have been good.
In saying that, the Juninho fiasco still annoys. If he is not made for our team - why was he brought here, why is he still here?
Additionally, as much as I like Paul Lambert - was he really getting 20k a week while in Germany getting his coaching badge?
Too much of Celtics money has/is filling too many undeserving pockets.
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BLennon, one more time, Sep Blatter, President of FIFA himself came to Celtic Park last year and said that if the leagues agreed to the move FIFA and Uefa would not object.
One more time, these moves happen all the time, Gretna done it three years ago.
Half Fool
Agree with your assessment. From memory I think Paul Lambert was given his last contract in 2001. I remember him well against Basel; he had clearly lost his pace even then.
Nothing personal against Lambert, but it was a mistake to give a player of his age a four year contract on such massive money.
Looking forward to Sunday we have to be pleased with a midfield of Lennon, Sutton, Thompson, Petrov (which I expect). All players we have moved to retain.
I see that Henri Camara scored two goals for the World XI tonight in the charity game in the Nou Camp. There have to be a lesson there for us.
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Paul - the interim results will be very interesting indeed. Will they simply write off any remaining value on the players who have re-signed. I suspect so.
I have heard some very worrying things about summer activity (or indeed the lack of it) from various reputable sources. As promised however I will hold my tongue until we are there.
I don't really advocate blaming the press - but this so called summit on sectarianism is simply laughable. I watched the BBC news reports on the morning of this "historic event" and all they showed was Celtic fans and republican marches. I complained to dear old bigoted Auntie Beeb and I presume a few others did - they changed their "library pictures" in the afternoon to try and appear more balanced.
The Celtic Paranoia book is indeed excellent (though I don't agree with the overall conclusion) - the main fact I took out of it was that the BBC had their own sectarian signing policy with regards to recruitment up until the 1950's.
We are supposed to be pleased they are talking about it - but all they have done is lump us back together. The sectarian arrests and assualts show where the problem lies(but of course they didn't want to talk about that), take a trip to Ibrox and all your hear is hatred and bigotry - not so Parkhead - but lets ignore it.
But worse than that is the fact that the summit gives legitamacy to an institution which exists out of hatred for catholicism - the Orange Order.
Oh yeah Jack lets talk about Scotland's shame but allow these clowns to walk down the middle of the road, stop outside chapels and intimidate.
Personally I rejected catholicism ages ago - it can be equally as repugnant(my view guys). However this crap about the blame lying at "both sides" is galling.
This country is institutionally sectarian. The fact that Rangers had an openly sectarian signing policy until vey recently - which was tolerated by all of our institutions - isn't even mentioned.
Blaming catholic schools is just another symptom of the institutional sectarianism. Of course we will ignore the fact that these schools were set up to provide an education to children who were being denied it because they were catholic.
I DO believe that education should be purely secular. It should be up to parents to make the effort to teach their childen the religion of their choice. I've been watching the rise of the Christian right in the US with some dismay - soon we will be called to morning prayers at the workplace. But to concentrate on this matter betrays the real thoughts of the speaker.
Until this country faces up to its past history, until they stop lazily blaming it on both sides when we ALL know where the problems are this issue will continue to fester.
In the meantime we should simply reject this half baked initiative.
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Negative Anon
Are we about to see a test case?
Will they write-off any residual value in players who have re-signed to reduce the balance sheet, or will they amortise the remaining value over the period of the new contract in order to support the balance sheet?
I bet you are wrong :-)
We should be able to tell, if not you can write to them for the answer.
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Slightly off the topic,
I see Snoop Dogg has been spotted wearing the Celtic strip.
Could this be a major PR stunt by the board?
Could we set up a new merchandising deal to incorporate Snoop Dogg's label?
Could we see Snoop at the half-time draw?
Could I be any more tired.
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Are we sure Henri Camara does not have a twin brother....? Two well taken goals & controlling a football with, wait for it, first touch.....Oh well some signings you win, some signings you juninho.....SWBhoy
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Camara getting off to a flyer...scoring goals in low-pressure games and looking like he has potential- where have we seen that before?
We will see the other side of Camara when they get to the relegation battle at the end of the season....
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I saw Camara's quite outstanding goal for Southampton in his first match. He looked like a player with a weight off of his shoulders. Celtic is clearly too big a club for him. Posing in a high profile, no consequence (football-wise, I endorse the worthy cause of course)is much more his cup of tea than delivering in the SPL. I wish the boy well in England though, even if he couldn't hack it in our league.
Incidentally, does anyone else think that Bellamy just may be the making of Juninho?
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Hi Negative Anon
I am fairly sure Paul will win your little side-bet on the accounting treatment of re-signed players' residual values, but we'll know soon enough, and that's not why I'm writing today.
