Oh wow. Sometimes I wonder what reality I’m living in.
I lamented this just the other day, when Jim Traynor, at a Sevco press conference, flatly denied that Rangers had been liquidated, a rejection of historical fact so egregious I thought he must have got pulled up for it, and he did, but only by the bloggers afterwards.
Today another does of the unreality runs; Matthew Lindsay of The Herald reckons that Sevco can aid their recovery and “close the gap” on Celtic by selling the Ibrox naming rights.
Like I said, wow.
There are just perhaps maybe three thousand things wrong with that idea, and the rank stupidity of it.
But let’s focus on the main ones.
It won’t actually aid anything, or close the gap in any meaningful way.
Allow me to explain.
First, people assume this is worth a fortune; it’s true that various clubs in England have multi-year contracts that run into huge sums over the course of it. The valuation Stamford Bridge, for example, is estimated at around £6 million per year. That’s not pocket change (in the EPL it actually is) but nor is it a fortune.
It would plug some holes … but not significantly close the gap.
The numbers that follow are from a report by a US company American Appraisal, which looked into this matter on behalf of EPL clubs, in some detail.
Lindsay talks about how Arsenal have netted £200 million plus since 2004 from a combination of stadium naming rights and shirt sponsorship; please note that he never actually says how that breaks down. Arsenal’s stadium deal is worth £7 million a year.
Clubs like Arsenal and Chelsea are at the very top end of the scale, as clubs that will be featured in top level games and European competitions.
Those are clubs with the global exposure of the EPL itself, huge international brands and it’s no coincidence that the clubs who’s stadium naming rights packages are already in the high millions per year are those which sit at the apex of the Premiership; Arsenal and Manchester City (£18.23 million per year; a dodgy deal to get around FFP regulations, it’s literally their owners pouring money in via a “commercial” route).
The valuation of Old Trafford is around £16 million, that of Anfield is around £7 million and Spurs is around £6 million.
Drop below that, and you have a handful of clubs – Everton and Newcastle amongst them – who could command £2 million for their naming rights. Below that the values drop like a rock, with sides like Stoke able to fetch only around £500,000 in spite of being in the EPL.
There is no major pot of gold to be had for a Scottish team battling for third place in the SPL.
The historical name of Ibrox Stadium might bump your commercial value up a little bit, but actually there might even be as much commercial downside in that Ibrox is already the centre of its own wee merchandising empire. Who is going to buy a Kit Kat Stadium mug or a Coors Light Ale Stadium bedsheet? There is a risk here of a backlash, especially if the value of the deal is relatively low, as it certainly would be in comparison to the EPL giants.
We looked into this some years ago and concluded that the money wasn’t worth the aggro and the loss of that sense of history you can’t put a price on. There just wasn’t enough upside to it for us, and that came as a surprise to a lot of people inside Celtic Park.
There is no doubt that we would achieve a higher value than Sevco would; our exposure to Champions League football would make sure of that on its own, but we’re also a marketing juggernaut now. We have credibility in that sphere. Sevco could not do a strip launch properly this time around. Their efforts to flog the back of the jersey to sponsors netted zero interest, whilst we managed to net Magners there as well as a significant deal for the front of the shirts.
There are people at Celtic who know how to squeeze every available penny out of a sponsorship agreement.
They have rejected this idea without equivocating.
How much would Sevco get?
Take into account the shambles of recent sponsorship deals. Take into account their total absence from European group stages and the unlikelihood of them making it there any time soon. They are also desperate for external financing; that naturally makes your negotiating position diabolically weaker.
I’d guess probably about £1 million a year; that might be a fair reflection of their commercial value at this moment in time.
Not a pot of gold as much as a bucket of warm spit.
That wouldn’t make a dent in their troubles.
Here’s the other reason this is a pipedream; even if they earned five times as much – putting them on a par with the Arsenal’s etc – it wouldn’t come close to bridging the gap, and this is the reality that the media does not seem to want to accept or their fans to understand.
Celtic’s six month financial figures to December 2016 saw revenues of £61 million, and a profit for that trading period of over £18 million … before Champions League cash was even counted. Our turnover for last season is likely to be in excess of £75 million.
Sevco’s turnover for season 2015-16 was £22 million in total, for a 12 month period.
Say they made an extra £10 million being in the SPL – ludicrous – but give that to them.
They posted losses of £3.3 million for that season, so say they are £7 million in the black, which is also patently nonsensical.
Now add a couple of million from increased merchandising … and then toss that £5 million per year for the stadium right into the mix.
Turnover is around £40 million. Profits don’t equal ours, and nor does turnover.
That, actually, puts them sort of on a par with Rangers annualised earnings in the Murray years – where we were earning, on average, £12 million plus more than they were year on year. And that translates into real tangibles, signings, wages, scouting costs.
We’d still be in front, by miles.
There is no “magic wand” solution.
If the two clubs were at their peak, and only spending what they earned – and no bank will give them an overdraft with the way they burn through money right now and never post a profit – we would outpace them, easily as we would have done all the way through the EBT years if they hadn’t been doping up.
We are a bigger club than they are, and we were a bigger club than Rangers was – and that’s not wishful thinking it’s a stone cold fact borne out in hard numbers.
Lindsay and others can come up with all the creative “solutions” they want … this is all just a pipedream.
The sooner they get used to their current status – it is their future, if they are very lucky – the happier they will be.