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Sevco Declares More Losses In Their Accounts. This Is A Company In Deep Financial Trouble.

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How do you know that Sevco’s accounts are going to paint an unflattering picture before you even look at Page 1? That’s easy. You look at the timing of their release, a Friday evening. Back when I was an activist at Labour HQ Friday was seen as a good day to let negative stories seep out to the press, because it’s the start of the weekend and no-one cares.

In football that’s even more pronounced.

The press coverage is centred on the games.

Win or lose, that’s a sexier story than a bunch of numbers being crunched, and so real scrutiny – the kind that would cause you problems – gets laid aside for another time. Which in football means that it gets put in a drawer until people forget it was ever there.

On top of that, these are financial figures at Ibrox and in all the I’ve been writing about Scottish football I have yet to see a set of those go unspun. Spin is inevitable here, as they’ve reduced losses and increased turnover to £22.2 million.

Remember what I wrote last month? In a downturn year for us, we posted turnover of £30 million more than that.

Losses for the last reporting year were over £3 million (compare that to our £4 million profit; in a bad year we’re still making money!) a far cry from previous years, which is the gloss the media is slapping all over them. The rise in turnover partly explains this but there’s also been a corresponding increase in salaries (as expected) too.

The rise in turnover and the drop in losses is, says King and the board, a sign of a club in better financial health than it has been in years. His statement to the shareholders talks about areas where they’ve invested including – he says – in the stadium. Funny that no figure outlining that spending appears in the accounts. We’ll let that slide for another day.

It’s not the first I’ve seen a loss making business described as being in good health. Yet it’s the first time I’ve seen one borrow money from its own directors, admit that it will need more, and still claim the sun is shining and the flowers are growing in the garden. They’ve also got a curious business plan, predicated on reaching Europe next season. Quite what happens if they don’t is left up in the air but it doesn’t take a genius to hazard a guess.

Will they get through the season? I wouldn’t put money on it. The account said they made use of a £2.9 million loan this week, from “investors” although they aren’t named and the club isn’t legally obliged to give out that information as they are not listed any longer. This is what passes for transparency over there.

If they really have found a mug willing to hand over that kind of money with little by way of security or then fair play to them. They know a lot of stupid people with access to ready cash, but the pure and simple truth of it is that it can’t go on like this indefinitely and when the hits come they are going to hurt and they are going to hurt like Hell and all the spin in the world won’t make the bottom line facts go away here.

This is, as Phil is fond of saying, a loss making company without a credit line from a bank. It’s said often but still largely misunderstood. There is no fall-back here. If people stop lending them money in this way the is over. If they don’t invest in the team in January – with what? Shirt buttons? – there’s a very real risk that the season ticket increase that kept them from being in an even deeper hole will drop off … their won’t pay to watch third rate players struggle to mid-table ignominy, they aren’t built for it … and then the real fun begins.

Listen, over the next couple of days you will read some silly analysis of what their accounts mean and some of it will be in the mainstream press which will take one look at those numbers and their accompanying press release and conclude that everything’s fine. They were saying much the same at this point in 2011, and predicting that the club would spend money in the January window. Indeed, Dave King says there will be a budget for when it opens.

It’s madness, of course, but that never stopped boards over there before.

The lessons of the past haven’t been learned at all. Sevco is a club perfectly capable of living within its means, but no-one over there cares to do it.

And you know what? I don’t even blame them for it.

The responsibility for that lies elsewhere.

I’m going to be talking about that tomorrow.

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