20th October 2004, and Celtic slump to defeat in the Champions League as a result of three second half goals from expensive Brazilians, in Ukraine. Shakhtar Donesk triumphed 3-0. It is claimed this crystallised Celtic board room resolve to change policy on team recruitment and cost.
A recent share issue had cleared significant debts as Celtic chased the Champions League dream in support of Martin O’Neill. Perhaps unknown to the board at the time, they were also locked into an unwinnable arms race domestically with a tax-avoiding fuelled domestic rival. It was claimed by Brian Quinn that only five clubs in England had higher wage bills. £50million loses in 5 years could not go on. The team had to be self-sustaining.
The team in Donetsk that night was:
Marshall; McNamara, Balde, Varga, Agathe; Lennon, Juninho Paulista, Petrov; Sutton, Hartson, Camara.
The challenge of remodelling the squad to fit the new financial imperatives was a significant job. It was not one Martin O’Neill felt he could take on in addition to tending to his ill wife. This ushered in the Strachan era for the 2005/06 season, and transfer and recruitment policy would never be the same. But is Rodgers tweaking it?
Note1: transfer amounts are often not disclosed. I have used Wikipedia where gaps otherwise the amounts were those garnered at the time from a variety of sources.
Note2: I do know transfer fee are only part of the equation relating to overall player cost. This is a broad-brush analysis of Celtic’s transfer dealings not a detailed analysis using the Statement of Accounts. See CQN for that! Don’t mention amortisation to me!
Sweat the Asset
Under O’Neill, Celtic were buying proven, established talent at the peak of their game. There was little consideration for resale value. After O’Neill, it took a further five years to cycle out the last of his squad. Mainly this is due to the strange case of Bobo Balde and his determination to see out his lucrative contract even when ostracised to the reserves. Even Lawwell couldn’t get past Balde!
High initial cost, high wage players virtually all left for nothing. Only Hartson commanded any sort of resale fee (£500,000).
Note: According to the excellent Celtic Wiki, Hedman cost £1m and Douglas £1.5m.
On the plus side you could argue that the assets above were “fully sweated”. Celtic got good players in their prime, who would never be as productive again once they left.
The Celtic transfer strategy evolved rather than revolved with the appointment of Strachan. The ex-Southampton boss also bought seasoned players who could immediately perform in the first team and who would have minimal resale value. It was just that they cost significantly less in transfer fees and would be on considerably less than the £30-40k a week many of O’Neill’s squad were on. Same approach then, only cheaper.
The following were purchased to provide immediate value, broadly did the job they were bought for, and left with, again, no resale value. Even those that contributed little, like Henchoz, Camara and Keane, cost little in terms of transfers or long term wages.
When Lennon took over late in the 2010 season, this approach was largely abandoned.
Since that time, I posit only eight players fit the model of “sweat the asset” and four of them are current stalwarts. Brown may have been purchased as a “Buy Young, Sell High” but has turned out to be one of Celtic’s all-time great captains. So, very much an exception.
Scott Sinclair was 27 when purchased and clearly a Rodger’s indulgence, albeit correctly supported. Celtic may yet get a significant resale value from him. It would not be unexpected for an English Premier League side to pay over £10m for a 30 year old.
Gordon and Lustig were both signed on free transfers and look like providing good service beyond their peak years.
The other assets sweated over the last 7 years are:
And as we can see, the transfer amount values initially spent have come down, on average.
The Compper signing is an exceptional return to that approach. It may be as a result of increased Rodgers autonomy. Or it might be an increased flexibility due to tactical squad weaknesses allied to healthy balance sheet. I expect it will on an exception basis and not the norm however.
It hasn’t always just been about sweating assets. Let’s acknowledge here some more experienced players have been brought in, relatively cheaply, delivered value, and been sold at profit. It isn’t a huge list, but one I am sure Lawwell has pinned to his Liebherr fridge.
Here’s to Kenny Miller! And getting £3.5m for Scott McDonald is pure alchemy.
You Can’t Win Them All
Irrespective of the strategy and approach, not all transfers will be successful. Across all the post O’Neill managers there have been very poor purchases. It is only fair to acknowledge that before we assess the more recent model of purchasing potential.
Again taking 2005/06 as my “year zero”, or the start of the formal “Lawwell Years”, the discarded poor investments have been:
We’ll soon be adding the hapless Ciftci to that list.
I have included some £0 cost transfers on the basis that the signing was a waste of money anyway.
- Stokes – gave good service but left at prime age and Celtic got no transfer see for him so I am calling that bad business.
- Zurawski was good for 1 season but overall a disappointment, and costly.
- Jarosik – did a decent job in European games.
- Maloney was sold at a loss despite producing good performances subsequently in England, Hence I’m classifying as bad business.
- McCourt – I’d probably concede that one. Hugely entertaining in very small doses.
