19th annual financial review of Scottish football Season 2006/07 PricewaterhouseCoopers 19th annual financial review of Scottish football 2 Contents

Introduction 4

Profit and loss 6

Balance sheet 20

Cash flow 28

Club five year review 34

Post balance sheet events 48

Appendix one: The season that was 2006/07 52

Appendix two: What the chairmen thought 56

Appendix three: Significant transfer activity 58

Appendix four: The national team 60

PricewaterhouseCoopers 19th annual financial review of Scottish football 3 19th Football Review. An introduction by David Glen

David Glen

Welcome to the 19th annual financial review of the Scottish football premier league, covering the season 2006/07.

Steady as she goes

For the majority of the SPL clubs, financially season 2006/07 has been a stable one. For the first time in over 10 years the clubs have collectively generated a profit of £3m, a figure that was particularly assisted by some very successful trading in the transfer market with a record net gain of £19m being recorded. Celtic and Hibs led the way, recording gains of £9.4m and £6.4m respectively from the sales of the likes of Stilian Petrov, Shaun Maloney, Kevin Thomson and Scott Brown.

The most profitable club was Celtic, who recorded a surplus of over £15m, boosted by the financial rewards of a very successful run to the last 16 in the Champions league.

At the other end of the scale, Hearts posted the largest loss of just under £13m. A wage bill of almost £12.5m, with an income of only £10.3m is clearly not sustainable and will require some trimming going forward.

Overall, 8 of the 12 clubs recorded a profit, which is a far cry from the depths of financial despair we were confronted with just 4 years ago.

PricewaterhouseCoopers 19th annual financial review of Scottish football 4 The combined net debt has risen by £10m to £105m, with was cut‑off; there was no significant value in its stadium and both Rangers and Hearts posting increases of c£10m. In there was no significant fan base from which to generate Heart’s case this pushed their debt to over £37m which a significant income stream. Therefore the circumstances is now greater than Celtic (£9m) and Rangers (£16m) were fairly unique and I do not believe other clubs would be combined. Since these results were published steps have so readily faced with oblivion, but the situation nevertheless been taken by Hearts to reduce this debt by converting demonstrates the fragile nature of football finance. £12m into shares in the club. Will the credit crunch? In total seven of the clubs posted a decrease in their debt and of them, two (Falkirk and Inverness Caledonian At the time of writing, the other interesting aspect that Thistle) operate with no net debt. surrounds is the so‑called ‘credit crunch’ that is currently impacting the UK economy and the question is to what Other highlights include : extent might this impact the SPL clubs?

• Combined turnover (gross income) increased from Certainly, having got themselves onto a sounder financial £170m to £175m. A modest 3%, representing no more footing with reduced debt and more affordable wage than an inflationary increase. Of this Celtic accounted structures, the majority of the clubs are perhaps better for a record £75m and Rangers £42m. equipped to deal with a down‑turn. It is too early to predict the extent to which the clubs might be affected as we do • The combined wage bill increased by 7% from £93m not yet know how deep this crunch might be, however, to £100m with the Old Firm again dominating (Celtic for the corporate and individual supporters of clubs, £36m and Rangers £24m) their expenditure on football can clearly be defined as discretionary. There are some early signs that cut backs Is there another Gretna out there? on such expenditure are being made, with household and commercial budgets having to be prioritised – how Gretna were promoted to the SPL in season 2007/08 extensive these cuts will be and how deeply they will affect and therefore do not feature in the analysis of this review. football, at this stage, we can only wait and see. However, such a significant event as the complete financial annihilation of a club cannot be ignored. Thanks

On a number of occasions I have been asked if there is Thanks once again to my Sports Unit for helping me compile another Gretna waiting to happen? this report, in particular David Auld, Stuart MacDougall and Rory Forrest. Gretna were not the first, and will not be the last, club to be financially supported by a significant benefactor however, in comparison to most other clubs, Gretna had David Glen virtually nothing to fall back on when their financial lifeline August 2008

PricewaterhouseCoopers 19th annual financial review of Scottish football 5 Profit and loss. Overview

The 2006–07 season was the 110th season of competitive football in Scotland and was financially one of the most successful seasons in over a decade with the SPL yielding a ‘real’ cumulative profit for the first time in 11 years of £2.8m. This was primarily a result of Celtic posting a profit after tax of £15m, while at the other end of the scale, Hearts produced the highest loss in the year of £12.9m. Overall, these results are a significant improvement from the prior year’s loss of £9.4m.

10,000 Historic Profit/(Loss) Analysis £000’s

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Old Firm profits/(losses) Other profits/(losses) Total SPL profits/(losses)

The financial results of the SPL clubs have been obtained from their Statutory Accounts for the year ended 2007.

PricewaterhouseCoopers 19th annual financial review of Scottish football 6 The SPL Clubs’ Combined Profit and Loss Account ‘one of the most 2007 2006 Movement £’mill £’mill % successful seasons Turnover 175 170 3% in over a decade Wages (100) (93) 7% with the SPL yielding Other operating expenses (72) (76) ‑5% a ‘real’ cumulative Operating loss before player registrations 4 2 138% profit for the first Amortisation of player registrations (10) (8) 22% time in 11 years’ Impairment on player registrations (2) (0) 490% Net gain/(loss) on player registrations 19 4 395%

Operating loss 10 (4) ‑343% Gain/(loss) on tangible fixed assets (0) (0) 89% Exceptional debt write‑offs 0 2 ‑79% Net interest cost (7) (7) ‑1%

(Loss)/Profit before and after tax 3 (9) ‑131% Taxation 0 (0) ‑600% Loss after tax 3 (9) ‑131%

Source: Statutory Accounts

The key financial highlights of season 2006/07 are as follows:

• Turnover increased by 3% to £175m (2006: £170m). The Old Firm had mixed results with Celtic’s turnover increasing by 31% to a record breaking £75m. Rangers on the other hand saw total revenue fall by 32%, although this is principally a result of this season being the first to incorporate their licensing deal with JJB. As part of this deal, the club no longer operates retail stores, hence losing a significant amount of merchandising revenue. In order to gauge a true comparative, like for like turnover only fell by £1.7m from £43.5m in the previous year. Further success was noted at Dunfermline and St Mirren with exceptional increases of 77% and 74% respectively, buoyed by a Scottish Cup Final appearance for the former and a return to top flight football for the latter club. • Total wages increased by 7% to £100m (2006: £93m). This figure is skewed by an exceptional increase in Dunfermline’s wage bill of 95%, as the club attempted to stave off the threat of relegation by bringing in a number of loan players. • Amortisation cost of player registrations increased by £2m to £10m, with £9.6m of this cost assigned to the Old Firm (2006: £6.9m). • Almost 50% of the gain on sale of player registrations related to the departure of Stilian Petrov, Shaun Maloney, Stephen Pearson, Stanislav Varga, and Ross Wallace from Celtic realising a total gain of £9.4m. In addition, Hibernian made an impressive gain of £6.4m due to the big money sales of Scott Brown to Celtic and Kevin Thomson to Rangers. • Total net interest costs remained stable at £7m (2006: £7m).

PricewaterhouseCoopers 19th annual financial review of Scottish football 7 Profit and loss. Turnover

The total turnover of the SPL increased by 3.1% to £175.4m in season 2006/07 (2006: £170.2m). Ten out of the twelve member clubs managed to increase their turnover as a result of improved European and domestic performances. Furthermore, an additional 28,000 spectators attended games throughout the course of the season, positively impacting upon turnover.

Turnover By Club 2007 2006 2007 2006 £’000 £’000 Increase Increase Aberdeen 7,519 6,772 11% ‑6% Celtic 75,237 57,411 31% ‑8% Falkirk 3,997 3,303 21% 64% Dundee United 4,011 4,151 ‑3% ‑23% Dunfermline Athletic 5,149 2,905 77% ‑12% Heart of Midlothian 10,319 10,277 0% 22% Hibernian 9,847 8,706 13% 20% Inverness CT 2,877 2,742 5% 0% Kilmarnock 8,061 7,395 9% 20% St Mirren 2,956 1,702 74% ‑12% Motherwell 3,681 3,622 2% ‑10% Rangers 41,768 61,165 ‑32% 11% Total 175,422 170,151 3.1% 2.5% Average 14,618 14,179 17% 6% Average exl/Old Firm 5,842 5,158 18% 1% Source: Statutory Accounts

PricewaterhouseCoopers 19th annual financial review of Scottish football 8 Aberdeen Falkirk An improved end league position, Falkirk consolidated their second ‘an additional 28,000 beating Rangers 2‑0 on the last day season in the SPL with a respectable of the season in front of a capacity 7th place finish (2006: 10th). This was spectators attended crowd at Pittodrie to snatch third reflected in their enhanced turnover, up games throughout spot, impacted their turnover directly 21% to almost £4m. About half of this with an 11% increase to £7.5m (2006: was attributed to increased income the course of £6.8m). This was largely due to a from their SPL finish and the remainder the season’ combination of broadcasting income from improved gate receipts and other being up because of the new Setanta commercial activities. contract; the improved SPL position and corporate sales income increasing Dundee United by 9%. These increases offset the A marginal 3% decrease in revenues slight fall in average gate receipts was characterised by their stagnant experienced during the year to 12,404 9th placed league finish and early cup (2006: 12,728). exits. Match day revenues fell as a result of average attendances dropping Celtic by just over 1,000 spectators per After consecutive falls in turnover home game. from the previous two seasons, an extremely successful season both Dunfermline on and off the pitch resulted in a The club’s turnover increased for the 31% increase (£17m) in turnover to first time in 4 years to £5.1m (2006: a record breaking £75.2m, a first for £2.9m). However, the 2006/07 season any Scottish club. On the field Celtic ultimately ended in disappointment completed a domestic double, winning with Dunfermline being relegated to the SPL by 12 points and the Tennents the First Division after seven seasons Scottish Cup for the 34th time after in the top flight. The Fife club were defeating Dunfermline 1‑0. On the still able to achieve a place in the European front they progressed to final of the Scottish Cup, although the last 16 of the UEFA Champion’s eventually losing 1‑0 to Celtic. In League for the first time in the Club’s addition the club’s results were history. This followed a successful strengthened by the inclusion of their pre‑season with trips to Japan, Poland conference and hospitality business and North America enabling the club to which was previously operated as a spread the Celtic brand. separate entity.

