Today, KPMG published their annual European Champions Report. The Daily Record is already running with the headline fact, as they see it; Champions League football accounted for 30% of our club’s revenue in season 2016-17.
It will likely be roughly the same figure in this campaign.
This feeds into a narrative which gets a lot of play on the Sevco fan sites and elsewhere, and it’s one that needs to be put firmly into some kind of perspective. According to this theory, this narrative, we’re only two Champions League early exits from complete and utter ruination. I’ve looked into this before, and it won’t surprise you to learn it’s a fantasy.
Let’s take the top line figure; our revenues of around 100 million EUR. That’s satisfying to read, of course, but ultimately it leaves us well behind most of the other clubs on the list. That’s to be expected. We play here in Scotland.
Our total wage costs are around the 60 million EUR mark. That’s high. For Scotland it’s out of sight, around three times that of our so-called rivals at Ibrox. But is it too high? Is that a dangerous number for us to be dealing with?
The short answer is no, absolutely not.
Take Champions League football out of the equation. Imagine we don’t qualify for the Groups. Imagine, in fact, that we don’t qualify for the Europa League groups either, which is frankly the stuff of sheer fantasy. Even on our worst year the seeding system should see us comfortably in one or the other. What would the ultimate consequence be?
Losses? Perhaps, but not substantial ones. Let’s put it this way; even the sale of one first team player – think Dembele – would easily offset any losses and probably still keep us profitable. Some cost-cutting would be needed, but the team would still be comfortably stronger than all of our closest challengers here in Scotland.
Celtic has never budgeted for Champions League participation. The simple truth of that is rarely properly acknowledged, but it’s a fact nonetheless. We never plan for it. We never rely on it. We base all of our spending on limited European football. Which is why Celtic does not splash tens of millions on signings based on us “making it all back” when we get there.
Our cost base right now seems massive. Our total costs are around £76.3 million … and that’s a lot of money, even above salaries and running costs. But note that in the last 15 years – even in really disastrous years – revenues have rarely dropped below £50 million.
In the Nightmare of Bratislava year – Gordon Strachan’s first at the club – we went out of Europe instantly, playing a single match in continental competition. Our revenues for that year were around £57 million. The year before last, with Europa League group games, they were £52 million, and in that context £76.3 million in running costs seems enormous ….
But put it in the proper light and you’ll see it’s not quite what it appears to be.
Wage costs have gone up – but not significantly. Operating expenditure rises were perfectly in keeping with playing six Champions League games at home, most in front of full houses, player bonuses including for qualification, investment in infrastructure … what people tend to forget is that playing in front of a packed stadium incurs costs that playing in front of half a ground doesn’t. A successful club will incur costs that a less successful one will not.
Do we need European football? Hell yes, but only in order to grow as a club … our survival doesn’t depend on it, which is where Sevco’s “business plan” is ridiculous. Don’t forget, they had become totally dependent on European football to the point where a single season without it was enough to wipe them out.
Their fans live in denial of that, but the truth is had they failed to win just one of their last three titles they’d have been in the grubber before their fans had even heard of Craig Whyte and that’s not speculation, that’s a fact.
Without European football we would, of course, have to cut our cloth accordingly, but we’ve been able to do that down the years with surprising success. Even then, we would still have wage ratio twice as high as that at Sevco (and they can’t afford theirs, don’t forget) and many times higher than those of all the other clubs in Scotland.
In addition, as long as we have top players on the books who could be sold in an off-season – I think most of us know Moussa would have been gone in the summer had we not made the Groups of the Champions League – we can cope with the bad years when they come along.
For our club, the key is in reducing our dependence on Champions League income by growing other parts of the business, and our investment in the Celtic Village and our digital media side are steps towards doing that.
But ultimately Celtic wants to be more than a club living off the crumbs in Scotland. We have to be at that table, to increase revenues across the board and to generate interest in the global brand. We, unlike other clubs in Scotland, do have one of those.
A European League can’t be more than a decade away; at that point Celtic’s troubles will be over, provided we’re sitting at the top table.
Until then, we’ll survive whatever happens.
Everything else is background noise.