Naughty footballers, financial transparency

After Celtic’s reversal in Astana I pinned the decision to allow Kelvin Wilson to leave after the Elfsborg tie as critical.  It left us playing an unaccustomed central defensive partnership against Shakhter while generating only £2.5m.

Before Saturday’s game with Dundee United Neil Lennon suggested the player and his agent had been “naughty”, which might explain things.

It is not unknown for players to cite that they are “not in the right frame of mind” to compete for the club which pays their wages while there is an alternative deal on the table.  This tactic is a certified banker for the player, who does not need to fail a fitness test, he just needs to look a bit down in the dumps.  It is a shocking state of affairs which can cost their employers dearly.

I’m absolutely delighted to see the emergence of some interest in Celtic’s financial position over the last week.  The club have long term loan agreements, an overdraft facility, and, at any point in time, cash on deposit.  We have preference shares which, as long as the club attains certain financial covenants, will attract a dividend.  At any point in time we also money owe trade creditors, utility companies, other football clubs and HMRC, but as you know, for 126 years Celtic have always paid their bills.

Our NET debt position at on 30 June 2012 was £2.77m.  Since then we have had an excellent financial and footballing year.  In 2005 UK accounting rules changed, re-classifying some equity categories and debt.   In their 2006 financial statement, then chairman, Brian Quinn wrote:

“Under FRS 25 the group’s Preference Shares and Convertible Preferred Ordinary Shares, previously defined as equity, were reclassified as a combination of debt and equity; and non-equity dividends were in essence re-classified as interest.  As a result, net assets were £3.8m lower, net debt £4.7m higher and interest charges £771,000 higher than would have been reported prior to the implementation of FRS 25.”

This was “hidden” away on page one of the accounts.  Further details were published at appropriate places throughout the accounts.  A video presentation was also given to shareholders and the media to explain the situation further.

Perhaps the word “transparency” should be used instead of “hidden” by some.

For further reading on FRS 25 see page 5 of this report.
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