Decks cleared and £77m in the bank... but UEFA red tape will hold Celtic back in the January sales
Football finance expert on why O’Neill’s side will not be able to attack transfer window hard despite funds
BEFORE his voice was drowned out by the boos and jeers of the more partisan shareholders who were in attendance at the Celtic AGM at Parkhead in November, Ross Desmond attempted to defend how the Scottish champions conduct their business.
Before then chairman Peter Lawwell was forced to abandon the meeting in the Kerrydale Suite due to the disorder, the son of major shareholder and nonexecutive director Dermot endeavoured to explain why navigating the transfer market has become so complex for the Glasgow club.
“The board respects financial reality,” said the Irishman. “We act prudently, not recklessly. Those who accuse the club of hoarding cash or being in it for the money display a deep misunderstanding of financial responsibility.
“Those who talk about the club not having kicked on in Europe since 2003 ignore the enormous change in the management landscape of football in that period. It has created a gap which keeps growing.
“Of course, clubs can still punch above their financial weight and we should aspire to do that. But if you swing and miss, you risk the very stability of the club and that would be profoundly irresponsible.”
With a desperately disappointing summer transfer window and a humiliating Champions League playoff defeat to Kazakh minnows Kairat still fresh in the memories of those in the room, his words were ignored.
For the rabble rousers, there was no excuse for a club which had been unlucky to lose to Bayern Munich in the knockout stage play-off of Europe’s premier club competition last season going into such an important double header with a winger up front and a playmaker out wide, suffering a penalty shootout defeat as a result and once again missing out on an lucrative pay day.
Especially with their last set of financial results in June showing they had cash reserves of £77.3 million. Why hadn’t some of that money been spent bringing in quality replacements for Kyogo Furuhashi and Nicolas Kuhn?
But did Desmond Jnr make some valid points which were lost amid all of the acrimony? Do Celtic face greater difficulties strengthening their squad than at any other period in their history because of how dramatically football has changed at the highest level in the past 20 years? Could speculating to accumulate in the transfer windows backfire on them spectacularly further down the line? Are they wise to be frugal?
Dr Dan Plumley, a senior lecturer in sport business management at Sheffield Hallam University and an expert in football finance, has seen how clubs from lesser nations with vastly inferior domestic broadcasting deals can overcome the considerable challenges they face in the modern game with dynamic structures, smart recruitment and innovative strategies. More of which later.
However, he also understands why the former European Cup winners have to consider more, far, far more, than how much a potential signing will cost. He believes they will, even though they have fallen behind in the Scottish title race and desperately need to bring in reinforcements, have very good reason to tread warily during the January transfer window.
“UEFA have now introduced the squad cost ratio, which has replaced financial fair play, to promote sustainability” he said. “A club’s squad is not allowed to cost more than 70 per cent of their turnover. But that cost covers player and manager wages and all amortisation of transfer fees and agent fees.
“Everything that goes into the transfer market goes towards your squad cost and is matched against revenue. It does put Celtic in a bit of a sticky spot. They can’t overstretch
because they can’t fall foul of UEFA’s regulations.
“For the record, they are not even close to doing that. But they still can’t push the envelope too far because if they do then they start to run up against UEFA’s regulations. When they then qualify for Europe, which they always do, there will be fines and sanctions incoming if they break them.
“I wouldn’t say the squad cost ratio is more prohibitive than financial fair play. There are similarities. It is sort of an extension of the soft wages to turnover ratio rules that UEFA had before but never really monitored. I think they’re a slight improvement on what’s been before. There are regulations around overall losses and what clubs can lose in a three-year rolling period.
“There’s a lot of clubs on UEFA’s radar at the minute. We’ve seen Aston Villa, Chelsea, Lyon and Barcelona all get fined eight-figure sums. So Celtic are juggling with that as well. It is really important. It is tricky for them because the fans will always want more. But they have to be mindful of what they do. They aren’t able to attack a transfer market really hard.”
Celtic have done exactly that in the not-too-distant past. Perhaps not to the same extent as their counterparts down south. Still, they parted with significant sums at the start of the 2022/23 campaign. Alexandro Bernabei (£3.75m), Cameron CarterVickers (£6m) and Jota (£6.4m) did not come cheap.
The following season, after Brendan Rodgers had replaced Ange Postecoglou as manager, around £20m was spent bringing on board the likes of Odin Thiago Holm, Maik Nawrocki, Gustaf Lagerbielke, Luis Palma, Yang Hyun-jun and Kuhn.
The purse strings were well and truly loosened last term. Paul Bernardo (£3.4m), Adam Idah (£8.5m), Auston Trusty (£6m), Arne Engels (£11m) and Jota (£9m) all came in along with several others in an unprecedented £40m spending spree.
But Celtic were guaranteed Champions League football in each of those seasons due to the Scottish coefficient. This summer that was not the case. There was clearly an unwillingness in the boardroom to potentially overstretch their resources before the play-off in case, as has been the case on numerous occasions in the past, they came up short.
