This article analyses Celtic finances in respect of the 2020/21 season.
Season review
Celtic entered the 2020/21 season with the hopes of a tenth league title in a row in what has been a dominant era for the Bhoys. A resurgent Rangers spoiled the party as Celtic had to settle for second place. The highlight of the season came in December 2020 when Celtic won the delayed 2019/20 Scottish Cup to complete a ‘Quadruple Treble’. It was however a disappointing season with early exits in both domestic cups in 2020/21.
Celtic finances were adversely impacted by its drop in performance, a subdued transfer market and the pandemic. This led to losses of £12m.
Celtic Finances – Revenue
Revenue fell from £70m to £61m (13%) as Celtic felt the force of the pandemic’s impact on finances. It is worth noting that Celtic also recorded £5m of ‘Other income’ which it provided no further detail on. This was not present in 2020.
Matchday
Matchday revenue fell from £36m to £21m (42%) as the season was played behind closed doors. Due to a loyal fan base, Celtic retained a fair chunk of its matchday revenue. This was partly repaid by gifting all 55,000 season tickets of £50 of vouchers.
The return of fans in 2021/22 means that matchday revenue should mostly recover in 2022.
Broadcast
Broadcast revenue fell from £14m to £11m (18%). This was driven by worsened performance across all competitions, specifically the UEFA Europa League (UEL). Celtic received €11m in 2020 compared to around €4m in 2021 from UEFA.
Celtic will be hopeful of reaching the knockout rounds of this season of the UEL which will boost its broadcast revenue. However, at the time of writing, the club sit in third place in its group. This would however result in qualification to the UEFA Europa Conference League (UECL) which could boost revenue if Celtic reach the latter rounds too.
Commercial
Commercial revenue rose from £21m to £29m (38%) as the club benefited from a new deal with Adidas and strong retail/merchandise sales. Celtic has no major new deals next season but will be hoping to grow commercial revenue further.
Celtic Finances – Revenue summary
With the return of fans to stadium, Celtic will be hoping to boost revenue significantly and back towards the £80m mark achieved in 2019. Key to this will be UEL performance and qualification for next season’s UEFA Champions League (UCL).
Celtic Finances – Operating costs
Operating costs fell from £83m to £75m (9%) as Celtic looked to manage its costs in light of falling revenue.
Wages
Wages fell from £56m to £52m (8%), largely as a result of no bonuses for winning the league or domestic cups in 2021 (albeit bonuses would have been payable for the delayed 2020 Scottish Cup win). Celtic’s wage bill sits at around £1m per week.
Celtic’s wages to revenue ratio rose to 85%, a bit higher than the 70% limit recommended by UEFA. However, given the circumstances and impact of COVID-19, this should not be a major worry.
Other costs
Other operating costs fell from £26m to £23m while Celtic benefitted to the tune of £2.6m from the Job Retention Scheme (JRS).
Celtic Finances – Operating costs summary
Celtic proficiently cut its costs as it braced itself for falling revenue that damaged profitability. With revenue likely to bounce back next year, the level of cost growth will be important for overall profitability.
Celtic Finances – Transfers
Celtic like many others were cautious in the 2020/21 transfer markets, purchasing only a few players. In came Ajeti (£4.5m), Barkas (£4.5m), Turnbull (£2.7m) and Duffy (Loan – £2m) for a combined £14m. Departing Celtic Park were Frimpong (£10m), Klimala (£3.9m), Kouassi (£1.4m) and Abd Elhamed (£0.8m) for a combined (£16m).
This resulted in net transfer income of £1.9m compared to net income of £6.5m in 2020.
Amortisation
Player amortisation charges remained stable at £12m as spending largely matched the levels of recent years. Spending of £20m so far in 2021/22 may see this figure rise.
Profit on player sales
Profit on player sales fell from £24m to £9m (61%) as the club were less financially successful in the transfer market. The sale of Tierney in 2020 significantly boosted the club’s finances and improved profitability. The absence of such sales was a major reason for the larger loss in 2021.
However, the sales of Edouard and Ajer in 2021/22 will see profit on player sales rise significantly in 2022.
Transfer debtors / creditors
Celtic does not outrightly disclose its transfer debtors and creditors. However, using trade receivables and payables as a proxy, it appears it is a net transfer debtor. This means it owed more in transfer fees from other clubs than it owes.
Celtic Finances – Transfers summary
Celtic had a quieter season from a player sales perspective in 2021. The major sales of Edouard and Ajer in 2021/22 will see a huge boost to the club’s finances.
Celtic Finances – Profitability
Celtic saw its losses rise significantly to £12m as it counted the costs of the pandemic and lower player sales.
Operating profit / loss before player trading
Before player trading, operating losses fell from £12m to £9m (27%) as despite revenue falling 13% and costs by only 9%, Celtic recorded £5m of ‘Other income’. The nature of this is not disclosed. Celtic is likely to see its revenue growth outpace costs growth in 2022 which should improve profitability.
Operating profit / loss after player trading
After player trading, Celtic’s operating losses rose from £0.3m to £11m, highlighting the sizeable impact player sales can have on finances. As mentioned, major sales in 2021/22 so far should see this figure improve.
Profit / loss before tax
Net finances costs of £0.2m saw Celtic record a loss of £12m. This compares to a £0.1m profit in 2020.
Celtic Finances – Profitability summary
No one likes losses but Celtic is likely to relatively relaxed about this loss. COVID-19 had a huge financial impact on all clubs, and this combined with a dip in player sales was always going to result in larger losses. Larger player sales and the return of fans and more normal revenue levels should see Celtic profitable again in 2022.
Celtic Finances – Assets / Liabilities
Celtic were able to absorb its losses via player transfers in 2021 without the need for significant external funding.
Cash flow
Celtic’s cash reserves fell from £22m to £20m. Cash inflows from player transfers of £12m completely absorbed cash outflows from operations of £12m. This meant that outflows from capital expenditure (£0.5m) and financing (£2.5m) were the reason for the slight decline.
Debt
Celtic holds little debt but it did increase its access to a Co-Operative credit facility from £2m to £13m to provide a significant buffer to its finances. The club states it is not currently utilising this facility but does have a £2.9m long term loan with the bank. Overall, the club has around £8m of debt, of which £4m is convertible preference shares.
Net debt
As a result of this, Celtic is in a net cash position of £11m.
Celtic Finances – Final Remarks
It was a challenging season for Celtic on and off the pitch as its dominant era in Scottish football was disrupted. Celtic finances took a hit in 2021, however the return of fans and major player sales should see strong profitability in 2022. As always, Celtic’s performance in Europe will be key to boosting revenue considerably and the club will be pinning its hopes on reaching the UEL knockout stages and regaining its Scottish title.
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