Glasgow is green and white and no red flags

I have received some dignified criticism that I only focus on matters financial at Ibrox.

The Churchillian challenge is that I should examine what is happening across the City at my own club.

With that in mind, I contacted my rugger chap in the Square Mile rugger.

By way of assistance, I furnished him a copy of the recent accounts from the Champions.

Here is what he sent to me:


“I have been asked by Phil to do a review of the accounts of Celtic PLC “Celtic” for the year ended 30 June 2016.

When I carry out a review of accounts, normally I start at the end of the accounts and selectively work my way through what I consider to be the next most important areas.

I will lay out my report based on the respective areas that I review.

Why do I look at the backend of the accounts first?

Normally this will highlight areas of the business that may be critical to the future, for example, contingent liabilities, or matters that occur after the year end, which may also have a large bearing on the future of the company. It is amazing how many times this review highlights a red light in terms of an investable proposition.

Next, I look closely at the report of the auditors. Clearly, I am expecting a clean report with no qualifications at all. In the event that the auditor refuses to express a view, this, in my opinion, renders the accounts useless. Where there is an emphasis of matter opinion by the auditors then clearly the extent of this emphasis will determine how serious the situation may be, and if the accounts are qualified on a going concern basis, then quite frankly another red light appears.

The third area that I consider is a strategic review of operations where it is possible to look at a financial summary of the main business units.

The fourth area is a review of the accounts themselves, in particular looking at the supporting notes.

I will also look at the working capital of the business; this comprises a review of cash flow together with looking at current assets and current liabilities. This should identify if there are any likely potential problems in the short term financing needs of a business.

Finally, I will look closely at any notes that are highlighted in the account that are worthy of closer scrutiny.

A lot of people start at page one and work their way through. My issue with this is that there is a lot of marketing commentary and self-congratulations at the front end of the accounts. I prefer to look at potential problem areas before giving the accounts a clean bill of health.

A review of the back end of the accounts.

The first thing that pops out is that there are no contingent liabilities or legal issues outstanding, so that is reassuring. Events that took place after the year end represents player trading. It highlights that the purchase of 5 players, including Sinclair, Dembélé, and Gamboa, cost £6.3m. However, the sale of Fisher and Johansen yielded £2.4m. In net terms, this has cost Celtic a little under £4m. This does not appear to be significant in financial terms.

The conclusion here is that this seems positive for Celtic and definitely no red lights.


“2 Auditors Report

The first thing to note here is that the auditors are BDO LLP. In auditing firms, there is a recognised “top four” in terms of size, KPMG, Deloitte, EY, and PWC. BDO is in a small group immediately below this size. They are considered to be a sizeable, professional firm who audit a number of companies that are quoted on the main and aim markets. Unsurprisingly Celtic have no qualifications, whatsoever.


“3. Strategic review of Operations.

Celtic’s business is split into 3 main areas.

Football and stadium operations. This includes all revenues and costs in relation to all football operations, ticket office, stadium and youth development

Merchandising. This is made up by all retail, wholesale and mail order activities.

  1. Multimedia and other Commercial operations. This is effectively all other revenue generating departments.

Total revenues were flat compared to last year at £52m, and Celtic reported a small pre-tax profit of £0.6m versus a loss of £3.9m last year. The results were boosted by the profit on sales of players and in particular Van Dijk. Gains on sale of players almost doubled to £12.6m compared to last year and amortisations of players contracts were almost £5m versus £7.3m. In a nutshell, in the absence of champions league revenues, Celtic need to sell players in order to provide the investment in the infrastructure of the football club, including player and youth development.

I could go into the minutiae of each division’s contribution, but it is largely similar to last year. Suffice to say that the contribution of merchandising and multimedia are required to offset the substantial loss in the football operations. I understand that this has been the stated policy of the club for a number of years. Develop and sell players and reinvest in the infrastructure.


“4. Review of the accounts.

As highlighted above, Celtic made a small profit on flat revenues, assisted by the profit on disposal of players. The balance sheet shows fixed assets to be valued at £55m, in line with last year with capital expenditure of less than £2m. Intangible assets which are largely player registrations as I understand it are valued at just under £10m, and monies receivable in more than 12 months, suspect it is sponsorship monies is £4m.

Regarding intangible assets, namely players, Celtic spent £11m during the financial year, in line with the previous year. Celtic analyse the value of players contracts above £1m, included as intangible assets and they now have 3 players with between 2 and 3 years left on contracts versus 1 last year. I interpret this as having greater control over the more valuable assets of the club. It also appears that Celtic had impairment costs (write off of contracts) of £1m this year versus almost zero last year.