PricewaterhouseCoopers 19th annual financial review of Scottish football 9 Profit and loss. Turnover

Hearts ‘Hibs achieved After conquering the Old Firm’s stranglehold on the top two spots the year before, Hearts began the season attempting to qualify for the UEFA Champion’s League. a record level of This European adventure was short‑lived, however, the additional turnover season ticket sales, generated from the gate receipts from ‘home games’ at Murrayfield offset the lost revenues from poor domestic cup runs. These home games included a up by 11% to 10,500 lucrative pre‑season friendly against Barcelona in which a record 57,857 crowd for season 2006/07’ watched an inspirational performance from Ronaldinho help Barcelona to a 3‑1 victory. This still remains the biggest ‘home’ attendance in their 133 year history. These opposing factors resulted in a negligible rise on last year’s record turnover of £10.3m, coupled with season ticket sales having to be capped at 13,500 for the season.

Hibernian Hibernian’s turnover increased by 13% (£1.1m) in the year to £9.8m, this being their second successive season of strong growth. To underpin the healthy figures Hibs achieved a record level of season ticket sales, up by 11% to 10,500 for season 2006/07, in addition to a successful season on the park. Under the stewardship of John Collins, they won the CIS Insurance Cup and reached a Scottish Cup semi‑final, only to be beaten by Dunfermline 1‑ 0 in a replay.

Inverness Caledonian Thistle As Inverness Caledonian Thistle filed abbreviated accounts in the current year no information in regard to turnover was available.

Kilmarnock Kilmarnock finished in 5th place for the second consecutive season as well as reaching their first domestic Cup Final since 2001, although they were comfortably beaten 5 – 1 by Hibernian. This appearance in a cup final, in addition to enhanced match day revenues, helped to increase turnover c£700k to £8.1m. (2006: £7.4m)

PricewaterhouseCoopers 19th annual financial review of Scottish football 10 Motherwell A disappointing SPL campaign saw Motherwell finish in the bottom six once again, and resulted in a trifling increase in turnover of 2% to £3.7m (2006: £3.6m).

Rangers Rangers entered the season under the new management of Paul Le Guen under an immense wave of expectation, but unfortunately the Frenchman was unable to mirror his previous successes at Lyon. Leaving by mutual consent in January, Le Guen was replaced by fans favourite Walter Smith returning for his second managerial spell at the Ibrox club. Under Smith’s stewardship Rangers finished the SPL season in second place and gained subsequent entry to the UEFA Champions League second qualifying round after defeating Celtic 2–0 at Ibrox. A drop in sponsorship and advertising revenue of £8.2m was a direct result of no Champion’s League football, and highlights the importance of participation in this competition. Overall turnover fell by £19m from the record high of £61m in 2005/06, however £17.2m of this drop is attributable to the aforementioned discontinued operations. Furthermore, this was compounded by 3rd and 4th round exits from the Scottish and League Cups respectively.

St Mirren The club’s return to the SPL for the first time since their relegation in 2001 witnessed an unprecedented 74% increase in turnover to £3.0m (2006: £1.7m). This remarkable increase can be attributed to a combination of increased attendances at Love Street, up 48%, and higher ticket prices.

PricewaterhouseCoopers 19th annual financial review of Scottish football 11 Profit and loss. Attendance level

The SPL attracted slightly higher crowds during the 2006/07 season with average attendance figures up 3% from the previous season. Total average attendance for a round of SPL fixtures was 194,321, in comparison to 192,857 the season before. On the back of St Mirren’s return to the SPL, their first time since season 2000/01, the club witnessed the largest percentage increase in average attendance: a staggering 48%. Kilmarnock was second with an increase of 7%.

The largest crowd of the season was on 28 January 2007 at Celtic Park where 59,659 spectators witnessed Celtic defeat Hibernian 1–0.

Total stadium utilisation has remained constant at 76% in the year, and similarly a third of SPL stadiums remained half empty as in the previous year. Note that utilisation figures are based on average attendance as a proportion of stadium capacity.

12 Average Average Average Attendence Utilisation Utilisation Attendence Attendence by Club 2006/07 2005/06 2007 2006 ‘On the back of St

Aberdeen 12,474 12,727 58% 59% Mirren’s return to Celtic 57,927 58,149 96% 96% the SPL, their first Falkirk 5,386 5,515 68% 69% time since season Dundee United 7,146 8,197 50% 58% 2000/01, the club Dunfermline 6,105 6,260 49% 50% Heart of Midlothian 16,889 16,767 97% 96% witnessed the Hibernian 14,586 13,816 84% 79% largest percentage Inverness CT 4,814 5,061 64% 67% increase in average Kilmarnock 7,556 7,070 42% 39% attendance: a St Mirren 5,608 3,800 52% 35% Motherwell 5,876 6,250 43% 46% staggering 48%.’ Rangers 49,954 49,245 98% 98% Totals 194,321 192,857 76% 76% Source: Scotprem.com

13 Profit and loss. Employee costs

Wage to Turnover Ratio Analysis Total Wages Total Turnover Wages/Turnover Ratio 2007 2006 Movement 2007 2006 Movement 2007 2006 £’000 £’000 % £’000 £’000 % £’000 £’000 Aberdeen 5,155 4,312 20% 7,519 7,320 3% 69% 59% Celtic 36,421 32,490 12% 75,237 57,411 31% 48% 57% Falkirk 2,310 1,827 26% 3,997 3,303 21% 58% 55% Dundee United 2,582 2,825 ‑9% 4,011 4,151 ‑3% 64% 68% Dunfermline Athletic 3,339 1,708 95% 5,149 2,905 77% 65% 59% Heart of Midlothian 12,488 10,499 19% 10,319 10,277 0% 121% 102% Hibernian 4,063 3,678 10% 9,847 8,706 13% 41% 42% Inverness Caledonian Thistle 1,349 1,310 3% 2,877 2,742 5% 47% 48% Kilmarnock 3,899 3,329 17% 8,061 7,395 9% 48% 45% St Mirren 1,752 1,012 73% 2,956 1,702 74% 59% 72% Motherwell 2,371 2,449 ‑3% 3,681 3,622 2% 64% 68% Rangers 24,258 27,989 ‑13% 41,768 61,165 ‑32% 58% 46% Total 99,987 93,428 7% 175,422 170,699 3% 57% 55%

Source: Statutory Accounts

Employee Costs turnover during the year, leading to a reduction in the wage to turnover ratio Aberdeen to an extremely manageable 48%. The wage bill at Aberdeen increased significantly during the year by 20% Dundee United to £5.2m (2006: £4.3m). This is partly Dundee United was one of only three explained by an end of season bonus clubs that managed to reduce their paid to the players for achieving year on year wage costs. A 9% fall to a 3rd place finish in the league, £2.6m equated to a saving of £240k accompanied by an increase in first for the Tangerines. This follows the team wages to improve the quality club’s stated strategy of reducing the of the squad. This has resulted in a wage bill by disposing of the higher drift away from the more sustainable earning players. Even though the club wage to turnover ratio of 59% from the experienced a drop in turnover for the season before. year, the significantly greater reduction in wage costs enabled the club’s Celtic wage to turnover ratio to fall to 64% Once again, Celtic continues to have (2006: 68%). the highest wage bill in the SPL. At £36.4m the employee costs for 2007 Dunfermline were 33% higher than their Old Firm After finally reaching the recommended rivals, partly due to their successful industry wage to turnover ratio of season on the park and the increased c60% in 2006, the Pars wage bill bonus payments that accompany it. soared this year by a staggering However, this increase was more than 95%. This was in part due to the offset by the club’s record breaking club reaching the Scottish Cup Final

PricewaterhouseCoopers 19th annual financial review of Scottish football 14 Wage to Turnover Ratio Analysis Inverness Caledonian Thistle Total Wages Total Turnover Wages/Turnover Ratio As Inverness Caledonian Thistle 2007 2006 Movement 2007 2006 Movement 2007 2006 produced abbreviated accounts in the current year no information in regard to £’000 £’000 % £’000 £’000 % £’000 £’000 wage costs was available. Aberdeen 5,155 4,312 20% 7,519 7,320 3% 69% 59% Celtic 36,421 32,490 12% 75,237 57,411 31% 48% 57% Kilmarnock Falkirk 2,310 1,827 26% 3,997 3,303 21% 58% 55% Kilmarnock increased wages by 17% Dundee United 2,582 2,825 ‑9% 4,011 4,151 ‑3% 64% 68% to £3.9m (2006: £3.3m), following the Club’s appearance at Hampden for Dunfermline Athletic 3,339 1,708 95% 5,149 2,905 77% 65% 59% the CIS Insurance Cup Final. This Heart of Midlothian 12,488 10,499 19% 10,319 10,277 0% 121% 102% successful cup run contributed to an Hibernian 4,063 3,678 10% 9,847 8,706 13% 41% 42% increased turnover of £700k, resulting Inverness Caledonian Thistle 1,349 1,310 3% 2,877 2,742 5% 47% 48% in a slight increase in the wage to turnover ratio by 3%. Kilmarnock 3,899 3,329 17% 8,061 7,395 9% 48% 45% St Mirren 1,752 1,012 73% 2,956 1,702 74% 59% 72% Motherwell Motherwell 2,371 2,449 ‑3% 3,681 3,622 2% 64% 68% Motherwell’s wages to turnover Rangers 24,258 27,989 ‑13% 41,768 61,165 ‑32% 58% 46% ratio was positively impacted by the marginal increase to turnover, coupled Total 99,987 93,428 7% 175,422 170,699 3% 57% 55% with the negligible drop in wages. The Source: Statutory Accounts current year ratio of 64% is down from 68% in the previous year.

Rangers and the associated bonus payments, Hearts This season has witnessed Rangers’ however it was mainly a result of 2006/07 saw Hearts continue to continual push to run a sustainable the increased playing squad which maintain a wage to turnover ratio in business by slashing £3.7m off their was required to compensate for excess of 100% with an additional wage bill. The 13% fall was the single a catalogue of injuries as the club £2m being tied up in employment biggest decrease of all the clubs attempted to stave off relegation. costs. Hearts’ wage costs have nearly in the SPL. However, the greater Furthermore, Dunfermline created a tripled in three seasons from £4.5m proportional decrease in turnover new position of Director of Football in 2005 to a present figure of £12.5m resulted in the club’s wage to turnover during the year alongside the due in part to additions in the playing ratio rising by 8% to 58%. appointment of a new Manager in squad during the year coupled with Stephen Kenny and his backroom an improvement in terms offered to St Mirren management staff. These factors have existing players. As a result of the St Mirren’s return to the SPL and the had the net effect of a shift in the wage significant increase in costs, the need to improve the strength and to turnover ratio from 59% to 65%. wage to turnover ratio now sits at an depth of their playing squad in order unsustainable 121%. to maintain top flight status directly Falkirk impacted both employment costs Following Falkirk’s survival in the Hibernian and turnover, with rises of 73% and league, this enabled the directors Despite a 10% increase in wage costs, 74% respectively. The net impact on to procure increased quality in their Hibernian continues to operate with the wage to turnover ratio remained playing squad, as the club look to the lowest wages to turnover ratio in constant at 59%, thus demonstrating continue the strides made in the the SPL. The 13% increase in turnover a prudent but effective approach to previous season. In spite of this during the year more than covered SPL survival. increase, the wage to turnover the increased employee costs, as the ration remains at a respectable 58% wage to turnover ratio reduced from (2006: 55%). 42% to 41% in the year.

