One of the surprising elements when we compare Celtic and Newco’s accounts is that the former have a higher wage bill: Celtic, £60m; Newco, £64m, despite Celtic having a bonus liability for winning all three trophies. The variance is even more stark than it looks. Celtic’s wage figure includes 130 retail staff, Newco’s retail operation is outsourced, pay to staff in their shops is not included in that £54m.
One area I prefer the Newco accounts to Celtic’s is that they show fixed costs. This appears as ‘Other operating charges’ in their accounts, Celtic do not offer as clear a figure. The Newco figure is £28m, consistent with the previous season and up from £23m in the last full season before Covid. Celtic’s fixed costs will be much the same (we have comparable electricity, stewarding, rates, insurance and other non-football costs).
Those fixed costs left Newco with an additional £55m for football operations. Assuming Celtic’s fixed costs are the same, their money available for football operations for the year was £92m. Let’s park this for a moment, until we look at the current season.
Celtic’s profit was assisted by exceptional items. £13.5m came from Covid insurance and compensation for Ange Postecoglou’s departure. Neither is likely to happen again. Despite selling Jota, Juranovic and Giakoumakis, our profit (sale minus kick-back to previous club and minus current asset value) was only £14.4m.
If we develop another Kieran Tierney and sell him for £24m, all of that money goes to the bottom line, but buying players in creates a completely different financial model. The latter is more likely going forward than the former. I doubt we will repeat anything like the sales of Jota et al this season, or for a while.
A couple of points on insurance and player trading figures noted above. Notes to Celtic accounts indicate insurance and compensation for a manager “do not meet the definition of revenue under IFRS 15”. Player sales also do not meet this definition. So although these payments significantly benefited profit and the cash position, they are not included in our £120m turnover figure. We have fewer cup games this season and one less trophy prize money, but income should be in much the same space.
Newco’s income will be down this season, I estimate to £70m. Subtract £28m fixed costs and they are looking at £42m available for football operations, before player sales income (but who can they sell?). It is not just that our income is 45% higher than Newco’s, which is significant enough in itself, the money available for football operations, by my estimate, is 215% higher.
You could say, “For every fiver they spend, we’ll spend £10.70”, but in reality, we’ll spend £10.70 and they’ll spend much more than this, until the day they don’t.
You see what is at play in Glasgow right now? Newco are in a horrible position if they are serious about trying to move Celtic off the podium. The new chairman John Bennet made disparaging remarks in his statement about the regime he took over, “Having spent recent months getting closer to the daily operations of the club, it is clear to me that there is widespread scope for improvement.”
“Widespread scope for improvement” is a clear dig at outgoing execs, Stewart Robertson and Andrew Dickson; Douglas Park may also have flinched on reading that one. But Bennet still banged the drum for good times to come.
There are two other things I would like to talk to you about: the new Uefa Financial Sustainability regs (which Celtic played a big role in designing) and our own bank balance, we’ll pick up on both later.
I started writing about Rangers’ finances here eight years before they went out of business. The direction of travel was clear and an outcome similar to what happened, inevitable. The only thing I didn’t know was how soon, or by what method, the walls would crumble.
This story has a few (?) seasons left to run, but the path is clear.