Scottish Premier League/Interview with Martin O'Neill: Martin O'Neill sipped his tea and buttered a piece of cold toast. It was Thursday morning in a small office downstairs at Celtic Park and his day was under way in normal fashion. But a question was raised by the scene of such an eminent manager at breakfast in such a celebrated stadium: where's the jam?

The Scottish Premier League season begins this weekend, champions Celtic starting at home to Motherwell tomorrow. But amid the customary anticipation greeting each new season is ever more vocal anxiety about the state of Scottish football. Once again it is being asked how long Celtic and O'Neill can tolerate what he described as "the wrong environment". For both parties, the institution that is Celtic and the ambitious 52-year-old football manager that is O'Neill, the answer is being deferred for another year but, at some point soon, change must come.

Money, and the distribution of it, is at the root of Celtic's and O'Neill's dilemma. Unless there is structural movement at league level, Celtic's - and Rangers' - financial harness will feel tighter and tighter as time passes.

As O'Neill said, on the morning when the Deloitte and Touche annual review revealed English Premiership yearly turnover had reached £1.33 billion: "Celtic and Rangers are big clubs but TV money is dictating a great deal. We get £1.2 million - teams that stay in the English Premiership get £25 million-plus. That's a massive dent in us proceeding.

"Sometimes you look across rather enviously at that. But money seems to follow money, so despite the great size of Celtic, despite the great support, we are in the wrong environment."

The immediate follow-on would be - is O'Neill? But he is tired of responding to hypothetical inquiries about his future. "I'll see what develops. This is a big, big season for us, after Henrik Larsson. Let's see how we can do. There is always movement afoot; the game has changed enormously over the past 10, 12 years, and who's to say what will happen? But for Celtic and Rangers to compete at a high level in Europe from this environment is difficult. That's why last season and the season before were excellent."

O'Neill's managerial excellence is not in doubt, even among Rangers fans. His ability to stay at Celtic has been debated this summer, though, because of his wife Geraldine's illness. Thankfully this week brought "decent news" on that front.

But, professionally, he has concerns. His is a career characterised by overachievement, at Wycombe Wanderers, Leicester City and Celtic - where the aim is to make it four championships in five seasons, the other being lost on goal difference. But what is more uncertain now is whether his talent can be fulfilled much longer at a club restless in its traditional habitat. It is no slight on Celtic, just recognition that Scotland is not what it was. A move to England still feels a distance away and so Scottish weakness will continue to affect Celtic in Europe, which does seem to be O'Neill's preoccupation.

"At this minute in Scotland only Celtic and Rangers are capable of withstanding a season," he said. "On any given day you can lose, but at the end of the season either Celtic or Rangers will win the league. That wasn't the case before. With respect, the Scottish league, the SPL, is in poor shape, poor shape in the sense that 30 years ago Hearts, Hibs, Aberdeen, Dundee United were pretty strong.

"Does that leave you equipped to play European football? The answer is that if you are playing strong, competitive football every single week, then European football is not as demanding in terms of a leap. You become battle-hardened. I mean, there are only so many sides that can win the English league but the matches are tough every week. In Scotland the opposition do raise their game, and the games are difficult. Don't respect that and you'll get done."

It felt like a large "but" was coming, but no. O'Neill, four years into his time at Celtic, is sensitive to Scotland's domestic situation and was "not apportioning blame". And yet having taken Celtic past Blackburn Rovers and Liverpool to meet Porto in the 2003 UEFA Cup final, broadening Celtic's fan base and credibility south of the border, he thought he had the foundations to take Celtic beyond Scotland again. But he spent not a penny last summer and then saw Celtic fail to reach the last 16 of the Champions League in December because of an 86th-minute penalty in Lyon.

"The environment in which we are involved does not give us the wherewithal. I understand Celtic looking prudently but our debt is very manageable indeed. The problem is that you can manage debt but expectation remains very high. Trying to manage that with the resources you have is the difficult thing and - occasionally - the frustrating thing.

"The frustration is not always present, but there is no doubt that at this minute, when you see what we have done domestically and in Europe, when you think of Seville and what a driving force that is to push on, the frustration is that, actually to push on, you definitely need strength. Our squad, by comparison to other squads looking for the same in Europe, is just not there. The periphery here is just not good or strong enough."

Do not Porto, who overcame Celtic in injury-time in Seville, offer hope to clubs on Europe's periphery?

"What people are trying to say is that the Portuguese League is like the Scottish League. Well, it's not. Celtic and Rangers are two big clubs that would hold their own anywhere, but there are four or five pretty strong teams in the Portuguese League; in Scotland there are two. Portugal can import Brazilians; Deco is Brazilian. Porto are a decent side but along the way they got a bit of luck that perhaps eluded us - Paul Scholes scored a goal at Old Trafford that was disallowed. But you need a bit of luck. Good luck to them."

O'Neill attributed Porto's success and Greece's at Euro 2004 to a "collection of circumstances" rather than an emerging pattern, and again he returned to the power of money in football and the importance of context.

"It is too easy for people to say that Alex Ferguson has everything at his disposal, that everyone wants to play for Manchester United and that it's easier. He's built it. I have the utmost regard for that. And if you can take a minute to reflect, we have got to a UEFA Cup final, been involved in the Champions League, got to the UEFA Cup quarter-final last season - it has been a massive rise when you consider Celtic had not been involved in European football after Christmas for 20-odd years. But I don't think people have time for reflection. Life seems to be in a bit of a rush for everybody."