Two weeks ago, in the State of the Club Report, I noted, “What happens in [Newco’s] qualification tie against Malmo and if they progress, in the subsequent play-off round, will go a long way to determine how competitive the league race is over the next decade. It is the sting in the tale of losing such a momentous title.”
The next decade’s power within Scottish football is what last night’s result is all about. To explain why, let’s look at what is allowed under Uefa’s Financial Fair Play (FFP) rules:
Clubs are allowed to lose €5m each season without breaching FFP. Some costs are deductible: spending on youth development and depreciation (often incurred to improve facilities) are deducted from your FFP loss. In addition to this, clubs can convert up to €25m debt into shares, raising the maximum allowable loss for any period under consideration to €30m.
The monitoring period for FFP in normal times covers the three years before the current season. In response to the current crisis, Uefa amended the reporting period for season 2019-20 to cover two seasons (2019-21), so currently, the FFP reporting period is for seasons 2017-18 until 2020-21. Uefa also permitted crisis-related costs of revenue falls would be recognised, so clubs that are normally run prudently will not be penalised due to the mess the world is in.
Newco’s most recent accounts are for year ending June 2020. Figures for the season just ended have not been published yet, but they were obliged to report their figures to Uefa at the middle of last month and are due to report again to Uefa in October.
See graph below:
I calculate three of the four FFP years show a cumulative loss of £32.76m. This converts to €38.657m. Unlike Celtic, Newco did not offer season ticket holders refunds for season 2019-21, though there will be some crisis-related loss of revenue, I estimate no more than £500k.
To align with FFP requirements, Newco would have to have made a profit after adjusting for the crisis of around £8m last season. That did not happen. It is more likely that their adjusted figure was between the trend of £11m loss and £15m loss.
All of this crystallises now. Champions League revenue would have resolved this, but now they are in breach, and will be required to come into compliance if they wish to compete in European football.
So what happens next? Uefa will investigate Newco’s financial housekeeping on receipt of the figures submitted last month. This will be reviewed in October, allowing Newco to downsize and come into compliance during this transfer window.
If they do not come into compliance, Uefa will offer a Settlement Agreement. The most relevant recent example is Milan, who were in breach for the monitoring period, seasons ending 2015, 2016 and 2017. Uefa offered, then imposed, a two-year European ban in 2018. Milan appealed to CAS, then in 2019, the club accepted a compromise one-year ban.
Other remedies short of a ban are available and have also been used. These always include a transfer ban and reduced European squad size, and are only permitted when strict measures are taken to bring the offending club into compliance. The process can be lengthened by appeal, so Newco can choose to bury their heads in the sand and compete for the title this season.
This latter possibility is dependent on them continuing to raise money. Between November last year and June this year, Newco issued share capital on 10 occasions, giving the impression of a business living very much hand to mouth.
With Europa League revenue, everything else being equal, I estimate their loss for this season will be around £15m. If they fail to reach the Europa, that figure will rise to a £25m loss. That’s a lot of BMW sales.
I started CQN in 2004 because there was financial madness going on at Ibrox and many Celtic fans were asking why we were not working with the same gusto. For 8 years, I predicted Rangers would crash and burn before they eventually did. I predicted this would lead to a Generation of Domination – which it did.
Those were tough years in the Celtic financial blogging scene as we lost leagues and trophies to an outfit that seemed to always survive. Like Oldco Rangers, Newco are playing casino football. They run huge losses in order to become competitive. If they lived within their means, they would have finished nowhere near the top of the table last season.
The predictions I made for Oldco were always likely but never certain. We have followed Newco’s accounts for years. The direction of travel was clear, but a team that was a goal up and comfortable against 10 men at halftime last night, blew their chance of competing for a £40m lifeline tie against a side from Bulgaria.
On the turn of a 4-minute spell last night, the world changed. Football is a fascinating business; the complexity of risk is incomprehensible. If you think it looks easy from the outside, you are almost certainly missing a huge part of the plot.
And permit me another point, if a grinning Jon Dahl Tomasson knows all of this, why do you have to come to CQN to read about it? We are talking about publicly available information here, noted in Newco accounts and prospectuses. A decade on and again, the mainstream are sleeping while the biggest story in football unwraps.
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Facemasks no longer mandatory on Scotrail.
