One from the Archives: The following article appeared in one of the early CQN magazines. It was called


(or why we have not won since the 2007/08 season.)

On re reading it I’m renaming it


You will see why when you see the figures. I have also added in bold italics new information on the ebts RFC used, something not known then but of importance now in respect of the fitness of Dave King for any role at Ibrox. To the article…

I have recently (in 2011/12) finished reading Why England Lost by Simon Kuper (Sports Journalist) and Stefan Szymanski (Sports Economist) which takes a look at football, well mainly English football, with the idea that much in football can be explained, even predicted by studying and exploring data as opposed to buying into the myths surrounding the game. It is not an analysis of individual players or games in the short term but a look at what the statistics tell you if you examine them over a period of time.


What I read got me thinking about why Celtic lost during Walter Smith’s time using what I had learned from Why England Lose. It follows that this is not an explanation of or excusing for the football factors that took place in and around games in the seasons 2008/09 and 2009/2010, but a look at the deeper reasons for Celtic losing. More importantly what does it tells us about changing the circumstances that helped us to (almost inevitably) lose, putting aside our own football errors of judgement as well as the football attributes Rangers demonstrated on the field of play.safe_image.php


Two main findings leapt out at me


  • 1) On Transfers and Wages from the chapter Gentlemen Prefer Blondes


“the amount that almost any club spends on transfer fees bears little relation to where it finishes in the league” – that their outlay on transfers explained only 16% of their total variation in league position.” (p59 & p60)


“By contrast, their spending on salaries explained a massive 92% of that variation if you take each club’s average for the entire period” (p60)


“In short, the more you pay your players in wages, the higher you will finish”

(p63) Remember this for later.


  • 2) On the Impact of Spending Policies from the chapter The Worst Business in The World

“Every now and then one of them (businessmen) takes over a club and promises to run it “like a business” Alan Sugar became chairman of Tottenham Hotspur in 1991. His brilliant wheeze was to make Spurs live within their means. He more or less kept his word. In the 10 years that he ran Spurs, they lived within their means. But most of their fans hated it . The only thing Sours won in that decade was a solitary League Cup. They spent most of their time mid table of the Premier League, falling far behind Arsenal [who incidentally have followed a similar business like policy more successfully in terms of profit making but who also have won nothing for a number of seasons]. Nor did they even make much money: about £2M a year in profits in Sugar’s first six years – Spurs disappointed both off and on the field but they also illustrated a paradox: when business people try to run a football club as a business , then not only does the football suffer, but so does the business.”

“Other businessmen pursue a different strategy from Sugar’s. they assume that if they can get their clubs to in prizes, profits will inevitably follow. But they too are wrong. Even the best teams seldom generate profits.” The book then uses a chart to demonstrate that “there is barely any connection between finishing high and making money.”

[Man Utd were quoted as the exception but since the book was published even that ability has gone against Man Utd by attracting the Glazers who have saddled them with huge debt whilst making the Glazers money which has impacted on the football on offer for the price asked. Eds note and how more true is that now?]

Now what I was wondering from the above was does this explain why Celtic, who follow the Alan Sugar approach, lose to Rangers who adopt the pursuit of prizes approach in search of profitability (or in their case more sustainable debt). Is there not a contradiction at play here because the one thing that makes losing the last two titles even harder to bear is losing the title to skint Rangers?

It should surely follow that if you are spending within your means and  over the piece you are earning what your main opponents are, (our total turnover from Season 2006/07 to 2009/10 was £282,500M compared to Ranger’s £202,224M) that you should be able to spend more, not just on transfers but more importantly in terms of where spend really matters, on players wages. Why is it that Celtic with a higher wage bill than Rangers and better turnover were not able to turn that advantage into a team that consistently won? What did Rangers do since January 2007 to ensure their success in the last two years?

