Dundee United look forward rather than backwards

IT HAS been a long time since Dundee United were referred to as part of the “new firm”, but the club’s management are confident the hurdles of the pandemic may soon be consigned to the past. The Tangerines’ finances took a hit in 2020-21, but the club managed to limit their losses to £ 2.5 million for the campaign. 

Dundee United aim to be a top six Premiership club and qualify for European football. In 2021-22, they are currently in a Conference League position and are still in the Scottish Cup, their objectives look realistic at the moment.

The club’s turnover in 2020-21 was down by around 2.5% to £ 3.8 million, while their deficit was an improvement on 2019-20 when they lost £ 3 million. Like all other Scottish clubs, the lack of matchday income decimated turnover, but Dundee United fared better than some – Hearts saw their revenues drop by 38%, Aberdeen 22% and Celtic 13%.

With revenues dropping, the wage bill became more of a drain on the club’s finances. In 2020-21, the wage bill was up by 7% to £ 4.9 million and this represented 132% of income. In 2019-20, the wage to income ratio was 120%. Ideally, the club would like to see the ratio closer to 80%, still high but much more manageable.

Scottish football benefitted from the government’s relief measures and Dundee United secured £ 2.8 million from the debt facility which has a zero interest rate and is repayable over 21 years. The club estimates it has lost around £ 4.2 million from the pandemic.

In addition, the club’s owner and chairman, Mark Ogren, a US-based businessman, has made interest free loans of over £ 9 million to the club since taking over in 2018. He is committed to the club in the medium to long term and is aware that success on the field is the best way to get a return on his investment. 

Covid has got in the way of his plans and his claim the club is “going places”, and he has received some criticism from a section of the fanbase. However, Dundee United won the Championship in 2020 and returned to the Premiership.

The club expects to return to profit in 2022 partly due to income from transfers involving Lawrence Shankland (who was sold to Beerschot for £ 1 million) and youth product Kerr Smith (£ 800,000 to Aston Villa, rising to £ 2 million), and also a return to normal income streams. 

There is also considerable upside to match attendances. In 2019-20, they averaged 8,500 at Tannadice, but the 2021-22 gates are around 6,500. There is potential at Dundee United, although the gap between the “old firm” and the rest of Scottish football is enormous and growing all the time.

The fans have played a major role in assisting the club during the pandemic, with most of the 3,000 season ticket holders waiving their refunds and the Supporters Foundation donating £ 100,000 towards the development of the academy site at Gussie Park. 

Dundee United could end 2021-22 in a better financial state and bound for European football, that would certainly be a case of going places, to quote the club owner.

Barca are back… or are they masters of spin?

JUST A couple of months ago, Barcelona were supposedly staring into the abyss, broke, unable to keep their talismanic player and in a deep, deep crisis. Their story was a lesson to every over-ambitious and reckless football club and also, some assumed, an indication of the troubles to come for the industry. The perils of debt and overspending, that was the moral of the tale.

Barca have been in better places and they have certainly lost ground on their rivals at home and abroad. But what’s this we have here, some kindly bankers saving the club? It’s not a Spanish institution that has come to their rescue but Goldman Sachs, the US investment bank who, according to their then CEO in 2009, were very good at doing “God’s work”. Barca probably need celestial help at the moment, so why not hire Goldman to sort out the mess that has built-up at the club? One might suggest the Wall Street firm have provided a big vote of confidence for the Blaugrana.

Joan Laporta, who won the political battle to become president last year, claimed that “Barca are back” after acquiring Manchester City’s Ferran Torres for around € 50 million. With the club’s debts supposedly well over € 1 billion, people are naturally asking how they can suddenly afford such a signing. Laporta, who called Barca “a benchmark club” also insisted a new squad is under construction at the Camp Nou and boasted he will sign Europe’s hottest property, Erling Haaland from Dortmund in the summer. There has been talk of bids for Chelsea central defender Andreas Christensen and Juventus striker Álvaro Morata.

Barca were never going to become football’s Lehman moment precisely because they are Barca. Nobody was going to close them down and even if it did get to the 11th hour, Spain and Catalonia would never allow the demise of one of its biggest sporting entities and ambassadors. The public relations would be a disaster, the blow to Spanish morale would be ill-timed and the politics would also be very tricky to handle. Barca’s situation was undoubtedly caught up in politics, but it did highlight how badly they had been run for a long time.

