1st Club to go into Administration?

[Guest JTS98]

I find this a very strange topic at the moment. I know Twitter is a bad gauge of anything, but there seems to be a large number of people trying to point-score over this.

Surely the idea that a business with salaries to pay and a stadium to maintain etc might be put in danger by unexpectedly having no income, potentially for months, would be of no surprise to anybody?

I don't really have a problem with what Hearts have done. I wouldn't have a problem with any other club taking measures to protect itself at this point.

I'm in the position where my work may well go bust in the coming weeks and the staff have already agreed among ourselves through a vote that we would accept a pay reduction of up to an agreed level if it meant we might be able to keep our jobs medium term. I think this is coming to most football clubs, certainly at the Scottish level.

 

[Illgresi]

1 hour ago, JTS98 said:

I find this a very strange topic at the moment. I know Twitter is a bad gauge of anything, but there seems to be a large number of people trying to point-score over this.

Surely the idea that a business with salaries to pay and a stadium to maintain etc might be put in danger by unexpectedly having no income, potentially for months, would be of no surprise to anybody?

I don't really have a problem with what Hearts have done. I wouldn't have a problem with any other club taking measures to protect itself at this point.

I'm in the position where my work may well go bust in the coming weeks and the staff have already agreed among ourselves through a vote that we would accept a pay reduction of up to an agreed level if it meant we might be able to keep our jobs medium term. I think this is coming to most football clubs, certainly at the Scottish level.

 

I disagree. The world isn't about to end...

Some businesses may be about to fail...but I would imagine they are few. At least in my industry (engineering), current projects are agreed and paid for in stages. In our circumstance, those who can work from home (including me), can continue to provide value to the company. Those who can't; i.e our workshop staff, continue to work under government guidelines, or don't. The company should then receive recompense up to 80% (apparently...though who can believe the Tories).

The only situation where companies will go bust are those whose overheads are so high, that their salary costs are inconsequential. Even then, they would surely have some mitigation in cost.

[Guest JTS98]

2 minutes ago, Illgresi said:

I disagree. The world isn't about to end...

Some businesses may be about to fail...but I would imagine they are few. At least in my industry (engineering), current projects are agreed and paid for in stages. In our circumstance, those who can work from home (including me), can continue to provide value to the company. Those who can't; i.e our workshop staff, continue to work under government guidelines, or don't. The company should then receive recompense up to 80% (apparently...though who can believe the Tories).

The only situation where companies will go bust are those whose overheads are so high, that their salary costs are inconsequential. Even then, they would surely have some mitigation in cost.

I certainly don't think the world is going to end, but the difference between your employer and a football club is that football clubs' expected income stages have now gone. The business plan is in tatters.

I don't think a football club can be criticised for having made a budget for the last few years and signed players and spent on a pitch/stadium/training ground etc without having budgeted for the complete removal of anticipated income.

[The DA]

I see The Rangers have reached 55 after all.

[Dons_1988]

5 hours ago, JTS98 said:

I find this a very strange topic at the moment. I know Twitter is a bad gauge of anything, but there seems to be a large number of people trying to point-score over this.

Surely the idea that a business with salaries to pay and a stadium to maintain etc might be put in danger by unexpectedly having no income, potentially for months, would be of no surprise to anybody?

I don't really have a problem with what Hearts have done. I wouldn't have a problem with any other club taking measures to protect itself at this point.

I'm in the position where my work may well go bust in the coming weeks and the staff have already agreed among ourselves through a vote that we would accept a pay reduction of up to an agreed level if it meant we might be able to keep our jobs medium term. I think this is coming to most football clubs, certainly at the Scottish level.

 

I suspect that clubs getting through this with minimal difficulty will be the ones with willing investors to support no income for 3-6 months.

So if you're hammering clubs who can't survive then you're basically hammering them for not having millionaire backers.

Other than Rangers, I don't think any club in the Premiership (maybe Dundee Utd if you go beyond premiership) are actively spending beyond their means in normal trading circumstances.

[thepundit]

2 hours ago, Dons_1988 said:

Other than Rangers, I don't think any club in the Premiership (maybe Dundee Utd if you go beyond premiership) are actively spending beyond their means in normal trading circumstances.

Im not sure how much each club is spending this season but there was an article recently showing the financial accounts for each club for the 2018/2019 season and six clubs were operating at a loss in the Premiership.

(Rangers, Kilmarnock, Dundee, St Johnstone, Hamilton and Aberdeen) 

[Dons_1988]

16 minutes ago, thepundit said:

Im not sure how much each club is spending this season but there was an article recently showing the financial accounts for each club for the 2018/2019 season and six clubs were operating at a loss in the Premiership.

(Rangers, Kilmarnock, Dundee, St Johnstone, Hamilton and Aberdeen) 

I can't comment on other clubs really but Aberdeen's losses were driven by a write off of the value of Pittodrie in the balance sheet. I think we pretty much broke even from an operating standpoint. Our wages to turnover ratio is mid-50's which is around industry standard, although has been creeping up slightly.

Rangers are the only ones who are quite open that they are overspending in pursuit of their goals, and that their turnover doesn't cover it.