Your post set me thinking about your theory that the board is trying to depress the share price by writing down values in the balance sheet wherever they can. Previously, I've focused on what I see as factual errors in your theory relating to individual assets, but there is a much more fundamental point which both of us have been ignoring.
Let's suppose that you're going to buy a football club (or any other company for that matter). What will you do in trying to establish a fair price? You'll look at the assets and liabilities of the club, the future income potential, and so on, and decide what it's worth.
Of course, the balance sheet, P&L account etc will help you in this, but you are not going to stop there. You will look beyond these to the real world. In particular you will take into account the true market value of assets, not whatever the balance sheet shows.
So, if the club you're eyeing up has a bunch of high-quality, long-serving players whose acquisition costs have been mostly amortised, you're going to say "Well, Hartson, Thomson etc etc might not be showing on the balance sheet but I reckon they're collectively worth around £20M", and you will build that into your calculations. The person selling to you will be doing the same thing.
This can work both ways. For example, anyone buying Rangers (leaving aside the fact they'd have to be nuts to be thinking about it in the first place) is not likely to value Ibrox at the ludicrous £100M+ value currently shown in the club's accounts.
No-one is currently planning to take over Celtic (as far as we know) but the valuation process doesn't only happen during takeovers. For all publicly quoted companies, the stock market does this very job, every working day of every year. If the balance sheet of a company does not properly reflect its underlying assets, the stock market will 'look through' the balance sheet and value the shares higher (or lower) anyway.
There are many examples of this. In the property sector, some companies value properties or land bought decades ago at its acquisition value, although there is a potential profit of many millions of pounds should they ever sell these assets. Are the directors of these companies involved in some complicated scam whereby they will be able to buy their company's shares at a discount of unsuspecting outsiders? Simple answer: no. The market takes account of these assets and values the shares accordingly. These companies have share values which reflect 2005 land/property prices, not historical ones.
Celtic's balance sheet value is only £17M or so - but at current market prices, its shares are worth around £45M. That gap is there because the market sees either the possibility of future profits (maybe including some EPL hope value), or a disparity between the declared and actual value of assets, or both.
My point is this: even if I grant every point you have made regarding the board having a policy of writing down the value of Celtic's assets, the conclusion you draw (i.e. these policies are depressing the share value) is flat-out wrong.
Celtic's accounting policies will only affect its share value if those policies are so convoluted and opaque that the market finds it difficult to see what's going on (Enron being a good if extreme example of that).
That's clearly not the case. While we can argue about whether Celtic's balance sheet is presented in an excessively conservative format, we must surely agree that the assets of the company are public knowledge, as they consist principally of the stadium and players. Far from opacity, there is near-complete transparency regarding the club's assets and liabilities. In those circumstances, Celtic's share price should reflect the club's true value, irrespective of the board's accounting policies.
I think this point is pretty much beyond argument - though of course you may disagree. However, even if I'm right, it only demonstrates that you are wrong in thinking the board is manipulating share prices via the accounts. It does not prove that no manipulation is happening.
Let me suggest one possibility for you to consider. Celtic shares are very thinly traded, on a typical day only a few thousand shares change hands. Large blocks of the equity are concentrated in a few hands, and much of the rest is held on a long-term basis by committed fans, most of whom own 1000 shares or less.
Given this situation, it would be fairly easy for someone with a substantial shareholding - let's call him Mr X - to arrange for the club's share price to move in whatever direction was desired by buying or selling relatively small amounts of shares from time to time.
All directors' shareholdings in the club are declared in the club's accounts, as are substantial holdings of non-directors, so Mr X would not easily be able to deal in this way without being detected. One solution to that could be additional shareholdings held through nominees, in ways that would make it very difficult to trace the ultimate beneficial ownership of the shares.
However, if Mr X concerned is also a director, it would be illegal for him not to declare a beneficial interest in shares held by nominees. If I were Mr X, I would therefore be inclined to achieve my hypothetical goal of depressing the club's share price by entering into informal agreements with business associates, whereby they might decide to buy or sell Celtic shares from time to time, and I might coincidentally be persuaded to involve them in profitable but entirely unrelated business transactions. Virtually untraceable; all but impossible to prove.
Manipulation of share prices is illegal in the UK, and I don't wish to suggest that it is happening at Celtic. It wouldn't exactly shake to the core my views of the financial world if I discovered that it was going on, though.
I'm afraid that your accounting theories don't hold water; some of the board's accounting decisions which you have criticised have actually had zero net effect on the balance sheet (e.g. the deferred tax asset), and all of them are subject to the X-ray vision of the stock market which renders them useless as a means of affecting the club's share price. If you want to garner evidence that Celtic's share price is being manipulated, the place to start looking would be the company's share register.