PricewaterhouseCoopers 19th annual financial review of Scottish football 15 Profit and loss. Player registration fees

The costs associated with the amortisation of player transfer fees have risen 38% to £11.5m (2006: £8.3m), on the back of increased activity in the transfer market for both halves of the Old Firm.

Celtic’s amortisation charge increased £800k to £5.9m, demonstrating the club’s increased investment in the first team squad. This increase of 15.1% from the previous year is mainly a result of the charge for players acquired during the year including Thomas Gravesen, Paul Hartley and Jan Vennegoor of Hesselink, offset by elimination of the charge in respect of football players who left following the end of the 2005/06 season.

Rangers’ amortisation charge also increased from £1.8m to £3.8m, with a total of £7.2m worth of additions made in the year, constituting Kevin Thomson, Filip Sebo, Jérémy Clément, Saša Papac and DaMarcus Beasley.

After doubling their charge in 2006 from 2005, Hearts’ charge for the year almost doubled again to £1.3m (2006: £0.75m), mainly due to their persistent transfer market activity.

The gain on sale of player transfer increased dramatically from £4m in the prior year to £18.8m, a staggering rise of 360%. Notable gains were made by Celtic and Hibernian, being £9.4m and £6.4m respectively. Celtic’s gain was derived from the sales of Stilian Petrov, Shaun Maloney, Stephen Pearson, Stan Varga and Ross Wallace. Hibernian’s gain is principally attributable to departing midfielders Kevin Thomson and Scott Brown. After a lengthy struggle from both sides of the Old Firm to procure their signatures, Kevin Thomson moved first to Ibrox during the January transfer window in a £2m deal. After months of speculation, Scott Brown completed his move to the other side of Glasgow for £4.5m. This was in spite of their agent’s desire to package the players in a combined deal to obtain a synergised price.

PricewaterhouseCoopers 19th annual financial review of Scottish football 16 17 Profit and loss. Profit/Loss before tax

The SPL generated an overall profit before tax of £2.8m, this being the first time that the clubs produced a combined ‘real’ profit since 1996. ‘Real’ in the sense that the surplus that was recorded in Season 05/06 was as a consequence of the write off of debt following administration proceedings. Only four SPL clubs adversely impacted this profit during the year by generating losses.

Net profit/(loss) before tax by club £’000 2007 2006 Movement Aberdeen ‑537 ‑1,500 ‑64% Celtic 15,040 ‑4,222 ‑456% Falkirk 146 479 ‑70% Dundee United ‑989 ‑786 26% Dunfermline Athletic 319 ‑359 ‑189% Heart of Midlothian ‑12,933 ‑5,768 124% Hibernian 7,418 2,222 234% Inverness Caledonian Thistle 278 219 27% Kilmarnock 52 127 ‑59% St Mirren 277 27 926% Motherwell 7 122 ‑94% Rangers ‑6,310 92 ‑6959% Total 2,768 ‑9,347 ‑130% Source: Statutory Accounts

PricewaterhouseCoopers 19th annual financial review of Scottish football 18 Aberdeen However, this return to profitability a second successive profit during Aberdeen were one of the four clubs for the Falkirk club further highlights 2007 albeit slightly reduced at £52k to post a loss during the year, however the importance of sustaining their (2006: £127k). This profit was driven this was approximately one third of the SPL status. by increased turnover generated in loss incurred in 2006, at £0.5m (2006: the year, whereas 2006 figures were £1.5m). This operational improvement Hearts skewed by a gain of £100k on the sale was impacted by their improvement on Hearts generated a loss of £12.9m in of fixed assets. the park and their third place finish in the current year; an increase of £7.2m the SPL. This financial improvement from the previous season. Although Motherwell assisted in reducing their interest costs record income was posted for the year Motherwell remained in the black for by c£100k. alongside a gain in player registrations the fourth consecutive year generating of £1.1m, this was counteracted by a small £7k profit, down £115k from Celtic the significant increase in wage costs the previous year. The reduction in For the third successive season, (£2m). Furthermore, the additional profit is principally due to increased Celtic generated an operating profit. operating costs incurred during the operating expenditure. Aided by record levels of turnover and season negated the record turnover. significant gains on the sale of players, Rangers the club managed to convert this into Hibernian 2006/07 was the first full year a record bottom line profit before tax Hibernian announced record annual which incorporated the impact of of £15m. net profits of £7.4m following a Rangers’ licensing deal with JJB highly successful year on and off Sports plc. Coupled with a second Dundee United the pitch. Big‑money sales of Scott successive trophy‑less season, and no Dundee United buck the recent trend Brown to Celtic and Kevin Thomson participation in the Champion’s League and posted an increased loss following to Rangers saw a net gain of £6.4m group stages, the club’s profit before a reduction in turnover during the year. from transfers together with turnover tax in the previous year was eroded Total loss was £1m compared to £0.8m increasing by £1.1m to £9.8m (2006: and a loss of £6.3m was incurred. last year. £8.7m). Hibs results were underpinned Despite the reduction in wage costs by a year‑end operating profit of and improved operational efficiencies, Dunfermline £1.4m, being their third successive the loss was compounded by the Dunfermline yielded a profit of £0.3m year in which the Edinburgh club doubling of the annual amortisation in the year compared to a loss of has traded profitably; demonstrating charge and a startling 32% fall in top £0.4m in the previous year. Wages that the club's costs are in line with line turnover. These results underscore skyrocketed but this was offset by a revenues. This provides Hibs with a the significance of Champion’s League significant increase in turnover due solid platform for continued growth football to the Old Firm’s financial to their successful Scottish Cup run. and prosperity, in contrast with their health, and the adverse effect of lost The financial success this season was Edinburgh rivals. merchandising revenue. further boosted by an exceptional loan write off by Wood Investments Limited Inverness St Mirren of £904k. In their third season in the SPL, The SPL factor was epitomised Inverness Caledonian Thistle by the soaring profits of St Mirren, Falkirk generated a profit of £0.3m (2006: demonstrating the financial rewards Their second successive year in the £0.2m) which is a reflection of the that a place in the SPL brings for SPL continued to be profitable, albeit tightly run Highland league club provincial clubs. Profits before tax with a depressed profit of £150k (2006: whereby increased costs are more were up by a monumental 924% to £480k). This was attributable to the than met by enhanced turnover. £277k (2006: £27k). This was due to rising costs in the club’s attempts a combination of higher sponsorship, to attract a higher calibre of player Kilmarnock television revenues and attendances. to the first team squad resulting in Following on from the club’s return to enlarged salaries of £500k in addition a profit for the first time since 1999 to a similar rise in operating costs. last year, Killie managed to generate

PricewaterhouseCoopers 19th annual financial review of Scottish football 19 Balance sheet. Overview

The total net assets of the SPL clubs at the end of season 2006/07 was £98.2m, up by 10% from the previous year (2006: £89.5m). The current year increase follows significant improvements in profitability and, consequently the cash held at both Celtic and Hibernian due to the recognition of income received on player sales recognised.

The SPL Clubs’ Total Total Movement Combined Balance Sheet 2007 2006 £’000 £’000 % Fixed Assets Investments 2,868 2,868 0% Intangible Assets 28,947 19,727 47% Tangible Assets 267,809 254,935 5% Total Fixed Assets 299,624 277,530 8%

Current Assets Stocks 4,292 3,004 43% Debtors 24,151 21,251 14% Cash at bank and in hand 26,806 29,805 ‑10% Total Current Assets 55,249 54,060 2%

Creditors: due with one year. (122,794) (110,552) 11% Net current assets (67,545) (56,492) 20% Total Assets Less Current Liabilities 232,079 221,038 5% Creditors: due > 1year. (133,856) (131,502) 2% Net Assets 98,223 89,536 10%

Capital and reserves Called up share capital 44,742 44,727 0% Share premium account 150,373 149,219 1% Rangers Bond 7,736 7,736 0% Revaluation reserve 92,648 88,897 4% Captial redemption reserve 2,440 1,739 40% Other reserves 30,829 30,827 0% Profit and loss account (230,545) (233,609) ‑1% Total 98,223 89,536 10%

PricewaterhouseCoopers 19th annual financial review of Scottish football 20 Key balance sheet highlights are noted as follows: ‘Ten clubs in the • Intangible assets (player contracts) increased 47% to £28.9m in the year due to continued significant investment by Celtic, Hearts and Rangers. SPL improved their • Tangible fixed assets witnessed a 5% increase following Aberdeen’s upward net asset position in revaluation of Pittodrie stadium and Celtic’s considerable investment in their the year’ new training facilities at Lennoxtown. • Ten clubs in the SPL improved their net asset position in the year, with the most notable increases at Aberdeen Celtic and Hibernian as outlined above. • Net debt increased by 12% to £105.9m (2006: £94.9m), led by Hearts with a £9m increase. Rangers met with a £10.6m increase and at the other end of the scale, Celtic and Hibernian offset some of this increase with improved net debt positions of £4.8m and £4m respectively.