[craigkillie]

34 minutes ago, thepundit said:

Im not sure how much each club is spending this season but there was an article recently showing the financial accounts for each club for the 2018/2019 season and six clubs were operating at a loss in the Premiership.

(Rangers, Kilmarnock, Dundee, St Johnstone, Hamilton and Aberdeen) 

Killie made a profit in our last set of accounts, and just sold a player for £2m in the summer.

[Archie McSquackle]

Early payments are to be made by the SPFL which should hopefully go some way to prevent any club going into administration. Not sure about the logic of the top three clubs getting over double the rest of the premiership are getting (£395k + VAT compared to £157,500 + VAT), particularly in my own club's case (Motherwell) when they're only a point above Aberdeen and both of those have been on the slide recently.

[craigkillie]

It's essentially advance payment of prize money, so each club will likely be getting a share of the minimum based on their league. Celtic, Rangers and Motherwell are guaranteed top six, so they'll get more than the other Premiership clubs.

[C4mmy31]

7 hours ago, JTS98 said:

I certainly don't think the world is going to end, but the difference between your employer and a football club is that football clubs' expected income stages have now gone. The business plan is in tatters.

I don't think a football club can be criticised for having made a budget for the last few years and signed players and spent on a pitch/stadium/training ground etc without having budgeted for the complete removal of anticipated income.

The Scottish Professional Football League has made advanced payments to the country's 42 senior clubs as they attempt to navigate coronavirus.....

https://www.bbc.co.uk/sport/football/52047550

 

[Guest JTS98]

2 minutes ago, C4mmy31 said:

The Scottish Professional Football League has made advanced payments to the country's 42 senior clubs as they attempt to navigate coronavirus.....

https://www.bbc.co.uk/sport/football/52047550

 

Top flight clubs outwith the top three get 157,000. A good start, but how far does that go?

At the moment clubs have lost home games and season ticket money. We don't know when the next prize money will be paid. Four clubs are also down on cup semi-final money.

This is good, but it hardly solves the problem.

[thepundit]

3 hours ago, Dons_1988 said:

I can't comment on other clubs really but Aberdeen's losses were driven by a write off of the value of Pittodrie in the balance sheet. I think we pretty much broke even from an operating standpoint. Our wages to turnover ratio is mid-50's which is around industry standard, although has been creeping up slightly.

Rangers are the only ones who are quite open that they are overspending in pursuit of their goals, and that their turnover doesn't cover it.

Granted, but my point was a more general one in that we can be sure it's not just Rangers who are operating at a loss if 6 clubs in the league were also doing so the previous season.

[Dons_1988]

16 minutes ago, thepundit said:

Granted, but my point was a more general one in that we can be sure it's not just Rangers who are operating at a loss if 6 clubs in the league were also doing so the previous season.

Except you've been corrected on Kilmarnock and Aberdeen, so that leaves you 3 that are unsubstantiated.

If you're just looking at making a loss on the face of a P&L then that isn't the correct measure.

ETA - your 6 included Rangers

Edited March 26, 2020 by Dons_1988

[thepundit]

10 minutes ago, Dons_1988 said:

Except you've been corrected on Kilmarnock and Aberdeen, so that leaves you 3 that are unsubstantiated.

If you're just looking at making a loss on the face of a P&L then that isn't the correct measure.

ETA - your 6 included Rangers

The article...

https://www.thescottishsun.co.uk/sport/football/5020840/celtic-rangers-premiership-profit-loss-table/

Again though, its the previous season so could be quite different for clubs this season. Certainly gives the impression it won't just be Rangers spending more than they're bringing in this season. 

ps, The piece also states that Aberdeen would still have made quite a significant loss even when the stadium costs are factored in. 

Edited March 26, 2020 by thepundit

[Swello]

The  point is that the figures quoted for all clubs will be *really* out of date as they report on stuff that were happening in 17/18 as well as 18/19 season - we're not far from the end of another financial year and every club will be in a different position (or league) than the period covered by these figures - so it's baseless speculation at this stage

 

[Dons_1988]

2 minutes ago, thepundit said:

The article...

https://www.thescottishsun.co.uk/sport/football/5020840/celtic-rangers-premiership-profit-loss-table/

Again though, its the previous season so could be quite different for clubs this season. Certainly gives the impression it won't just be Rangers spending more than they're bringing in this season. 

Again, that's a really simplistic measure, as I said previously.

[thepundit]

1 minute ago, Dons_1988 said:

Again, that's a really simplistic measure, as I said previously.

Ah right. Fair enough.

[bennett]

10 hours ago, C4mmy31 said:

The Scottish Professional Football League has made advanced payments to the country's 42 senior clubs as they attempt to navigate coronavirus.....

https://www.bbc.co.uk/sport/football/52047550

 

As a one off for this season, couldn't they have made every club the same. 

 

 

[craigkillie]

As a one off for this season, couldn't they have made every club the same. 
 
 

Only if they wanted to put top flight clubs out of business. If you budget for the minimum top flight prize money and then end up with substantially less than that it's going to be a real struggle at that stage.