By Paul Nicholson
September 21 – Scottish giants Celtic announced a £500,000 pre-tax profit for the year to end June, reversing a loss of almost £4 million for the previous 12 months and prompting one stockmarket analysis to predict the AIM-listed shares could rise by 400% over the next five years.
Certainly there is a positive feeling around Celtic despite the club’s thumping 7-0 loss to Barcelona in the first round of Champions League matches. But it is the Champions League that could deliver the revenue bump the club is looking for with a potential £30 million coming into next year’s numbers.
The strength of the club is in its fanbase and its global nature that has yet to be fully exploited commercially. If the club can maintain its Champions League group qualification (not made easier by UEFA’s Champions League group qualification criteria coming in next season), then significant growth on the £52 million revenue last year can be expected.
The £500,000 profit was achieved through increased income from player sales, in particular the £12 million for the sale of defender Virgil van Dijk to Southampton, and the transfers of Teemu Pukki to Brondby and Adam Matthews to Sunderland.
But it is the Champions League where the club sees the immediate potential for revenue increase.
Peter Lawwell, Celtic’s chief executive, said: “For a club like Celtic, operating in a market where television values have fallen significantly behind our neighbours across Europe, qualification for the group stages of the UEFA Champions League is of paramount importance.
“The financial rewards allow for investment in the playing squad and physical assets, but moreover, the prestige of participating in the premier club competition in the world reinforces the reach and importance of the club to so many people around the world,” he added.
“Fundamentally, Celtic is a Champions League club; our infrastructure and continued investment reflect that.”
That position is verified by looking at other income streams where, for example, a profit of £4.7 million was made on merchandising, only a small increase on the previous year.
The return of rivals Rangers to the Scottish Premier League should stimulate domestic income, but it is the international markets that could be developed further for partnerships and sponsors.
It is this potential that led investor briefing site Seeking Alpha to project an upward revaluation of the club’s shares, based on a “fantastic global brand with conservative capitalization and improved fundamentals backstops current market valuation.”
The US-based analysis continued: “Celtic is an institution. Yet, with years of limited float, marginal profits, and next to zero liquidity, it is also completely overlooked despite improved fundamentals and a potentially enormous (if uncertain), impending catalyst which could propel the stock 400% higher within years.”
An effusive billing in a cup half empty market.
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