Profit for the Pitch: Rangers v Celtic — Part Two
Updated: 5 days ago
In Part One of Profit for the Pitch, we ran through Rangers’ rise to nine consecutive League Flags, Celtic’s reconstruction under Fergus McCann and the moment Celtic stopped Rangers from winning ten titles in a row.
But the end of Rangers’ domestic dominance did not end their ambition. If Scotland could no longer provide the financial scale to match Europe’s biggest clubs, Rangers would have to find another way.
Could Rangers buy their way into Europe’s elite — and how could the business afford the cost?
1998–2002 — Investing for European Excellence
Success in Europe would mean more prize money, more television revenue and more commercial opportunities than domestic success. These factors increased: the quality of the players that a club could attract and also value of players on its books. Financially, this could create a virtuous cycle of: reducing the costs of recruiting top talent while improving returns on player trading; if you succeed in Europe.
Rangers had dominated Scottish football for over a decade. However, it failed to consistently convert the domestic dominance into European success: one third-place in the 1992/93 European Cup was not enough for the fans, the owners, or the finances.
After seven years in the top job, in 1998 Walter Smith also moved to Liverpool (albeit to Everton FC), having helped Rangers to appoint his successor: leading European manager Dick Advocaat, the Little General. He had previously managed the Netherlands to the Quarter-Final of the 1994 World Cup, where only eventual winners Brazil stopped the Oranje.
Under Advocaat, the club invested even more heavily in elite European talent, starting with Dutch internationals Giovanni van Brockhorst and Arthur Numan in 1998, before bringing the De Boer brothers from Barcelona. But the zenith of transfer fees was towering Tore André Flo from Chelsea for £12m in 2000, then a British record transfer fee.
Meanwhile, in 2001 Rangers opened Murray Park as first-class training facilities for its professional and youth players. It was the first facility of its kind in Scotland, and it would be another six years before Celtic opened its equivalent.
The ambition was clear: produce a squad that dominated domestic competitions and competed to win the Champions League. These ambitious investments in players increased the financial risks for the club. Rangers were spending heavily on transfers to increase the chances of advancement to lucrative stages of European competitions, before the European income was guaranteed to cover that spending.
Excellence in European competitions still proved much more difficult to buy than domestic success. Insights from Walter Smith’s famous exchange with journalist Chick Young in 1993 still rung true in the 2000s.
By 2001/02, Rangers’ turnover was c.£45m, but the club reported a loss of c.£35m. Staff costs had risen to c.£37m, as Rangers spent c.£50m on new signings in the first 3 seasons under Advocaat. In the financial competition, the European gamble was not paying off and now it looked like David Murray was losing the financial competition.
Although the business around Rangers was big enough to dominate Scottish football, the level of spending required to excel in European competitions was altogether another level of budget and risk.
Worse, in the 2000s Calciopoli confirmed that match-fixing was still a significant risk in European football, when four Italian clubs were punished publicly with Juventus even relegated to Serie B. Similarly, in the 1990s when Rangers finished third in the European Cup, the eventual winners Marseille were later found guilty of match-fixing (yet officially retained their trophy).
Frustrated, in 2001 David Murray replaced Advocaat with rising star in Scottish football management Alex McLeish. A year later the Bank of Scotland increased its stake in the club to secure its debts and Murray passed the Chairmanship to John McClelland who was widely regarded as a safe pair of hands in the Scottish business community.
Catch 22: Rangers needed European success to justify its investments in players but the investments themselves looked like pre-requisites to improve the odds of European success.
2003 — Infrastructure for the European Final
The scale of support needed for a squad to dominate domestically while also campaigning far through European competitions created a financial conundrum. Rangers invested heavily in established elite players, but European success remained difficult to buy against clubs with bigger budgets from more lucrative European leagues.
Celtic took another tack to Europe.
In 2003, Celtic reached the UEFA Cup Final, eventually losing 3–2 to Porto after extra time. The run demonstrated that a Scottish club could compete to the top of European competition without gambling against the spending power of Europe’s biggest clubs.
The strategic questions in Scotland were becoming broader than simply how much a club could spend in the next transfer window.
Rather than buying established elite players every season, could careful coaching and recruitment be enough to excel in Europe?
Further, could investments in infrastructure, player development and trading create a more profitable and sustainable competitive advantage?
Part Three explores the delayed damage of gambling too heavily on European success and compares it with gambling on investment in player development and trading.
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