The Economic Impact of the Old Firm

 

In this report we attempt to quantify the combined impact of the Old Firm football clubs, Glasgow Celtic and Glasgow Rangers, on the economies of Glasgow and Scotland for the year to end June 2004. The study focuses on demand-side effects. It identifies the “new money” brought into the local economy by the presence of the Old Firm and the impact of expenditure switching as supporters channel their consumption into football-related services and commodities.

 

In the year to June 2004 the Old Firm clubs had a combined turnover of £126 million, a value added (contribution to Scottish GDP) of £80.3 million and direct employment of 876. The expenditure in Scotland associated with attending Old Firm matches equals £93.7 million, of which £20.1 million is additional expenditure from outwith Scotland and the remainder expenditure switched within Scotland from other forms of consumption.

 

We estimate that the net impact of the Old Firm football clubs, that is the direct and knock-on effects, on total Scottish gross output (value of sales) is £189.6 million, with an impact of £117.9 million on value added in Scotland and employment of 3,056.

 

We use input-output analysis to quantify the knock-on effects. These are the changes in the demand for locally produced inputs used in the production process and the changes in consumption demand that accompany the changes in employment and therefore wage income.

 

Basic data come from the firms’ accounts and questionnaires sent to a sample of 200 suppliers and 4,000 supporters of the Old Firm clubs. The multiplier impacts are calculated using the Scottish Executives input-output table for Scotland, which we have disaggregated to report separately results for Glasgow and the rest of Scotland. The impacts are also disaggregated by industrial sector.

 

The net impact on the Scottish economy is found by combining all the effects outlined above. These therefore comprise:

 

·        The direct activity in the Old Firm clubs

·        The sports tourism and other expenditure associated with attending the matches

·        The adjustments to take into account displaced local consumption (consumption switching)

·        The multiplier (knock-on) effects

 

The net increase in economic activity is focussed on Glasgow, with small reductions in activity in the rest of Scotland. This is primarily reflects the fact that around 65% of the Old Firm season ticket holders live in the rest of Scotland and displaced consumption in these areas leads to small net negative effects. The sector that most benefits from the presence of the Old Firm in the Scottish economy is the “Hotels and Restaurants and Transport” sector. Over 2650 jobs and £42.7 million of additional value added in Scotland are indirectly supported in these two sectors alone by Old Firm related activity.

 

 

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