“Working Capital

In order to assess working capital, I look at cash flow and an examination of current assets, current liabilities and some other areas.

Celtic had net cash at the year-end of £3.6m vs. £4.7m last year. Excluding deferred income (sponsorship money and season ticket monies received in advance) Celtic had positive net working capital of over £13m at the end of the year. However,  Celtic’s net cash balance is helped enormously by receiving almost £20m deferred income this year, against £13m last year from season ticket monies and sponsorship, so clearly this has had a very positive effect on year-end balances. I am informed that as a consequence of qualifying for the Champions League, there is a distinct possibility that revenues and sponsorship monies will increase substantially by the end of the financial year.

“Review of notes in the accounts

Player trading remains a pivotal element to the financial model of Celtic, and this can have considerable effect on the trading results. This information can be found under the analysis of intangible assets.  In Summary, Celtic add about £9m each year, incur a charge during the contracts of £5m this year,£7.3m last year, so there is the possibility that this can change the financial outcome considerably. However, if the value of the squad improves year on year, the profit and loss account should benefit accordingly.

In conclusion, in my opinion, Celtic is in rude financial health!”

Dear reader, you can consume the preceding as you see fit.

I am not qualified to confirm or deny any of the above.

However, what I did do (go to someone appropriately qualified and ask for their professional opinion) appears to be beyond even award winning stenographers.

My lay understanding of the analysis is that Celtic are in an excellent financial place after a disappointing season on the field of play apropos European football.

Of course, as the Champions of Scotland are back in Champions League action tomorrow night, it is worth noting that the accounts for next year will be much better.

Now anyone who can spin that as a negative Celtic story for their dignified demographic deserves an award!

47 thoughts on “Glasgow is green and white and no red flags

  1. joe mccormack

    Not sure if anyone else has mentioned it but the 50th Lisbon anniversary celebrations have kicked off already with the Celtic shops choc a bloc with merchandise in the run up to Xmas and beyond.

    I doubt if there will be a Celtic fan on the planet who doesn’t end up with an anniversary item, the boost to retail income will be enormous.

    It would be fitting, would it not, that in 2017 Brendan delivers a treble in our special year.

  2. sligojoe

    I was having a quick look on the DR website today during lunch.

    I noticed that, contrary to my understanding of the situation, the Rectum is actually hedging its bets on the Rangers/Sevco continuation myth.I clicked on the Celtic FC tab which opens a page headed…..

    “FOUNDED in 1888 as a charitable venture in the East End of Glasgow, Celtic have grown to become one of the biggest clubs in Scotland and the only Scottish club to win the European Cup when they beat Inter Milan 2-1 in 1967. They also reached the 1970 European Cup final and the 2003 UEFA Cup final. Their 60,000-seater stadium is the biggest football ground in Scotland”.

    I then clicked on the Rangers tab and it reads….

    “Rangers will this season be playing in the Scottish Premiership, having won the Championship. The club has claimed a host of trophies, including a world record 54 league titles and appeared in four European finals, winning the Cup Winners’ Cup in 1972”.

    No mention of the year of foundation?

    I thought that all in the print press and media had bought into the continuation fairy tale, however, the use of the phrase “The club has CLAIMED a host of trophies”, suggests that might not be the case.

  3. jimlarkin

    Phil, have you been on the phone to Scottish water to find out if the ‘water’ story is indeed true?

    I find it very hard to believe something like this is even possible, with all the rules and regulations relating to water treatment and supply…there’s no way this can happen.

  4. and connelly makes it three

    phil , they don`t need to find a negative to spin a celtic story

    when it`s favourable they will simply ignore it , as they have with the highly successful day in George square yesterday.

    all the kids there are the future of our club.

    also please watch peckham springs on only fools, a brilliant episode .

    Scottish water is answerable to their shareholders and have a legal duty to collect all debts ,
    if true , no shortage of puns come to mind , a veritable deluge.

  5. Luke`s Grandad

    No disgrace to lose to Borussia last night, They are an excellent side and deserved their victory, Also praise to the German fans they contributed to a great atmosphere.

    1. joe mccormack

      Sligo, it’s more than interesting reading, it’s an unbelievable story.

      Someone has tampered with the Scottish Water supply at an adjacent church and Ibrox has had free water for the last two years with no one at SW or Ibrox questioning the sudden lack of invoicing ?

      Now given that historically we know that Rangers have gone to great lengths to hide the detail of two dodgy tax schemes from HMRC and the SFA during the tenure of two of the current Directors, what appears to be an outlandish claim may well have some substance.

