New stadiums may help but they won't solve football's financial problems alone
Interesting contradictory evidence from a couple of football finance reports this week.
PricewaterhouseCoopers' report on the Scottish Premier League (they must be kicking themselves that Deloitte has cornered the market on analysing the more lucrative and headline-worthy English equivalent) paints a healthy picture of the Scottish game.
Six of the twelve Scottish Premier League (SPL) clubs reported a profit in the 2005/06 season, it says, 'a significant turnaround from the days when substantial losses were reported across all the clubs'.
Deloitte itself, meanwhile, reports that new stadiums for many English clubs have boosted their turnover by 66%. Some 25 new club football stadia have been built in England since 1990 with at least half of all Premiership clubs have plans for further investment in new stadia or redevelopment of their existing ground.
But scratch beneath the surface and not all is rosy.
As Deloitte says: 'Whilst on average playing in a new stadium drove an immediate first year 51% increase in attendance, the "new stadium effect" is not the permanent panacea. The club’s performance on the pitch has to measure up to the quality of the new facilities to maintain attendance at the new, higher, levels particularly among the recent ‘converts’ to following the club live. Some clubs have seen the “new stadium effect” quickly eroded even in the second year of relocation.'
Pretty obvious stuff. But Mark Roberts, senior consultant in the Sports Business Group at the firm, adds a worrying and more explanatory note: 'Unfortunately, we have seen some clubs press ahead with stadium development plans without the evidence to substantiate the proposed development. In these cases development plans often tend to come unstuck when funding for the plans is sought, or, worse still, a white elephant is born.'
And as PwC points out there are further examples of questionable financial decision-making. SPL clubs collectively lost £9m in 2005/06. And some are running numbers that are clearly unsustainable in the long-term. Hearts' wage bill more than doubled to £10m, 97% of the clubs turnover.
With Leeds United's financial woes continuing (despite winning their opening match the club is bottom of League One on minus 12 points after incurring a 15 point penalty for failing to comply with the terms of the Football League's insolvency policy) the battle with financial instability clearly isn't won yet .
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