Well the first thing they did was to spend money on transfer fees to buy in new players when the Paul Le Guen debacle ended as the following shows:


Rangers Transfers Under Walter Smith
Transfers In Transfers Out
Thomson Jan-07 £2,000,000
Cuelar Jun-07 £2,370,000
MCCulloch Jul-07 £2,000,000
Whittaker Aug-07 £2,000,000
Naismith Aug-07 £2,000,000
Cousins Aug-07 £1,000,000
Velicka Jul-08 £1,000,000
Webster Jun-08 £0
Alexander Jan-08 £0
Miller Jun-08 £2,000,000
Lafferty Jun-08 £3,000,000 Hutton Jan-08 £8,700,000
Bougerrha Jul-08 £3,000,000 Cuellar Aug-08 £7,800,000
Davis Aug-08 £3,000,000 Cousins Sep-08 £3,000,000
Edu Aug-08 £3,000,000
Mendez Aug-08 £3,000,000
£18,000,000 £19,500,000
Total £29,370,000 Net spend 07/08 £9,870,000

The transfer list above covers the main moves in and out in 2007 and 2008 only and show that Rangers spent nearly £10M net to improve the team. Now whilst Why England Lose say that what is paid on transfers is no guarantee of changing league position, few would argue that had this money not been spent that the results of spending to win prizes did not indeed succeed.

It is interesting to note the timing of the latest purchases in August 2008, just as the credit crunch was starting to manifest itself and not long before Halifax Bank of Scotland had to approach tax payers for a bail out and were merged with Lloyds to save them. The same Lloyds who subsequently called a halt on Ranger’s spending once they had seen their accounts and that of the parent company MIH.

[2015 Update] What was not known at time of writing was that not only did the banks run out of money but that the determinations, that is the demands for payment that became the subject of the big tax case started to arrive at Ibrox from 28th February 2008 to 25th April 2008. They were followed by more afterwards but a significant number arrived BEFORE Rangers embarked on the £18m gross spend (£9.8M net) in August 2008. Dave King was a Director at this time and so along with Sir David Murray and fellow Directors was responsible for a decision that ultimately made Rangers unsellable and opened the door for Craig Whyte.

Tax evasion or avoidance is apparently in his Mr King’s DNA as given that in 2011, whilst still a Director, real tax liabilities were waiting to be paid and £17M including the wee tax case never reached HMRC coffers.

I think it is fair to say that many recognise that the input of the Abramovich type is really a form of subsidy to whatever club is lucky enough to have such a Sugar Daddy and who has enough wealth from his own companies to support that role and so we reluctantly (or wishfully) accept it as part of the modern game,

I submit however that there is the world of difference between an Abramovich and the other kind of Sugar Daddy who uses borrowings that cannot be repaid by his companies or personal wealth and has to subsequently depend on a tax payer rescue to pay for such risk taking that, as Why England Lose shows, was never going to generate profit, only trophies.

Both kinds of subsidies are bad for football but the decisions at Rangers are only excusable if there was no knowledge in the summer of 2008 of how bad things were at MIH. It is unlikely we will ever find out.

[2015 Update] Well we know now that Rangers Directors did have knowledge of a potentially huge tax bill in 2008 and it was the decision by those Directors, including Davie King, that set RFC on the path to Craig Whyte and its ultimately demise as a club.dave-king-439195

The fact is Rangers were able to rebuild their team with borrowed money in 2007 and 2008 that took them over a sustainable debt limit.

The impact of their net spend on transfers over 2007/2008 can be seen in the increase in Rangers reported debt over the same period starting in 2006/07 but increasing by almost £10M from 2007/08 to 2008/2009 at which point the bank stepped in. You will also note that as Why England Lose states, teams who chase prizes to make a profit do not make profit, Rangers showing a £16.76M loss over the five years. Celtic in contrast made a £19.27M profit.

2006/2007 2007/2008 2008/2009 2009/2010
Euro Comp UEFA Cup UEFA Cup No Euro CL Turnover in Period
Turnover (000s) 41768 64452 39704 56300 £202,224
Loss Over Period
Operating P/L -5079 641 -17325 5000 -£16,763
Debt (Millions) 16.5 21.6 31.1 27.1
2006/2007 2007/2008 2008/2009 2009/2010
Euro Comp CL CL CL UEFA Turnover in Period
Turnover 75237 72953 72590 61720 £282,500
Profit Over Period
Operating P/L 15000 4400 2000 -2130 £19,270
Debt (Millions) 4.99 3.52 1.51 5.85

Celtic, however because of our business like approach were constrained from matching Rangers transfer spend in Jan 2009 when we might have done. A factor at play was that the manager Gordon Strachan thought we had the players to win the title which would make them better and if you adopt the Why England Lose philosophy that higher wages means better players, it is perhaps understandable that he and Celtic thought they were paying enough to players and certainly more than Rangers were to clinch that title. But were we?