      This could be the large bill that Phil referred to previously, £2m plus according to JJ?

      Apparently SW is going to cut off the supply if payment is not forthcoming immediately, though if true I’m sure Rangers will be doing their utmost to water down the bill.

  6. joe mccormack

    For those critical of last night’s performance take a deep breath and ask yourself the question….have we improved significantly since last year? A resounding yes to that.
    Being outclassed by a team that finished 4th in the Bundesliga last year is no disgrace.
    Brendan has been at the club for less than 6 months, you can’t build a new team in that timescale.
    Next season I would expect CL qualification to be less fraught than this season and with a couple of additions , and with a bit of luck in the CL draw, make a much better fist of it.
    For those of a bluish hue taking some pleasure from last night’s result, ask yourself where does that leave you in the scheme of things, effectively 10 points behind a quarter way through the season, in 5th place in the SPFL, with an ageing squad half of which will need to be replaced again next season?
    No credit line from a bank, ST monies circling the drain, creditors bills piling up, outstanding fines, damages bill for Celtic Park, unable to pay up Barton’s contract, no significant monies incoming before next May……………..hardly cause for celebration.

    1. Vinnie

      “………hardly cause for celebration.”

      The poor wee souls.
      Joe, so glad you didn’t mention the state of their stadium and the £10 million or so cost of repair.
      Shit………I’ve just let it slip out but I think I got away with it.

  7. joe mccormack

    I suppose the £10m that Murray/Robertson were trawling for in the City was what is required to take them through to May’s ST monies?
    Seeking 3rd party finance would indicate that the 3 Bears are tapped out and King’s war chest has been lost or stolen in transit from SA.
    If current and future lenders are investing on a cash for future equity basis, even a successful share issue is unlikely to raise enough money to cover the loans, never mind bring fresh money into the club.
    May is 7 months away, it’s going to be a long, cold winter in Govan.
    The marquee signing is persona non grata at Ibrox or the training ground but remains on full pay, the highest earner at Ibrox .
    If his misdemeanours amounted to gross misconduct then he would already have been sacked, the betting charges are a red herring as Joey’s briefs would quickly shoot down that kite by introducing Ian Black’s betting against his own team affair despite which the club failed to sack him.
    With the amount of time Joey has now been banished it’s more likely that his briefs will be preparing a constructive dismissal claim against the club, to include paying up his contract and damages which could be the tipping point.

  8. Trotsky's Tortoise

    I just want too say that we were beaten by a far better side last night and that the Borussia fans were superb. On a positive note, the monies from the CL put us beyond the other clubs here on a financial basis, I hope we can continue in a similar vein. For all the lurking huns on here, revel in the defeat but come Sunday you’ll be climbing the walls again. I’m positive that a strong Celtic performance will put you all back into yer boxes once more.

  9. JimBhoy

    When is the Sevco AGM? That should be fun, should be a bit less of a cheer leading event this time. We haven’t seen King handle a wee bit of public pressure as yet.

  10. JimBhoy

    Warbler says…”What we have to do is recognise we are building here, hopefully strong foundations, for what we hope will be a very prosperous future – this is another step on that road, that journey.”

    — The road to Nowhere on a foundation of sand

  11. Avid Reader

    Assuming the cash reserves (stop laughing at the back) reach the point where TRIFC are unable to meet the November commitments, Joey would not be getting paid anyway. It appears to me he would be better playing the long game with them over his departure to figure out the lay of the financial land at Ibrox before accepting any deal from them.

    1. Tictalk

      Companies house, you’ll find that sevcos accounts are around 1 year old. Audited accounts should be produced prior to agm(don’t Hold your breath)

  12. Mark

    Sevco’s problem is impatience & stupidity.

    It took Celtic years to build the club up to where it is now – a solid financial foundation with a robust business model, based on Scottish football.

    Because of this we are able to have a caliber of player above that of our domestic rivals, and also have the resources to invest in new players should there be a requirement to do so. Sevco want all that too, but don’t want to go through the pain we did in the 1990’s to get there.

    They have to build their new club up slowly but don’t have the patience because of stupid promises made by people running the show. If they built slowly, over time, they’d get to a level where they would be in a position to challenge Celtic in Scotland. But instead they gamble on players/wages they can’t afford, and when that fails (as it’s doing now) it puts them further behind us and closer to financial disaster.

    This story seems vaguely familiar!

