The World Cup is a huge money-mak­ing ma­chine but pro­fes­sional sport in Scot­land re­quires a rad­i­cal over­haul to sur­vive, writes Ginny Clark

The Herald Business - - Future Of Scotland -

TH­ESE are dif­fi­cult times for foot­ball fans in Scot­land. No mat­ter where we stand on the is­sue of who to sup­port in the World Cup – though few are shoul­der to shoul­der with Gor­don Brown – one bare fact di­min­ishes the whole ex­pe­ri­ence. We aren’t there.

If sport­ing achieve­ment has the power to unite a coun­try, to raise spir­its and boost con­fi­dence, to en­cour­age a strong sense of cul­tural iden­tity, then the op­po­site must also be true.

In which case, Scot­land is suf­fer­ing. If it wasn’t for the achieve­ments of our swim­mers at the Com­mon­wealth Games, and the me­te­oric rise of ten­nis star Andy Murray, we would have lit­tle to cheer.

How­ever, de­spite this suc­cess in so-called mi­nor­ity sports, the pro­fes­sional are­nas which are the fo­cus for the ma­jor­ity of Scots – foot­ball, in par­tic­u­lar, and rugby – are a cause of frus­tra­tion.

In­evitably, as dis­ap­pointed fol­low­ers mut­ter into pints and wine glasses, the whole is­sue of sports fund­ing and po­lit­i­cal will comes un­der the spot­light.

“Pro­fes­sional sport is big busi­ness,” says David Gra­ham, head of sports busi­ness at law firm Shep­herd+ Wed­der­burn, spon­sor of the Scot­tish Busi­ness in Sport awards.

“Spon­sor­ship is a sig­nif­i­cant in­come base for clubs, and th­ese spon­sor­ing in­vestors de­mand a re­turn on their in­vest­ment. For smaller teams, the amount of spon­sor­ship of­ten means the clubs are run on a hand-to­mouth ba­sis. In such a cli­mate, pay­ing for the de­vel­op­ment of grass­roots level tal­ent is dif­fi­cult to jus­tify. We can see this in larger foot­ball clubs hav­ing looked out­side of Scot­land to pop­u­late their teams.

“How­ever, it is im­por­tant not to take too sim­plis­tic a view. There are prob­lems in the fil­ter­ing of spon­sor­ship down to the peo­ple who need it in some mi­nor­ity sports, just as there are pro­fes­sional teams where spon­sor­ship money is ap­plied ef­fec­tively from f irst team player through to com­mu­nity ini­tia­tives. The key is to en­sure in­vest­ments are man­aged so sports are given ad­e­quate sup­port and en­cour­age­ment to de­velop.

“The linch­pin of ef­fec­tive man­age­ment is good cor­po­rate gov­er­nance. This has be­come in­creas­ingly rel­e­vant in sport, where or­gan­i­sa­tions and the so­cial, eco­nomic and po­lit­i­cal en­vi­ron­ments in which they op­er­ate are more com­plex than ever be­fore.

“The im­por­tant thing to re­mem­ber is that gov­er­nance is not a sep­a­rate en­tity. Good struc­tures should un­der­pin ev­ery­thing an or­gan­i­sa­tion does. In sport, they of­fer guid­ance, and help par­ties deal with the chal­lenges ahead – both on and off the field.“

Pro­fes­sional and semi-pro sports must not only sur­vive, but flour­ish as busi­nesses in their own right. If they fail to do so, one con­se­quence is they may also fail to nour­ish the next gen­er­a­tion of play­ers nec­es­sary for na­tional achieve­ment.

It’s a mes­sage Scot­tish foot­ball and rugby now seems to have ab­sorbed.

How­ever, while Lot­tery and other fund­ing may help sup­port in­di­vid­ual elite ath­letes, and their sport’s gov­ern­ing bod­ies, the ma­jor pro­fes­sional sports are op­er­at­ing on a dif­fer­ent level of the play­ing f ield, de­spite strong spon­sor­ship re­la­tion­ships, such as that be­tween the Royal Bank of Scot­land and the Six Na­tions rugby tour­na­ment.

Gor­don McKie, nine months in the job as chief ex­ec­u­tive of the Scot­tish Rugby Union, has the task of deal­ing with a £23m debt. How­ever, man­age­ment of this prob­lem goes be­yond pure fi­nance.

“This is a rugby busi­ness, not a char­ity,” he says. “The or­gan­i­sa­tion must be run prop­erly while also en­sur­ing the de­vel­op­ment of the game. The two are linked, but his­tor­i­cally, I think there has been more em­pha­sis on the lat­ter, not the for­mer.

“We’re now try­ing to put the SRU on a cred­i­ble busi­ness foot­ing, with a more joinedup and in­te­grated approach. We need to look at is­sues such as suc­ces­sion plan­ning, look­ing at who will be a coach or a full-back in five years’ time.

“This also re­quires us to grow the game of rugby, by en­cour­ag­ing more peo­ple to play, and in­te­grat­ing all lev­els from mini rugby in schools, en­sur­ing this feeds through to un­der­age rugby, and then into the pro­fes­sional clubs, and on to the na­tional team.

“We’re a small coun­try with a shal­low pool of play­ers. If we want to ex­tend the gap now nar­row­ing be­tween us and the emerg­ing rugby coun­tries, grow­ing the game is es­sen­tial.

“To do this, we need to es­tab­lish part­ner­ships with lo­cal au­thor­i­ties and or­gan­i­sa­tions such as SportScot­land. We’re not ask­ing for hand­outs, just co-op­er­a­tion. Kids play­ing rugby in school is good for the coun­try’s health, and it pro­vides us with more play­ers.”