Net Assets/Liabilities per Club 2007 2006 Movement % Aberdeen 2,948 ‑235 ‑1354% Celtic 36,729 22,097 66% Falkirk 3,480 3,324 5% Dundee United ‑3,887 ‑4,003 ‑3% Dunfermline Athletic ‑7,894 ‑8,215 ‑4% Heart of Midlothian ‑24,891 ‑12,444 100% Hibernian 12,375 4,758 160% Inverness CT 1,141 862 32% Kilmarnock 3,394 2,595 31% St Mirren 1,613 1,337 21% Motherwell 1,313 1,305 1% Rangers 71,902 78,155 ‑8% Total 98,223 89,536 10%

PricewaterhouseCoopers 19th annual financial review of Scottish football 21 Balance sheet. Overview

Source of Borrowings £’000 Borrowings due < 1 Borrowings due > 1 HP/ Finance Overdraft/(Cash) Club External Connected External Connected Leases Total Borrowing balance Net Debt Aberdeen ‑ ‑ (12,331) (300) (261) (12,892) 1,434 (11,458) Celtic (901) (158) (15,112) ‑ ‑ (16,171) 7,006 (9,165) Falkirk ‑ ‑ ‑ ‑ ‑ ‑ 980 980 Dundee United ‑ (226) (6,000) (10) (48) (6,284) (999) (7,283) Dunfermline Athletic ‑ (1,840) (3,757) (79) (5,676) (3,248) (8,924) Heart of Midlothian (3,000) (17,066) (14,600) ‑ ‑ (34,666) (2,902) (37,568) Hibernian (70) (80) (6,532) (1,280) (59) (8,021) 5,145 (2,876) Inverness Caledonian Thistle ‑ ‑ (20) ‑ (20) 430 410 Kilmarnock (78) ‑ (8,663) ‑ ‑ (8,741) (2,860) (11,601) St Mirren (462) ‑ (678) (17) (1,157) (217) (1,374) Motherwell ‑ ‑ ‑ (1,104) (8) (1,112) 634 (478) Rangers (1,200) ‑ (22,073) ‑ (4,292) (27,565) 11,023 (16,542) Total (5,249) (17,992) (87,151) (7,149) (4,764) (122,305) 16,426 (105,879) 2007% 5% 17% 82% 7% 4% ‑ ‑16% 100% 2006% 2% 12% 85% 9% 5% ‑ ‑13% 100% Source: Statutory Accounts

Analysis of combined SPL net debt 2007 2006 Movement 2007 2006 £’000 £’000 % % of total debt % of total debt Cash at bank and in hand 26,806 29,806 ‑10% Bank Overdraft (10,380) (17,205) ‑40% Net cash/(overdraft) 16,426 12,601 30% ‑16% ‑13% Borrowings due within one year (23,241) (12,951) 79% 22% 14% Borrowings due in more than one year (94,300) (89,640) 5% 89% 94% Amounts owed under hire purchase (4,764) (4,954) ‑4% 4% 5% Net debt (105,879) (94,944) 12% 100% 100%

PricewaterhouseCoopers 19th annual financial review of Scottish football 22 Source of Borrowings £’000 Borrowings due < 1 Borrowings due > 1 HP/ Finance Overdraft/(Cash) Club External Connected External Connected Leases Total Borrowing balance Net Debt Aberdeen ‑ ‑ (12,331) (300) (261) (12,892) 1,434 (11,458) Celtic (901) (158) (15,112) ‑ ‑ (16,171) 7,006 (9,165) Falkirk ‑ ‑ ‑ ‑ ‑ ‑ 980 980 Dundee United ‑ (226) (6,000) (10) (48) (6,284) (999) (7,283) Dunfermline Athletic ‑ (1,840) (3,757) (79) (5,676) (3,248) (8,924) Heart of Midlothian (3,000) (17,066) (14,600) ‑ ‑ (34,666) (2,902) (37,568) Hibernian (70) (80) (6,532) (1,280) (59) (8,021) 5,145 (2,876) Inverness Caledonian Thistle ‑ ‑ (20) ‑ (20) 430 410 Kilmarnock (78) ‑ (8,663) ‑ ‑ (8,741) (2,860) (11,601) St Mirren (462) ‑ (678) (17) (1,157) (217) (1,374) Motherwell ‑ ‑ ‑ (1,104) (8) (1,112) 634 (478) Rangers (1,200) ‑ (22,073) ‑ (4,292) (27,565) 11,023 (16,542) Total (5,249) (17,992) (87,151) (7,149) (4,764) (122,305) 16,426 (105,879) 2007% 5% 17% 82% 7% 4% ‑ ‑16% 100% 2006% 2% 12% 85% 9% 5% ‑ ‑13% 100% Source: Statutory Accounts

Analysis of combined SPL net debt 2007 2006 Movement 2007 2006 £’000 £’000 % % of total debt % of total debt Cash at bank and in hand 26,806 29,806 ‑10% Bank Overdraft (10,380) (17,205) ‑40% Net cash/(overdraft) 16,426 12,601 30% ‑16% ‑13% Borrowings due within one year (23,241) (12,951) 79% 22% 14% Borrowings due in more than one year (94,300) (89,640) 5% 89% 94% Amounts owed under hire purchase (4,764) (4,954) ‑4% 4% 5% Net debt (105,879) (94,944) 12% 100% 100%

PricewaterhouseCoopers 19th annual financial review of Scottish football 23 Balance sheet. Overview

2007 2006 Movement Movement Net Debt by Club Net Debt Net Debt £’000 % £’000 £’000 Aberdeen ‑11,458 ‑10,876 ‑582 5% Celtic ‑9,165 ‑13,965 4,800 ‑34% Falkirk 980 926 54 6% Dundee United ‑7,283 ‑7,634 351 ‑5% Dunfermline Athletic ‑8,924 ‑7,803 ‑1,121 14% Heart of Midlothian ‑37,568 ‑28,405 ‑9,163 32% Hibernian ‑2,876 ‑6,834 3,958 ‑58% Inverness Caledonian Thistle 410 179 231 129% Kilmarnock ‑11,601 ‑12,444 843 ‑7% St Mirren ‑1,374 ‑1,817 443 ‑24% Motherwell ‑478 ‑388 ‑90 23% Rangers ‑16,542 ‑5,883 ‑10,659 181% Total ‑105,879 ‑94,944 ‑10,935 12% Average per Club ‑8,823 ‑7,912 ‑911 12% Average per Club ‑8,017 ‑7,510 ‑508 7% (excl Old Firm)

The rise in net debt during season 2006/07 has bucked the trend of recent years which have seen many of the clubs take additional measures to reduce their debt burden and experience the benefit from improved operating results. The current year has been impacted by the first full season of Rangers’ JJB deal, in addition to their poor trading year following early exits from both cup competitions in addition to no Champions League football. This has subsequently reduced the in cash balance to £11m (2006: £22m). Furthermore the continuation of the Romanov era at Hearts has doubled their net liability position to £24.9m this year (2006: £12.4m).

PricewaterhouseCoopers 19th annual financial review of Scottish football 24 Aberdeen Falkirk Hearts Aberdeen’s net debt increased by 5% The Bairns are the only club in the SPL The Edinburgh club’s debt continued to £11.5m in the year (2006: £10.9m). to have a positive cash position with to soar from the previous year to a Their debt is mainly funded through no debt. Funds were improved further record £37.6m (2006: £28.4m). This the new banking arrangements that in the year via increased turnover more increase in net debt of £9.2m was the club entered into during the year, than covering the increased costs. second only to Rangers during the year namely a £12.3m loan from the Bank This was Falkirk’s second successive as the club continued to be bankrolled of Scotland which the club managed to year in the SPL and in order for the by UAB Ukio Banko Investicine Grupe secure through the sale and leaseback club to continue to sustain their net and the additional usage of bank of Pittodrie stadium. This is in stark asset position it is essential that they overdraft facilities. Hearts now have contrast to the previous years whereby continue to consolidate their place in the unenviable position of having more debt was continually increasing due the top tier of Scottish football. debt than both Celtic and Rangers to the additional usage of the clubs combined (£25.7m). overdraft facilities as opposed to Dundee United drawing down on loans. In addition Net debt levels at Dundee United Hibernian to this change in the company’s debt reduced by 5% to £7.3m (2006: In contrast to their rivals, Hibs’ structure, the net assets of the Dons £7.6m) due in full to the reduction in net debt dropped £4m to a very were uplifted by the revaluation of the loan balance to the current owner manageable £2.9m, down 58% from Pittodrie stadium during the year. This Eddie Thompson. The majority of the the previous year (2006: £6.8m). The was responsible for adding £3.6m to debt (£6m) is held with the Bank of reduction is due to a combination of their net assets during the year. Scotland, to which Eddie Thompson improved operating results in addition acts as personal guarantor. to the sales of both Kevin Thomson Celtic (£2m) and Scott Brown (£4.5m) to The principal factor affecting Celtic’s Dunfermline Rangers and Celtic respectively. financial performance was the volume Dunfermline’s net debt increased by Both of these factors contributed of transfer activity during the year 14% to £8.9m (2006: £7.8m). The to improving the net cash position mainly to the English Premiership, reasons being two‑fold: the club at the year‑end by £3.3m from the the most affluent league in the world attempted to stave off the threat of previous year. The main component following the FAPL television contract relegation whilst trying to compensate of the remaining debt is unchanged with BSkyB. The effect of these player for the horrific injury list by bringing in from the previous year and includes a sales combined with their success on additional players during the January £6.5m stadium mortgage and £1.4m of the park resulted in the Glasgow club transfer window. This resulted in the connected parent company debt. reducing their net debt by £4.8m to club borrowing an additional £840k £9.2m (2006: £14.0m). Further, due from the bank in order to meet these to the application of FRS 25, funds needs. Unfortunately the club did not previously classified as equity are now win the battle against the drop and presented as debt. This has had the in order to reverse this debt position effect of increasing debt by £4.0m going forward the club will be hoping in the current year and £4.7m in the for a quick return to SPL football. previous year.

