Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

Glasgow, one of the world’s most football-mad cities and a hotbed of near-tribal team rivalries, might not seem an obvious place for a lesson in the principles of sensible soccer business management.

Indeed, the biggest sports story of recent years in Scotland’s second city has been the disaster at once-mighty local club Rangers, which was forced into liquidation by hefty debts and controversial tax liabilities and now labours in the lowly third division.

But while Rangers offers a stark example of the dangers faced by even the world’s most famous football clubs in an era of soaring player wages, just across town can be found a much more positive footballing case study in the form of Celtic FC.

Amid a flood of financial disaster across the Scottish game and beyond, Celtic finds itself virtually high and dry, debt free – even as it relishes the achievement of making it to the last-16 stage of Europe’s Champions League competition.

So what is the secret of the fine flush of health being enjoyed by a club that celebrated its 125th birthday in November?

In part, says Peter Lawwell, chief executive, it is about simply keeping a level head when all about you other football executives are losing theirs.

“I think in football, in particular, it’s so easy to be seduced by the highs and too depressed by the lows,” Mr Lawwell says in an interview in the stadium some fans call Paradise. “[Success comes from] keeping on a business footing.”

For Celtic, a key turning point came more than half a decade ago, when the club realised it could not compete on a financial basis at the top European level.

Ticket sales to a large and loyal local support were increasingly outweighed by the importance of television rights revenues. And an ever more overheated international market in football talent sent salaries for the best players skyward.

For Celtic, stuck in the Scottish league without the global audience commanded by southern neighbour England, playing the new business game could have been disastrous.

TV rights to the Scottish Premier League generate less than 1 per cent of the income attracted by its English counterpart, says Mr Lawwell, leaving Celtic no choice but to find new ways to success.

One response was to forgo buying successful players with high transfer price tags and hefty salaries.

So, when Celtic saw it could not match the wage bill of its European competitors, it actually took “several million” pounds from its budget for the club’s first team and put it into training, recruitment and sports science.

It was, as Mr Lawwell says, “quite a brave thing to do”. Yet while some fans grumbled, the focus on ­finding and developing new talent has given Celtic a pool of young players that are an investment as well as a cost.

By casting its recruitment net widely, the club has also been able to build a presence in overseas ­markets where Scottish football would otherwise make little mark.

In a high-profile example of the strategy, Celtic bought South Korean midfielder Ki Sung-yueng from FC Seoul in 2010. Ki was not only “man of the match” in Celtic’s 2011 Scottish Cup final victory, he made South Korea the second biggest market after Scotland for sales of its Nike replica kits.

And the sale of Ki to Swansea last August for a reported £6m also accounted for the bulk of the £5.2m profit from transfer market trading that the club reported in its interim results this month.

Repeating such tricks will be harder as other teams join the trend toward more sophisticated analysis of sporting talent.

And Celtic will also pay a price for Rangers’ woes: the rivalry between the “Old Firm” as the two Glasgow teams are known has long been a driver of ticket sales and interest.

Still, the lack of Old Firm games this season has been more than offset by European success, even though a 3-0 home defeat at the hands of Italy’s Juventus this month looks set to end Celtic’s Champions League run.

And Mr Lawwell insists that the club will remain firmly focused on long-term benefit rather than short-term gains, no matter how heated sentiment gets in the stadium.

“Everything we do, we look for value,” he says. “You’ve just got to be strong to your principles and do the right thing.”

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article