Before you start looking, though, consider this. If you were an investor looking at Celtic purely with a view to profit, what would you say the club is worth? If it makes it to the EPL, then a lot. But if it doesn't? £45M doesn't seem to me to represent a gross undervaluation of Celtic in its current circumstances, bearing in mind that it would take closer to £100M actually to buy the club - most shareholders wouldn't sell at anything like the current price.
One final question. If you really think the board is depressing the share price, what would a fair price be in the absence of their manipulation? What do you value Celtic at - not personally, but as a business? Without that point of comparison, it's hard to evaluate your suggestion that the share price is lower than it 'should' be.
Finally, I found myself agreeing with almost everything you said about the recent sectarianism debate and religious education. Which is probably worrying for both of us!
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I’ll put my cards on the table, I was brought up in the Catholic faith only later to become a born again atheist. I have for many years worked in Catholic schools, however, education to me should be, as in France, secular. (PS a Celtic fan since the 1965 Cup Final)
Paul67 you said “I really object to being drawn into this debate (Celtic that is). We should move on.” Well after this I will not raise it again after all this is your site so you are entitled to the ‘my ba’ mentality.
Whatever your reasons for wishing to “move on” are yours however, this debate is not only being discussed at the highest govt levels it shapes the way Celtic and those who believe in the right to a denominational education are represented. To ignore it is in itself not only ‘lazy journalism’ but plays into the hands of those who would use it to attack Celtic. It also allows individuals to make comments like the one made (and we have all heard them) as de facto statements.
That maybe answers Bobby Ewing’s comment as to why I would listen to Radio Clyde in the first place.
Paul67 you also said ”While some will abhor what was said above, some will agree and listen more. Job done, and job done very well I may add.” Surely you have to ask the question what job is being done here it. To say as you do “Don’t blame the newspapers, radio, TV or web sites, they are very effective at doing what they are in business to do.” is real head in the sand stuff for this statement would excuse any sort of attacks on any group or individual via the press ( see the current debate as to Mayor of London comments). Should both MON and Neil Lennon not have taken the media to court and won successful cases and just said oh well they “doing what they are in business to do”? Would it have been better for the people of Liverpool not to have taken action against the Sun after Hillsbourgh saying they “doing what they are in business to do”?
CambuslangisaReality I’ll take your correction in good faith and thank you for it.
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Celticbhoy
I had no objection to you raising the sectarianism debate here, I was objecting to Celtic sitting around the table with other parties, as I don’t believe we are equal partners in that debate.
Your media question; if you are wronged in the media as Lennon and O’Neill were you have every right to seek recourse, however, this does not establish a case for consuming their output.
The media will not change if people still listen to and read them. Selling adverts is their business objective and they do it very well – this is not me condoning their behaviour, I am simply stating the obvious.
If Celtic fans want the media to change their approach to Celtic they have the power in their own hands. Don’t read them, don’t listen to them, don’t click on them and they will soon get the message.
Your example of Hillsbourgh and the people of Liverpool is an excellent example of this. The Sun soon got the message and spent a lot of time trying to win back market share (which it still has not done).
Listening to them, even if you complain afterwards, only gives them a chance to pitch their advertising at you. Clicking on their web site only gives them a chance to charge the advertiser for displaying his advert to you.
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NeilR-interested to see your new take on the ongoing Debate with NegAnon re the balance sheet and the value of the club.
It's been something I've been chewing over, weighing the many pointers from this site and elsewhere. Apologies in advance for the speculative nature of the next part. Not being privy to 'inside' info. means it can't be too much more than this.
If we accept that the club is presently undervalued then who might benefit from that-and what might they do to benefit? I make no comment on NegAnon's theory that the club value(share price) is being maintained at an artificially low level.I don't have the expertise to know whether that might be possible or plausible. Maybe the small volumes of trades. I take your point Neil that any bidder would have to look at the underlying asset value. But what if we aren't looking at a bidder? Here comes the speculation!!
New stockbrokers have been appointed. Fargo says something big is happening!!(I can't quite marry this with the eggs and the river but what the hell!!)
What if there was to be a rights issue? For the unitiated have a look at this link for an 'idiot's guide'-my level as well!
http://www.moneyworld.co.uk/glossary/gl00090.htm
Rights issues are traditionally discounted. DD & Co.(including MON!) would be able to buy further shares at a discount to present(low) market price. As would other shareholders. One might expect that if DD was behind it then he would take up his full uptake. Smaller shareholders(like some of us) might not for a number of reasons-food required on the table for instance.The lower the share price the less DD has to come up with.