PricewaterhouseCoopers 19th annual financial review of Scottish football 25 Balance sheet. Overview

Inverness Caledonian Thistle gross cash position (2006: £12.4m). As in the previous years, the Highland This was assisted by the clubs club continues to operate with a net impressive season operating under a cash position as they hold only £20k tight budget, they managed to make of debt which is in the form of an a League Final and cement their place interest‑free loan. This follows the with another top six place finish in the extremely prudent approach by both SPL. The mixture of debt continues the Chairman Alan Savage and the in a similar vein to the previous year Board, as the clubs inflows continue to with both bank overdrafts and loans exceed their outflows resulting in the being utilised. clubs net assets increasing to £410k (2006: £179k). Motherwell Motherwell’s net debt increased in the Kilmarnock year to £0.5m (2006: £0.4m) primarily Kilmarnock’s net debt decreased by due to the clubs poor domestic league £0.8m to £11.6m in the year primarily finish and early exits from both cup due the improvement in the clubs competitions. As the club does not

200000 Historic debt vs loss £000’s

150000

100000

50000

0

(50000)

(100000) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

PricewaterhouseCoopers 19th annual financial review of Scottish football 26 997 998 999 2000 2001 2002 2003 2004 2005 2006 2007 1 1 1 have an overdraft, the rise in debt merchandising. Add to this the position to £1.4m (2006: £1.8m) is due to the poor operating results. clubs lost broadcasting revenue from thus highlighting the importance of Furthermore, the club has also taken missing out on the Champions League sustaining their SPL status. Similar steps to reduce the amount due to and early exits in both domestic cup to many of the provincial clubs that Chairman John Boyle at the year end competitions resulted in depressing experienced enhanced net debt figures to £1.1m (2006: £1.2m). their cash balance to £11m from during the year, this was attributable 2006 and increasing net debt back to the club reducing its reliance on its Rangers to its 2005 levels (2007: £16.5m). overdraft due to improved operating As a result of the £18m JJB Deal Gross borrowings remaining relatively performance coupled with the upfront payment, Rangers’ net debt unchanged at £27.6m, which is largely increased gate receipts, broadcasting reduced significantly from £23.1m made up of a £22.1m bank loan and revenues and sponsorship deals that (2005) to £5.9m (2006). However, £4.3m of finance lease creditors. the SPL brings. the current year was the first to feel the full impact of this deal and St Mirren subsequently Rangers have lost The Paisley clubs return to the top out on the additional revenue which flight for the first time since 2001 was previously generated from helped the club improve its net debt

200000 Total SPL profits/(losses) Net debt

150000

100000

50000

0

(50000)

(100000) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

PricewaterhouseCoopers 19th annual financial review of Scottish football 27 997 998 999 2000 2001 2002 2003 2004 2005 2006 2007 1 1 1 Cash flow. Overview

For the third successive year, the SPL generated a net cash inflow of funds of £21.7m, up from £8.3m in the previous year. These results are somewhat skewed by the JJB financing provided to Rangers. The club received £15m upfront in the previous year, but due to the accounting treatment adopted, this cash inflow did not have any impact on the accounts until the current year.

Financing levels decreased slightly from that experienced in the previous year £14.8m (2006: £16.4m) however this was primarily due to the previous year figure containing the £15m rights issue that was undertaken by Celtic in order to repay £8.4m of their debt. By far and away the greatest contributor to this balance in the current year was Aberdeen who undertook a large refinancing operation following the revaluation of Pittodrie to reduce the interest burden of their overdraft by replacing it with a long term loan.

Cash generated from operating activities has decreased by 53% to £13.0m (2006: £27.4m).

Rangers suffered the greatest turnaround in the cash flow generated from operating activities. During the current year they had a net cash outflow of £4.3m while in the previous year they yielded a cash inflow of £24.7m. This follows the clubs disappointing operating activities, whilst the previous year figure incorporates the funds received from JJB Sports.

Hearts managed to decrease their cash outflow from £5.2m in the previous year to £3.0m in the present year. Similar to the previous year Hearts were bankrolled by considerable investment from their parent company, UAB Ukio Banko Investicine Grupe who again invested £10m into the Tynecastle club. This additional loan resulted in Hearts incurring £1.8m in interest costs during the year (2006: £1.3m).

On the contrary Celtic’s record breaking season with regards to turnover and profits transformed the net cashflow they generated from operating activities £18m (2006: £5m). Although significant sums were then reinvested into their new training facilities, the first team squad and the repayment of a further £0.9m of debt, the Parkhead club still managed to generate a greater cash inflow than the previous year £4.1m (2006: £2.7m). This is even more remarkable given that the previous year’s balance included the results of a fully underwritten £15m rights issue by Celtic’s influential non‑executive director Dermot Desmond.

PricewaterhouseCoopers 19th annual financial review of Scottish football 28 2007 2006 Movement Due to the additional investment Combined SPL Cash Flow £’000 £’000 % made in both player registrations and Celtic’s investment in their new Net Cashflow from Operating Activities 13,009 27,390 ‑53% training facilities at Lennoxtown ROI and Servicing of Finance (4,818) (6,284) ‑23% during the year, cash outflow from capital expenditure was up 16% to Capital Expenditure & Financial Investment (16,497) (14,260) 16% £16.5m (2006: £14.3m). The main Taxation 174 272 ‑36% contributors to this outflow continued Acquistions ‑ (221) 100% to be both halves of the Old Firm with Celtic spending £12.1m (2006: Management of liquid resources 15,000 (15,000) 100% £6.9m) to Rangers £5.2m (2006: £5.8m). However Hearts’ investment Cash Inflow/(Outflow) before Financing 6,868 (8,103) ‑185% levels continued in a similar vein to the previous year as they attempted Financing 14,827 16,384 ‑10% to break the Glasgow clubs as the top two clubs in the SPL at £3.3m (2005: £2.5m). Net Cash Inflow/(Outflow) 21,695 8,281 162%

The management of liquid resources of £15m (2006: ‑£15m) is derived solely from Rangers and represents the funds received from the JJB deal transferred from the short‑term deposit account, which they were placed in during the previous year.

Due to the fact that no cashflow statement was presented in their statutory accounts both Dunfermline and Inverness Caledonian Thistle were omitted from the analysis.

PricewaterhouseCoopers 19th annual financial review of Scottish football 29 Cash flow. New finance raised

Cashflow from financing activities has decreased by 10% to £14.8m (2006: £16.4m). The previous year was inflated by the funds raised via Celtic’s rights issue which raised £14.6m, while there were smaller issues at Falkirk and Dundee United. During the current year only Dundee United issue share capital of any significance totalling £1.1m. Further details on the debt raised in the period are contained within the Balance Sheet section of this report.

2007 2006 Movement New Finance Raised £’000 £’000 % Net Proceeds from Share Issue 1,124 15,126 ‑93% Debts 21,818 12,224 78% Inflow from new finance 22,942 27,350 ‑16%

Repayment of Debt (7,928) (10,555) ‑25% Capital Element of finance lease (188) (411) ‑54% Outflow from finance (8,116) (10,966) ‑26%

Net cashflow from financing 14,826 16,384 ‑10%

PricewaterhouseCoopers 19th annual financial review of Scottish football 30 31 Cash flow. Player transfers

Analysis of cash movement from player transfers 2007 2006 £’000 Outflow Inflow Net Outflow Inflow Net Aberdeen ‑25 689 664 ‑242 35 ‑207 Celtic ‑10,959 5,974 ‑4,985 ‑4,477 643 ‑3,834 Dundee United ‑172 364 192 ‑397 463 66 Heart of Midlothian ‑3,822 1,280 ‑2,542 ‑1,517 113 ‑1,404 Hibernian ‑409 6474 6065 ‑230 1,555 1,325 Rangers ‑6359 2336 ‑4023 ‑4,017 1,527 ‑2,490 St Mirren ‑25 0 ‑25 ‑5 0 ‑5 Totals ‑21,771 17,117 ‑4,654 ‑10,885 4,336 ‑6,549

Source: Statutory Accounts

The net cash outflow from player transfers decreased in the year to £4.7m (2006: £6.5m). The level of cash outflow has doubled in comparison with the previous year. The cash inflow has also increased significantly year on year experiencing a 295% increase from the 2006 levels at £17.1m (2006: £4.3m). This is directly attributable to the level of transfer market activity of both sides of the old firm, whilst Hearts continue to remain the third most prominent force in player activity.

The principal factor affecting the transfer market activity was the buoyant market in England which was stimulated by the FAPL television contract. This enabled various English clubs to take advantage of less affluent conditions north of the border with the lure of offering greater wages. Although there are financial advantages which the Scottish clubs are able to reap from this contract, the gap between the two markets has grown enormously in the past two years resulting in the movement of the best players from the SPL to the English Premiership becoming more pronounced. This has consequently impacted the talent pool which clubs out‑with the old firm are able to draw on, as they find themselves competing with clubs within England’s second tier, which has recently been named the 5th richest league in the world.

Domestically within the SPL, Hibs benefited from the sales of their home grown duo Kevin Thomson (£2m) to Rangers and Scott Brown to Celtic (£4.5m), whilst only a fraction of this money was reinvested in the playing squad with the most notable addition being Rob Jones (£0.1m) from Grimsby.

Out‑with the SPL Celtic realised inflows from the sale of the following players: Ross Wallace and Stan Varga left to join Sunderland for a combined fee in the region of £1m, while Stilian Petrov went to Aston Villa for £6.5m. During the January transfer window Shaun Maloney joined Martin O’Neill at Aston Villa for a fee of £1m while Stephen Pearson went to Derby for £0.8m. The fact that the

PricewaterhouseCoopers 19th annual financial review of Scottish football 32 Analysis of cash movement from player transfers 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 £5000k 2007 2006 Net transfer fees

£’000 Outflow Inflow Net Outflow Inflow Net £0k Aberdeen ‑25 689 664 ‑242 35 ‑207 Celtic ‑10,959 5,974 ‑4,985 ‑4,477 643 ‑3,834 £-5000k