    1. Son of Henry Root

      Can only hope that Messrs Doncaster and Reagan have learned their lessons from 2012 and onwards and refuse the imminent stay of execution which Mr Robertson will no doubt be seeking in a matter of weeks…with a gun against his head.

      Stewart and Neil will not be so gullible this time round….will they?

    2. sligojoe

      There is a business argument that says that they’e got to get their quickly too. A slow return will diminish the fan base which in turn will have a knock on effect to all revenue steams of the club. They are saddled with “big club” infrastructure which will always be expensive to maintain. It’s a difficuly circle to square. A catch 22. The only sustainable way to get where Celtic are now is the slow way, however, how many will return to the fold years down the line when the club is making progress. Will younger fans find other things to do in the meantime and be interested enough to return when there’s silverware to be won?

      1. Phil Mac Giolla BhainPhil Mac Giolla Bhain Post author

        Sevco will also have to get there in the knowledge that for the next SIX year they have little or no retail income.
        Ashley gets that.

        1. sligojoe

          Exactly, big club infrastructure with smaller club turnover.

          They should be looking at a player budget ( an alien concept at any club called Rangers ) in line with Hearts or Aberdeen.

          If that were the case, as it should be, what conceivably would the season ticket uptake be in those early years? 15,000 or 20,000? Perhaps thereabouts.

          These would be the die hard (no pun intended) fans who would dig in and see it through. However, the knock on effect of lower ST income along with the lack of retail and other income such as sponsorship and matchday spend would mean that the way back would be long….very long. How else can they do it?

          Rhetorical question, BTW

          ps: Get there, not their. Doh!

    3. PJGreenandwhite - I recruit!

      Problem with that model they are already in the Old Dead Rangers debt model already! To get through 4 seasons of lower tier play! Money is spent and chances of Europe very slim! Let’s face it no competition for years!

      I’d say Hearts or Aberdeen go on a run against teams not against us and make a fight of it soon! Not this season though

    4. PP


      Forget about r4ngers. It’s about time Celtic were gambling on players’ wages they CAN afford.

      Last night was a disgrace and only showed how poor Scottish football is. It’s all very well ” balancing the books” but the books can be balanced by spending big as well as scrimping about looking for bargains that turn out to be duds that imbalance the books.

  13. Agrajag

    Fantastic idea and a great way of confirming what a lot of us believed, if to a certain extent intuitively. It is good to read the thoughts of a professional within the field.

    Even better when, as you point out, the financial results should be substantially better this year.

    1. Phil Mac Giolla BhainPhil Mac Giolla Bhain Post author

      Being UCL group stages is a game changer. It has a multiplier effect on other revenue streams like sponsorship etc.

  14. JimBhoy

    One of their own, now departed told it as it is. Celtic have a global brand and sevco are a provincial West of Scotland club..

    Sevco needed EBTs just to compete with Celtic, an old manager said recently.

  15. mursheen

    Thanks phil, always be even handed to show no bias,only professionalism. I congratulate you on your new site, very clean and i hope,more secure

  16. MacTomas

    Remembrance season looming! A month of pious finger pointing to raise the spirits of the Peeps, & distract them from the Queens 11 once again teetering on the abyss.

  17. Cortes

    The real problem for Rangers then and Sevco now is that they were and are operating in a cosy wee environment where everything was tailored to their needs.

    No need to try to be better than others, just wait for their entitlement.


  18. James Macnicoll

    The difference between the two teams,Celtic got a straight shooting Business man in when they badly needed it,he also had money to invest,Rangers,well???????

  19. theclumpany

    That’s a very interesting read for a fellow layman. Many thanks.

    However, I can’t help but wonder whether it is all just Timmy lies! Where is the mention of crippling Co-op loans, the benefit of state aid, and last week’s tax scandal?

    And where is the professional commentary on a shortage of height in the Celtic squad?

    That last question is asked on behalf of Gordon Strachan, who seems to think that a ‘lack of height’ outweighs Leigh Griffiths’ ability to score 40 goals in a season when it comes to selection for Scotland! As you can imagine, Strachan laid himself wide open to a spoof. And if I may, here it is!

    Keep up the good work!

    1. Son of Henry Root

      Great stuff as always from you….only bettered by the picture you posted of Neil fawning over Noel Gallagher at the Man City game two weeks ago…stunning!

      Or maybe Neil thought Noel was a waiter who would top up his wine glass…that would have been an interesting conversation.

  20. Darren rbhoy

    Brilliant Phil. Excellent reading. Who reads the papers these days? Hopefully 3 points tomorrow and another 1.5m in the bank.


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