Next to go?

[EdinburghBlue]

3 hours ago, O'Kelly Isley III said:

It could change if clubs were licensed and had to operate within some sort of fiscal discipline

Prompted by your comment I thought I might as well do something useful while watching football on the TV this afternoon and so went to the Companies House website and downloaded the latest accounts for league one/two clubs and did a quick analysis of them. I think the headline message from this is that the next (few) to go might be because of money problems.

The latest accounts available at Companies House are generally for clubs’ financial years ending in 2022, so I’ve looked at the figures for clubs that were in those two leagues in season 2021/22. Accounts aren’t available for all clubs – Annan and Stranraer aren’t companies and so don’t have to publish accounts. Queen's Park changed their accounting date and so don’t have any accounts with an end date in 2022. So I’ve necessarily had to exclude all three of these clubs from the analysis.

Another issue is that clubs generally don’t publish profit and loss accounts. However, you can get a reasonable estimate of the profit or loss from looking at the change in shareholder funds between the two balance-sheet dates, and this is what I’ve done.

Collectively the nine league one clubs for which figures are available lost £1.701 million in that year. Only Airdrie made a profit, of £12k. For the eight league two clubs for which I can get figures the collective loss was £201k, with only Forfar (£5k) and Stirling Albion (£154 k) making surpluses. So across the two leagues the total loss was £1.913m.

Five of the 17 clubs were technically insolvent at the balance-sheet dates, two narrowly but one (Cove) with negative net assets of three quarters of a million. Four of these five had net negative current assets, putting them in even greater danger of insolvency.

Eight of the 17 clubs had a negative figure for retained profit/loss. In other words they were solvent only because shareholder funds had been spent subsidising their  day-to-day activity. In some cases these figures are astonishingly high, with well over £1 million of accumulated losses. 

The new arrivals to those two leagues wouldn’t have improved the position. Hamilton, Queen of the South and Spartans all made losses in that financial year.

[O'Kelly Isley III]

7 minutes ago, EdinburghBlue said:

Prompted by your comment I thought I might as well do something useful while watching football on the TV this afternoon and so went to the Companies House website and downloaded the latest accounts for league one/two clubs and did a quick analysis of them. I think the headline message from this is that the next (few) to go might be because of money problems.

The latest accounts available at Companies House are generally for clubs’ financial years ending in 2022, so I’ve looked at the figures for clubs that were in those two leagues in season 2021/22. Accounts aren’t available for all clubs – Annan and Stranraer aren’t companies and so don’t have to publish accounts. Queen's Park changed their accounting date and so don’t have any accounts with an end date in 2022. So I’ve necessarily had to exclude all three of these clubs from the analysis.

Another issue is that clubs generally don’t publish profit and loss accounts. However, you can get a reasonable estimate of the profit or loss from looking at the change in shareholder funds between the two balance-sheet dates, and this is what I’ve done.

 

Collectively the nine league one clubs for which figures are available lost £1.701 million in that year. Only Airdrie made a profit, of £12k. For the eight league two clubs for which I can get figures the collective loss was £201k, with only Forfar (£5k) and Stirling Albion (£154 k) making surpluses. So across the two leagues the total loss was £1.913m.

Five of the 17 clubs were technically insolvent at the balance-sheet dates, two narrowly but one (Cove) with negative net assets of three quarters of a million. Four of these five had net negative current assets, putting them in even greater danger of insolvency.

 

Eight of the 17 clubs had a negative figure for retained profit/loss. In other words they were solvent only because shareholder funds had been spent subsidising their  day-to-day activity. In some cases these figures are astonishingly high, with well over £1 million of accumulated losses. 

 

The new arrivals to those two leagues wouldn’t have improved the position. Hamilton, Queen of the South and Spartans all made losses in that financial year.

 

I'm not at all surprised.  My own club's balance sheet is a smoke and mirror job, and indeed I understand that confirmation of the latest Annual Accounts awaits input from the majority shareholder.  The Supporters Trust has been trying to get to the bottom of it but it's difficult when the rump Board of the football club and the majority shareholder/owner don't seem to be much in communication, added to which there hasn't been an AGM for years.

It's interesting that Hamilton are making losses despite having rental space to offset the football costs at NDP.  Without knowing the details it appears that the rental aspect may not be as beneficial as might have been thought.