Dundee United ‑172 364 192 ‑397 463 66 £-10000k Heart of Midlothian ‑3,822 1,280 ‑2,542 ‑1,517 113 ‑1,404 Hibernian ‑409 6474 6065 ‑230 1,555 1,325 £-15000k Rangers ‑6359 2336 ‑4023 ‑4,017 1,527 ‑2,490 £-20000k St Mirren ‑25 0 ‑25 ‑5 0 ‑5 Totals ‑21,771 17,117 ‑4,654 ‑10,885 4,336 ‑6,549 £-25000k Source: Statutory Accounts All Clubs Celtic Rangers £-30000k

club only received £6m in the way of (undisclosed) and the FBK Kaunas duo their Cashflow Statement. transfer fees is a result of the Shaun of Eduardas Kurskis and Arkadiusz Maloney fee being dependent on the Klimek joined for undisclosed fees. The main influence in recent years number of appearances he makes for This pair joined four of their colleagues on the net transfer fees of the SPL the Midlands club. that had previously been loaned to the is a club’s ability to raise funds in Edinburgh club for the season. player sales as significant spending Celtic spent heavily in the transfer in the transfer market by Scottish market on the back of the guaranteed Rangers’ main source of inflow was clubs remains scarce. Since the Champions League broadcasting generated from the sale of Fernando high spending days of the 1999/2000 and sponsorship revenue on Scott Ricksen to Zenit St Petersburg (£1m) season Rangers have spent over Brown as outlined above. In addition, and Julien Rodriguez to Olympique £40m in player acquisitions including the other notable purchases de Marseille (undisclosed). During the that of Tore Andre Flo and Jean Alain were Jan Vennegoor of Hesselink summer months previous manager Boumsong, whilst Celtic have spent (£3.4m) from PSV Eindhoven, Jiri Paul Le Guen brought in the following £56m over the same period due to Jarošík (undisclosed) from Chelsea notable additions Karl Svensson high profile arrivals of Chris Sutton and Thomas Gravesen from Real (£0.6m), Jérémy Clément (£1.1m), Filip and Neil Lennon. In more recent times Madrid (£2m). Sebo (£1.8m) and Saša Papac (£0.5m). the trend has continued towards the However following the managerial development of home grown players Hearts inflow was derived from the change, Walter Smith brought in British and between the end of the 2006/07 sale of Rudi Skácel to Southampton players during the January transfer season and the time of writing, for £1.6m, however this fee was window in the form of David Weir, Andy clubs such as Rangers and Hearts conditional on certain factors meaning Webster and Ugo Ehiogu all on free have benefitted substantially with the Tynecastle club have only banked transfers in addition to securing the the sales of Alan Hutton and Craig £1.3m to date. Hearts were particularly transfer of Hibs' highly rated midfielder Gordon to Tottenham Hotspur and active in strengthening their squad Kevin Thomson for £2m. Sunderland respectively for £9m each, as they pursued Champions League hence underlining the importance of qualification. Hristos Karipidis was No balances in respect of movement developing youth. signed from PAOK Salonika £0.2m, in players’ transfers were disclosed for Laryea Kingston from Terek Grozny Falkirk, Kilmarnock and Motherwell in

PricewaterhouseCoopers 19th annual financial review of Scottish football 33 Club five year review

This section provides a snapshot of the key financial numbers of turnover, profit/(loss) before tax, wages and net debt over the past five years for each SPL club.

PricewaterhouseCoopers 19th annual financial review of Scottish football 34 PricewaterhouseCoopers 19th annual financial review of Scottish football 35 Aberdeen

Aberdeen’s successful season helped £12,000k to ensure that they posted their best financial performance over the last five years. While wages and salaries increased by £0.8m, a corresponding £10,000k increase in turnover helped to reduce losses for the period to £0.5m, a five year low. The only slight downside to this being that debt levels did again £8,000k rise, however, only by £0.6m, £1.0m less than the previous year increase.

£6,000k Turnover Profit before tax Wages Debt £4,000k

£2,000k

£0k

(£2,000k)

(£4,000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 36 Celtic

£80,000k Celtic’s financial performance over the past five years has largely been driven by success in European Competitions, typified by an appearance in the UEFA £70,000k Cup final in 2002/03 and a last 16 spot in the 2006/07 UEFA Champions League. Turnover rose to a new peak £60,000k in season 2006/07 of £75m principally as a result of this run to the last 16 of the Champions League, coupled with a domestic double. £50,000k Celtic continues to manage the wage bill effectively whilst enjoying £40,000k continued success on and off the field. Profit before tax soared to £15m, eclipsing the four previous periods by some distance, with losses being £30,000k recorded in each of them. Not only did Celtic post a £15m PBT, they also managed to reduce net debt by £4.8m. £20,000k Turnover Profit before tax £10,000k Wages Debt

£0k

(£10000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 37 Dundee United

Dundee United have reduced their £8,000k total loss by £2.0m over the past five years as a result of revenue growth, particularly in the 2004/05 season £7,000k when the club experienced successful runs in domestic cup competitions. Wage costs have remained relatively £6,000k stable over the period, although they have reduced by £1m since the 2003/04 season. £5,000k

Debt levels have remained fairly constant over the past four seasons. £4,000k However, the continued reduction in losses has allowed Dundee United £3,000k to reduce the net debt in 2006/07, by £0.4m. £2,000k Turnover Profit before tax £1,000k Wages Debt £0k

(£1,000k)

(£2,000k)

(£3,000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 38 Dunfermline

£15,000k Dunfermline suffered a season indicative of a team that was battling relegation. Turnover increased by £2.2m, principally as a result of a run to the Scottish Cup Final and £12,000k the additional revenues associated with that success. However, wages doubled from the previous year as a result of adding players in an attempt £9,000k to beat the drop, as well as a serious injury crisis. However, while the wage rise eradicated a significant majority of the increased turnover, a PBT of £0.3m was still reported. £6,000k Net debt rose by £1.1m in the 2006/07 season, with the reasons for this being consistent with the those noted £3,000k in explaining the increased wage expenditure – spending in the January transfer window and a crippling injury list.

£0k Turnover Profit before tax Wages (£3000k) Debt

(£6000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 39 Falkirk

Falkirk’s promotion to the SPL in £4,000k season 2005/06 helped to produce the most successful set of financial results the club had enjoyed for several £3,500k seasons. While PBT fell in 2006/07, principally as a result of a £0.7m increase in wages, a profit was still £3,000k posted as a result of a 21% increase in turnover. Falkirk also have no exposure with respect to the increasing £2,500k cost of debt financing due to them being in a positive cash position (£1m at the end of 2006/07), as opposed to a net debt position. This was achieved £2,000k through the sale of their old Brockville stadium to a supermarket chain over 5 years ago. £1,500k

Turnover £1,000k Profit before tax Wages Debt £500k

£0k

(£500k)

(£1000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 40 Hearts

£40,000k The financial effects of the take‑over of Hearts by Vladimir Romanov was revealed in the 2005/06 financial £35,000k results. The most significant impact was the considerable increase in wages. In the years previous to the £30,000k Romanov takeover, wages remained around the £5m mark, however, they more than doubled in the 2005/06 £25,000k season. This trend continued in 2006/07 with wages totalling £12.5m and more worryingly for Hearts, £20,000k exceeding the club’s turnover. This is wholly unsustainable and with wages only being one cost component of £15,000k running a club, the record £12.9m loss Hearts suffered in the year was a £10,000k highly unsatisfactory bottom line. Debt levels again continued to rise, with an additional £9.2m of debt financing £5,000k utilised in the period, taking total debt to £37.6m, £11.9m greater than the combine debt of Celtic and Rangers. £0k

Turnover (£5000k) Profit before tax Wages Debt (£10000k)

(£15000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 41 Hibernian

Over the past five years, Hibs have £15,000k seen wage costs remain relatively constant, never deviating greatly from the £4m mark. By contrast, PBT has strengthened year on year from 2003/04, culminating in a £7.4m £12,000k profit being recognised in 2006/07. This can principally be attributed to the big money sales of Scott Brown (to Celtic) and Kevin Thomson (to Rangers), as well as the increased revenues associated with a run to £9,000k the CIS Insurance cup final. Debt levels have fallen since the peak of £14.5m in 2002/03 after the write off of connected party debt, with numerous gains on player transfers being utilised £6,000k in reducing debt to its current 2006/07 level of £2.9m.

Turnover £3,000k Profit before tax Wages Debt

£0k

(£3000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 42 Inverness Caledonian Thistle

£3,000k Promotion to the SPL in season 2004/05 had the most significant impact on Inverness Caledonian Thistle’s results in the past five years, with turnover more than doubling to £2,500k £2.7m as a result. Wage costs have also risen over the years but remain one of the smallest wages bill in the SPL. The club has operated in recent £2,000k years with no net debt as management run the club on a prudent basis. At the end of 2006/07, ICT were in a net cash position of £0.4m.

£1,500k As the club filed abbreviated accounts in 2006/07, no current year details on turnover or wages was available.

£1,000k Turnover Profit before tax Wages Debt £500k

£0k

(£500k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 43 Kilmarnock

Losses have reduced gradually over £15000k the past five years at Kilmarnock, with £0.1m profits being posted in both the 05/06 and 06/07 seasons. This is principally due to steady increases in turnover as a result of increased £12000k match day revenues and a trip to the CIS Insurance Cup Final, as well as the careful management of wages expenditure. Debt levels however remain high, although having peaked at £13m in 2004/05, debt has decreased £9000k by £1.4m in the past 2 years.

Turnover Profit before tax £6000k Wages Debt

£3000k

£0k

£-3000k 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 44 Motherwell

£10,000k Motherwell was the first club in the SPL to be placed into administration after debt levels peaked at £9m in 2002/03. As a result of the process, debt levels fell by c£8m as club owner, £8,000k John Boyle wrote off the majority of the liability. Post‑administration results continue to show steady wages and turnover which in turn has kept debt levels below the £1m mark. £6,000k Turnover Profit before tax Wages Debt £4,000k

£2,000k

£0k

(£2000k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 45 Rangers

Rangers have undergone the most £80000k significant financial restructuring of all the SPL clubs after reducing net debt levels by £68m in recent years. £70000k In 2003/04, Rangers net debt was £73.9m however the combination of a £52m rights issue and £18m upfront £60000k payment from the JJB Licensing Agreement deal has heavily impacted the current net debt level of £16.5m. £50000k

While the Ibrox side broke through the £60m turnover barrier in 2005/06, a £40000k drop in sponsorship and advertising revenue of £8.2m in the current year £30000k as a result of no UEFA Champions League football, as well as early exits in both domestic cup competitions £20000k meant that turnover fell by £19.4m. Wages continued to fall however, with a £10.7m drop being evidenced in the £10000k past five years.

The profit generated in 2004/05 was £0k due to the release of negative good will and not trading related. Rangers endured a £6.3m loss in the current £-10000k year as a result of a disappointing season on the field, no Champions League football and the increased £-20000k costs associated with servicing the increased debt. £-30000k 2002/03 2003/04 2004/05 2005/06 2006/07

Turnover Profit before tax Wages Debt

PricewaterhouseCoopers 19th annual financial review of Scottish football 46 St. Mirren

£3,000k St. Mirren reaped the benefits of a return to the SPL, with an improvement in both their net debt position, as well as their profit for the period. Turnover increased by 74% in the period and £2,500k together with the management of wage and other costs associated with a return to the Premier League, St. Mirren posted a £0.3m profit before £2,000k tax. SPL survival was ensured and the club’s net debt position was reduced from £1.8m to £1.4m, in what must be classed as a successful season for the Love Street outfit. £1,500k

TurnoverTurnover ProfitProfit before before tax tax £1,000k WagesWages DebtDebt

£500k

£0k

(£500k) 2002/03 2003/04 2004/05 2005/06 2006/07

PricewaterhouseCoopers 19th annual financial review of Scottish football 47 Post balance sheet events.

