Scottish football is shedding its debt, but what does it all mean?

Aberdeen chief executive Duncan Fraser and Dundee United chairman Stephen Thompson

Debt has become a rarity in Scottish football.

That scenario once seemed beyond the reach of clubs that were being weighed down by the heedless spending of the past and drastic changes in the financial landscape of the game.

What has brought about this shift, though? And what does it mean to the individual clubs and the state of Scottish football itself?

There are a number of questions to ask about how the debt has been shed and what the impact might be.

Which top-flight clubs are debt-free?

In terms of bank debt, essentially all are free of long-term liabilities now that Aberdeen have reached a deal with Lloyds Bank.

Dundee United and Kilmarnock reached similar agreements last season, while Motherwell and St Mirren have been operating at more or less break even for a number of years. That said, the former often need the financial support of major shareholder John Boyle at points in the season and have been operating at a loss.

Celtic have no bank debt and their interim results for the financial year to 31 December showed a surplus in the bank, while, through long-term planning, St Johnstone, Inverness Caledonian Thistle and Hamilton Academical are all free of bank debt.

Dundee received investment from a US consortium and are now managed carefully financially, as are Partick Thistle, while Ross County's progress has been enabled by the largesse of the owner Roy MacGregor.

How how clubs managed to shed their bank debt?

Essentially, because Lloyds Bank had already written off the debts and there was no prospect of clubs ever being able to pay it back in full.

Clubs have been fortunate that when Lloyds took over HBoS in January 2009 it provided a window of opportunity for the new owners to review all the debt on the bank's books. Any that was declared bad could then be written off in the accounts.

Billy Bowie (centre) has become a director at Kilmarnock after buying the Park Hotel

With Scottish football unable to generate rising income streams - indeed, the league is still currently operating without a title sponsor - clubs saddled with large debts were ultimately able only to service them.

Kilmarnock, for instance, owed £9.4m, having invested in the building of the Park Hotel next to Rugby Park. Last season, with the hotel valued at around £2.5m, it was sold to a company owned by Billy Bowie, with the businessman then converting the balance of the bank debt into equity.

As a result of the restructuring, chairman Michael Johnston's 87% stake was reduced to below 50% and he was joined on the club board by Bowie and three new investors: Jim Mann, David Moran and Russell Smith.

Is something similar happening at Aberdeen?

Aberdeen are set to become debt free with chairman Stewart Milne revealing a restructuring plan

Yes, the bank's debt is being bought by Willie and Elaine Donald, who own the Stonehaven-based engineering company, WM Donald.

Whatever sum the bank receives towards the approximately £9m debt is more than they expected, since in accountancy terms it was written off five years ago. The Donalds will likely convert the debt to equity at some stage and join the Aberdeen board.

By wiping out the bank debt, Aberdeen have a little more financial freedom and can direct more resources to investing in the football side of the business.

So Aberdeen will have more money to spend?

To an extent. The club will still have to operate at break even, since banks are no longer lending to clubs. They have to live within their means now that sources of credit have reduced or, as with the case of some clubs, disappeared completely.

There will be more money available to Aberdeen since they will not have to service the debt any more, but it will not mean a drastic increase in available finance. Manager Derek McInnes won't be about to embark upon a spending spree.

Have clubs benefited from being debt free?

Dundee United sold striker Johnny Russell to English Championship club Derby County

Dundee United will feel less constrained now, since selling assets was part of their agreed strategy with the bank to meet repayments. There is no essential need to accept offers for young players each summer, so the club can hold out for higher fees.

The bank will have protected itself to an extent so that the debt reduction deal wasn't agreed only for the club to suddenly sell a batch of players and raise millions of pounds; percentages of future transfer fees will, until the end of next August, still go to the bank.

Similarly, other clubs will not suddenly be able to sell their stadium having just agreed to a debt reduction deal. The bank was in a position to do these deals out of necessity but also desire, since there is no wish to be involved in football any more. There are also community and social benefits to striking the deals.

Has Scottish football benefited?

It is too early to tell, but the best case scenario is that clubs are no longer on the brink of financial collapse.

Also, there should be more leeway to try to hold on to their better young talents, although there must always be a recognition that English clubs will lure them south eventually.

It is also often good for the players' career to move to a higher level, but they can move too early and become lost in the reserve squads of clubs when staying for longer in Scottish football will help them develop and boost the game in Scotland.