BRRB,
Good to see you posting – though no mention of the Star Bar 🤷🏽♂️
TOM MCLAUGHLIN on 12TH AUGUST 2021 10:45 AM
PARKHEADCUMSALFORD
You don’t require a paid subscription to watch the game on CelticTV tonight. It’s free to all UK, Ireland and Czech Republic viewers.
You sure about this?
Need to be Celtic TV subscriber, I think. No additional cost if you are one.
A thing that’s been itching away at me.Why does the DJ guy at Celtic Park,play YNWA,while the team is in the dressing room.Surely better to have the team walk out to it.Awesome,inspiring sight.I know not possible at Euro games,but for domestic surely.
Subscribers in the UK, Ireland and overseas* can tune into Celtic TV from 7:15pm, where Connie McLaughlin will be live pitchside at Paradise, joined by John Hartson and John Collins bringing you all the pre-match build up from Celtic Park.
Gerry McCulloch and John Hartson will then take over on commentary duty, as the game gets underway in Glasgow!
So subscribe to Celtic TV today and don’t miss a minute of the action as the season heats up for the Celts!
I took a facemask to the Dundee game. Travelled with the Leith CSC. Walked past the stewards into stadium, up to my seat, went to toilet once, back on bus after game. Facemask didn’t leave my pocket, because nobody else was wearing one and rightly or wrongly, I followed the crowd.
This morning, 4 days after the game, I took a PCR test and got the all-clear. I’ll test myself a few days after each visit for the foreseeable future.
Happy with that.
HH
Majestic Hartson 11.05. Thanks. Been going to Victoria bar, Neesons and Brazen. Too many clowns in the Star now.
Bhoys
I stand corrected re CelticTV. Apologies. I misread.
If you are a subscriber the Celtic game is available to watch on Celtic TV everywhere apart from the Czech Republic, I assume that they have a tv channel covering it there.
AZ Alkmaar summer exodus continues.
Interesting read should Celtic prevail tonight.
https://footballfoyer.com/2021/08/05/az-alkmaar-summer-exodus-continues/
In Ange we trust.
TOM MCLAUGHLIN on 12TH AUGUST 2021 11:15 AM
I took a facemask to the Dundee game. Travelled with the Leith CSC. Walked past the stewards into stadium, up to my seat, went to toilet once, back on bus after game. Facemask didn’t leave my pocket, because nobody else was wearing one and rightly or wrongly, I followed the crowd.
This morning, 4 days after the game, I took a PCR test and got the all-clear. I’ll test myself a few days after each visit for the foreseeable future.
Happy with that.
The WHO have said,months ago,very difficult to catch Covid in open air.Like everything else regards Covid,it’s who,(no pun ) you believe.Is walking the streets,the same as sitting beside someone in a stadium.The spokesman for WHO did mention stadiums,and said chances were slim.
I attended the match on Sunday courtesy of one of CQN finest and his good lady, all 3 of us wore our masks admittedly there was very few Celts switched on as the virus hasn’t gone away, masks save lives
“:/
SLÁINTE ANGE on 12TH AUGUST 2021 11:27 AM
AZ Alkmaar summer exodus continues.
Interesting read should Celtic prevail tonight.
https://footballfoyer.com/2021/08/05/az-alkmaar-summer-exodus-continues/
In Ange we trust.
Now that’s a great read.Some amount of goals to lose from your strikers.Seems more to follow.Hopefully before next week.Surprised the Record has not run with this story.
“Oh ur ye,Aye”
WHO’s Science in 5 on COVID-19: Delta variant
https://youtu.be/jVneDKDuOhg
BRRB,
Glad to hear you’re still keeping yourself watered 😀
Don’t be a stranger on here 👍🏼
Facemasks no longer mandatory on Scotrail.
—
i dont thats quite true
all scotrail said is that they wont expect their staff to enforce it
but other enforcement agencies are available!!
new article posted.
if the person sitting to the right of me in the ground tonight doesnt have a facemask on then i wont be slow in saying to him “why are you sitting on the stairs ya muppet”
I don’t see us getting past AZ with our current back 4, if we pick up an injury beforehand then even more so.
I suspect we’re working on the basis of Europa conference football this season and seem to be waiting on Eddie going before sanctioning more buys, which is worrying as Ange confirmed yesterday that we’ve received no bids for him.