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Could Rangers ‘Demotion’ Help Scottish Football?

Written by on December 12, 2012 | 1 Comment »
Posted in Scottish Leagues

By now, Rangers and their fans have come to terms with the fact that they must climb through the ranks to regain the station in the pyramid they consider to be their rightful home, the Scottish Premier League.

While they may have grudgingly accepted this fate, they remain very unhappy and very vocal about it.  This past week Rangers announced they would refuse to take up their allotment of Scottish Cup tickets away to Dundee Utd at Tannadice in February.  Ostensibly, this decision has been taken over the club’s anger at Dundee Utd for their vocal stance against Rangers petition to rejoin the SPL after dissolution last summer.

Rangers fans have characterized the decision of their former league contemporaries as “mean spirited” and “cruel”.  While each member club will have its own reasons for rejecting the application, there can be no doubt that money played some part in it:  Rangers owed about half of the SPL significant sums, many of which remain unpaid (including funds related to last season’s DUFC-RFC Scottish cup tie).  It must also be noted that the vote was 10-0 against (Kilmarnock abstained) so the decision can hardly be seen to be equivocal.

The opposing view to that of Rangers fans has tended toward the indifferent.  A rough approximation of this view being: “If you can’t do the time, don’t do the crime”.

There can be little argument that under Craig Whyte, Rangers had been living above their means.  Many are of the view that it is the new owners and the fans that are being punished for the actions of the old guard.  The fact is that the new owners acquired the club under very favorable terms given its encumbrance and thus cannot reasonably claim to have been unduly harmed by the decision.  Had Rangers been guaranteed a place in the SPL prior to the formation of a “new” Rangers company, the cost of acquisition would have been much higher.

Neutral critics have tended to point to what they see as the obvious drawbacks of the decision:  That an SPL with only one of Celtic or Rangers becomes a walkover, and that by the time Rangers are able to get back to the SPL, Celtic’s revenue growth will have pushed them far beyond where rivals can hope to reach within a decade, possibly longer.  Several have suggested that this decision could effectively kill Scottish Football, given that it was largely a race between the two Glasgow clubs year in and year out.

Certainly Celtic will have a very successful period while Rangers remain out of the SPL.  However, at present they are just three clear of their nearest challenger (Inverness Caley Thistle) and Motherwell and Hibs just one point further back.

The tight race may be in part due to Celtic’s Champions League commitments, but nevertheless the top end of the SPL is far tighter than most would have predicted 16 games in.

The long term financial difficulties of the SPL in general have not abated, of course.  A recent report by PwC  indicated that the average loss in the SPL in 2010/11 was about £1m per club.  While this is a trifling amount by the standards of the EPL and other elite leagues, it represents significant loss as a percentage of total turnover for some of the SPL’s member clubs.

As with all other nations, the Scottish footballing pyramid generates the vast majority of its income from the top league.  And of that PL revenue, the majority has historically been generated by the two elite Glasgow clubs.

Is there no possible outcome, then, other than that this revenue will shrink dramatically as a result of Rangers ‘demotion’ with drastic impact to all clubs?

The revenue will certainly shrink at the SPL level.  But what might be the result of this?  Is it certain to cause damage to member clubs, or will they adjust to the new revenue level quickly enough to avoid the consequences some believe are inevitable?   Hearts is already struggling with finances, but how much of that is down to straight mismanagement versus the loss of anticipated “Rangers related” income?  The loss of Old Firm matches is expected to cost Celtic as much as £2m annually, however that is a pittance compared to what they will earn from CL competition.

Expecting rational economic behavior from football clubs is perhaps asking too much.  However, freed of the compulsion to outdo each other, perhaps Rangers (by necessity) and Celtic (by choice) can and will reduce their spending to supportable levels.  The decreased competition for players should lead to downward pressure (or at least nominal increase) on domestic player salaries and spending in general (though the top echelon players are in demand elsewhere as well as Scotland).

Celtic may choose to spend what seems likely to be annual Champions League income on improving the squad, but the reality is they do not need to do so to beat their league brethren (and more importantly, their major rival) any longer, nor to remain annual participants in lucrative UEFA competitions.

For lower league clubs, the presence of even a diminished Rangers in their leagues will inevitably lead to greater revenue and exposure.  While some SPL clubs will feel a short term financial pinch, Div 3 clubs this year should see a significant boost in fortunes.  As Rangers progress through Scottish football, they should bring a modest financial windfall to each club they share a league with.  For some of the minnows, a reasonable gate share from Ibrox could raise their annual turnover by 40-50% – enough money (if used properly) to create stability for these businesses for years to come, as well as raise the level of play across the board.

There will be some pain – not only for Rangers but their former SPL colleagues as well – as a result of their expulsion.  But far from killing Scottish football, Rangers admittance at the third tier could actually help save it.

Rangers Football Creditors List: (prior to Sevco)

 Hearts                   £800,000

Dunfermline           £84,000

Celtic                         £40,500

Inverness CT         £40,000

Dundee United     £65,000*

Man City               £330,000

Chelsea                  £240,000

Arsenal                  £140,000

Rapid Vienna                 £ 1.1m   (Jelavic transfer)

St. Etienne           £260,000

Palermo                £210,000             

Orebro                  £150,000

 * amount disputed by Rangers, who reported £30,000


One Response to “Could Rangers ‘Demotion’ Help Scottish Football?”

  1. Ed Gomes says:

    Just my thoughts.
    No, it will not help the SPL in the long run. First and foremost, overall finances will drop. Clubs, like Hearts, that have over extended themselves will take a huge hit. Lets face it, clubs depended on the Rangers.
    As for quality, that will also drop off. Like it was mentioned, Celtic won’t have the burden of keeping up with someone. The need to improve just won’t be as great. The rest of the clubs can’t improve due to the further loss of revenue. Races might become tighter but overall quality will take a hit.
    Lastly, I doubt Rangers will help the lesser clubs finances by being in the lower leagues. Will their fans travel as much, and are the stadiums that great in size to make a difference. Even if they did, will they improve competively and financially enough to promotion? I highly doubt it.
    I know it’s not fair big clubs getting breaks and getting treated differently. Rangers deserved everything they got. But this will hurt the SPL even beyond them getting promoted to the top level once again.

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