What would happen further to a rights issue? Well-it would wipe out the debt-we would be financially sound for any move. It could fund transfers-cash straight to the bank. It could fund a substantial legal challenge in Europe(or threaten it). Expand the stadium? Build a new training ground?! Buy a feeder team?!!
Who knows? I'm just throwing this out there. Any takers?
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Paul wins the bet...
Celtic like other companies have to prepare their financial statements in line with existing accounting standards. Although these in some areas are open to abuse (for example the timing of writing off a deferred tax asset)the amortisation of intangible assets are pretty strict.
Amortisation will be written down over the useful economic life - ie the terms of the original contract. Any bonuses relating to the new contract will be over the new contracts life.
NeilR- Although share manipulation is illegal theres not many people get prosecuted. This results in the ramping up of shares on ervey bulletin board in the UK....
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Perhaps a sign of things to come :
Switzerland's top football league will be missing a club when the season resumes this weekend following confirmation that Servette Geneva are no longer in business.
The Genevan side announced on Wednesday that a late bid to rescue the bankrupt club had failed to materialise.
Formed 115 years ago, Servette were the only Swiss club never to have been relegated from the top division.
Matters off the pitch were to ensure the club's collapse, however, following the club's takeover by former player's agent Marc Roger.
The Frenchman ran up debts of more than ten million Swiss francs ($8.33 million) after authorising the acquisition last summer of 21 players, including French World Cup winner Christian Karembeu.
Many of the players, including Karembeu, have since left the club after their wages stopped being paid.
Servette Geneva will continue to exist only as an under-21 side, playing in Switzerland's lower divisions.
A Swiss league spokesman told Reuters on Wednesday that the top division will resume play as planned this weekend, but with nine clubs instead of ten.
Points taken from matches against Servette will still be valid as every club in the division had played the Genevan side twice before the winter break.
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Paul - test case it is - lets see what they do.
Rumoid - methods of amortisation are an accounting policy choice. Celtic are ultra conservative here - in my opinion for reasons I have outlined earlier and below.
Neil - what you say in your post is factually correct - however I think you're missing some of the realities facing Celtic. I also think you are failing to ask yourself the important questions.
Valuing any company is very difficult - generally, if its a hostile takeover then the proposed buyer will offer a premium above the share price. This is designed to force the director's hand by invoking their fudiciary duty to look after shareholder's interests first and foremost.
But thats not what's going to happen with Celtic.
DD is the main man here - I presume you know that DD's friends also have substantial celtic shareholdings - though these are not formally connected through nominee arrangements. DD's "de-facto" controlof celtic is well beyond the percentage where he would need to make a bid for all the shares.
As for the share price - well as you pointed out (and as I have pointed out in the past) the trade in celtic shares is not efficient. Generally though the share price will move in line with the success (or otherwise) of the club.
And here is where my theory reasserts itself.
1) Celtic's balance sheet is at a criminally low level at £17M. Remember this includes all the players, stadium and general infrastructure (ok lets knock off a few million for that bloody ticket office). Paul has pointed out that, the weakness of this balanc sheet is hampering arrangements with the bank.
The first question you must ask yourself is WHY. Why are the board maintaining the balance sheet at this level. It makes no sense when it hampers our potential success. As I said before - why not revalue the stadium to a sensible level.
2) Seville was our big chance - a chance to build on success. A chance to sit at the top table in Europe - all it needed was a modest investment. The board did nothing - again ask yourself WHY -was it really down to having no cash after such a lucrative run?
If you add 1 and 2 together you have a situation where the board is presiding over a balance sheet which you must agree is too low - but argue that they have no cash to invest/borrow against. At the very least the board are being outrageouly unambitious. But we have already shown that they are talking bollocks on the Don't speculate to accumulate nonesense. I think we all agree they are taking some enormous risks in the impending attempt to move leagues.
So what we have here is a combination of keeping value off that balance sheet and limiting our Eurpopean success - BOTH of which will keep the share price depressed.
Which in turn will allow DD to buy more of those shares - either through a rights issue - or if he is bolder - an offer to buy the club outright. I suspect the former - because his chums/coherts - who are along for the ride will benfit. So will those of us who are shareholders (if we have the cash to maintain our holdings). xiledinaberdeentim - spot on in your analysis here.
And as discussed - if we get entry to the EPL - bang! DD has made a very tidy profit.
Neil - I know you are not niave enough to believe that boards don't manipulate things in this manner. It happens all the time. And as for company accounts - you know what - I have never seen acounts which are not opaque - thats simply part of the game.
So hopefully you'll see why I don't think what I am saying is flat out wrong (though it could be wrong as a theory).
Oh - and you know I completely disagree with what you say on that pesky (and odd) tax asset.
I don't understand why you think it would take £100m to buy the club -is this the point about offerring a premium?
