Celtic accounts, asset management

Celtic’s annual results for the year to 30 June 2021 were released this morning.  This was an exceptional year as the stadium was closed to spectators for the entire season, although, as the figures demonstrate, season ticket sales, or the ‘Pass to Paradise’, made a crucial contribution to the club’s health.

Finances to the previous year, to 30 June 2020, was impacted by the curtailment of that season and millions of pounds of refunds, so our normal comparisons at this time are moot, it has been two full years since the club traded normally.

Income fell almost £10m to £60.8m.  This is £23m less than the year to June 2019 but still significantly higher than the £52m in Ronny Deila’s last season, to June 2016.  Operating expenses soared above income at £74.4m, leaving an operating loss of £11.5m.  A year earlier, the club effectively broke even, having made a profit in each of the four prior years.

A straight £5m of Other Income was recorded during the year.  I expect this will be HMRC Business Support, Covid-19 related.

The sales of Jeremie Frimpong and Patryk Klimala brought in a net £9.4m after sell-on payments, principally to Manchester City for Frimpong.  Despite the disappointing season, £13.5m was spent on player acquisitions, with Vasilis Barkas and Albian Ajeti making up the bulk of that figure.  The year-end cash figure, net of bank borrowings, was £16.6m, not much changed from the previous year’s £18.2m.

With all the bars and kiosks closed, Football and Stadium operations income fell the most, from £35.8m to £20.8m.  The biggest surprise in any part of the figures was the rise in Merchandising sales, from £15.0m to £22.6m.  Considering that in-person retailing was inhibited for much of the year, this is a stunning increase in what I assume was online sales.  The commercial metaphorically department kicked every ball.

The club paid £630k to settle contract terminations, Neil Lennon’s severance will feature heavily here.

So much went wrong with last season it is remarkable that we are able to report losses of ‘only’ £11.5m and a positive cash balance, my early season expectations were that we would be in overdraft on 30 June.

With hospitality, Stadium Operations and ticket sales for European and cup games, income should push towards £80m this season.

We have talked here about Asset Management for 17 years.  The post-year player sales indicate that despite horrible performances on the field, our player asset values were very high.  With a different manager, who knows?

Player purchases in the summer were concentrated around the 26-year-old age group.  There is less room for asset appreciation in this new squad as there was among players we sold this year, so either we sell our new stars very soon, or we accept they will leave later in their careers for nominal or no fees.  That decision will fall to a new chief executive, I expect few would be bold enough to announce thier arrival with a sale of assets, so expect to keep our main talent for a while.

That is a problem for the business model, one we have not seen since Martin O’Neill’s great team died on its feet, with a huge wage bill and no resale value.  Fortunately, this squad can address the problem by winning the league and delivering compensating income from the Champions league, so no pressure now.  Strategically, we need to get back to maximising Asset Management potential as soon as possible.  Failure to do so always ends in clubs having to pull back eventually.

As a community, Pass to Paradise subscribers, staff and executives, we navigated the club through a year of genuine systemic threat in good shape.