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Celtic faced up to the cost of its continued slump Monday when the Scottish Premier League club announced a pretax losses of 2.13 million pounds ($3.32 million) for last season.
Celtic's turnover dropped 15 percent for the year ending June 30 and bank debt increased almost fourfold to 5.85 million pounds ($9.11 million) after the club failed to reach the lucrative Champions League or win any domestic trophies.
Celtic made a 2 million pound profit ($3.11 million) for the previous season, when it reached the Champions League group stage and won Scotland's League Cup.
"Just as football and financial strength are essential partners in progress, so too they affect each other adversely when we are not succeeding as we should," Celtic chairman John Reid said. "The combination of the financial and economic recession and disappointing football results have taken their toll."
The annual report, released to the London Stock Exchange's AIM market for smaller growing companies, suggests things may not get any better in the coming year.
A playoff loss to Arsenal left the Scottish power in the Europa League last season rather than the more prestigious and lucrative Champions League.
A Europa League appearance is the best it can hope for this season after losing a Champions League qualifying match to Portuguese club Braga, but it must win a two-game playoff with FC Utrecht to even get that far.
"When considered in the context of the season that we had and the changes that had to be made as a result of poor football results, this outcome, heavily influenced by exceptional costs, is not overly disappointing," Reid said. "But we must try to ensure that it is not repeated in the coming year.
"That will not be straightforward."
Celtic fired manager Tony Mowbray in March after slipping so far behind rival Rangers that it lost all hope of regaining the Scottish Premier League title.
Neil Lennon stepped in and led the team to 10 wins and a draw. The former Celtic midfielder led his team to a 1-0 win at Inverness in the opening league game of the 2010-11 season on Saturday.
"The unacceptable results on the football pitch meant that a change in the football management team was needed," Reid said. "Some pride was then restored from an unbeaten run in the SPL at the end of the season, with Neil Lennon taking temporary charge.
"But that does not in any way compensate for the extreme disappointment and frustration we and all Celtic supporters felt last season. It was simply not good enough for this club and those who support it."
With crowd numbers down and no success in Scotland's cup competitions, Celtic's turnover dropped to 61.72 million pounds ($96.31 million).
But like many clubs, Reid said that Celtic would have to keep spending money in the hope of avoiding further losses.
"The relatively strong financial position we have insisted in maintaining in recent years has enabled us to continue to rebuild even after last year's setback," Reid said. "Last year, we signed or took on loan 13 new players.
"Already under our new management in the new financial year, we have brought in seven new faces and will continue to seek to enhance our football squad."