As for a fair price for shares - the current price is probably fair - but remember its based on the lack of European success since Seville - which is a direct consequence of the board's policy. As a result its impossible for me to come up with anything else. Now if we had bought wisely after Seville and gotten into second stages of champions leagues etc - that share price would be an awful lot higher......
You've got to keep asking why - why do nothing - is it just a lack of ambition? Well DD is nothing but ambitous. So why not invest? Is it because we have no money? So why have an artificially low balance sheet and restict your borrowing ability? If its not that then WHY?
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morning Paul, fellow tims
small point Paul. I think you will find Lambert is in the second and final year of a 2 year contract
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camara - four good goals but i'd rather have bellamy in the hoops.
when it matters the bhoy will score goals (here's hoping!)
would love everybody to focus on defeating the devil's children.
And let's remember CELTIC FC are not just a business but something that a lot of people put their lives into.
Hail hail
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Well said Franco67................
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I presume everyone has noticed, but we are listed as then 13th 'richest' club in the world according to the latest Deloitte report.
http://news.bbc.co.uk/1/hi/business/4269991.stm
Paul, does this go along with what you would expect our turnover to be ? Do you agree with what the report outlines ?
The financial realities of our club are well documented here and try to understand as much I can.
However it is still counter intuitive to me that clubs who have less cash passing through them, such as Spurs, can spend 10 times the amount of money we can.
Note: Before everyone jumps in, Im not trying to go over old ground. Rather pointing out how strange things can be. I Cant help but think tommorros DR will feature an shocker exclusive about how the 13th richest club in europe SHOCK wont give thier manager a transfer budget SHOCK. which surely means he will be leaving to take over at aston villa SHOCK. :-)
bobby.
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Negative Anon,
I think both yourself and Neil make really valid points however, we forget that DD has to SELL his shares before he can make any profit. ome of the sentiments toward DD and the board suggest to me that some readers of this forum would rather have a new board - betterthe Devil you know and all that.
Franco67 - to say Celtic is a way of life and more than a business is buryingyour head in the sand. We all love the club and team but both sides of the coin are inextricably linked.
Roll on Sunday I'm bursting with excitement over this game - can't wait!!
Hail Hail
Martybhoy
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I presume everyone has noticed, but we are listed as then 13th 'richest' club in the world according to the latest Deloitte report.
http://news.bbc.co.uk/1/hi/business/4269991.stm
Paul, does this go along with what you would expect our turnover to be ? Do you agree with what the report outlines ?
The financial realities of our club are well documented here and try to understand as much I can.
However it is still counter intuitive to me that clubs who have less cash passing through them, such as Spurs, can spend 10 times the amount of money we can.
Note: Before everyone jumps in, Im not trying to go over old ground. Rather pointing out how strange things can be. I Cant help but think tommorros DR will feature an shocker exclusive about how the 13th richest club in europe SHOCK wont give thier manager a transfer budget SHOCK. which surely means he will be leaving to take over at aston villa SHOCK. :-)
bobby.
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Negative Anon
I don’t know if we’re any closer to agreeing on things, but you do seem to be accepting that certain things you have said in the past are wrong. Most of the things you say in your post don’t support the claims you have made in the past.
NA: “..all company accounts are opaque – it’s just part of the game”. That is a straight acknowledgement that the Celtic accounts are not unusually opaque, which is something you have previously maintained.
NA: “..the current [Celtic share] price is probably fair”. This is a major statement from you. You are saying that any hypothetical manipulation of the Celtic share price going on HAS HAD NO EFFECT WHATSOEVER. Given this strong evidence advanced by you that no manipulation is happening, why are we even discussing it?
You have retreated to a fall-back position of saying that although the share price is fair now, it is fair in relation to the club’s reduced circumstances, which are the result of the board’s deliberate policy of not investing in the team post-Seville. In other words, the board has actively sought to promote Celtic’s failure on the football field in order to depress the share price.
This is unfalsifiable; no-one can prove it is wrong. But it is an amazing allegation and one which I would like to see backed up with a little evidence. I don’t say you’re ‘flat-out wrong’, but what I have said many times already is that strong claims require strong evidence. You postulate extreme ideas and advance no evidence to support them.
MON is a proud and principled man. Do you think he would have stuck around for the last two years if there was a vestige of truth in what you allege? Would some of our best players, who could have found better-paying contracts with other clubs in bigger leagues, have re-signed for the club if they felt the team was being undermined? No, and no. You see a conspiracy by the board which MON does not see. I think he is rather better placed to judge; his actions speak louder than your words.