Celtic

Unaudited interim results released by Celtic for the period ended 31 December 2007 highlight:

• Turnover decreased by 9.3%, to £42.4m, from the corresponding period a year ago. • Profit before tax decreased to £10.1m, a fall of 43.9% from the £17.9m reported at the same stage in the previous year. • Net debt decreased from £9.2m at 30 June 2007 to £6.8m at 31 December 2007, a decrease of 26%.

The dip in turnover and profit before tax can principally be attributed to the following factors; two fewer home games were played at Celtic Park in the period, giving rise to less revenues from ticket sales and match day commercial revenues, while Celtic and Rangers’ dual participation in the UEFA Champions League constitutes the sharing of certain multimedia and commercial revenues. In the corresponding period, Celtic were the sole Scottish representatives in the Champions League.

PricewaterhouseCoopers 19th annual financial review of Scottish football 48 Rangers

Unaudited interim results released by Rangers for the period ended 31 December 2007 highlight:

• Turnover increased by 43%, to £33.1m, from the corresponding period a year ago. • Profit before tax increased to £2.3m, from a loss making position of £1.5m, as reported at the same stage in the previous year. • Rangers do not prepare a Consolidated Balance Sheet in releasing their interim results, thus, no comment can be made with respect to their latest net debt position.

Rangers’ improvement in financial performance is primarily due to the UEFA Champions League performance, associated market pool income and the positive impact on ticketing and hospitality sales. An increase in operating costs, as a result of expenditure on the playing staff, tempered the 43% increase in turnover; however, a profit was still reported as opposed to a loss in the corresponding period a year ago.

PricewaterhouseCoopers 19th annual financial review of Scottish football 49 Appendices

PricewaterhouseCoopers 19th annual financial review of Scottish football 50 PricewaterhouseCoopers 19th annual financial review of Scottish football 51 Appendix one. The season that was 2006/07

Bank of Scotland Scottish Premier League

Winners: Celtic Runners‑up: Rangers

On April 22 2007, Celtic beat Kilmarnock 2‑1 to win the title for the second season running with a last‑minute winner from Shunsuke Nakamura. This secured a consecutive title for Celtic in a season which they dominated from the outset. Aberdeen and Rangers battled it out for second place, with the departure of Paul Le Guen and arrival of Walter Smith acting as the catalyst for Rangers to secure the lucrative second Champions League spot, with Aberdeen settling for UEFA Cup qualification.

At the other end of the table, Dunfermline Athletic ended their seven year stay in the SPL, going down in a dramatic final day. A point behind St. Mirren going into the final round of fixtures, a Jim McIntyre goal put the Pars 1‑0 up after 37 minutes of their encounter with Caley Thistle at the Tulloch Caledonian Stadium. With St. Mirren trailing 2‑0 to Motherwell at one point, Dunfermline looked destined to beat the drop. However, three unanswered goals from Motherwell, coupled with two late Caley goals, consigned Dunfermline to the Scottish Football League.

Tennents Scottish Cup

Winners: Celtic Runners‑up: Dunfermline

In a repeat of the 2005/06 seasons CIS Insurance Cup final, league champions Celtic met the already relegated Dunfermline Athletic, in the Hampden season finale. In a far tighter contest than many predicted, it took an 84th minute strike from Celtic’s Cameroonian left‑back, Jean‑Joël Perrier‑Doumbé, to break the deadlock. Dunfermline were unable to respond and Celtic went on to complete their 34th Scottish Cup victory.

CIS Insurance Cup

Winners: Hibernian Runners‑up: Kilmarnock

With both sides of the Old Firm falling at the quarter final stage, the 2006/07 CIS Insurance Cup presented a great opportunity to four semi finalists; Kilmarnock, Falkirk, St. Johnstone and Hibernian, to collect some silverware. It was Kilmarnock and Hibernian that triumphed in their respective semi‑finals, with Hibernian and their new manager John Collins, who went onto dominate their Ayrshire opponents in the final, running out 5‑1 victors, with goals from Rob Jones, Abdessalam Benjelloun (2) and Steven Fletcher (2). This was the Easter Road men’s 9th major Scottish Honour.

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 52 European Qualification

Champions League: Celtic, Rangers

UEFA Cup: Aberdeen, Dunfermline

Scottish Football Writer’s Association Player of the Year 2007:

Shunsuke Nakamura (Celtic)

Scottish Football Writer’s Association Young Player of the Year 2007:

Scott Brown (Hibernian)

Scottish Professional Footballers Association Player of the Year 2007:

Shunsuke Nakamura (Celtic)

Scottish Professional Footballers Association Young Player of the Year 2007:

Steven Naismith (Kilmarnock)

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 53 Appendix one. The season that was 2006/07

European Competitions

Thanks to an increasing UEFA coefficient, Celtic were afforded the luxury of direct entry into the lucrative UEFA Champions League group stages, where they were drawn with Danish outfit FC Copenhagen, Portuguese heavyweights Benfica and Sir Alex Ferguson’s Manchester United. It was Celtic’s imperious home form that ensured they would emulate great rivals Rangers’ achievement in the previous season, and reach the competition’s last 16 for the first time in its revised format. The highlight of this being a trademark Shunsuke Nakamura free‑kick, which secured a 1‑0 victory against a star studded Manchester United side in the penultimate round robin match. Italian giants AC Milan were next up for Celtic, and after a closely contested 0‑0 draw at Celtic Park in the first leg, it took a extra time goal from World Footballer of the Year, Kaka, to end Celtic’s Champions League challenge against a team that would go on to be crowned champions.

After splitting the Old Firm during the 2005/06 league season, Hearts’ reward was entry into the 2nd Qualifying Round of the European Champions League. Murrayfield, the 67,000 capacity home of Scottish rugby, was selected as the venue for Hearts’ home games in this competition, rather than their traditional home ground, Tynecastle. A combination of Tynecastle falling short of UEFA requirements in terms of pitch size and hospitality facilities, and Murrayfield's greater capacity, meant that Murrayfield was the preferred choice for the Tynecastle board. Having successfully defeated Bosnian champions Široki Brijeg 3‑0 on aggregate, in their 2nd round qualifying tie, Hearts were drawn against Greek side AEK Athens in the final qualifying round. The Greek side won 2‑1 at Murrayfield thanks to two late goals and then went on to win 3‑0 in the Athens Olympic Stadium. Indiscipline cost Hearts dearly in this tie, with one player (Bruno Aguiar) sent off in the first leg and two players (Julien Brellier and Neil McCann) sent off in the second leg.

Despite a stuttering start to the domestic season, Rangers started their 2006/07 UEFA Cup campaign in an exceptionally strong fashion. Norwegian cup holders Molde were disposed of in the 1st round, before topping a round‑robin group that included Livorno (Italy), Auxerre (France), Partizan Belgrade (Serbia) and Maccabi Haifa (Israel). More Israeli opposition followed in the last 32, with the Ibrox men disposing of Hapoel Tel‑Aviv 5‑2 on aggregate, setting up a clash with Spanish outfit, Osasuna. A hard‑fought 1‑1 draw at home, left Rangers needing a goal in Pamplona to stand any chance of progressing. The Osasuna defence, marshalled by ‘soon‑to‑be Rangers stopper’ Carlos Cuellar, proved impenetrable and a further Osasuna goal meant that the Ibrox men exited the UEFA Cup at the last 16 stage.

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 54 Changes in Management

Frenchman Paul Le Guen was the highest profile The Hibs hot‑seat also changed hands throughout the managerial casualty in 2006/07. Arriving at Ibrox with season, with the difference being that Tony Mowbray’s a reputation as one of Europe’s top coaches, Le Guen departure from Easter Road was due to success as left with the unenviable record of being the club's opposed to failure. Following a string of fine performances, shortest‑serving manager, and the only one to leave the nurturing of several talented youngsters, shrewd the club without completing a full season in charge. buys and a brand of football that thrilled the Leith faithful, With Rangers languishing in the league and out of both Mowbray was soon the target for several cash rich English domestic cup’s (the Scottish Cup departure suffered outfits. English Championship side West Bromwich Albion at the hands of Dunfermline Athletic under caretaker tempted Mowbray back to his native England on 13th manager Ian Durrant), Rangers chairman turned to a October 2006. Former Hibs and Scotland internationalist, trusted and respected Rangers legend to restore pride John Collins, was appointed in his place and steered the at Ibrox. Walter Smith, who in the 90s led Rangers to Hibees to the CIS Insurance Cup final, where they put on a nine league titles in a row, was installed as Rangers tremendous display in disposing of Kilmarnock by 5 goals manager on January 10th 2007, in the process leaving to 1. his highly successful tenure, as manager of Scotland. Like their city neighbours and fiercest rivals, Hibs, Hearts A 5‑1 Defeat to Falkirk, on 29th October 2006, signaled also underwent a season of managerial change, although on the end of Craig Brewster’s tenure as Dundee United an altogether greater scale. The season started with Valdas manager. Terrors chairman Eddie Thompson moved Ivanauskas at the helm after he had successfully steered swiftly in replacing Brewster, appointing former Hearts Hearts to Scottish Cup glory in his caretaker capacity, the and Leicester City manager Craig Levein to the role, previous season. Ivanauskas remained in official charge who at the time was enjoying a successful spell until February 2007, having spent a couple of the couple managing 2nd division Raith Rovers. This change of weeks away from Tynecastle, suffering from illness. He proved highly successful, with Levein rejuvenating was officially replaced by the Russian, Anatoly Korobochka, the Tannadice men, steering them to safety and a who remained in charge of team affairs until the end of the respectable 9th place finish. season. This turbulent season resulted in Hearts finishing in 4th spot, missing out on European qualification. Dunfermline Athletic’s poor start to the season, three wins in the club’s first 13 matches, was the catalyst for Pars chairman John Yorkston to persuade club legend Jim Leishman to relinquish his handling of team affairs and return to his post as General Manager. In his place arrived Stephen Kenny, who moved from his role as manager of Eircom League (Irish football’s top flight) outfit Derry City. Kenny had a difficult start to life at East End Park, with many questioning his appointment after a run of nine games without victory. However, this pressure abated after Dunfermline recorded a 3‑2 home Scottish Cup 3rd Round victory over a manager‑less Rangers outfit.

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 55 Appendix two. What the Chairmen thought

Aberdeen: Stewart Milne CBE, Chairman “The period covered in this report has been one in which the club achieved its highest league position since the club became a plc back in 1994 and was just reward for the hard work that has gone on both on and off the park over the previous three seasons.”

