As relegation beckons and questions arise over Dundee United’s financial situation, The Courier asked football finance expert Charles Barnett to shed some light on what the club can do next.
Q: What kind of impact can relegation have on the finances of an established top league side such as United?
A: All revenue streams including season and match ticket sales, commercial income, sponsorship will see a significant reduction. Player costs may reduce depending on the terms of individual players’ contracts – particularly if they have a clause stating an amount or percentage reduction in the event of relegation. Non-playing staff may need to take a (voluntary) salary cut or there may be redundancies.
Q: Are you aware of any parties looking to invest in Scottish football – is it likely that if, as many fans desire, the owners decided to leave alternative owners would be easy to find?
A: I am not aware of any investors for Scottish football – at the moment it is not an attractive proposition with low TV revenues and with Rangers having been out of the top division for the last four years most SPFL top division clubs have suffered financially.
Q: Many clubs have recently tried to go down the fan ownership route. Do you think that is a realistic option for a club like Dundee United?
A: Fan ownership requires the willingness of the existing owners to sell at a realistic price that the fans can finance. I believe that the existing owners have a substantial sum invested in the club and are unlikely to wish to realise a loss.
Q: Some fans fear administration may be on the horizon. Do you think that would be a likely outcome for United if they are relegated?
A: I understand that the club has no external debt and am not aware that it has fallen behind on its payments to creditors so administration in the short term seems unlikely.
Q: What would your advice to the current board be given their league position/financial situation?
A: The board will undoubtedly be planning for what it believes is the most likely scenario for next season and will be preparing its budget accordingly. This will involve looking at all revenue streams and all expense to ensure that the club is getting value. If projected expenses are higher than projected income then this is likely to result in a cash shortfall. In this scenario the board will consider how to finance this gap – perhaps by selling players, obtaining a loan or injecting new funding for shares.
For more on our study of the challenges facing Dundee United, click here.