I share your frustration about the inability of the club to progress on the field after Seville. I do not share your refusal to accept the obvious truth that Seville was due to the club having gone out on a limb financially to support MON in 2001, with the result that the success we had was actually imperative if the original investment was not to prove a terrible financial burden in the style of (though much less severe than) Leeds and Rangers.
The board has made two big gambles since 1999. First, Barnes / Dalglish / Scheidt / Berkovic, which failed. Second, MON / Robertson / Sutton / Lennon, which succeeded.
Some people have castigated the board now for being irresponsible and gambling with the club’s future in 1999. If that’s true, they did the same again in 2001. You could reasonably give the board a hard time for taking too many chances with Celtic’s finances. Instead, you are giving them a hard time for being too prudent, which flies right in the face of the evidence of the last six years.
NA: “..I completely disagree with what you say on that pesky (and odd) tax asset” I have previously demonstrated with utter clarity that over its lifetime the asset had NO net effect on the balance sheet. This is a matter of simple arithmetic, an asset was added to the balance sheet, and later taken away. I took the trouble of having that analysis confirmed by a tax partner in a big 4 accountancy firm, and told you so in a previous post. You have never refuted what I said, or tried since then to explain to the rest of us how the tax asset has been used to run down the club’s balance sheet. In a previous post, you have said how when presented with facts you are always willing to change your mind. Not on this issue I’m afraid.
NA: “ Celtic’s balance sheet is at a criminally low level of £17M”. No, it is not. It is at a perfectly reasonable level of £17M. If you think differently, it should be easy for you to be specific. Which assets should be shown at a higher value?
All the club’s cash is declared. The stadium is shown at a very fair £35M. The playing squad is shown at well below its true value IN LINE WITH EVERY OTHER FOOTBALL CLUB IN BRITAIN. These are the club’s main assets; nothing else is on the books at a figure much different from its real value.
Your balance sheet argument is ultimately irrelevant anyway, as it has little or no effect on the club’s finances. The club and its bankers are well aware of the player’s value. The bank will lend against what it considers to be adequate security. It knows what the club’s assets and income are, and is perfectly capable of adjusting the balance sheet values to the real world in deciding on its lending policy. Bolstering the balance sheet by an unprecedented revaluation of players (or the stadium, or anything else) wouldn’t change a thing.
The real answers to the club’s situation are blindingly obvious to anyone who doesn’t have an anti-board / DD / capitalism agenda. The club spent every penny it could up to 2002; there has been little or no additional bank funding available to Celtic since then, and MON has chosen to spend most of his substantial (and increasing) budget on retaining existing squad members.
These are the over-riding reasons why there has been minimal investment in the team since Seville, and those who choose to believe otherwise are flying in the face of the clear facts shown in the club’s accounts and confirmed by even a superficial examination of wider football finances in recent years.
I would be amazed if DD was not interested in maximising his profits from Celtic. After all, that is the motive which allowed us to benefit from millions of pounds of his money already, and I didn’t hear anyone telling him not to invest at the time. But to jump from that reasonable assumption to alleging underhand or even criminal behaviour on his part without a single shred of evidence to back up these assertions is not debate, it is libellous scaremongering and can serve no constructive purpose.
You are spot on in pointing out that if a discounted rights issue is launched, and the club is subsequently successful in getting to the EPL, it will be to the financial benefit of all those shareholders, large or small, who take up their rights to buy. I will add to that, if we as fans turn away from the club at that time and allow others to profit from our short-sightedness, we will get what we deserve.
If there is any possibility of maintaining a high percentage of Celtic shares held by fans in future, we should be striving to ensure that happens. I believe that the percentage of shares held by fans is a very important factor in determining the future direction the club takes. If it stays over 25%, it will always be impossible for a Glazer to come in and take over the club entirely. When the next share issue comes, we should all dig as deep as our circumstances allow, and take up our rights.
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Wee correction for you bobby, we're actually the 13th most money-making club in the WORLD. Not sure if that makes us the 13th richest though.
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The Rich List makes interesting if depressing reading. The gap between the top clubs and the rest is increasing. The top 10 clubs in the list won 8 of the last 10 CL trophies, and provided 5 of the runners-up. They won 4 UEFA Cups for good measure. Who would predict anything but a strengthening of that grip in the next decade?
Financially-troubled Roma apart, it is clear Celtic cannot hope to overtake any of the clubs above it while remaining in the SPL; our 2004 turnover (which is probably going to be lower this year) was £21M short of the 11th club, Newcastle. Even the odd £5M a year from Nike or other sources will not change our fundamental status as a second-tier club. We cannot climb to the top levels of European football under these circumstances.
We can of course succeed in any one year, CL semi-finals or a UEFA Cup win are not impossible dreams. We cannot reasonably hope to achieve consistently at that level, though, until we escape to the EPL or a European League.