[EdinburghBlue]

Just now, O'Kelly Isley III said:

I'm not at all surprised.  My own club's balance sheet is a smoke and mirror job, and indeed I understand that confirmation of the latest Annual Accounts awaits input from the majority shareholder.  The Supporters Trust has been trying to get to the bottom of it but it's difficult when the rump Board of the football club and the majority shareholder/owner don't seem to be much in communication, added to which there hasn't been an AGM for years.

It's interesting that Hamilton are making losses despite having rental space to offset the football costs at NDP.  Without knowing the details it appears that the rental aspect may not be as beneficial as might have been thought.

Indeed. The note about repayment of a large loan from the club being dependent on the granting of planning permission and completion of a development would worry me if I were a Dumbarton fan.

Looking at the Hamilton accounts I wonder whether the stadium is owned by another company. Their balance sheet shows the capital value of leasehold improvements, which I interpret as what they've spent on improvements to the stadium.

[C'mon_the_Sons]

5 minutes ago, EdinburghBlue said:

Indeed. The note about repayment of a large loan from the club being dependent on the granting of planning permission and completion of a development would worry me if I were a Dumbarton fan.

Looking at the Hamilton accounts I wonder whether the stadium is owned by another company. Their balance sheet shows the capital value of leasehold improvements, which I interpret as what they've spent on improvements to the stadium.

Stadium is owned separately if I recall correctly.

[Sweet Pete]

21 hours ago, Bring Back Paddy Flannery said:

I have absolutely nae idea what your point is here tbh. Cowdenbeath, Albion Rovers, Berwick Rangers and East Stirling had some of the smallest core supports in the SPFL, and had numerous season between them at the arse end of Division 3/League 2. When the pyramid opened up they were always going to struggle and I don’t think a single soul expected them to start tearing things up in the Lowland league. Albion Rovers looked a fairly decent side last season but I’m not entirely shocked they haven’t adjusted well.

The raging hardon some folk get over previous SPFL clubs struggling after being relegated is utterly bizarre stuff. 

FWIW Brechin are 1 point behind 1st placed Banks O’ Dee with 2 games in hand.

Absolutely this. You're talking about clubs who struggled to make three figures of home support at times, were often in peril both on and off the park and who play in utter crumbling dumps, whose own home towns don't give two fucks about them. Some of them a bawhair above amateurs, basically separated from Saturday league by having stands and maybe a social club. If the pyramid hadn't been introduced they'd likely have gone bust at some point. Don't get me wrong, they all had purple patches in League One, even the Championship in Cowden's case, but those were unusual spells in the history of those clubs. It's absolutely no surprise that as soon as the trap door came into existence they all started finding their natural level.

6 hours ago, DiegoDiego said:

That's a nice idea, but if Ed City's new owners couldn't tell they were being sold a timebomb, then I'm sure the previous owners could have presented a plausible case to meet whatever criteria the league put in place. Certainly to the point where it could hold up in court.

"So Kelty Hearts, is your business model sustainable?"

"Oh yes, unfortunately we really don't have much money to spend on players, probably start the season with Old Jock as coach. It'll be a struggle to stay in the league, but we've got a strong community behind us."

"Sounds great, you're in."

"Thank you! We're delighted!" [gets on phone] "Hello, yes, are you the agent for Kallum Higginbotham?"

However, my biggest worry, having followed Scottish football for decades, is that any fit and proper test would be applied very differently to some clubs/prospective owners than others. (See also: UEFA FFP rules.)

I suppose an objective, simple and fair law might be something like having a maximum percentage of previous season's income from a certain number of sources. For example, if 70% of your income came from two sponsors then you would fail, but if 70% of your income was from prize money, gate receipts, league funding and club lottery, then you'd be fine. However, accountants will always find a way around these things.

A Fife based friend of mine and former member of this parish (mon' the honey badgers) has always insisted that the Kelty Hearts money men "sell conservatories by the gram..."

4 hours ago, nofixedability said:

Yep, gotta love ‘ambitious’ clubs that throw money around like confetti then cry a few season later when the bubble bursts.

Queens Park has entered the chat.

[PossilYM]

Remember attending a meeting of credit union reps in the Glasgow Royal Concert Hall one midweek afternoon about 15 years ago.

A detective from the then Strathclyde Police spoke about money laundering and the Black Economy in Scotland. The figure stated being quite high, something like 15% of every pound spent in Scotland was dodgy money. Remember being shocked when he mentioned football clubs being used to launder money.