“… This achievement in no small measure has been brought about by a period of real stability at the Club which has enabled us to look ahead instead of dealing with short term issues that distract from the wider picture.”

Celtic: Brian Quinn CBE, Chairman “Spreading the Celtic brand continues to be a high business priority. The new TV contract in England makes it even less likely that change will take place in the structure of football there, and the fact that all but the top half a dozen FAPL sides may find themselves facing the possibility of relegation in any given year, with all that that entails in terms of foregone revenue, means that the great majority of teams in the FAPL would oppose, even more than previously, any move to admit Scottish teams. We believe that it is our responsibility to explore whether such a change is possible, but we accept the position as we now find it and have turned out attention increasingly to other options in looking to the longer term.”

Dunfermline: John Yorkston, Chairman “The financial results for the period reflect the increased playing squad that was required to compensate for a period of horrendous injuries and our attempt to avoid relegation by bringing in a number of loan players. The Club also created a new position of Director of Football and obtained a new Football manager with additional management staff. Reaching the Scottish Cup Final helped to offset this additional expenditure.”

Dundee United: Eddie Thomson OBE, Director “The priority is to continue to reduce operating losses through the development of a cost structure aligned to the revenue base… The principal risks and uncertainties facing the club surround the performance and results of the first team, which has a direct impact on revenues and financial performance.”

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 56 Falkirk: Campbell Christie CBE, Chairman “Our Balance Sheet remains strong with no bank debt. As a result of our profits ‘...a period of real over the last two years we have generated cash reserves, a position the Board believes to be essential given the uncertainties in football.” stability at the Club which has Hearts: S Fedotovas, Director “The Board believes that the current levels of debt are manageable and will enabled us to look be reduced as the club moves towards profitability. Future revenues will be ahead instead of generated through increased participation in European competition, larger attendance in a redeveloped Tynecastle Stadium and an associated greater dealing with short sponsorship and retail income… The Board is also working towards a more term issues that appropriate ‘salary to turnover’ ratio with the full effect of some of the club’s top earning players not being felt until the next set of financial results.” distract from the wider picture.’ Kilmarnock: Michael Johnson, Chairman “Debt reduction remains my short term goal but this objective will be tempered by my desire – which I share with Jim, Billy and the supporters – to provide entertainment and a measure of success on the pitch in keeping with the traditions of our great Club.”

Rangers: Sir David Murray, Chairman “The decision on the proposed supercasino was disappointing however it is still our intention to create value from the area surrounding the stadium to help bridge the financial gulf that currently exists between ourselves and European leagues. Discussions are ongoing with Glasgow City Council to combine the brand strength of the Club and our strategic land holdings to help create sustainable community development, and in doing so generate income for the Club.”

St Mirren: Stewart Gilmour, Chairman “The deal to sell the ground to Tesco and build a new stadium has been finalised and all conditions of the contract have been met to date… The club is now operating without bank borrowings and has repaid most of our outstanding debt, Stewart Milne CBE, which in turn reduces the costs to the club and this in turn allows us to have an Chairman, Aberdeen. increased budget for players.”

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 57 Appendix three. Significant Transfer Activity

Player Date From To £ Jiri Jarosik June 19, 2006 Chelsea Celtic £2m Jérémy Clément July 7, 2006 Olympique Lyonnais Rangers £1.1m Filip Sebo August 3, 2006 Austria Wien Rangers £1.8m Karl Svensson May 26, 2006 IFK Goteborg Rangers £600,000 Lee Naylor August 24, 2006 Wolverhampton Wanderers Celtic £600,000 Thomas Gravesen August 30, 2006 Real Madrid Celtic £2m Saša Papac August 31, 2006 Austria Wien Rangers £450,000 Rudolf Skácel July 29, 2006 Hearts Southampton £1.6m Fernando Ricksen November 28, 2006 Rangers Zenit Saint Petersburg £1m Stilian Petrov August 30, 2006 Celtic Aston Villa £6.5m Kevin Thomson January 30, 2007 Hibernian Rangers £2m Jan Vennegoor of Hesselink August 24, 2006 PSV Eindhoven Celtic £3.4m Stephen Pearson January 11, 2007 Celtic Derby County £750,000 Shaun Maloney January 31, 2007 Celtic Aston Villa £1m Scott Brown May 16, 2007 Hibernian Celtic £4.5m

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 58 Player Date From To £ Jiri Jarosik June 19, 2006 Chelsea Celtic £2m Jérémy Clément July 7, 2006 Olympique Lyonnais Rangers £1.1m Filip Sebo August 3, 2006 Austria Wien Rangers £1.8m Karl Svensson May 26, 2006 IFK Goteborg Rangers £600,000 Lee Naylor August 24, 2006 Wolverhampton Wanderers Celtic £600,000 Thomas Gravesen August 30, 2006 Real Madrid Celtic £2m Saša Papac August 31, 2006 Austria Wien Rangers £450,000 Rudolf Skácel July 29, 2006 Hearts Southampton £1.6m Fernando Ricksen November 28, 2006 Rangers Zenit Saint Petersburg £1m Stilian Petrov August 30, 2006 Celtic Aston Villa £6.5m Kevin Thomson January 30, 2007 Hibernian Rangers £2m Jan Vennegoor of Hesselink August 24, 2006 PSV Eindhoven Celtic £3.4m Stephen Pearson January 11, 2007 Celtic Derby County £750,000 Shaun Maloney January 31, 2007 Celtic Aston Villa £1m Scott Brown May 16, 2007 Hibernian Celtic £4.5m

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 59 Appendix four. The National Team

Date Venue Opponents Score1 Competition Scotland scorer(s) September 2 Celtic Park, Glasgow (H) Faroe Islands 6–0 ECQ(B) Darren Fletcher, James McFadden, Kris Boyd (2, 1 pen.), Kenny Miller (pen.),Garry O’Connor September 6 S Dariaus ir S.Gireno SC, Kaunas (A) Lithuania 2–1 ECQ(B) Christian Dailly, Kenny Miller October 7 Hampden Park, Glasgow (H) France 1–0 ECQ(B) Gary Caldwell October 11 Olympic Stadium, Kiev (A) Ukraine 0–2 ECQ(B) March 24 Hampden Park, Glasgow (H) Georgia 2–1 ECQ(B) Kris Boyd, Craig Beattie March 28 Stadio San Nicola, Bari (A) Italy 0–2 ECQ(B) May 30 Gerhard Hanappi Stadium, Vienna (A) Austria 1–0 F Garry O’Connor June 6 Svangaskard Stadium, Toftir (A) Faroe Islands 2–0 ECQ(B) Shaun Maloney, Garry O’Connor August 22 Pittodrie Stadium, Aberdeen (H) South Africa 1–0 F Kris Boyd September 8 Hampden Park, Glasgow (H) Lithuania 3–1 ECQ(B) Kris Boyd, Stephen McManus, James McFadden September 12 Parc des Princes[5], Paris (A) France 1–0 ECQ(B) James McFadden October 13 Hampden Park, Glasgow (H) Ukraine 3–1 ECQ(B) Kenny Miller, Lee McCulloch, James McFadden October 17 Boris Paichadze Stadium, Tbilisi (A) Georgia 0–2 ECQ(B) November 17 Hampden Park, Glasgow (H) Italy 1–2 ECQ(B) Barry Ferguson 1. Scotland score shown first

The European Championship qualification started positively for the Scots with three straight wins including a 1‑0 victory over France at Hampden courtesy of a Gary Caldwell goal. With Scotland still leading the qualification group Walter Smith then left the national side in early 2007 to return to Rangers and with previous Rangers manager Alex McLeish being named as his successor and Scotland's twentieth manager. McLeish's first match in charge was against Georgia which the Scots won 2–1, making McLeish only the third Scotland manager to win his first match in charge. Following this defeat to the Italian’s in Bari, McLeish then guided Scotland to wins against the Faroe Islands, Lithuania, France and the Ukraine. However their qualification campaign ultimately ended in disappointment with defeats to both Georgia and Italy when a win in either match would have been enough to secure qualification.

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 60 Date Venue Opponents Score1 Competition Scotland scorer(s) September 2 Celtic Park, Glasgow (H) Faroe Islands 6–0 ECQ(B) Darren Fletcher, James McFadden, Kris Boyd (2, 1 pen.), Kenny Miller (pen.),Garry O’Connor September 6 S Dariaus ir S.Gireno SC, Kaunas (A) Lithuania 2–1 ECQ(B) Christian Dailly, Kenny Miller October 7 Hampden Park, Glasgow (H) France 1–0 ECQ(B) Gary Caldwell October 11 Olympic Stadium, Kiev (A) Ukraine 0–2 ECQ(B) March 24 Hampden Park, Glasgow (H) Georgia 2–1 ECQ(B) Kris Boyd, Craig Beattie March 28 Stadio San Nicola, Bari (A) Italy 0–2 ECQ(B) May 30 Gerhard Hanappi Stadium, Vienna (A) Austria 1–0 F Garry O’Connor June 6 Svangaskard Stadium, Toftir (A) Faroe Islands 2–0 ECQ(B) Shaun Maloney, Garry O’Connor August 22 Pittodrie Stadium, Aberdeen (H) South Africa 1–0 F Kris Boyd September 8 Hampden Park, Glasgow (H) Lithuania 3–1 ECQ(B) Kris Boyd, Stephen McManus, James McFadden September 12 Parc des Princes[5], Paris (A) France 1–0 ECQ(B) James McFadden October 13 Hampden Park, Glasgow (H) Ukraine 3–1 ECQ(B) Kenny Miller, Lee McCulloch, James McFadden October 17 Boris Paichadze Stadium, Tbilisi (A) Georgia 0–2 ECQ(B) November 17 Hampden Park, Glasgow (H) Italy 1–2 ECQ(B) Barry Ferguson

UEFA Euro 2008 qualifying Group B

Team Pts Pld W D L GF GA GD Italy 29 12 9 2 1 22 9 +13 France 26 12 8 2 2 25 5 +20 Scotland 24 12 8 0 4 21 12 +9 Ukraine 17 12 5 2 5 18 16 +2 Lithuania 16 12 5 1 6 11 13 ‑2 Georgia 10 12 3 1 8 16 19 ‑3 Faroe Islands 0 12 0 0 12 4 43 ‑39

PricewaterhouseCoopers 19th Annual Scottish Premier League Report 61 For more information on the PricewaterhouseCoopers Annual Scottish Premier League Report, or to request a hard copy, please contact Mark Rennie on [email protected]

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