Football Finances: Rangers v Celtic
The two big Glasgow teams have had mixed fortunes
on and off the pitch in recent years, and both have just announced their financial results
for 2018/19. This season, Celtic won the domestic treble
and Rangers were runners up in the Scottish Premiership. So how do their finances compare?
Clubs generate income from three sources: matchday, broadcasting and commercial. Compared
to the rest of Scottish football, where many clubs are so small that they are not legally
obliged to show income and expenses in their accounts, Celtic and Rangers dominate as expected.
Both clubs have committed fanbases and this is reflected in ticket sales with Celtic averaging
nearly 58,000 every match at home last season and Rangers well over 49,000.
Matchday revenue is effectively number of tickets sold per match, times average ticket
price, times number of home matches played. With both clubs close to selling out every
match and fans resistant to significant ticket price increases, growth is linked to maximising
the number of matches played. Rangers increase in 2018/19, for instance,
was due to reaching the group stage of the Europa League, where Celtic reached the last
32 of that competition. The two clubs are significantly ahead of the Hearts, who have
the third highest matchday income in the Scottish Premiership, with just over £5 million.
Such is the level of support from fans, that the clubs would be behind only the Premier
League’s ‘Big Six’ clubs within a table of Premier League matchday income. Broadcast income is a combination of sums
earned from domestic and UEFA competitions. Both clubs benefit and suffer from the complex
distribution methods used to reward clubs by UEFA.
Because BT Sport pay the largest sum for Champions and Europa League rights in Europe, Scottish
and English clubs benefit from this being distributed via what is known as the market
pool. Scotland’s relatively low UEFA coefficient (which measures historical success by national
teams in Europe) means that their share of this pot is far lower than that of England,
Germany, Italy, Spain and France. Celtic’s broadcast income was higher than
that of Rangers because they made more progress in the domestic cups and in Europe. Celtic
also had more money from yet another of UEFA’s pots of cash, which is linked to overall performance
over the last decade in Europe. With Rangers being in the lower leagues of Scottish football
for some of this time and not qualifying for Europe, they earned far less money from this
source. The gap between Celtic and Rangers compared
to the Premier League is well known, what is perhaps more alarming for fans of both
clubs is that they are also behind many teams in the English Championship too, who are earning
parachute payments that actually exceed the sums earned by European participation.
Commercial income is a combination of sponsorship, advertising, kit manufacturing, merchandise
and hospitality. Celtic again have had an advantage here over
the years. Rangers had a significant increase in 2018/19 due to the Steven Gerrard effect,
as sponsors proved willing to pay more to be associated with such a high-profile individual.
Retail sales increased substantially at Ibrox last season but are still not maximising their
potential due to an ongoing legal dispute with other parties, including Mike Ashley,
the Newcastle owner, which has restricted sales and led to some fans boycotting products.
The combination of all the above has resulted in Celtic generating revenue of over a quarter
of a billion pounds more than Rangers over the last six years. Whilst the gap last year
was the narrowest for some time, Celtic still had a £30m advantage over Rangers and that’s
before considering player sales. Celtic also had ‘other income’ of £8.8
million as compensation from Leicester City for headhunting Brendan Rodgers and his backroom
team part way through the season. The main costs for clubs are in respect of
players, in the form of wages and transfer fee amortisation. The two big Glasgow clubs
have wage bills far in excess of other Scottish clubs and Celtic’s higher income allows
them to pay higher wages than their rivals’. The wage bills of both clubs were travelling
in different directions last season though. Celtic’s total fell by 5%, with Rangers’
rising by over a third, as the cost of employing Steven Gerrard plus the players he recruited
for the club resulted in wages increasing by £10 million.
Transfer fee amortisation is the cost of acquiring a player’s registration spread over the
length of the contract. So, when Rangers signed Conor Goldson from Premier League Brighton
for an estimated £1.5 million on a four-year deal, this results in an amortisation cost
of £375,000 a year for four years. Celtic have a far bigger amortisation charge
in recent years, partly due to winning nine Premiership titles in a row. The income that
such success brings domestically and in European competition has then been invested in player
signings. Rangers’ spending has increased noticeably since they returned to the top
division and this is shown by the rise in their amortisation charge.
In addition, both Rangers and Celtic reported ‘impairment’ costs of £1.6 million and
£2 million respectively, in relation to players signed whose poor performances meant their
values were reduced in the balance sheet. Rangers ‘other costs’ increased by 70%
to over £21 million. Part of this is due to extra stewarding and policing required
at Europa League matches at Ibrox, but also an alarming £3.6 million increase in legal
costs, as Rangers’ disputes with Sports Direct rumbled on.
In recent years, Celtic have made profits selling one or two high profile players each
year and 2018/19 was no exception, as Moussa Dembele was sold to Lyon for about £20 million,
having cost the club a fraction of that sum from Fulham. The sale of Kieran Tierney took
place after the accounting year ended and that will contribute £25 million to next
year’s figures. Rangers by contrast have not been able to
sell players for such large sums, although the prolific Alfredo Morelos is likely to
command a high price should he leave the club in the next year or so.
Under Steven Gerrard last season, Rangers outspent Celtic for the first time in many
years in terms of player signings as the club tried to narrow the performance gap. Profits are total income less costs. Celtic’s
profits fell significantly in 2018/19 but were still substantially ahead of Rangers’
performance. If a club is losing money, then the only way to survive is to sell off assets
or have investment from lenders or shareholders. Rangers generated £2 million from share issues
and £8 million from loans in 2018/19 to plug the gap from the day to day losses, whereas
Celtic needed no such funding.