“Celtic have a £143m turnover,” said Dr Plumley. “All squad costs have to be within 70 per cent of that. Their total wage bill in their last accounts was £75m and the player wage bill alone was estimated to be
We’ve seen Villa, Chelsea, Lyon and Barcelona all fined eight-figure sums. Celtic are juggling with that
over £50m. So on those headline numbers, they don’t have a huge amount of wiggle room.
“Yes, the cash figure is healthy for sure and that’s a good thing. But it’s really not as easy as them saying, ‘Right, let’s go out and spend that money on players’. The £77m that is in the bank has to do other things as well. That is also only the amount they have when the accounts are published. It will not remain the same during the course of the financial year.”
Celtic spent £13m bringing in 12 new players during the summer. But they received far more than they parted with from the sale of Kuhn to Como and Idah to Swansea City as well as others for nominal fees. They turned a sizeable profit from their trading.
The members of their worldwide support were, with a place in the expanded Champions League league phase to be secured, far from impressed with what Desmond Snr once described as their “Mr Micawber Economics”. After all, they made a cool £39.7m from their involvement in that competition in the 2024/25 campaign.
Their many critics asked what the point of having a small fortune sitting gathering dust in a bank vault was if the side on the park was not good enough to realise their ambitions? Dr Plumley, though, can appreciate why their besieged hierarchy have been reluctant to dip into those funds.
“Don’t get me wrong, Celtic are a club that will always be able to go into the transfer market when they want to,” he said. “But it’s still not an easy market for them. They can’t just go out and grab lots of high-quality players.
“What will certainly shift the dial for Celtic and Rangers is getting into the Champions League league phase. They can have a good run in the Europa League, but the participation money is nowhere near as high as the Champions League.
“But there’s a lot of risk involved in that given the Scottish co-efficient and the fact they’ve now got to go through the qualifiers. How much do they gamble in the transfer market? Do they spend money on players before they’ve got there? Or do they hedge their bets a little bit and look to try and bring in fewer players for less money? Remember, they might not qualify if they do. That then has a major impact on their squad cost ratio.
“Even if they do decide to spend money, it won’t take them much closer to the established European elite. The big clubs will always win out. Even if Celtic are one of the 36 teams which get into that competition, they’re up against it from the start.
“The game has shifted. There is wider commercialisation, overseas pre-season tours, tie-ups with other brands and partners around the world. Multi-club ownership has played a huge part in the change. Clubs look to drive recruitment models through multi-club ownership and who they partner up with.
“In five years’ time the same clubs will have won most of the European competitions. The show will go on and on as well because many of the broadcast deals are fixed. The Premier League is fixed until 2029 and the Champions League rights are next up in 2027.”
SO why, then, have Bodo/Glimt managed to reach the Conference League quarterfinals, the Europa League semi-finals and the Champions League league phase in the past five years?
The four-time Norwegian champions had a turnover of just €30m last season. How have a club which is situated in the Arctic Circle managed to overcome their obvious disadvantages? Are there not lessons for Celtic to learn from “Gleam”?
“It’s definitely important that the clubs which are not in that established European elite look to ways of doing things differently,” said Dr Plumley.
“A lot of clubs today are asking, ‘Who are we as a club? What club do we want to be?’ Internally at boardroom level anyway. I am not sure that message often gets out publicly. It’s tricky, isn’t it? Fans want to win every game they play.
“There’s certainly merit in the models that some of the clubs which are not in that upper bracket are using. Bodo/Glimt would be a very good example. They have shown you can have relative success taking a different approach. They are great for football. What they have done in Europe has been fantastic.”
He continued: “When it comes to recruitment, clubs have questions they must ask themselves. Where do they bring players in from? What kind of profile do they look at? Is it younger players with good sell-on value who will come to develop and put themselves in the shop window before being off-loaded for profit?
“When it comes to squad cost ratio, you are allowed to use all your revenue in the calculation. But you can also use what is effectively adjusted net spend across the year. If clubs sell more players than they buy they get the net position there. It can boost the number.
“I’m not saying it’s easy and lots of clubs in lots of different countries are doing the same thing now. But there are absolutely ways you can do things. There are still challenges within that to get the players that you want. But there are certainly viable strategies.”
Dr Plumley feels that William Hill Premiership leaders Hearts – where Brighton owner Tony Bloom, whose Jamestown Analytics firm has unearthed some outstanding players, now owns a 29 per cent stake and – are a perfect example of how a club can punch above their weight with some outside-of-the-box thinking.
“The wider European landscape obviously affects Celtic and Rangers and puts them on the back foot,” he said. “But within the Scottish football landscape it is really tough for the others to compete with them most of the time.
“But last year Hearts had a turnover of £25m, Rangers have a turnover of £89m and Celtic have a turnover of £143m. If Hearts go on and win the Premiership this season they will show what can be achieved at any level of the game.”