[Sergeant Wilson]

1 hour ago, PossilYM said:

Remember attending a meeting of credit union reps in the Glasgow Royal Concert Hall one midweek afternoon about 15 years ago.

A detective from the then Strathclyde Police spoke about money laundering and the Black Economy in Scotland. The figure stated being quite high, something like 15% of every pound spent in Scotland was dodgy money. Remember being shocked when he mentioned football clubs being used to launder money.

Why did it shock you?

[PossilYM]

7 hours ago, Sergeant Wilson said:

Why did it shock you?

Probably because the top man of the underworld in Scotland came from Shotts.

Although thinking back it may have been Shotts Prison.

[Sergeant Wilson]

6 hours ago, PossilYM said:

Probably because the top man of the underworld in Scotland came from Shotts.

Although thinking back it may have been Shotts Prison.

I was shocked, that anyone could be shocked  by the revelation of money laundering in football.

It is rife. Football is up there with tan shops, American sweets, ice cream, pubs, storage facilities, nurseries...It'd be easier to list businesses not affected or utilised by it.

[O'Kelly Isley III]

32 minutes ago, Sergeant Wilson said:

I was shocked, that anyone could be shocked  by the revelation of money laundering in football.

It is rife. Football is up there with tan shops, American sweets, ice cream, pubs, storage facilities, nurseries...It'd be easier to list businesses not affected or utilised by it.

And not forgetting barbers who have cultural links to the land where they punch their referees.

But you are correct, folk need to be pretty naive if they don't realise what is going on.  Unlike most if not all of these activities however, Scottish football has two governing bodies which we should reasonably expect to provide oversight and demand financial transparency.

Years of evidence would suggest though that they haven't bothered their arse, and the really worrying aspect is that post the Rangers shitshow there is even less likelihood of it happening.  As such, the game here will continue to attract the wrong sort of ownership  and 'investments'.

I admit to a very vested interest in all of this, as the financial details and liabilities of the 2021 takeover of my club Dumbarton are very opaque indeed, and follow a pattern since we relocated to the base of Dumbarton Rock in December 2000.  In short, we have become a magnet for land speculators whose primary interest is not football.  And worryingly this latest iteration is potentially the dodgiest yet.

 

[EdinburghBlue]

As we near the halfway point, interesting that on a PPG basis the bottom four all projected to get fewer points than Albion Rovers achieved last season. 

[Skyline Drifter]

On 10/12/2023 at 15:44, EdinburghBlue said:

The new arrivals to those two leagues wouldn’t have improved the position. Hamilton, Queen of the South and Spartans all made losses in that financial year.

Clubs in relegation years are always likely to make losses unless they've had some sort of special cup run or windfall income in the same season. That said, Accies and ourselves will continue to make six figure losses as long as we sustain full time football in League 1. Likewise Falkirk and Cove, though Falkirk at least given their crowd sizes, shouldn't. It's looking like they'll escape this year anyway.

On 10/12/2023 at 16:05, O'Kelly Isley III said:

I'm not at all surprised.  My own club's balance sheet is a smoke and mirror job, and indeed I understand that confirmation of the latest Annual Accounts awaits input from the majority shareholder.  The Supporters Trust has been trying to get to the bottom of it but it's difficult when the rump Board of the football club and the majority shareholder/owner don't seem to be much in communication, added to which there hasn't been an AGM for years.

It's interesting that Hamilton are making losses despite having rental space to offset the football costs at NDP.  Without knowing the details it appears that the rental aspect may not be as beneficial as might have been thought.

Hamilton don't own their stadium, and don't collect the rents from it, including that paid by Clyde.

In any event, it's doubtful that the amount of rental space a football stadium has will be enough to cover a full time football operation in itself. I think they'd still be making losses even if they did get the rental income.

On 11/12/2023 at 15:57, PossilYM said:

Remember attending a meeting of credit union reps in the Glasgow Royal Concert Hall one midweek afternoon about 15 years ago.

A detective from the then Strathclyde Police spoke about money laundering and the Black Economy in Scotland. The figure stated being quite high, something like 15% of every pound spent in Scotland was dodgy money. Remember being shocked when he mentioned football clubs being used to launder money.

 

On 12/12/2023 at 07:51, Sergeant Wilson said:

I was shocked, that anyone could be shocked  by the revelation of money laundering in football.

It is rife. Football is up there with tan shops, American sweets, ice cream, pubs, storage facilities, nurseries...It'd be easier to list businesses not affected or utilised by it.