Goldman Sachs have agreed a € 595 million loan that will run for 35 years but for the first five years, Barca will only have to deal with the interest. In that period, Goldman will work on the vital task of restructuring the club’s finances. The loan, of which € 100 million was available immediately, will allow Barca to stay afloat and also provide some much-needed breathing space. 

Laporta, when he unveiled Torres, said Barca were recovering their status and warned the rest of the football world that “we are back as big players in the market”. Such a statement would appear a little premature and also tasteless given the publicity surrounding the club’s financial crisis in 2021. Borrowing money is not an achievement, but merely underlines the parlous state of their finances. A little humility would have served them better.

However, if a bank is going to lend to any football club, it would ideally be to one that can generate € 1 billion a year when the climate is right. With such a high cost base, the problem was that when conditions turned bad it exposed Barca’s fragile business model.

On top of being able to meet their running costs, the club also has its ambitious Espai Barca project in the pipeline. Barca’s members voted overwhelmingly to continue this scheme, which includes the Camp Nou and a new sports centre. The stadium, when completed, will cost around € 900 million, but Laporta believes additional revenue generation from the project will total € 200 million per year.

Barca suddenly seem to be in a better frame of mind than they were just a few weeks ago. Although they crashed out of the UEFA Champions League at the group stage, which must have been a seismic shock on so many levels, they now have “one of their own” in Xavi as coach, their seventh full-time appointment since Pep Guardiola departed in 2012. Only Luis Enrique has seemed anything like a comfortable hiring during that time. Xavi could be Barca’s Zidane, but he doesn’t have the squad the Frenchman inherited at Real Madrid. Xavi has been in charge for nine games and his win rate is 44%, but he will enjoy the luxury of patience from the Barcelona top brass. 

Cynics believe Barca desperately needed some good news and Laporta is doing his best to stir things up in the media. He may well have cash that is burning a hole in his pocket, but competition will be fierce for Europe’s big names. How far can they go when they still have so many issues to solve?

“Big fish” Rangers still trailing Europe’s elite

ALONG with their Old Firm rivals, Celtic, Rangers continue to enjoy the status of being Scottish football royalty, earning way more money than every other club in Scotland. The Gers’ finances for 2020-21 underlined the gulf between the Glasgow duo and the rest of Scotland, but it also highlighted the challenge facing Rangers in competing with Europe’s top names.

With an appetising Europa League encounter with Borussia Dortmund on the horizon, Rangers will be reminded of how far they still have to come. Dortmund may not be Bayern, but the Ibrox club will be only too aware that they were once in the same ballpark as BVB and met them in the 1967 European Cup-Winners’ Cup. In 2022, they will be the underdogs.

Rangers won their first Scottish Premier title in a decade under Steven Gerrard in 2020-21, but their losses increased by 43% to £ 24.7 million. The last time Rangers made a profit was in 2013.

The club’s revenues dropped from £ 59 million to £ 47.7 million (-20%), largely due to a dramatic fall (-49%) in matchday income, which was partially offset by increases in both broadcasting (+39%) and commercial revenues (+9%).

Rangers’ wage bill rose by 10% to £ 47.7 million, which entirely absorbed the club’s revenues and was a marked difference from 2019-20 when wages were 73% of income. By way of comparison, Celtic’s wage bill totalled £ 51.7 million and was 85% of total earnings.

Scottish football still appears to be undervalued by many people. According to data produced by football analyst Swiss Ramble, the TV deal, for example, is paltry compared to many leagues, just € 34 million per annum compared to the € 3.6 billion awarded to the Premier League and € 2 billion paid to La Liga. The total income of the two leagues is also eye-opening; the Scottish Premiership generated € 221 million while the Premier League earned € 5.1 billion.

Consequently, matchday income is far more important to Scottish clubs than their counterparts across many leagues. Overall, 48% of revenues is derived from matchday, although Rangers’ matchday cash amounted to 38% in 2020-21. By contrast, matchday income amounts to 13% of Premier League income, 11% of both France’s Ligue 1 and Serie A, 15% of La Liga and 16% of the Bundesliga’s revenues.

One area that Rangers need to improve is in their player trading activities. Over nine seasons, they have made less than £ 10 million in profits from player sales, versus the £ 100 million made by Celtic.

Rangers have started the 2021-22 season reasonably well and are top of the table once more, although they have been beaten. They went out of the Champions League rather cheaply but they go into 2022 with the Europa League play-off awaiting them. In November, they lost manager Gerrard to Aston Villa, replacing him with Giovanni van Bronckhorst. The odds are they will probably retain the league title they won earlier this year, but can they make a splash in Europe?