Of course we were. The respective wage bills are published in both Celtic and Ranger’s accounts and they show that Celtic since 2006/07 to 2009/10 have not only earned more (see Turnover above) but have paid more in wages. The thing is though when you get a wage slip do you look at the Gross Pay or the Net Pay? What matters to you what your pay is or what you get to take home? I know what I look at first.

I submit footballers are only concerned with Net Pay and when deciding if a contact is worth signing, net pay is what counts most. So how does net pay compare? The following uses the published salaries at Celtic and Rangers from 2006/07 to 2009/210 and looks at what the net pay might look like under the general wage payment regimes that operate at both clubs.

Take Home Wages: PAYE (Celtic) v EBT (Rangers)

2005/2006 2006/2007 2007/2008 2008/2009 2009/2010
Celtic Wage Bill £32,500,000 £36,421,000 £38,981,000 £38,751,000 £36,483,000
Footballers Employed 65 65 65 63 56
Other Employees 399 399 435 437 452
Total employees 464 464 500 500 508
PT (Inc in FT Equivalent) 0 0 0 0 0
464 464 500 500 508
Average Annual Wage Other £15,000 £16,000 £17,000 £18,000 £18,000
Total Other Annual Wage £5,985,000 £6,384,000 £7,395,000 £7,866,000 £8,136,000
Football’s wages £26,515,000 £30,037,000 £31,586,000 £30,885,000 £28,347,000
Less Developing Squad £700,000 £700,000 £900,000 £800,000 £700,000
Main Squad Wage £25,815,000 £29,337,000 £30,686,000 £30,085,000 £27,647,000
Top Player Share 60% £15,489,000 £17,602,200 £18,411,600 £18,051,000 £16,588,200
Rest 40.0% £10,326,000 £11,734,800 £12,274,400 £12,034,000 £11,058,800
Take Home PAYE Value
of Top Players Share £9,231,444 £10,490,911 £10,973,314 £10,758,396 £9,886,567
Debt (Millions) 4.99 3.52 1.51 5.85
2005/2006 2006/2007 2007/2008 2008/2009 2009/2010
Rangers Wage Bill £27,989,000 £24,258,000 £34,339,000 £30,662,000 £28,133,000
Footballers Employed 62 59 68 71 66
Other Employees 324 210 199 200 190
PT 206 36 39 41 45
FT Equivalent (2/5ths) 82 14 16 16 18
Total FT 468 283 283 287 274
Annual Wage Other £15,000 £16,000 £17,000 £18,000 £18,000
Total Other Annual wage £7,026,000 £4,534,400 £4,804,200 £5,173,200 £4,932,000
Football’s wages £20,963,000 £19,723,600 £29,534,800 £25,488,800 £23,201,000
Less Developing Squad £700,000 £700,000 £900,000 £800,000 £700,000
Main Squad Wage £20,263,000 £19,023,600 £28,634,800 £24,688,800 £22,501,000
Top Player Share 60% £12,157,800 £11,414,160 £17,180,880 £14,813,280 £13,500,600
Rest 40.0% £8,105,200 £7,609,440 £11,453,920 £9,875,520 £9,000,400
Take Home EBT Value of
Top Players share £9,958,454 £9,349,338 £14,072,859 £12,133,558 £11,058,341
Difference in Take Home Pay £727,010 -£1,141,573 £3,099,545 £1,375,162 £1,171,774
Of Top Players
Net Debt £5,883,000 £16,540,000 £21,560,000 £31,118,000 £27,074,000

Notes on the above and the value of an EBT will appear in illustrations at the end of this article.

The key line is The Difference in Take Home Pay that an EBT arrangement confers on the players of a club who choose to use it as a payment device. It can be seen from the above that after removing general staff costs, which are lower at Rangers because they employ less staff and development squad costs which are likely to be cost neutral, that using EBTs provides a take home wage advantage to any club who choose to use it. The above advantage is based on 60% of Rangers top player squad (say 15 from 25) being covered by an EBT but even if that were reduced to 10% (say 3 top players) there is still a wage advantage applying to players on EBTs.

Thus from 2007 when Walter Smith rejoined Rangers, they have been in a position, through the questionable use of EBTs to more than match the take home pay of top players, the one’s who make a difference on the field of play.

This at least explains why a skint Rangers in pursuit of trophies were able to counter Celtic’s Alan Sugar approach to conducting business. Rangers might have been skint but by over borrowing and using questionable EBTS they were able to nullify the advantage that Celtic ostensibly had through having a higher wage bill.

