Saints without Rangers: A question of $$$
Since Valentines day, when Rangers went into administration the ‘Mass Scottish Media’ (MSM) and SPL supremo Neil Doncaster, along with the SPL chairman (including our own Stevie Brown) have been telling us all that Scottish Football without Rangers will die. There will be no money and we’ll all go bankrupt.
It has been left to a few voices from Non Old Firm clubs to try and point out that the message of doom is not what it seems. Tam Cowan pointed out that over the last 20 years, no club relegated from the SPL has been bankrupted. They lost all TV revenue, and had no games against the Old Firm, yet didn’t go bankrupt. So how come losing 2 games against Rangers will bankrupt us and the rest of Scottish Football?
Let’s look at the arguments…
Myth number 1 – the SKY TV deal…
Without Rangers there will be no TV deal. The new SKY deal, which is meant to start this coming season is worth 80million GBP over a 5 year period, or GBP16million a year. This is split to the clubs dependent on league position. The argument is, without Rangers, that there will be no TV deal. This is myth number 1. It is rubbish.
The SKY deal, reportedly, has a clause in it which allows SKY to cancel the deal, should either Rangers or Celtic not be in the league. Now, while I’m sure SKY won’t be happy, there will still be a TV deal of sorts. If Rangers are gone, SKY will either negotiate a lower figure, or ESPN/BBC will take over a smaller deal.
Myth Number 2 – Rangers in the SPL is worth 1.5 million to St.Johnstone
Ah, the myth that the Perthshire Advertiser quoted. Sure, the number will sell papers, but it is the same kind of accounting that values Ibrox at GBP110million, yet lets the Admins sell it for GBP5.5million. It is called creative accounting. Lets look at some numbers shall we?
Where did the 1.5 million come from?
Let’s look at our TV deal. By finishing 6th this season Saints will have brought in around GBP1.3million in commercial revenue from the SPL prize money. See the table below. 6th place gets a total of 7.5% of the available pool, thought to be around GBP18million this year. Meanwhile, our two games against Rangers this season brought in gates of a combined 13,036 punters. Take away the approx 2000 season ticket holders, giving a combined 4000, and that leaves 9,000 paying customers. At GBP25 a head this is approx GBP225,000. Add it all together to get the magic number of 1.5 million.
On the face of it, that’s quite a hit, when you consider Saints have a turnover of just over GBP4million. But is the number right?
Firstly, let’s look at the gates.
Our two matches at home to Rangers brought in crowds of 6459 and 6577 respectively (NOTE: I am only considering 2 home games, not the three we actually had. 3 is a one off event, which is as likely to happen as us getting one home game. Therefore, I used 2 home games as the long term average number of gates against them), giving a total of 130236. But what proportion of this can be attribute to Rangers. Our average for the season was 4170 spectators, so the net effect of the Rangers fans was just 4697 paying customers (see above). At GBP25 a head, this makes an additional revenue attributed to Rangers of just GBP117,417 from match day receipts.
Secondly, we can look at the larger portion of this, the TV revenue of 1.3million, thanks to our 6th place finish. How will the revenue look with Rangers? Well, lets assume that there will still be a TV deal – what will it look like? What do Rangers bring to the table?
Well, according to accountancy specialists Deloitte, Rangers and Celtic account for 67% of the league revenue. (Now, Celtic actually account for 60% of this total, with Rangers at 40%, given the larger capacity of Celtic Park, but for the sake or argument we’ll stick to a 50/50 split here.) Therefore, it’s safe to assume that should Rangers depart the league, SKY will be looking to cut the deal by 33% (half of the contribution of the Old Firm). This cuts the revenue to GBP12million to be split between the 12 clubs.
But wait, this is huge right? Yes, but without Rangers, what will happen to the 11-1 voting powers? Are the 11 non Old Firm clubs going to agree with the current TV split? Not a chance. Currently the top two in the SPL get 32% of the TV revenue. To change this needs a 11-1 vote of SPL member clubs. Rangers and Celtic vote together, ensuring this can never change. The rich get richer, the poor get poorer. The minute Rangers are gone, this will change the split will be more even. If edited the split % and came up with something much fairer for the league, based on the reduced revenues.
As you can see, the spread is much fairer. But how does this affect Saints? Well, with the decreased TV deal, revenue does drop. By being in the 6th place, with a TV deal reduced by 33%, but distributed more evenly, Saints would have received just over GBP1million instead of GBP1.3million. A drop of under GBP300,000. Saints may even have finished a place higher, as they would have faced Ross County/Dundee/Hamilton instead of Rangers, however, the redistribution of funds would mean this would be a negligible difference to the prize money.
When added to the lost gate revenue this would see Saints lose out on GBP382,017 by Rangers not being in the league. Ouch, right?
Well, to me and you yes, but what does this mean in real terms? How could we make this back?
Saints reported turnover last year of just over GBP4,000,000. So a loss of 382k would mean an approx 9% decrease in turnover. If we could reduce the squad size/wage bill by 10% we would be therefore better off. Is 10% realistic? Without Rangers in the league, and the associated pressure to compete, clubs could comfortably reduce wage budgets to more realistic levels. Saints ran last season with a first team squad of 22-23 players. Reducing this by 9% would leave us missing 3 players. 3 players? Yeah, no Carl Finnigan, no Sean Higgins and no David Robertson… would we really have noticed? Alternatively, players commanding higher wages would have to lower their expectations… It is not unreasonable to think that a 10% wage reduction across the board would be impossible, given other clubs will have to cut wages too.
But there is another option to cover the loss. What if we could increase crowds? What would we actually need to cover this?
Well, to cover the shortfall, Saints would need just 849 fans extra at every home game (see below). Just 849. Is that possible? Well, back before the days of Rangers dominating the league, the average attendance for Saints was 4859, compared to last seasons average of 4170. It is realistic to think that attendances would improve with less fans going to Old Firm matches, so, as you can see, the increase is feasibly possible. Interestingly, as you can see above, the increase in Old Firm attendances since 1983 is a massive 315%, while the decrease in the other teams attendances is 10%. That’s a massive, massive swing to the Old Firm. It is almost a given, that attendances over time will increase for the other teams, as less fans attend Rangers/Celtic games.
The conclusion? The MSM are giving out a myth, which is being supported by club chairman. The rest of us need to get the word out, that the financial aspect is just a cover up. The facts DO NOT support it. See above
Saints, without Rangers, could very realistically be GBP76,0833 BETTER OFF without Rangers. Shout that from the roof tops.
If any SPL chairman thinks I am wrong, I challenge them to present their figures to disprove this. I, and the rest of true Scottish Football supporters would love to see them.
(I have uploaded the full spreadsheet to google docs – link here)