In foot­ball, mean­while, clubs are also de­ter­mined to curb costs. In­deed, a more re­al­is­tic approach was re­flected in re­duced trans­fer ac­tiv­ity at the Jan­uary win­dow ear­lier this year. How­ever, it was a dif­fer­ent story at Hearts, where supremo Vladimir Ro­manov is look­ing at an es­ti­mated £5m rise in wages.

Yet cham­pi­ons Celtic, three years into a fiveyear fi­nan­cial turn­around plan, and de­spite mak­ing an­nual losses of around £45m in re­cent years, could be mov­ing into the black next sum­mer. The £9m lift into the Cham­pi­ons League group stages at the end of this sum­mer pro­vides an ex­cel­lent plat­form.

How­ever, achiev­ing a strong busi­ness

fo­cus at club level isn’t al­ways straight­for­ward.

Blair Nimmo, head of re­struc­tur­ing for KPMG in Scot­land, and des­tined never to win any pop­u­lar­ity polls with Airdrie sup­port­ers fol­low­ing his de­ci­sion to call time on the then­trou­bled club four years ago, ex­plains.

“It is hard to com­mer­cially sup­port a sport­ing busi­ness such as foot­ball, and there aren’t many that can stand alone,” he says.

“You might think it’s not com­plex. Af­ter all, staff wages are known, so you can pre­dict this and other costs, and from crowd sta­tis­tics you gen­er­ally know in­come. But this isn’t how it works.

“How can you ex­pect foot­ball clubs that turn over less than £1m an­nu­ally to build a 10,000 seater sta­dium? And what other busi­ness only op­er­ates 20 days a year, us­ing only 30% of its as­set base?

“The fact is, part of the value of a foot­ball club is its pas­sion, but that is also its prob­lem. Peo­ple don’t tend to run clubs on nor­mal busi­ness prin­ci­ples, and to a cer­tain ex­tent it’s not ac­tu­ally pos­si­ble. But a de­gree of busi­ness fo­cus is vi­tal.

“There have been some high-prof ile ca­su­al­ties, and equally there are some well­minded peo­ple such as Ed­die Thompson at Dundee United and John Boyle at Mother­well who have per­son­ally in­vested in clubs. What Brooks Mile­son has done at Gretna is fan­tas­tic, but this kind of in­vest­ment is sim­ply not sus­tain­able.

“The per­cep­tion there is a never-end­ing queue of rich peo­ple wait­ing in the wings is mis­guided. Foot­ball has to stand on its own two feet. Clubs must get smarter and take a more strate­gic view.

“Hav­ing said that, I be­lieve there could be more sup­port from the gov­ern­ment. It can’t just come from the private sec­tor.

“The peo­ple who are gen­er­ally in­volved in foot­ball, and all sports in Scot­land, are not in it to line their pock­ets, quite the op­po­site usu­ally. Their ef­forts in terms of time, en­ergy and money of­ten go un­recog­nised.

“Sport has to be raised up the po­lit­i­cal agenda. Al­though foot­ball has al­ways stood out­side pub­lic fund­ing, it can still ben­e­fit from a height­ened cul­tural sup­port and aware­ness. And that in­cludes Scot­land tak­ing ad­van­tage of the op­por­tu­ni­ties that do come our way, such as mak­ing the most of the Olympics in Lon­don in six years time.”

The Scot­tish Foot­ball As­so­ci­a­tion, through its re­gional struc­tur­ing of youth foot­ball, has al­ready em­braced the ‘joined-up’ approach to de­vel­op­ment now planned by the SRU.

How­ever, wider pub­lic sup­port for a strong sport­ing Scot­land would clearly be wel­comed, not only by th­ese two gov­ern­ing bod­ies, but all or­gan­i­sa­tions, in­clud­ing foot­ball’s Scot­tish Pre­mier League.

Chair­man Lex Gold, some­what tired of gloomy head­lines, says the busi­ness end of the revo­lu­tion is al­ready well un­der­way - and ar­gues fans will soon be see­ing the ben­e­fits.

“The for­ma­tion of the SPL in 1998 was a re­sponse to the pre­vi­ous lack of a busi­ness

approach,” he says. “There have been dif­fi­cult times, but I think the clubs had a wake-up call when we lost the BSkyB television deal.

“Now, we are look­ing at a brighter fu­ture. We don’t have debt, we’ve just com­pleted a £54.5m television deal with Se­tanta Sports, and we’re well ad­vanced in the hunt for a spon­sor.

“When the SPL was first formed, we knew we needed to work harder at de­vel­op­ing our young play­ers. Eight years ago, there were 27 teenagers play­ing in our league, and last sea­son there were 54. And we’ve just had the high­est crowds in our top di­vi­sion since the 1950s, so some­thing is go­ing right.

“But we can’t be com­pla­cent. And while we don’t want hand­outs, we would like to see bet­ter re­sources, par­tic­u­larly for those young­sters not in the elite sys­tem. That means bet­ter fa­cil­i­ties, such as in­door are­nas, be­ing of­fered through lo­cal au­thor­i­ties.”

The busi­ness of pro­fes­sional sport does ap­pear to be chang­ing for the bet­ter.

How­ever, with more than just hope for Scot­tish sport­ing ex­cel­lence, the way for­ward, it seems, is greater col­lab­o­ra­tion by the private and pub­lic sec­tors.

Mak­ing waves: Euan Dale (left) and David Carry of the suc­cess­ful Melbourne swim­ming team

Level play­ing field: Foot­ball makes lit­tle eco­nomic sense with­out rich bene­fac­tors such as those at Hearts and Gretna

Happy days: Scot­land’s rugby play­ers cel­e­brate clinch­ing the Cal­cutta Cup

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