KILMARNOCK FOOTBALL Club is the role model for others to follow," chairman Michael Johnston trumpeted in the club's latest accounts, published last November. He was partially right. If you're looking for the club most at peril from the potential collapse of Setanta, then the Rugby Park club provides the model. As the Irish broadcaster tries to stay afloat and weighs up a £20 million buy-out proposal from Russian-American billionaire Len Blavatnik, Kilmarnock look increasingly
They find themselves in an environment where revenue from television accounts for a quarter of their income. If that is threatened, you really don't want to be a football club with high debt, meagre gate receipts and no benefactor. In short, you
don't want to be Kilmarnock. Liabilities total £11.4m, around 130 per cent of typical turnover. Attendances have dropped by almost 1,800 in the past three years, and last season were around the 5,800 mark. Meanwhile, former guarantor Jamie Moffat, having sold his travel company AT Mays, has stepped back from the lifelong passion of his late father.
Johnston is now the man charged with making the sums add up at Rugby Park. He as good as admitted in the local press that they can't do so without a deal to screen live SPL football. "It's a massive blow to for Scottish football," he said as Setanta suspended new subscriptions in midweek. "I've got no reason to think that we won't be able to manage the situation, but it would be very difficult if no broadcaster came forward with a new bid (in the event of Setanta's deal going down]."
How difficult is a matter for conjecture. In the accounts for the year to June 2008, Johnston bigged up the country's oldest senior professional club as the "leading provincial club with a unique blend of stadium and leisure facilities." These non-football businesses – in the form of a hotel and health club – might be a big part of the club's problems.
"Everyone knows we have a larger debt than a lot of other clubs because we have a great thing in the hotel," says manager Jim Jefferies of a 2002 construction believed to have piled £6m in capital costs on to the club's balance sheet. "Over the years, though, it will prove its worth by generating income."
Recently, the Park Hotel is said to have been responsible for a "positive cash flow". Kilmarnock, though, have been able to post profits in the past two financial years because of a negative flow of player talent. A £1.5m surplus last year was achieved because Steven Naismith moved to Rangers for £2m in August 2007. The £400,000 received for Kris Boyd from the Ibrox club 18 months earlier, meanwhile, is what allowed the Ayrshire side to remain in the black across the previous year's trading.
"The fact we have taken in good transfer money in the past three years might means things wouldn't be quite so bad for us, if the worst were to happen with the TV," Jefferies says. But it has come at a different cost. In 2006-07, the club finished fifth and reached the final of the CIS Cup. In the two years since, they have found themselves 11th and eighth, and had no decent cup runs. Kilmarnock's monetary outgoings, as they have been in recent years, can't be covered if the club does not make the top six. The club cannot seem to support a playing pool that would make them sufficiently competitive in the top half.
Jefferies says he is experienced enough to cut his cloth accordingly. But, as questions remain over Setanta's viability, it is impossible to know how to calculate "accordingly". Two years ago they club had 34 senior professionals. Next season, the squad will be 18 outfield players and three keepers. David Lilley was surprisingly freed this week. There will be no contract renewals for Allan Johnston, Gary Locke – who might be retained as a coach – and younger players.
"What happened with David is a perfect example of how the uncertainty is affecting us," Jefferies says. "He had a great end to the season and I told him I hoped to keep him, but the doubts over Setanta haven't allowed for that."
Jefferies says he hasn't had the board set out to him the hefty budget cuts that any loss of television revenue would force on them. "There have been assumptions, speculation about the TV deal, but we can't know how to go forward until we know exactly what we are dealing with," he says. "I know everyone is talking about Kilmarnock going into adminstration, but not inside the club. Even before Setanta's troubles, we were confronting the repercussions of the economic downturn."
In doing so, Jefferies might require to confront another harsh reality. With eight goals in 11 games for the Ayrshire club, Kevin Kyle single-handedly seemed to transform Kilmarnock. The striker signed an 18-month deal at Rugby Park in January. He did so after buying out the remaining six months of his Coventry contract and immediately phoning up admirer Jefferies to offer his services. Now, if the club need to plug in their cash flow, they may require to ring round other sides to offer Kyle's .
"Kevin will attract interest if he scores a few goals at the start of the season. There could then be bids and he could bring in money in January. But maybe even before that, you don't know," admits Jefferies. The continual need to flog forwards to firm-up the finances seems a thor- oughly flawed business model.
The full article contains 950 words and appears in Scotland On Sunday newspaper.