Now I do not know about you but this raises some questions for me. Were Rangers just smarter than us to take advantage of a compliant lender thinking they would never have to pay the piper and to use existing tax laws, both avenues that were open to Celtic, or did they indeed cross a line into unethical behaviour as a result of which Celtic were deprived of the fruits of a prudent spending policy?

I suppose a lot depends on the outcome of HMRC’s EBT case against Rangers. If the courts rule in favour of Rangers, then they just took risks that have paid off. However if the courts rule in favour of HMRC then just as borrowing what you might have known you could not repay is a less acceptable ball game than using non football money that was available, so too by a long way is using a wage payment system that turns out was illegal and designed not only to avoid paying tax but also conveyed an unfair advantage over wage competitors.

Of course if the courts find in favour of HMRC Rangers will have a tax bill to pay but in focussing on the likely level of debt and the consequences this might produce for Rangers I think we have overlooked the cost of Ranger’s policies to Celtic. For without the policies Rangers followed, the ones that Celtic did would in all likelihood have been more profitable, not just in finance terms but in terms of prizes too.

In the EPL with 4 to 6 clubs chasing 4 top spots the mortality rate for failing to achieve such a spot is always going to be less than the SPL where winner takes all. It is therefore imperative that if they are to be successful in the future Celtic look at their current Alan Sugar business like approach and do one of two things.

1) Abandon it and chase prizes or

2) Ensure that their main competitors follow the same business like policies.

We have all seen the mess that Rangers and EPL teams can get into in the pursuit of prizes, and in Scotland how last season the integrity of our football was being questioned when Rangers benefited from an unprecedented series of honest mistakes. Therefore I would never advocate a) but as a Celtic supporter I would be asking for three things.

1) To restore integrity: Celtic insist that the SPL introduce for the SPL its own version of the Financial Fair Play Rules that UEFA are implementing for qualification of the CL that sets out debt levels and payments systems that are allowable.

2) To Be Aware: Celtic supporters realise just what they are up against in Scotland and unite behind Celtic against a club who seem prepared to go to any lengths to stop us being successful

3) To Fight Back: Celtic work more closely with the support to ensure that every means at our disposal are used to maximise revenue that will then be used to maintain Celtic’s position on the even financial playing field that must be established and no longer contains the conditions that underpin Why Celtic Lost.

Illustration One. The advantages of EBTS over PAYE from Bedouin an EBT Company.

Wkly Take
Paye Per Week Per Year After Tax Monthly Take Home Home Equivalent
£20,000 £960,000 £572,158 £47,679 £11,920
PAYE % Amount of Gross pay retained 59.60 Wkly Take
Monthly Take Home Home Equivalent
EBT £20,000 £960,000 £786,330 £65,572 £16,393
EBT % Amount of Gross pay retained 81.91 Weekly Difference
Increment over Paye £214,172 As % 22.31

Notes on PAYE v EBT Table


Celtic Waqe Bill – from published accounts

Footballers Employed – Celtic do not give separate numbers but latest squads in 2009 and 2010 are known. Previous years figures based on average number at Rangers

Total Employees – from published accounts.

Average Annual Wage Other – Assumes an average annual wage including NI for a range of 400 plus staff. (If higher then less for Football bit same used for Rangers so cost neutral.)

Football Wages – Balance left after deducting other staff wages

Development Squad – Based on estimates of development squad costs over last two seasons. Again cost neutral.

Top Player Share – Assumes ratio of top wages to lower player wages in main player squad . Can be changed in original spreadsheet to see effect on remaining calculations.

Take Home PAYE Value of Top Players’ Share What Celtic players on PAYE – Take Home based on total wage bill obviously split according to individual contracts


Rangers Wage Bill

Numbers                      ALL taken from Rangers published accounts.

Footballers Employed

Other Employees


FT Equivalent – Assumes PT of 2 days a week rolled up to FT equivalent

Annual Wage Other

Football Wages – see above for Celtic

Development Squad

Top Player Share –. Assumes ratio of top wages to lower player wages in main player squad .Can be changed to see effect on remaining calculations.

Also assumes that Ranger’s players in this grouping are likely to have EBTs

Take Home EBT Value of Top Players Share. What Ranger’s players on EBTS Take Home based on total wage bill obviously split according to individual contracts

Difference in Take Home Pay of Top Players. How much more (or less in 06/07) Rangers were able to offers their top signings compared to Celtic as a result of using an EBT.


Click Here for Comments >

About Author