We can also hope to make better use of the resources we have. Several clubs below us have won European trophies in the last 10 years, and have generally outperformed us in Europe. Porto and Ajax have shown what is possible.
Equally, though, we could do a lot worse. The bottom half of the list is a veritable roll-call of clubs which have over-reached themselves financially and have suffered as a result: Roma, Lazio, Marseille, Rangers. Borussia Dortmund (and of course Leeds) do not even make it into the table.
If the list demonstrates anything, it is that whatever money the board might be able to borrow and spend on the team could only have a temporary effect on our fortunes, and that the risks of doing so are considerable.
We must achieve a move to another league, or accept that our dreams of returning to the top table in Europe are just that – dreams.
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Bobby Ewing, the figures are correct all right.
You are right to highlight the Spurs comparison; they are following a different route from us. Over any business cycle all bills need to be paid, though, and they will need to recover their losses in the same way we will.
While these figures make stark reading, it is clear that Celtic is miles ahead of other teams outside the big five leagues.
I am convinced that if we were to make it to England we would be top three, and would enjoy the kind of European success achieved by the clubs currently there.
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The whole 'Sectarian Sumit' is a complete joke, but sadly one that Celtic cannot afford not to back, can you imagine the negative press we'd recieve for that ?
The Evening times ran a piece yesterday on 'Sectarian pubs' yet only mention Bar67 and Baird's, not one mention of pubs from the other side. They also seemed to go on about Police complaints against these pubs, what chance have you got if the police are making the complaints and also complain about trouble when they allow an Orange Walk sorry a War rememberance walk to go through the Gallogate, a very well known Celtic area, and the bbc were not willing to interupt a Rangers game to announce the death of the Pope.
Another complaint was of Pro IRA chanting, some will claim that this is a political belief and so not Sectarian, you may disagree with this but if the Government can justify the needs for the Orange order to attend the summit, an order who's whole exsistance is to be sectarian to Catholics, then you can justify anything.
Act of Settlement, 1701.
there's an interesting law.
Sadly though, we cann't afford to not be part of these talks and must be seen to fully support them.
We can wait and wait but the apology or admitting of being guilty will never come, we're just going to have to live with that, honestly I just wish we were all just better educated.
Rant over. I'm just bored reading about the money at Celtic, even found myself looking for Forgo posts :), lets just win the league get to the summer and see what it brings or doesn't.
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Good point regarding stadium revenue:
http://www.theherald.co.uk/sport/33638.html
Much of the Act of Settlement 1701 has thankfully been repealed over time. However it will never be totally void until there is a seperation of Anglican Church and Crown.
Don't know about you guys, but I am concerned that this sectarian conference will open the floodgates to anti-Celtic (and only anti-Celtic) media coverage on a much larger scale.
We may get UEFA fair play awards abroad but at home we are tarnished by the Old Firm brush.
We all know where the culture of hate is encouraged and it isn't in Paradise.
Anyway, roll on The Game.
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Neil,
You still aren't listening to me and you still think that if you keep saying something enough then it must be true.
Please try and open your mind here (and admitting your wrong is a sign of strength not weakness).
1) Most accounts are opaque - Celtic's included - are you accepting this then.
2) That task asset - can you explain where the asset actually came from in the first place? Didn't it come off the P&L? Of course it did and so the net effect is to reduce profit in a particular year, create the asset and then write the asset off. Net effect? Aritificially reduced profit.
3) I know you like evidence - but the only evidence you really have for the board's stated position is becuase they have told you so. Much as you might like it my position is equally viable if you aren't willing to accept what they say.
4) So are you REALLY telling me that the book value of celtic is £17M - c'mon Neil - that really is crap.
5) You then go on about bank lending - well you are contradicting Paul here - are you saying that the bank will give loans on the basis of value not included on the balance sheet?
6) I agree with your share ownership point - but do ordinary fans have the cash?
Martybhoy - you're right he would need to sell the shares to realise the profit (but didn't McCann do the same).
Neil - I am not in a court of law here, I am proposing a theory (which, despite what you say and think, is well thought out and perfectly plausible).
Finally - did the board really want celtic to fail in Europe - well let me put it another way. If we failed in Europe they win (in the long term), if we did well in Europe they win (in the shorter term). A perfect risk hedge if ever I saw one.
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Negative Anon
I really am listening to you, and going to a great deal of bother to explain your many misconceptions about Celtic’s finances. I do hear your central idea that the board is conspiring against the fans’ interests to maximise DD’s profits. It just happens to be X-files standard nonsense.
Points below numbered as per your post. To everyone else, I apologise for this whole Groundhog Day thing and promise to give it a rest for a while after this post.
