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Stolen from the hat.

 

Scottish League: 3 clubs insolvent

Governance

Written by Paul Williams

Monday, 22 June 2009

 

Hamilton Academical, Hearts and Motherwell all considered insolvent according to Equifax.

 

 

Equifax, the financial information supplier, has said that it believes three of Scotland's top league football clubs are technically insolvent.

 

Hearts and Hamilton Academical have been listed as insolvent as they would struggle if all their creditors came at once to demand the money they are owned.

 

Motherwell Football and Athletic Club Limited is a company voluntary arrangement, so automatically given zero points and insolvency rating.

 

St. Johnstone and St. Mirren are in the best possible financial health according to Equifax as they both scored 100% in their credit rating check.

 

Equifax is warning that some Scottish clubs could find it hard to source new funding, based on their current credit scores.

 

Despite preparing to splash the cash on new players, many of the top football clubs already owe more than the value of their assets. As such, Equifax External Affairs Director, Neil Munroe, believes this data could provide an important reality check for the clubs.

 

“Our Equifax ScoreCheck review of the SPL credit ratings certainly rings some warning bells about the Scottish clubs who could be facing financial difficulty for the next season. Not even Premiership football is safe from the recession if investors decide to withdraw funds.

 

“We have listed 3 clubs as insolvent because they would struggle if everyone came at once to ask for the money they owe. Of course, that is unlikely to happen, but like most other sectors of the UK economy it is likely to be a difficult year ahead for the nation’s favourite sport. Also, with the possibility of Setanta going into administration, the smaller clubs may find it increasingly difficult to make payments and remain solvent.â€

 

St Mirren, despite narrowly avoiding relegation this season, achieves full marks (100) in its credit score along with newly promoted St Johnstone. However, although finishing the season third in the SPL, Hearts has a score of zero and is therefore listed as insolvent. Hamilton Academical also fared badly, scoring just two points. In general, the lower the score the more likely a business is to experience difficulty meeting its financial obligations.

 

When compared with English Premier League clubs, the performance of Clubs in the SPL is, however, quite positive. Just one team scored 100 – Manchester United.

 

And 11 teams had such low scores that they are technically classed as insolvent.

 

http://www.dofonline.co.uk/governance/scot...ent-060922.html

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SPL announces £23m record profit

Money

The 2007/08 season was the most profitable in the SPL's history

 

The Scottish Premier League has reported a record-breaking profit, generating £23m for the 2007/08 season, according to PricewaterhouseCoopers.

 

Following a decade of losses, action taken by clubs has resulted in eight clubs reducing debt, with two reporting no debt, and all but one breaking even.

 

St Mirren are the SPL's most profitable club after the sale of their former Love Street ground for £9.2m.

 

Celtic have the highest wage bill at £39m, a 53% wage-to-turnover ratio.

 

Hearts are the only club in the SPL to report a loss, despite the sale of Craig Gordon to Sunderland for £9m in January 2007, while Inverness and Falkirk operated with no debt during the same accounting period.

 

Rangers' operating figures were boosted by the sale of Alan Hutton to Tottenham Hotspur for £9m in January 2008, but the Ibrox outfit were the only club in the SPL to report an increase in net debt, up £5m on the previous season to £21.6m.

 

The SPL attracted slightly lower crowds during the 2007/08 season with average attendance figures down 3% from the prior season to 184,297.

 

Two thirds of the SPL teams experienced a decrease in attendance levels.

 

The increase in profit across the league was largely driven by the success of SPL clubs on the European stage, with Celtic reaching the last 16 of the Champions League and Rangers reaching the final of the Uefa Cup, where they lost to Zenit St Petersburg.

 

Much of the SPL's profits are derived from media rights to broadcast matches, with the television deal agreed with Setanta representing £13m per season - or close to £1m per club.

 

For the smaller clubs in the league, the Setanta income represents 20-30% of their operating income, however, the Irish broadcaster lost the rights to broadcast SPL matches after failing to meet a third deadline to pay £3m owed to the SPL by Monday.

 

The SPL chief executive Lex Gould insists that the league is actively seeking a new broadcasting partner in time for the 2009/10 season starting on 15 August.

 

SPL FINANCES - KEY FACTS

Most profitable club: St Mirren with £11m

Highest wage bill: Celtic with £39m

Highest operating loss: Hearts with £3.5m

Biggest increase in net debt: Rangers up £5m

 

http://news.bbc.co.uk/sport1/hi/football/scot_prem/8114799.stm

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I guy i know is a Hearts shareholder and got a copy of the accountants' reports from their AGM.  Needless to say, they don't look too good.  One of the things noted was that the accountants couldn't even work out the scource of Romanov's money.  Not that this isn't anything that hasn't been feared before.

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Man U are 600 odd million in debt and get 100?

 

It's really about your ability to pay creditors should the situation arise.  Man Utd would have no problem in raising money, their revenue streams are huge.  Also, Hearts listing is may be a bit misleading as I'd imagine the bulk of the money owed to creditors is actually to Romanov's bank, so really unless Romanov decides enough is enough and the "bank" demand their money back their rating probably isn't too realistic, despite being factually accurate.

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It's really about your ability to pay creditors should the situation arise.  Man Utd would have no problem in raising money, their revenue streams are huge.  Also, Hearts listing is may be a bit misleading as I'd imagine the bulk of the money owed to creditors is actually to Romanov's bank, so really unless Romanov decides enough is enough and the "bank" demand their money back their rating probably isn't too realistic, despite being factually accurate.

 

They may well be able to pay that off but they still have that debt to service and prior to the Glazers had nothing like that kind of burden of debt.

 

Still seems daft that they have 6 hunner million of debt and get a clean bill of health!

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As BB says its all about their net current assets position. You would need to know their current liabilities and their current assets to understand if they are in a position to meet any likely short term demand on debts/liabilities by liquidating any short term assets. In the case of Hearts, as has been said their current liabilities are mostly in the hands of UBIG so are not likely to be called in and so their ability to repay makes them 'technically' insolvent but not in reality.

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