Football clubs are a VERY obvious potential route for money laundering. The growth in e-ticketing will have made it a bit more awkward but it's still one of the higher cash turnover businesses along with pubs, clubs and restaurants.

[ScottishLoon]

4 hours ago, EdinburghBlue said:

As we near the halfway point, interesting that on a PPG basis the bottom four all projected to get fewer points than Charlie Reilly achieved last season. 

 

[BallochSonsFan]

It was already bad for clubs dropping down into a division where spending a few quid could basically win you promotion. But the prospect of dropping down to a league with B teams? That's just absolutely tragic.

The prospect of a relegated team ending up being a chew toy for Rangers, Celtic and Hearts B is more than enough to drive fans away from football.

[FREDDYFRY]

9 hours ago, BallochSonsFan said:

It was already bad for clubs dropping down into a division where spending a few quid could basically win you promotion. But the prospect of dropping down to a league with B teams? That's just absolutely tragic.

The prospect of a relegated team ending up being a chew toy for Rangers, Celtic and Hearts B is more than enough to drive fans away from football.

And they have just voted to keep the B teams in. Shocking decision yet again from Lowland League clubs, shame on those clubs who voted for it!

[ScottR96]

9 hours ago, BallochSonsFan said:

It was already bad for clubs dropping down into a division where spending a few quid could basically win you promotion. But the prospect of dropping down to a league with B teams? That's just absolutely tragic.

The prospect of a relegated team ending up being a chew toy for Rangers, Celtic and Hearts B is more than enough to drive fans away from football.

It’s therefore only fair that Elgin take one for the team this season. At least they’ll be dropping into a proper league. 

[LongTimeLurker]

On 18/12/2023 at 19:38, Skyline Drifter said:

...Hamilton don't own their stadium, and don't collect the rents from it, including that paid by Clyde...

Correct on the first part, but think you are wrong about the rent from Clyde and other pitch related rentals because that's tied into a 50 year lease at this point. What the club doesn't get is office space related income. When the stadium was built that was expected to be one of the ways Accies could be sustainable despite the relatively small support.

[Skyline Drifter]

34 minutes ago, LongTimeLurker said:

Correct on the first part, but think you are wrong about the rent from Clyde and other pitch related rentals because that's tied into a 50 year lease at this point. What the club doesn't get is office space related income. When the stadium was built that was expected to be one of the ways Accies could be sustainable despite the relatively small support.

Fair enough, you'll know better than me. Although Clyde also rent office space so presumably their commitment is split.

[BallochSonsFan]

On 10/12/2023 at 16:10, EdinburghBlue said:

Indeed. The note about repayment of a large loan from the club being dependent on the granting of planning permission and completion of a development would worry me if I were a Dumbarton fan.

Looking at the Hamilton accounts I wonder whether the stadium is owned by another company. Their balance sheet shows the capital value of leasehold improvements, which I interpret as what they've spent on improvements to the stadium.

Our more recent accounts show more than a  bit of jiggery pokery. Of major concern is the amount showing for the development land deal. It would appear to be showing in the accounts and there being amounts due at regular intervals. The first £300,000 of which seems to be late. If the main reason that our accounts aren't even worse is the financial voodoo and an actual payment of money from the owners is late then the potential to hole the club below the water line is clear. 

The loan isnt really a loan. Its amounts owing for the paper transaction that gives the owners control over the development land with a view to completing their development. Payment due to the club on completion of the housing development. That raises the questions as to what happens if planning permission is refused or if the development happens in some form but doesnt bring in the expected profit to the owners? If the club is relying on the payment of money from the owners for it's continued survival and that money is never paid then there's a clear threat to the club. Likewise if the development happens in some form but doesnt generate the money needed to pay the club what it's owed.

The development on the outskirts of our ground is of huge concern. It has the potential to hem in the club and destroy any prospects of growing the club at the current ground. It carries significant risk that it'll either never be realised or will be done so with a much reduced return. Neither of those potential outcomes absolves the club board for overseeing a period of decline. The local board is essentially firefighting. Crowds are not where they could be. Potential sponsors have little appetite for parting with money. As messy as the owners' plans for developing the land around the club are, we can't ignore the shorter term risk to the club from dwindling crowds and a lack of willing sponsors.

[FifeSons]

Shaping up to be an interesting battle to avoid the trapdoor. Current results realty drag East Fife and Forfar into it, given you’d expect Clyde to improve.