1 Company accounts have to meet exacting legal standards. Because of these, they use a number of technical terms, which makes them difficult but not impossible for the lay person to understand. They are intended to give valuable information to those who have taken the trouble to understand them, in a form which as far as possible will allow like-for-like comparison with other businesses. I have taken that trouble. You evidently have not.
Celtic’s accounts are neither more opaque nor more informative than the great majority of plc accounts. They provide no support whatsoever for your theory. They provide a mountain of evidence for mine.
2 I am going to explain the tax asset one more time, very slowly.
The tax asset did NOT originally come OFF the P&L as you suggest. As a NEW ASSET it was ADDED TO the P&L (in bits, over a few years). Then later on, it was TAKEN OFF the P&L in its entirety. The same amount came off the P&L as went on it in the first place.
Again: to begin with the tax asset INCREASED PROFITS and ADDED TO CELTIC’S ASSETS. Later, when it was removed that DECREASED PROFITS and REDUCED CELTIC’S ASSETS, by EXACTLY the same amount that had been added earlier.
Net effect: ZERO. Zero point zero zero to be precise.
Some of our disagreements are matters of opinion. This is a matter of fact and you are embarrassingly, persistently, closed-mindedly wrong. Take half an hour, look at the accounts in the relevant years, and you will see this. If you can show me different, I’ll donate the usual £100 to the charity of your choice to make it worth your while. Post your explanation to CQN and others (not anons!) can vote on it. I lose; I pay up.
3 You reckon I have no evidence, and neither do you – so your position is as tenable as mine. OK, I will play by your rules, I will ignore the professionally-verified evidence of the accounts, the continued presence of MON in the face of the board supposedly undermining his team for the last 2 years, and the other 20 things I have advanced to support my thesis. Nor will I gripe about the utter absence of support advanced for your ideas. So we’re starting even.
Now: look at our positions. I say the board is making a more or less decent job of a very difficult position; I say they spent a lot of money earlier on (fact) and the subsequent ‘prudence’ has largely been forced on the club as a result of that.
You say the board is involved in a long-standing criminal fraud against other shareholders, not to mention Celtic’s sponsors and fans.
Here’s a third theory for you. Dermot Desmond is an android sent from Betelgeuse and controlled by thought-waves from Rangers-supporting aliens. And I am another.
Now there is nothing inherently illogical or inconsistent about any of these ideas. So how are we to differentiate between your, my and the alien-control theories? I suggest that because the aliens theory contains highly contentious statements, anybody proposing it should really divvy up with some evidence before we will take him seriously. Fair enough, surely? Well, that’s where I am with you. I am not the one making outlandish allegations. You are.
For months now we have been talking about this, and you haven’t come up with one single thing which stood up to even a minute’s reflection. Your theory is entirely possible, and entirely implausible, and entirely lacking in evidence. You’re right up there with the alien control brigade.
4) You say it is ‘crap’ to believe the book value of Celtic is £17M. Go on, then, what is it? Which assets are understated in value on the balance sheet? We know about the players, we treat them the same as every other UK club. What else? Where is the under-value? Tell me.
You can’t. You avoid answering the question, because there is no answer.
5) NA: “You then go on about bank lending - well you are contradicting Paul here - are you saying that the bank will give loans on the basis of value not included on the balance sheet?”
Of course I am saying that about the bank. Again, this is not an opinion, it is a fact, for assets which represent acceptable security to the bank. I have seen banks lend substantial sums of money to companies I deal with, secured on the real value of property which is shown on the balance sheet at negligible value. Players do not, generally speaking, represent acceptable security.
I am not contradicting Paul either. I am saying that there are NO UNDERVALUED ASSETS within Celtic on which a bank would lend. As I understand it, that is exactly Paul’s position. If you have cleverly spotted some, please share this knowledge with the rest of us. If you haven’t, can you please stop making these oh-so-convenient but entirely unjustified assumptions?
6) NA: “I agree with your share ownership point - but do ordinary fans have the cash?”
We all make choices. Lots of Celtic fans spend a huge amount of their money on the club. What they spend, and how they spend it, is absolutely their own decision. If they want to benefit the club to the maximum possible amount, though, and can’t afford to put any more money towards Celtic, I’d suggest they stop going to away SPL games which only put money in the coffers of bus companies and other SPL clubs, drink a pint or two less after each home match, and put the money saved into an account towards buying Celtic shares – either on the open market now, or at the time of a share issue if new shareholders are invited. Anyone that wants to carry on as they are, and not to buy any shares at any time, is no less of a Celtic fan, but the club will be poorer because of their decision.
And if we as fans don’t want rich people to put our money into the club, and prefer for it to live within its current means with no further financial support, then let’s make that clear to the board now. To accept money and then to turn aga |