Otherwise, a sorry list. But probably no sorrier than most clubs.
Back to the strategy.
Buy Young, Sell High!
Although the purchase of seasoned pros continued under Strachan, in parallel the club started to look at purchasing young players with limited experience to either develop of sell on for a profit. This is a natural strategy for clubs in leagues with low commercial income. With a high probability of European football, and perpetually challenging for trophies, Celtic are an attractive proposition. Scotland can also be seen as a “safe“ proving ground for onward integration into the English leagues. A player who can settle to the culture, the weather and the style of football in Scotland, is probably going to be fine in England.
There are also plenty of leagues outside the so-called “Big Five” for whom Celtic is an enormous step up.
This had not traditionally been a Celtic model, at least not explicitly. The exception proving the rule in recent times was Petrov. Bought by Barnes as an expensive teenage right back in 1999, he morphed into a skilful and goal scoring attacking midfielder under O’Neill. Eventually sold for £6.5m to Aston Villa, he was a template for the new Celtic strategy.
As an approach it is a very difficult one to guarantee success. Celtic have had relatively few success, but they there have been some very notable ones. And they are mostly recent.
That’s £44m of transfer fee profit from 11 players over the last 11 years (the Van Dijk windfall apparently continues – the amount varies in every tweet!). You may not deem some of those as playing successes for Celtic, but for the purposes of this analysis, Celtic turned a nice trading profit.
The legacy of the Petrov, Forster, Wanyama and Van Dijk experiences (and Ki to a lesser extent) is that EPL clubs trust that if a player looks the part playing for Celtic in Europe, there is a strong chance they will continue to develop in the English top flight. The latter three are now highly respected performers with a track record at that level.
Even if the approach is more flexible under Rodgers, this model will continue to be followed. The club will have to be patient with results however, and not expect more than one “profit” transfer per season.
Buy Young and se………..crap!
It is a high risk strategy in that squad places are taken by players unproven both at Celtic’s level but also in handling the expectations of playing for a very large club. Inevitably there are failures. And many more than successes.
Note the dates of players bought in this category start with the Lennon era.
Note Slane as free.
You could argue we got sufficient value from Kayal. Many were low risk frees or low fees from other Scottish or Irish sides.
The curious case of Amido Balde is hopefully an exception.
Grow Your Own
The other obvious strand to the strategy is to invest in development facilities at Lennoxtown and develop the crème of available youth talent. If they are good enough for the Celtic first team then you’ve likely saved a lot of money on transfer and attendant fees. If they are not good enough for Celtic, but good enough for another teams’ squad, then they may be prepared to pay a fee for a player that cost you very little.
Celtic have been relatively successful in this regard on both counts. Of the current squad, nine players from the Academy have first team experience and are either established or there are very high hopes: Hazard, Ralston, Tierney, Miller, Forrest, McGregor, Henderson (admittedly likely away soon), Johnston and Aitchison.
There are not too many top flight clubs in any league that could boast eight or nine academy graduates that are regularly in the match day squad.
In terms of recouping some sort of fee for developing players from youth level, Celtic have made over £16m in transfer fees over the last 11 years.
Admittedly McGeady accounts for the vast majority of the Academy profit. And there haven’t been many sales recently. But is this because more recent graduates have been successfully integrated into the squad?
It should be noted that there are no Academy graduates freed that retrospectively Celtic would think they missed a trick. Many have had good careers, but none would have commanded a major fee. The “best of the rest” would be McGovern who is a good goalkeeper at international level for Northern Ireland. Mulgrew was initially freed and proved a valuable player but Celtic benefitted. And that’s probably it.
The legacy of 11 years of a more cautious financial player trading strategy is that there are now a healthy number of players in the squad who COULD fall into the “Buy Young, Sell High” category:
It would be good to be able to add Eboue to that list.
Compare this squad to O’Neill’s in terms of those players who will be considered sweated assets. I reckon the four I mentioned above – Brown, Gordon, Lustig and Sinclair. Hopefully Compper can be similarly classified rather than as a poor investment.
Celtic spent over £26m on players in the O’Neill years that left for virtually nothing. Under Strachan, that figure fell to £9.2m.
In terms of buying and selling seasoned pros since Strachan, Celtic have net spent £16m in transfer fees.
The Buy Young, Sell High policy has net gained Celtic nearly £39m in the balance of pure transfer fees.
Finally, Celtic have produced and sold around £16m of their own talent in the last 11 years.
Therefore the current policy, with some recent exceptions, will undoubtedly remain. But Rodgers may get more latitude than previous managers. A high salary and delivering on expectations earns that.
The current squad cost around £32m in fees. What will Celtic get in return?
As mentioned above, the use of transfer fees here is probably secondary to the overall approach Celtic are taking. I hope you have enjoyed the jog through memory lane and the changing transfer approach since the O’Neill years.